Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 9, 2021
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Scope of supply - mere acceptance joint custody of the goods without the rights and privileges of ownership of the goods - Supply of goods cannot happen without the movement of possession of the goods from one person to another. - goods are destroyed by fire before being delivered under an agreement to sell - in the given circumstances, taking joint custody of Tendupatta by the applicant shall not amount to supply of Tendupatta to the applicant if the invoice of the said transection is not issued. - AAR
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Levy of GST - Applicability of GST on recovery of nominal amount for availing canteen facilities by the employees - he employer and employee are related person as per Explanation to Section 15, and therefore, the valuation of canteen facility provided by applicant to its employees shall be as per Rule 28 and not at the nominal amount recovered by applicant from its employees. - AAR
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Levy of GST - payment of notice pay by an employee to the applicant-employer in lieu of notice period - There can be no dispute about this fact that the applicant as employer is tolerating the act or situation whereby the employee is not giving the notice for the agreed period of 30 days before leaving the service of the applicant-company. Thus, by relieving an employee without notice period or by accepting a shorter notice period, the applicant is tolerating an act or a situation created by such action of the employee, and therefore, it is covered by Para 5(e) of Schedule II, and is a supply of service liable to tax. - AAR
Income Tax
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Special audit u/s 142(2A) - Denial of opportunity of being heard - The material on record would clearly indicate that substantial opportunity has been given as well as the reply to objections filed by the petitioner. Therefore, to contend that none of them has been considered by the respondents, in our considered view, may run opposite to the record produced before us. - HC
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Validity of order u/s 144B - Faceless assessment - violation of principles of natural justice - We are in total disagreement with the revenue that on account of issuance of notice u/s. 143(2) dated 22.09.2019 and opportunities provided earlier to the assessee, acceding to his request would be a mitigating circumstance so far as non-service of the Draft Assessment Order is concerned. The opportunity of furnishing the documents and hearing which has been given time and again and requests acceeded to by the authority to the assessee at that stage would not eventually culminate into furnishing of the final assessment order without service of prior notice along with draft assessment order, if any additions are made to the prejudice of the assessee. - HC
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Not accepting revised return of the petitioner in violation of Section 139 - When the respondents have geared up to operate in the regime of electronic and faceless mode for conducting all its operations including the filing of returns document, hearing and assessment, it shall need to improvise the software and closely examine the difficulties experienced by the tax payers because of the limitation of the softwares which can easily be corrected to allow the revised return more particularly, when the law has been made quite clear by virtue of the direction of the Apex Court. - HC
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Addition u/s 56(2)(vii)(b)(ii) - FMV of property - The events subsequent to the transaction of “transfer” of the immovable property under consideration will have no bearing on the applicability of the provisions of Sec.56(2)(vii)(b) - Accordingly, we reject the aforesaid claim of the assessee that the provisions of Sec.56(2)(vii) would not be applicable in its case - we are not inclined to accept the manner in which the A.O had made an addition in the hands of the assessee u/s 56(2)(vii)(b)(ii) of the Act i.e without making a reference to the valuation officer - AT
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Reopening of assessment u/s 147 - Change of opinion - We are of a strong conviction that in the garb of reopening the case of the assessee he had on the basis of the same set of facts as were available on record at the time of framing of the original assessment, tried to substitute his view as against that of his predecessor. In fact, we are unable to comprehend as to what new “material” or “information” had came to the notice of the A.O after the framing of the original assessment, which would have justified the reopening of its case. - AT
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MAT - Adjustments to book profit u/s.115JB - Disallowance on account of provision for periodic maintenance charges - Periodic maintenance cost is an integral part of the concession agreement and assessee is under a contractual obligation to incur the same and provision has been made by it on a scientific basis. Accordingly, the expenditure attributable to each year has been claimed as deduction both under normal provisions of the Act as well as in the computation of book profits u/s.115JB - AT
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Disallowance on account of depreciation on the right to collect annuity on toll roads - Entire investment/finance for developing the infrastructure facility was borne by the assessee. By making such investment what the assessee received in return was a right to collect annuity over the period of concession. Thus, the investment made by the assessee for acquiring such right certainly is an intangible asset coming within the purview of section 32(1)(ii) - AT
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Rejection of books of accounts - NP rate determination - Rejection of books of account is no ground for application of higher net profit even if books of accounts are rejected on one or the other ground, this in itself does not give liberty to the A.O. for making trading addition unless something specific is pointed out. - Average rate of last two years can be applied in case of GP application only. But where application of NP rate is concerned then you have to pointed out specific defect for the expenditure debited in P&L A/c which has not been done by the ld. AO as well as ld. CIT(A). - AT
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Denial of the exemption u/s 54 - Nature of property sold - as far as shops are concerned, even where they are built on a residential plot of land (land use not being changed in local municipality records), the nature of property for tax purposes cannot by any stretch of imagination be treated as property used for residential houses and are thus commercial in nature. - the property which was sold was clearly not a residential house and thus, the basic condition for claiming exemption u/s 54 has not been satisfied in the instant case. - AT
Customs
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Permissibility of Merchanting Trade Transactions - sale of PPE products by a supplier in China to a buyer in the United States - Clause 2(iii) of the 2020 MTT Guidelines was a proportionate measure in ensuring the availability of sufficient domestic stock of PPE products. The measure was validly enacted, in pursuance of legitimate state interest and did not disproportionately impact the fundamental rights of the appellant. Hence, Clause 2(iii) passes muster under Articles 14, 19(1)(g) and 21 - Appeal dismissed. - SC
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Levy of late fee charges - provision for purging the Bill of Entry - In fact, the expression purging is neither found in the Act nor in the aforesaid Regulation. Therefore, question of imposing late fee chargers merely because an importer files a second Bill of Entry on account of the factors mentioned above would not justify the levy of late fee charges on the petitioner. - Further it is noticed that in the impugned communication the amount was being demanded as a fine amount and not a late fee in terms of Regulation 4(3) - This writ petition is allowed by quashing the impugned order seeking to levy fine late fee - HC
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Levy of penalty u/s 112(a) - There is admitted case of collusion and forgery plus concoction of documents, including presenting and filing of false and incorrect documents (invoice), to evade Customs duty by the importer and the appellant company. Further, the present proceedings are for imposition of penalty and not for demand of duty under Section 28(4). The show cause notice on this appellant is not under Section 28(4) of the Customs Act. Fraud vitiates everything. - AT
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Rejection of the request for conversion of free shipping bills to drawback shipping bills - The request for conversion of free shipping bills to drawback shipping bills has to be allowed. However, since the application for conversion is filed on 23.11.2017 in regard to the shipping bills for the period 2013-14 to 2016-17, the period of limitation will apply. Hence, the shipping bills beyond the period of three years will not be eligible for conversion. - AT
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Absolute Confiscation - import of shoes - mis-declaration of the goods in terms of quantity and value - the impugned goods have violated the IPR and the import of these goods was, therefore, prohibited under Rule 6 read with Section 11. - As the seizure of the goods and suspension of the clearance was based on the IPR already registered with the Customs, it is covered under Rule 7(1)(a) and not under Rule 7(1)(b). - confiscation of these goods under section 111(l) in the order of the original authority affirmed in the impugned order is correct and proper - AT
Indian Laws
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Dishonor of cheque - denial of reasonable opportunity to explain the incriminating circumstances - rebuttal of statutory presumptions - In the instant case, apparently the accused petitioner did not lead any evidence in rebuttal of such statutory presumptions. He has also failed to bring on record such facts and circumstances which would make the courts believe that the liability, attributed to the accused petitioner was improbable or doubtful. - HC
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Dishonor of Cheque - signatories of the defaulted cheque - Liability of Chairman / Managing Director - Having done that there was no liberty available to the complainant and there was no requirement in law to implead the Managing Director. The Corporation is a juridical person, which was required to be impleaded (in the complaint lodged) to fulfill the requirement of law. That requirement however does not create any offence by its Managing Director. - HC
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Dishonor of cheque - denial of issuance of cheque and signatures - This court is convinced and satisfied that complainant has successfully proved by leading cogent and convincing evidence that the accused issued cheque in question in discharge of his lawful liability, but the same came to be dishonored. Since despite issuance of legal notice, accused failed to make good the payment, learned court below, in the totality of evidence led on record by the complainant, rightly held accused guilty of having committed offence punishable under Section 138 of act - HC
Central Excise
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Refund of amount deposited as pre-deposit - It stands clear that appellant is entitled for refund of ₹ 15 Lakhs as were paid in cash by him at the time of the investigation of the impugned proceedings and is also entitled for refund of ₹ 6 Lakhs in cash as was being paid from his Cenvat Credit Account at the same stage as mentioned above and that appellant has been held to not to be liable to pay the alleged amount of duty which includes said ₹ 21 Lakh also. - Refund allowed - AT
VAT
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Revival of second composite ex-parte assessment order - both for reason of grammar as also to keep the provision workable, the interpretation made by the assessing authority and as canvassed by the learned Standing Counsel cannot be accepted. An interpretation that makes the provision unworkable or leads to absurd results must always be rejected. In view of the above, we find that the assessing authority had not committed any mistake less so a mistake apparent on the face of record in passing the order dated 22.02.2014. - the fact that revenue has suffered a loss due to an error on its part, falls outside the domain of this Court, in these proceedings. - HC
Case Laws:
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GST
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2021 (12) TMI 324
Detention of goods alongwith vehicle - proper invoice or E-way bill not accompanied with the goods - Section 129(3) of the Central Goods and Services Tax Act, 2017 and Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT:- Considering the fact that the vehicle has been detained since 13.10.2021, this Writ Petition is disposed by directing the petitioner to pay the disputed tax proposed in the notice and to pay 50% of the proposed penalty within a period of two weeks from the date of receipt of a copy of this order. If such amount is paid, the respondents shall release the goods vehicle to the petitioner. The petitioner is given liberty to workout the remedy on merits before the Appellate Commissioner under Section 107 of the CGST Act, 2017 and TNGST Act, 2017 who shall consider the same on merits - Petition dismissed.
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2021 (12) TMI 323
Spot of starvation on account of seizure of goods - Betel Nuts - Clause (C) of Section (1) of Section 129 of the G.S.T. Act 2017 read with C.G.S.T. Act 2017- HELD THAT:- Respondent Nos. 1, 2 3 are represented through State and claim that so far as under the G.S.T. Act 2017 concerned are required to get the goods released unless and until that is done. There is no provision that mere on the asking on the carve of starvation of the petitioner it could be released in his favour. Therefore, he is required to follow the mandate a direction that provision has been made in Clause (C) of Section (1) of Section 129 of the G.S.T. Act 2017 read with C.G.S.T. Act 2017 whereby FORM GST MOV-08 represented before the authorities concerned among other compliance and to get the goods seized release. It is the incumbent duty of the petitioner to come out with specific papers and to prove he is the owner and with the interest of the goods he may file as per G.S.T. and there are provision that goods may be released by paying tax which is due against him otherwise to show that he is threatened by some any person would not come through rescue of his legal rights and no consideration is observed in that regard however the petitioner to approach the authority concerned in particular respondent no. 3 through any such application is required to be moved under the Clause (C) of Sub-section (1) of Section 129 of the G.S.T. Act 2017 read with C.G.S.T. Act 2017 that same shall be considered and decided in accordance with law. Petition disposed off.
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2021 (12) TMI 322
Classification of supply - rate of GST - supply of marine engines of heading 8407 and heading 8408 and/or their spare parts of heading 8409 - general tax rate as per the entry of schedule I, Sl. No. 252 of Notification No. 12017-Central Tax (Rate), Dated 28-06-2017 - whether the said marine engine and parts which are used on a fishing vessel are forming parts of the said vessels and therefore chargeable to tax @ 5% under Sr.No.252 of Notification No.1/2017 Central Tax? - HELD THAT:- The parts of goods of headings 8901, 8902. 8904 to 8907 are chargeable to CGST/SGST @ of 2.5% each - in the subject case, the marine engine and parts thereof attract 5% GST under Sr. No. 252 of Notification No. 1/2017-C.T. (Rate), dated 28-06-2017, if supplied to fishing vessels - However, if the impugned goods are supplied for use other than for fishing vessels and goods covered under 8901, 8904, 8905, 8906 and 8907, in such a case GST at the rate applicable under the respective GST Tariff Heading under which they are classified, will apply. Further, goods which do not conform to parts of marine engines will not be covered under the said Sr. No. 252 of Notification No. 1/2017-CT.(Rate), dated 28-6-2017. Whether GST rate of 5% can be charged on supply of marine engines of heading 8407 and heading 8408 and/or their spare parts of heading 8409 when it is supplied for use of defense purpose, patrolling purpose, flood relief and rescue operations being part of heading 8901, 8904, 8905, 8906, 8907? - HELD THAT:- Marine engine, and parts thereof will be covered under Sr. No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017, when used in the manufacture of goods falling under 8901, 8902, 8904, 8905, 8906, 8907. Items which do not conform to parts of marine engines will not be covered under the said Sr. No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017.
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2021 (12) TMI 321
Scope of supply - mere acceptance joint custody of the goods without the rights and privileges of ownership of the goods - goods are destroyed by fire before being delivered under an agreement to sell - Section 7 of the GST Act - point and time of supply - Principles of interpretation of Statutes - admissibility of application - HELD THAT:- The question regarding the act of supply of rate of GST applicable on the inward supply of the applicant is covered under the definition of Advance Ruling as per section 95(a) of the GST Act and the application is therefore admissible. Whether mere acceptance of joint custody of the goods without the rights and priviledges of ownership of the needs amounts to Supply within the meaning of Section 7 of the GST Act? - HELD THAT:- The definition of supply under the GST act is an inclusive definition. it defines supply as including all forms of supply or goods. Supply is an activity, including inactivity in case of supply of service, as per Schedule II to the GST Act. Supply presupposes a supplier, defined in section 2(105), a recipient, defined in section 2(93). consideration defined in section 2(31) and an activity. The activities that have been treated to be a supply in the definition are sale, transfer, barter, exchange, licence, rental, lease or disposal - It may thus be inferred that supply, so far as goods are concerned involves movement of goods or the transfer of possession of goods from one person to another. Supply of goods cannot happen without the movement of possession of the goods from one person to another. While a person has goods in his possession, he cannot be said to have supplied the goods to another. Under the GST Act there are provisions for ascertaining Time of Supply as well as the Place of Supply, which also corroborate that in supply of goods. there has to be movement of possession from one person to another. The provision of time of supply of goods, under section 12 of the GST Act slates that time of supply of goods shall be the date of issue of invoice and section 31 stales that invoice is to be issued before the removal of the goods for supply, in case where movement of goods is involved. Where movement of goods is not involved, then delivery of goods or making available for delivery shall be the time of supply - it becomes important to see at which point the delivery of the goods is given to the applicant to complete the transaction and convert the Agreement to Sell into a Sale. In this case, the payment was not made by the applicant at the point of collection and therefore, delivery was not given and the goods were stored in the Godown. In a case, the delivery was to be given from a certain place, the situs of such sate would be the place such 'right to use' is transferred. However, in case of oral or implied transfer of right to use (where the goods are not ascertained goods), the situs would be where location where the property in goods is transferred. In this case the property in goods would have been transferred upon payment of the full consideration and therefore, upon delivery at the godown, it would have been the situs. The fact that the federation has obtained insurance in its name along with the applicant, points to the fact that the risk in goods lay with the Federation. Section 26 of the Sale of Goods Act, 1930, states that the risk in goods passes with the transfer of the property in goods and thus an inference is drawn that the transfer of property in Tendupatta had not happened till the dale of the fire in the godown, since the insurance policy was in the joint name of the Federation and the applicant - It is therefore clear that neither the risk in the goods nor the property in the goods had passed to the applicant as on the date of the fire. Clearly therefore, the goods were also not delivered to the Applicant. Principles of interpretation of Statutes - HELD THAT:- Deeds and Documents refer to an absurdity Limit, which states that a statute cannot be interpreted literally if it would lead to an absurd result. Now, coining to the agreement of the applicant with the Federation, in case of non-payment of the dues, the Federation would sell the goods to another person and the sale proceeds of such sale shall be adjusted from the dues of the applicant. Now in such case, if the goods arc deemed to have already been supplied to the applicant vide joint custody, the second sale would also be taxed, being supply in terms on the GST Act. Therefore, such an interpretation would result in the same goods being sold to two different persons. This would be an absurd result and therefore such an interpretation would be erroneous in the eyes of the law. Whether in the given circumstances of the case, where the goods are destroyed by lire before being delivered under an agreement to sell, can there be Supply within the meaning of Section 7 of the GST Act alter the destruction of the goods by fire? - HELD THAT:- Supply within the meaning of Section 7 of the GST Act can only be of goods that are in existence. Although a contract may be entered into for supply of future goods and consideration also be received for such supply of future goods, non-existent or future goods cannot be supplied in terms of Section 7 of the GST Act. In this case, the goods are destroyed by fire. There cannot he any transaction in respect of such non-existent goods after their destruction that would amount to supply.
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2021 (12) TMI 320
Levy of GST - payment of notice pay by an employee to the applicant-employer in lieu of notice period under clause 5(e) of II of GST Act - amount of premium of Group Medical Insurance Policy recovered at actuals from non-dependent parents of employees, and retired employees those who are covered under the said Policy - recovery of nominal amount for availing the facility of Canteen at the Refinery at Bina when it is not a supply as per clause I of Schedule III of GST Act - recovery of telephone charges from the etitployees over and above the fixed rental charges payable to BSNL - whether full ITC is available to the applicant or ITC will be restricted to the extent of GST borne by the applicant-employer? - provision of canteen services to all the employees without charging any amount (free of cost) will fall under para 1 of Schedule III of GST Act and will nut he subjected to GST? - whether in view of the explanation to Section 17(3) of GST Act, ITC shall be available to the applicant on the goods and services used in the activity of provision of free canteen services to the employees? Levy of GST on payment of notice pay by an employee to the applicant - HELD THAT:- It is important to note that except due to exclusion by Para 1 of Schedule III, the services by an employee to an employer are also covered in supply, otherwise there should have been no need for such exclusion. lt is also important to note that Schedules are part of the GST Act. The Schedules contain specific provisions/exclusions, and therefore, they prevail over other general provisions of the GST Act - Section 7(1) is defining supply in an inclusive manner. Therefore, there can be other activities also which can be covered in supply even if they may not be a supply as per provisions of Section 7. There can be no dispute about this fact that the applicant as employer is tolerating the act or situation whereby the employee is not giving the notice for the agreed period of 30 days before leaving the service of the applicant-company . Thus, by relieving an employee without notice period or by accepting a shorter notice period, the applicant is tolerating an act or a situation created by such action of the employee, and therefore, it is covered by Para 5(e) of Schedule II, and is a supply of service liable to tax. Premium of Group Medical Insurance Policy recovered from the non-dependent parents of employees retired employees at actuals - HELD THAT:- As per applicant it is not covered by the scope of supply as defined u/s 7 of GST Act, as it is not in the course or furtherance of business of the applicant. It is also submitted by applicant that it is not covered by the definition of business as given in Section 2(17). However, both the contentions of the applicant are not valid - Had the services been provided by applicant as pure agent as per Rule 33 of GST Rules, then there would have been no liability to pay GST. But, the applicant has not provided the insurance service to the non-dependent parents of employees retired employees as an agent of the Insurance Company. Therefore, the premium of Group Medical Insurance Policy recovered by applicant from the non-dependent parents of employees retired employees will fall within the ambit of supply and is liable to GST. Applicability of GST on recovery of nominal amount for availing canteen facilities by the employees - HELD THAT:- As per Section 15(1) of GST Act, the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply where the supplier and the recipient of the supply are not related, and the price is the sole consideration for the supply. However, if the transactions are between related persons then value of supply is to be determined as per Rule 28. The employer and employee are related person as per Explanation to Section 15, and therefore, the valuation of canteen facility provided by applicant to its employees shall be as per Rule 28 and not at the nominal amount recovered by applicant from its employees. Applicability of GST on telephone charges recovered by applicant from its employees over and above the fixed rental charges payable by applicant to BSNL - HELD THAT:- It is covered in the definition of business given in Section 2(17), as it is an activity or transaction in connection with or incidental or ancillary to the business of the applicant. Moreover, it is a supply as per inclusive definition of supply given under Section 7. Accordingly, the applicant-company is liable to pay GST on the amount recovered from its employees towards telephone charges at actuals. Availability of ITC to the applicant in respect of inputs and input services pertaining to supply - HELD THAT:- The recovery of premium of Group Medical Insurance Policy from the non-dependent parents of employees retired employees at actuals is a supply of the said services by the applicant. It is an activity or transaction in connection with or incidental or ancillary to the main activity of the applicant, and therefore, it is covered in business as defined in Section 2(17) of GST Act - the transaction of supplying Group Medical Insurance services to the non-dependent parents of employees retired employees, and recovery of premium for the same, is a transaction which is in connection with or incidental or ancillary to the main business of the applicant, and therefore, the applicant shall be eligible to claim Input Tax Credit in respect of premium paid to insurance company to the extent of its further supply. Input tax credit in respect of Canteen services - HELD THAT:- In respect of telephone charges paid to BSNL, the applicant shall be eligible to claim Input Tax Credit, because it is a further taxable supply by the applicant. The said transaction comes under clause (b) of Section 2(17) as a transaction incidental or ancillary to the main business of the applicant, and is liable to tax. Moreover, telephone charges are not covered by the provisions of Section 17 relating to blocked credit Therefore, the applicant is eligible for ITC in respect of such telephone charges. Levy of GST on canteen services provided to the employees without charging any amount (free of cost) - HELD THAT:- The canteen services provided to the employees are to be treated as supply, even if there is no consideration. It will be liable to tax as per value determined in accordance with Rule 28. Eligibility for ITC in respect of canteen services provided by applicant to its employees without charging any amount (free of cost) - HELD THAT:- The applicant shall not be eligible to claim Input Tax Credit in respect of canteen services in view of specific provision of clause (ii) of SI. No. 7 of Notification No. 11/2017-Central Tax (Rate), dt. 28.6.17, as substituted by Notification No. 20/2019-Central Tax (Rate), dt. 30.9.19, w.e.f. 10.10.19 read with clause (xxxii) of Paragraph 4 relating to explanation given in Notification No. 11/2017-Central Tax (Rate).
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2021 (12) TMI 319
Maintainability of appeal - time limitation - whether the appeal has been filed within the prescribed time- limit? - whether or not the appeal filed against the refund rejection order to be decided are proper? - HELD THAT:- In the instant case the order dated 03.11.2020 was received to the appellant on 24.11.2020 first time from the concerned adjudicating authority and the appeal has been filed on 23.02.2021. The appeal has been filed with delay of the normal period prescribed under Section 107(1) of the CGST Act, 2017. It is found that though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017. With regard to delay in filing of appeal, it is found that the appellant was prevented by sufficient cause from presenting the appeal within the normal period Section 107(1) of the CGST Act, 2017 and further delay of 21 days is condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017. The appellant in his contention has stated that the provisions for levy of interest u/s 50 of CGST Act has been amended retrospectively vide section 112 of Finance Act, 2021 to provide that the interest on tax shall be payable on net tax liability paid by Electronic Cash Ledger and provisions of Section 112 of the Finance Act, 2021 have been notified to come into force from 01.06.2021 vide Notification No.16/2021-Central Tax dated 01.06.2021. Hence, there is no room left for controversy and the appellant is undoubtedly entitled for refund of interest paid in excess of interest on net tax liability. The appellant was required to pay interest on tax liability paid through Electronic Cash Ledger. However, the appellant before issuance of such instructions and amended provisions to Section 50(1) of the CGST Act, 2017 paid interest on account of delayed payment of tax through Electronic Credit Ledger and Electronic Cash Ledger for the period July-2017 to March-2018 (2017-18) - in consideration of the amended provisions to Section 50(1) of the Act, the interest paid on account of delayed payment of tax through Electronic Credit Ledger by the appellant is in excess of actual interest liability. Hence, the appellant has claimed the refund of such interest paid excessively in addition to his interest liability. There are force in the appellant's contention that the appellant was eligible for refund of interest paid in excess of interest on net tax liability - the impugned order passed by the proper officer/adjudicating authority and allow the appeal of the appellant is set aside - appeal allowed.
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Income Tax
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2021 (12) TMI 318
Reopening of assessment u/s 147 - Change of opinion - TP Adjustment royalty paid and lump sum fees for know how paid to Skoda Auto - HELD THAT:- As in this order by the Transfer Pricing Officer passed on 19th December 2006 under Section 92CA (3) of the said Act, the Transfer Pricing Officer has considered the royalty, technical know how amounts paid and passed his order. This order of the Transfer Pricing Officer has been considered by the AO while passing the original assessment order dated 29th December 2006 under Section 143 (3) of the said Act. Therefore, there can be nothing which has not been truly and fully disclosed and we cannot accept the submissions of Mr. Walve that explanation 1 to Section 147 provides that production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer is no defence. Petitioner has not only filed its account books and other evidence but those have been considered by the Transfer Pricing Officer whose order also has been considered by the Assessing Officer while passing the original assessment order. In our view, the reasons recorded for reopening is nothing but a change of opinion which is not permissible in law. We find support for this view in the judgment of this Court in Ananta Landmark Private Limited [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] In the circumstances, we are satisfied that the notice dated 23rd March 2011 issued under Section 148 of the said Act has been issued after illegally assuming jurisdiction under Section 148 - Decided in favour of assessee.
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2021 (12) TMI 317
Reopening of assessment u/s 147 - deductions under Chapter VIA that includes Section 80IA - HELD THAT:- The order dated 27/12/2004 for AY 2001-02 on which reliance was placed by Respondent No.1 as a reason for re-opening Petitioner's assessment for AY 1997-98 has been set to nought. On this ground also, the notice dated 30/03/2004 which is impugned in this Petition has to be set aside. We have to note that the jurisdiction exercised to reopen the assessment is not valid inasmuch as before passing the original Assessment Order dated 24/01/2000 for AY 1997-98, Petitioner was called upon to give details by a notice dated 30/07/1999 like nature of business, address of all business premises, details of current assets, details of additions / reductions to fixed assets, date of purchase, etc. Petitioner provided the details by its Advocate's letters dated 29/09/1999 and 14/12/1999. After considering Petitioner's submissions, the Assessing Officer has allowed deductions under Chapter VIA that includes Section 80IA. Therefore, we cannot accept that any new tangible material has been found for re-opening the assessment.
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2021 (12) TMI 316
Reopening of assessment u/s 147 - eligibility of deduction under Section 80HH/HHA/IA - HELD THAT:- The proviso of Section 147 of the Act shall therefore apply. Under Section 147 of the Act the assessment under Sub Section (3) of Section 143 can be reopened after a period of four years only if the assessee has failed to disclose fully and truly all material facts necessary for his assessment in that Assessment Year. The reasons as quoted above does not indicate initially what was the material fact that has not been disclosed fully and truly by petitioner. Therefore, on this ground alone, notice dated 30th March, 2004 has to be set aside. In the assessment order dated 30th January, 2004 the deduction claimed by petitioner have been disallowed and therefore question of any income escaping assessment also will not arise. Therefore, on the date when the impugned notice dated 30th March, 2004 was issued the Assessing Officer could not have any reason to believe that income chargeable to tax has escaped assessment u/s 148 of the Act. As noted earlier in the block assessment order dated 30th January, 2004 the deduction claimed under Section 80I, 80 HA and 80 IA of the Act had been disallowed.
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2021 (12) TMI 315
TP Adjustment - ALP determination - rejecting comparable given by the assessee company by applying certain filters like Related Party Transactions (RPT) filter, turnover filter, export earnings filter, employee cost filter, etc . - HELD THAT:- While undertaking the exercise to arrive at the arm s length price which is essentially a matter of estimate of the fair value which the Indian Company had paid or had received from its Associate Enterprise (A.E.), such exercise is required to be undertaken by the Transfer Pricing Officer (TPO) on the basis of the facts and figures relating to comparable cases of other similarly placed entities, whose relevant data is available in the public domain. As per the provisions of the Act and the Rules, the assessee company is required to furnish its own Transfer Pricing Analysis and the list of chosen comparables which may or may not be agreed to by the Revenue Authorities and they would introduce some more comparables rejecting the comparables given by the assessee company by applying certain filters like Related Party Transactions (RPT) filter, turnover filter, export earnings filter, employee cost filter, etc. to bring them within the comparable range of the cases of such comparables and generally there would be a disagreement between the assessee and the revenue in such a situation. Therefore, the entire exercise of making transfer pricing adjustments on the basis of comparables is nothing but a matter of estimate of a broad and fair guess-work of the authorities based on factual relevant materials brought before the authorities, i.e., the TPO or Dispute Resolution Panel (DRP) or ITAT, which are the fact finding authorities. See M/S. EIGHT ROADS INVESTMENT ADVISORS PVT. LTD. (FORMERLY KNOWN AS FIL CAPITAL ADVISORS INDIA PVT. LTD.) , [ 2019 (2) TMI 1806 - BOMBAY HIGH COURT] and BARCLAYS TECHNOLOGY CENTRE INDIA PRIVATE LTD. [ 2018 (8) TMI 574 - BOMBAY HIGH COURT] In our view, the ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that questions as pressed raises any substantial questions of law.
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2021 (12) TMI 314
Special audit u/s 142(2A) - Denial of opportunity of being heard - denial of natural justice - passing non speaking order - assessee contented as non-application of mind or non-granting of any reasons for passing order - HELD THAT:- What is being contended, is that when an order is passed under Section 142(2A) of the Act, necessary reasons have to follow which will enable the petitioner to know as to the circumstances on which the order was passed. On considering the same, we do not deem it appropriate to accept the contention. What was provided by the judgment of the Hon ble Supreme Court in Rajesh Kumar s case [ 2006 (11) TMI 135 - SUPREME COURT ], culminated into the proviso being added that an adequate opportunity be granted. Admittedly, even according to the petitioner, adequate opportunity has been given. That only presupposes, that the objections as raised by the petitioner with regard to the notice issued, have been duly considered by the respondents. It is only after such application of mind, the order has been passed. The material on record would clearly indicate that substantial opportunity has been given as well as the reply to objections filed by the petitioner. Therefore, to contend that none of them has been considered by the respondents, in our considered view, may run opposite to the record produced before us. The material clearly indicates that the provisions of law have been complied with. The contention of the petitioner regarding non-application of mind or non-granting of any reasons for passing order, therefore, would not be sustainable. WP dismissed.
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2021 (12) TMI 313
Validity of order u/s 144B - Faceless assessment - violation of principles of natural justice - Argument of Non service of any Draft Assessment Order as well as show cause notice - HELD THAT:- As the chronology of the events presented before us by the respondent authority that the return of the petitioner Company was selected for scrutiny and notice u/s 143(2) of the Act was issued on 22.09.2019. Date of hearing was fixed on 07.10.2019. Various responses have been given by the petitioner. It also sought time and review was also filed. Opportunity for filing reply and furnishing the document was granted. The assessee was also informed on 15.10.2020 about transfer of proceedings to the NFAC and notice was also issued to the assessee by the Regional Reassessment Centre on 04.01.2021 u/s. 142(1) of the Act. Notice of NFAC to the petitioner was issued on 03.02.2021 under section 142(1) of the Act. It appears from the assessment order which is claimed to have been placed for transfer on 08.04.2021 and averred to have been served upon the assessee under the communication dated 12.04.2021, is missing on the Web Portal of the Income Tax Department. Assessment order issued u/s 144B of the Act on 20.04.2021 along with the Demand Notice have been served upon the petitioner. Barring the Draft Assessment Order, rest of all the documents are already found on the web portal of the respondent department. Sub-sections (7) of section 144B provides that for the purposes of faceless assessment an electronic record shall be authenticated by the National Faceless Assessment Centre by affixing its digital signature and by assessee or any other person, by affixing if required his digital signature if he is required under digital signature. There is specific requirement for service by electronic mode and in absence of placing before this Court any proof of virtual exchange or authenticated copy of service to the assessee, there is no reason for this Court to accept the version of the respondent about the service. We are in total disagreement with the revenue that on account of issuance of notice u/s. 143(2) dated 22.09.2019 and opportunities provided earlier to the assessee, acceding to his request would be a mitigating circumstance so far as non-service of the Draft Assessment Order is concerned. The opportunity of furnishing the documents and hearing which has been given time and again and requests acceeded to by the authority to the assessee at that stage would not eventually culminate into furnishing of the final assessment order without service of prior notice along with draft assessment order, if any additions are made to the prejudice of the assessee. We have sought assistance from the learned advocate of both the sides to point out to us due service of the draft assessment order, as has been claimed by the respondent, however, the said order dated 12.04.21 has been duly served to the petitioner, show cause notice which is claimed to have been issued along with the draft assessment order are surely missing. This being a simple case of statutory non-compliance of the provision, the same would amount to breach of not only principles of natural justice, but also, of the action in complete disregard to the statutory provision. And therefore, the order of the respondent passed without following the mandate given by the statute under section 144B of the Act deserves to be interfered with by quashing and setting aside the same. We quash the impugned assessment order 20.04.2021 so also the notice of demand issued by the respondent authority and any other proceedings initiated pursuant to the said . We direct that the respondent/revenue will be at liberty to proceed with the assessment process under the provisions of Section 144B of the Act, as permissible under the law obviously after issuance of the prior notice-cum-draft assessment order and on availing an opportunity to the petitioner. The petitioner shall file response and the objection to the same. - Decided in favour of assessee.
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2021 (12) TMI 312
Not accepting revised return of the petitioner in violation of Section 139 - scheme of arrangement of the de-merger of the company conceived -time limit to file the revised return under Section 139(5) of the Act had expired - revised return pursuant to the demerger on account of the order of the NCLT - HELD THAT:- As the order of the NCLT had come on 17.03.2020 and therefore, it was not possible for the petitioner to so do it within time frame as set under Section 139(5) of the Act as the appointed date as per the order of the NCLT is fixed on 01.04.2017 the petitioner would be entitled to file the revised return and in wake of the decision of this Court in case of Principal Commissioner of Income- Tax Others Vs. Babubhai Ramanbhai Patel [ 2017 (7) TMI 744 - GUJARAT HIGH COURT] the original return under Section 139(1) will pale into insignificance and would not survive. The respondent authority therefore ought to have considered the filing of revised return and as that has not been done, it is a clear breach of statutory provision, indulgence at the end of the Court is a must. Matter has travelled to this Court only because the revised return was not permitted beyond the prescribed time limit as set under Section 139 (5) of the Act. The Apex Court in case of DALMIA POWER LIMITED [ 2019 (12) TMI 991 - SUPREME COURT] when has categorically held and observed that Section 119 of the IT Act in such matters also would not be applicable and therefore, the least respondent authority could have done was to permit revised return. When the respondents have geared up to operate in the regime of electronic and faceless mode for conducting all its operations including the filing of returns document, hearing and assessment, it shall need to improvise the software and closely examine the difficulties experienced by the tax payers because of the limitation of the softwares which can easily be corrected to allow the revised return more particularly, when the law has been made quite clear by virtue of the direction of the Apex Court. Let the requisite care be taken expeditiously in improvising the software wherever necessary since its limitations would have direct bearing on the satisfaction of tendency to swell the Court litigation. The petitioner could have been saved from this ordeal, had such care been taken to permit the revised return in an electronic mode once the direction of the NCLT was communicated along with the decision of the Apex Court. Present petition is allowed and disposed of by quashing and setting aside the order passed by the respondent-authority dated 07.05.2021 under Section 143(3) read with Section 144B of the IT Act.
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2021 (12) TMI 311
TDS u/s 194H - Disallowance u/s 40(a)(ia) - no tax has been deducted on the bank guarantee commission and credit card commission paid to the banks - CIT(A) has deleted the addition holding that the provisions of Section 194H are not applicable to the transactions made by the assessee as relying on JDS APPARELS PRIVATE LIMITED [ 2014 (11) TMI 732 - DELHI HIGH COURT] - HELD THAT:- As assessee having engaged in the business of trading and manufacturing of jewellery and it is the normal trade practice in this business to accept the payment through credit cards and debit cards. For facilitating the payment through credit cards and debit cards, the bank deducts some bank charges and these charges are deducted by the respective bank automatically upon receipt of payment. Only the net amount is actually received by the respondent. The assessee would not be in a position to deduct TDS on expenditure which was incurred on account of Credit Card and Debit Card Commission between Merchant Establishment and acquirer bank prior to 01.01.2013. This issue is stands adjudicated in assessee s own case [ 2017 (10) TMI 1421 - ITAT DELHI] bank was making the payments to the assessee after making the deduction of the charges to it, as such, there is no occasion for the assessee to deduct the TDS and further bank was not working for the assessee but on the other hand, it was working for its customers, as such, there is no requirement of TDS on bank charges - Decided in favour of assessee. Estimation of income - bogus purchases - addition @12.5% on purchases as the income of the assessee on account of inflation of purchase price of diamonds on purchases from accommodation entry providers - CIT(A) has held that the disallowance made is not valid as the Assessing officer has accepted the value and quantitative record of purchases and sales duly recorded in the books - HELD THAT:- CIT(A) has considered the quantitative details, stock and the payment made by the assessee with regard to this purchases - As per reasoning of the ld. CIT(A) and the retraction statement of Sh. Rajendra Jain, we decline to interfere with the order of the ld. CIT(A) on this issue for the A.Y. 2013-14 and A.Y. 2014-15. Expenditure on working capital - assessee intends to claim the said expenditure as allowable as the assessee has not carried out any extension or setting up new unit and the provision of section 35D shall not be applicable except ₹ 41.02 crores on shown room expenditure - HELD THAT:- As the claim of the assessee that the expenditure is in the nature of revenue expenses and hence allowable u/s 37(1) of the Act for the years in appeal in computing the total income under the normal provisions of the act as the fund raised is used as working capital by the company except an amount of ₹ 41.02 crores. As the assessee has utilised 92% of receipts on account of public issue on working capital and hence 92% of ₹ 38 crores of share issue expenditure would be revenue expenditure and balance 8% of share issue expenditure which was spent on capital expenditure would not be treated as revenue expenditure. The proceeds utilized for capital expenditure, is allowable u/s 35D of the Act. Appeal of the assessee on this ground is allowed. Book Profit u/s 115JB - assessee has submitted that the expenditure on IPO shall be allowable in computing Book profit u/s 115JB - HELD THAT:- As the issue is directly covered by the order of Hon ble Jurisdictional High Court SAIN PROCESSING AND WEAVING MILLS (P) LTD. [ 2008 (12) TMI 20 - DELHI HIGH COURT] the AO is directed to compute the book profit after considering the IPO expenditure amounting to ₹ 38 Crores. AO is directed to consider the Explanation 1 to Section 115JB and also considered the book profits taking into the treatment given to the receipt of the share capital in finalization of the accounts. Appeal of the assessee on this ground is allowed for statistical purpose. Allowability of Education Cess - additional grounds raised pertaining to deduction of Education Cess - HELD THAT:- Education Cess is not of the nature described in sections 30 to 36, Education Cess is not in the nature of capital expenditure, Education Cess is not personal expense of the Assessee, it is mandatory for it to pay Education Cess and for the purpose of computation of Education Cess, the Income Tax is taken as the criteria for computational purpose. Thus, the expense of Education Cess is mandatory expenses to be paid but does not fall under capital expense and personal expenditure and hence may be allowed as deduction. We have also gone through the various judgments of judicial authorities pan India wherein the fresh claim of the assessee is considered and the deduction u/s 37 of Education Cess has been allowed. The Hon ble High Court of Bombay held that the appellate authorities may confirm, reduce, enhance or annul the assessment or remand the case to the AO, because the basic purpose of a tax appeal was to ascertain the correct tax liability in accordance with the law. Thus keeping in view the provisions of the Act pertaining to Section 40(a)(ii) and Section 115JB, Circular of the CBDT No. 91/58/66 ITJ(19), the orders of Co-ordinate Benches of ITAT and judicial pronouncements of the Hon ble High Court of Bombay and Hon ble High Court of Rajasthan, we hereby hold that the assessee is eligible to claim the deduction of the Education Cess as per the provisions of Section 37 of the Income Tax Act.
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2021 (12) TMI 310
Reopening of assessment u/s 147 - Validity of reasons to believe - addition u/s 68 of the Act on account of share capital and share application money received by the assessee - as on the basis of a search operation conducted u/s 132 of the Act on 9th October, 2014 in the Kuber group of cases and on the basis of the statement recorded of Shri Mul Chand Malu and on the basis of post search enquiries, reopened the assessment after recording reasons - HELD THAT:- We find, in the instant case the information on the basis of which reasons were conceived was not gathered in search or post search enquiries. Further, the observation of the AO that M/s Binapani Merchandise Pvt. Ltd. is a Jamakharchi company is contrary to report of the commission. This company comes under the category of those companies whose address is not traceable. We further find, Shri Vikas Aggarwal, in his answer to questions No.7 to 12 has not named any of the companies who deposited the money is appearing. Further, in none of the statements recorded by the Investigation Wing of Kolkata, the name of any company who deposited money with the assessee company is appearing. We find, although the assessee has specifically asked for cross-examination of the persons whose statements were relied on by the AO, however, the same was not provided. So far as the name of Mr. Devesh Upadhya is concerned, we find the AO has stated that in the commission report received from Kolkata office, statement of Vikas Agrawala, Devesh Upadhya and Praveen Kumar are mentioned. However, in none of these statements of entry operators, the name of the assessee is mentioned. Further, opportunity to cross examine has not been provided. A perusal of the chronology of date chart shows that the statements of all these persons were recorded prior to the date of search in the Kuber group of cases i.e., on 09.10.2014. Since the assessee in the instant case also belongs to the Kuber Group of companies and the facts are identical, therefore, respectfully following the decision of the Tribunal in the case of Kuber Khanpan Udyog (P) Ltd. (supra), [ 2021 (3) TMI 1159 - ITAT DELHI] we hold that the addition made by the AO and sustained by the CIT(A) cannot be upheld. We, therefore, set aside the order of the ld.CIT(A) and direct the AO to delete the addition - Decided in favour of assessee.
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2021 (12) TMI 309
Bogus share transaction - addition u/s 68 - assessee being not able to prove genuineness and credit worthiness of share capital and securities premium - HELD THAT:- It is necessary for the lower authorities, more particularly the ld. CIT(A) to record, as to when the payment for issuance of shares were received by the assessee company in its books of accounts or, in other words, when the amount were credited in the account of the assessee . Since, no discussion have taken place in the entire order passed by the ld. CIT(A) , further, we noticed that in written submissions also no such details have been filed before us, on the basis of which it can be deduced as to the date of credit of the amount in the books of the assessee - interestingly in the balance sheet also there were no outstanding loans/ amount for the earlier years. In absence of these documents and information, it will be against the interest of justice and law to decide the issue merely on the basis of the judgement relied upon by the ld. AR and vague finding of the CIT(A) . CIT(A) has merely relied upon the confirmation letter given by the respective shareholders, confirming the transaction along with the loan transactions before us as well as before the ld. CIT(A). No books of accounts of the assessee were produced before us showing credit entry of the amounts invested in the shares prior to the previous years. For the purposes of section 68, it is essential that there must be credit entry in the books of account in the previous year for which the addition are sought to be made.CIT(A) without verifying the credit entry in the books of the assessee, have deleted the addition merely on the basis of the bank statement of other persons. The matter is required to be remanded back to the file of the ld. CIT(A) with a direction to examine the matter afresh and find out whether the shares were issued at a premium and if, the answer is yes, whether the amount for issuance of shares were credited in the books of account of the assessee company for issuing the shares. If the shares were issued and the amounts were received and credited by the assessee company in earlier years, i.e prior to assessment year under consideration, then the addition may be deleted. However, in case, the A.O. on factual verification conclude that the amounts are credited in the year under consideration, then onus lies on the assessee to show identity, creditworthiness of the depositors and genuineness of transactions to the satisfaction of the ld CIT(A), such is the mandate of section 68 of the Act. Therefore the assessee is directed to discharges its onus first before ld. CIT(A), he may examine the same and decide the issue afresh. Appeal filed by the Revenue is allowed for statistical purpose
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2021 (12) TMI 308
Addition u/s 56(2)(vii)(b)(ii) - FMV of property - Mandation of reference to the valuation officer as was required per the mandate of Sec. 50C(2) - adoption by the A.O of the value that was taken by the Stamp Valuation Authority for valuing the property in question - Assessee submitted that amount for which the property in question had been transacted as per the agreement be accepted without any reference to its market value as was adopted by the Stamp Valuation Authority - HELD THAT:- We are unable to persuade ourselves to substantiate to the claim of the assessee that as the property under construction was an under construction flat which pursuant to the fraud played by the builder had not been received by him till date; and the matter is sub-judice before the courts, therefore, the provisions of Sec. 56(2)(vii)(b) would not be applicable qua the transaction in question. Considering the definition of transfer as contemplated in Sec. 2(47) of the Act, we are of the considered view that pursuant to the execution of the registered agreement to sell dated 11/15.10.2013 between the assessee and the seller i.e the builder, viz. M/s Lok Housing and Construction Ltd., the transfer of the property under consideration for the purpose of triggering the provisions of Sec.56(2)(vii)(b) stood completed. The events subsequent to the transaction of transfer of the immovable property under consideration will have no bearing on the applicability of the provisions of Sec.56(2)(vii)(b) - Accordingly, we reject the aforesaid claim of the assessee that the provisions of Sec.56(2)(vii) would not be applicable in its case - we are not inclined to accept the manner in which the A.O had made an addition in the hands of the assessee u/s 56(2)(vii)(b)(ii) of the Act i.e without making a reference to the valuation officer as was required per the mandate of Sec. 50C(2) of the Act, therefore, we herein set-aside the matter to the file of the A.O for fresh adjudication - Appeal filed by the assessee is allowed for statistical purposes.
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2021 (12) TMI 307
Reopening of assessment u/s 147 - Change of opinion - reopening of concluded assessment - proof of fresh material or information with AO to reopen the assessment - directions to rectify the assessee s claim for deduction u/s 36(1)(viii) - HELD THAT:- On a perusal of the reasons to believe on the basis of which the case of the assessee had been reopened, we find, that it is a matter of fact borne from the record that no new information/material had came to the notice of the A.O (after completion of the original assessment) which would have justified the reopening of the assessment u/s 147 - as observed by the A.O, and rightly so, a perusal of the opening line of the reasons recorded for reopening the case of the assessee, viz. On perusal of balance sheet and computation of income, it is observed that during the year under consideration, the assessee has transferred an amount of ₹ 410.00 crore to special reserve, while the corresponding deduction u/s 36(1)(vii) of the Act has been claimed at ₹ 456.43 crore ,reveals beyond any scope of doubt that the A.O had reopened the concluded assessment only on the ground that the assessee had claimed an excess deduction of ₹ 46.43 crore, which in our considered view is nothing but clearly an attempt on his part to review/re-examine the assessee s claim for deduction on the basis of the same material/accounts/workings/computation as were available before his predecessor at the time of framing of the original assessment, vide his order passed u/s 143(3). We are of a strong conviction that in the garb of reopening the case of the assessee he had on the basis of the same set of facts as were available on record at the time of framing of the original assessment, tried to substitute his view as against that of his predecessor. In fact, we are unable to comprehend as to what new material or information had came to the notice of the A.O after the framing of the original assessment, which would have justified the reopening of its case. As can safely be gathered from a perusal of the reasons to believe, we are of the considered view that the A.O with the sole objective of substituting his view as against that of his predecessor had sought to reopen the case of the assessee bank. We are afraid that such a substitution of a view of a successor A.O cannot form a justifiable basis for reopening the case of an assessee. As decided in the case of CIT Vs. Kelvinator of India[ 2010 (1) TMI 11 - SUPREME COURT] that merely on the basis of a change of opinion the case of an assessee cannot be reopened. We, thus, in the backdrop of our aforesaid observations finding no infirmity in the view taken by the CIT(A) who had rightly struck down the assessment order passed by the A.O under Sec. 147 r.w.s 143(3), dated 12.03.2013 by holding the reopening of the assessment as bad in law, uphold the same - Decided in favour of assessee.
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2021 (12) TMI 306
Addition made towards discount allowed to customers - Year of assessment - addition of discount pertains to sales made in earlier financial year on the ground that same partakes nature of prior period expenses - HELD THAT:- Assessee has allowed discount to customers on the basis of refund of special additional duty and such discount was agreed to be paid as and when assessee received refund of special additional duty from department. We further noted that the assessee has received refund of special additional duty during impugned assessment years which includes duty pertains to sales made in earlier financial year. As per contractual arrangement between the parties discount allowed to customers pertains to sales made in earlier financial year accrued for year under consideration when the assessee has received refund of special additional duty - discount allowed to customers on sales made in earlier financial year accrued for year under consideration and thus, same is deductible as and when the assessee has allowed to its customers. Since, the assessee has allowed discount to customers on the basis of refund of duty, and same has been received during impugned assessment year, the assessee has rightly claimed deduction for same in current financial year. The Assessing Officer without appreciating facts simply disallowed discount allowed to customers. CIT(A) without assigning any reasons has simply confirmed additions made by the Assessing Officer. Hence, we direct the Assessing Officer to delete addition made towards discount allowed to customers. -Decided in favour of assessee.
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2021 (12) TMI 305
Deduction u/s. 36(1)(iii) - interest paid on loan borrowed for purchase of current assets - CIT(A) opined that the AO has erred in disallowing proportionate interest u/s. 36(1)(iii) - HELD THAT:- The assessee is in the business of developers and builders. The assessee has borrowed capital for the purpose of its business and interest paid on such capital has been claimed as deduction u/s. 36(1)(iii) of the Act in the year in which such interest has been paid. If you go through the nature of business of the assessee and the purpose for which loan was borrowed, then deduction claimed by the assessee in respect of interest paid on borrowed capital for the purpose of business or profession is deductable for the year in which such interest has been paid, because as per provisions of section 36(1)(iii) of the Act, any interest paid on capital borrowed for the purpose of business shall be allowed as deduction in the year of payment unless such interest is paid in respect of capital borrowed for acquisition of an asset. In this case, although the assessee has paid interest for acquisition of an asset, the said asset is in the nature of stock in trade of business and the moment, the assessee acquires the asset which partakes the nature of stock in trade and thus, interest paid on capital borrowed for acquisition of stock in trade is deductable irrespective of the fact that said stock in trade was sold or not during the relevant financial year. This legal position is supported by the decision in the case of Taparia Tools Ltd [ 2015 (3) TMI 853 - SUPREME COURT] where it was held that interest paid on capital borrowed for the purpose of business shall be allowed as deduction for the year of payment irrespective of accounting system given by the assessee in its books of accounts. Hon ble Gujarat High Court in the case of Torrent Pharmaceuticals [ 2016 (7) TMI 1301 - GUJARAT HIGH COURT] has considered an identical issue and held that interest paid on capital borrowed for the purpose business shall be allowed as deduction in the year of payment of said interest. In this case, the assessee has paid interest on borrowed capital for the purpose of business and the same has been claimed as deduction as and when the said interest was paid. CIT(A) after considering the relevant facts has rightly deleted additions made by the AO - Decided against revenue.
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2021 (12) TMI 304
Disallowance on account of depreciation on the right to collect annuity on toll roads - assessee is engaged in the business of executing the project for design, construction, finance and maintenance of Gorakhpur By-pass on NH-28(Project Highway) in the state of Uttar Pradesh on Build, Operate and Transfer (BOT) basis under the annuity scheme - assessee entered into concession agreement with National Highway Authority of India (NHAI) and as per concession agreement, NHAI had granted exclusive right, license and authority during the subsistence of the concession agreement to implement the project - assessee classified such cost incurred and right to receive annuity on the toll road as an intangible asset eligible for depreciation u/s.32(1)(ii) - HELD THAT:- We find that the ld. CIT(A) had placed reliance on the Special Bench decision of Hyderabad Tribunal in the case of Progressive Construction [ 2017 (3) TMI 1167 - ITAT HYDERABAD] and had granted relief to the assessee. We also find that the similar issue had come up before this Tribunal in the case of DCIT.Cent.Cir-7(2), Mumbai vs. Rajahmundry Expressway Ltd [ 2020 (3) TMI 632 - ITAT MUMBAI] as held entire investment/finance for developing the infrastructure facility was borne by the assessee. By making such investment what the assessee received in return was a right to collect annuity over the period of concession. Thus, the investment made by the assessee for acquiring such right certainly is an intangible asset coming within the purview of section 32(1)(ii) - Decided in favour of assessee. Disallowance on account of provision for periodic maintenance charges both under normal provisions of the Act as well as in the computation of book profits u/s.115JB - only argument advanced by the ld. DR before us was that the liability to incur periodic maintenance cost would arise to the assessee only in A.Y.2017-18 and the entire expenditure would get liable to be incurred only in A.Y.2017-18 - HELD THAT:- As pursuant to the concession agreement, the assessee is entitled to receive annuity income every year. It is not in dispute that as per the concession agreement, assessee is obliged to carry out the periodic maintenance cost on road pavement every five years and to address the strengthening course of the roads as and when required. For this purpose, it has to incur periodic maintenance cost once in five years and assessee has chosen to apportion the expenses over a period of five years. We find that assessee has made provision for periodic maintenance cost based on technical valuation report. The said document was duly placed on record before the lower authorities. Since the provision for periodic maintenance cost on year to year basis has been made based on technical valuation report on a scientific basis by the assessee and in view of the fact that annuity income has been derived by the assessee year on year basis, in view of the matching concept of income and expenditure, we hold that assessee had merely discharged its contractual obligation by making provision for periodic maintenance cost and since accounts are maintained by the assessee on a mercantile basis, the said provision needs to be made by the assessee in its books and accordingly, the same become an allowable expenditure u/s.37(1) under the normal provisions of the Act. We also find that the said provision has been made on a scientific basis by the assessee. This categorical finding recorded by the ld. CIT(A) has not been controverted by the ld. DR before us. Periodic maintenance cost is an integral part of the concession agreement and assessee is under a contractual obligation to incur the same and provision has been made by it on a scientific basis. Accordingly, the expenditure attributable to each year has been claimed as deduction both under normal provisions of the Act as well as in the computation of book profits u/s.115JB - Hence, it would not fall under the category of provision made for contingent liability or unascertained liability. We find that the ld. CIT(A) had rightly appreciated these contentions of the assessee and had rightly placed reliance on the decision in the case of Rotork Controls India Pvt. Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] and ASHOKA BUILDCON LTD [ 2015 (10) TMI 181 - ITAT PUNE] - Decided against revenue.
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2021 (12) TMI 303
Addition u/s.41(1) - cessation of liability - outstanding sundry creditors - AO invoking provisions u/s.41(1) in respect of outstanding sundry creditors is that the notice u/s.133(6) sent by the AO to the sundry creditors remain unresponded and those parties were not produced by the assessee for examination by the ld. AO - HELD THAT:- We find that the assessee had duly furnished the complete ledger account of the sundry creditors for the year under consideration as well as for the subsequent years. Except for M/s. Sangham Diamonds, the assessee had even furnished the ledger account of the creditors duly confirmed by them before the ld. AO. It is not in dispute that all these sundry creditors have a valid PAN. All these sundry creditors have been duly discharged by the assessee in subsequent assessment years. We also find as on 31/03/2015, the assessee had not written back the sundry creditors to its income as no longer payable, hence, the liability had not ceased to exist and assessee had duly acknowledged his debt payable to these sundry creditors. Hence, in these circumstances, in any case, irrespective of the payments made in subsequent years, the provisions of Section 41(1) could not come into operation at all. These points have been duly appreciated by the ld. CIT(A) and hence, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Accordingly, the ground raised by the revenue is dismissed.
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2021 (12) TMI 302
Disallowance of forward contract loss as treated as speculative loss by AO - assessee is a star trading house engaged in the business of diamond purchasing rough and polished diamonds mainly through import from various countries, manufacturing of rough diamonds into polished diamonds and sell polished diamonds mainly by way of exports to various countries - HELD THAT:- Since the facts for the year under consideration with regard to this issue of disallowance of forward contract loss are exactly identical to the facts prevailing in A.Y.2008-09 [ 2016 (8) TMI 1094 - ITAT MUMBAI] , the decision rendered hereinabove by this Tribunal for A.Y.2008-09 shall apply mutatis mutandis to the years under consideration also. Accordingly, the ground Nos. 1-4 raised by the Revenue are dismissed. Adhoc disallowance of miscellaneous expenses @15% made by the ld. AO - CIT-A deleted the addition - HELD THAT:- Since, no defects were pointed out by the ld. AO in the books of accounts / documents produced by the assessee before him, no disallowance of expenses could be made on adhoc basis by placing reliance on various decisions of the Tribunals, he deleted the adhoc disallowance made by the ld. AO. We hold that the ld. CIT(A)had rightly adjudicated the issue in dispute before us. The ld. AO had not rejected the books of accounts of the assessee or the various documents produced by the assessee before him by pointing out defects. The ld. CIT(A) has also categorically recorded a finding that entire details of miscellaneous expenditure has been filed by the assessee alongwith sample invoices, which fact has not been controverted by the Revenue before us. In view of the same, the adhoc disallowance made by the ld. AO has been rightly deleted by the ld. CIT(A). Disallowance made u/s.14A - assessee had made suo-moto disallowance of expenses - CIT-A deleted the addition - HELD THAT:- The law is now very well settled by this Hon ble Supreme Court in the case of Maxopp Investments [ 2018 (3) TMI 805 - SUPREME COURT] that disallowance u/s.14A of the Act cannot exceed the exempt income. Hence, we do not find any infirmity in the order of the ld. CIT(A) in this regard. Addition u/s.69A - difference between book stock and physical stock of polished diamonds - HELD THAT:- Only the profit element embedded on the said sale could be brought to tax. The argument of the ld. AO could be accepted when there is excess stock found physically either at the time of search / survey wherein the purchases of excess physical stock found need to be explained. In the instant case, since, there was only shortage of physical stock to the extent of 48.94 carats, we hold that only profit element embedded in said sale transaction could be brought to tax. In this regard we find that the ld. AR placed reliance on the Co-ordinate Bench decision of this Tribunal in the case of sister concern of the assessee in UNI Design Jewellery Pvt. Ltd.,[ 2020 (1) TMI 18 - ITAT MUMBAI] wherein this Tribunal had also under similar facts and circumstances pursuant to the same search action on 08/08/2011 had held that only the profit element need to be brought to tax. Hence, we direct the ld. AO to compute the gross profit portion on the said sale and tax the assessee accordingly. Addition u/s.69B - treating the difference between physical stock and book stock of rough diamonds as unexplained investment - HELD THAT:- As clinching evidence to accept the explanation offered by the assessee both before the search party as well as before the ld. AO during the course of assessment proceedings that stock to the tune of 169.45 carats represent diamonds received from M/s. Neelam Exports by the assessee which was included only in the physical stock, but not in the book stock maintained by the assessee. Hence, we are inclined to accept to the contentions of the assessee and direct the ld. AO not to make any addition for the value of 169.45 carats of diamonds as it stands properly explained. For remaining difference out of 180.15 carats of stock difference, 169.45 carats was properly explained and the difference of 10.7 carats need to be sustained in the form of addition. Now, for the purpose of arriving at the value of addition for 10.7 carats, the ld. AR has brought this alternative argument. Hence, we hold that this is only an argument advanced by the ld. AR and there is absolutely no fresh facts which requires verification in this regard. Either way this aspect deserves to be remanded back to the file of the ld. AO for arriving at the value for making addition in respect of deficit of 10.7 carats. Hence, we direct the ld. AO to make an addition for 10.7 carats by applying the respective rates applicable for rough rejections and rough diamonds as the case may be, as mentioned in the Government Valuation report. This in our considered opinion, would meet the ends of justice. Accordingly, the ground No.2 raised by the assessee for A.Y.2012-13 is partly allowed.
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2021 (12) TMI 301
Unexplained cash credit u/s.68 - Bogus share transactions - denying the exemption claimed in respect of Long Term Capital Gains u/s.10(38) - HELD THAT:- All evidences demonstrate that assessee had sold the shares through screen based trading through SEBI registered broker and the transactions were subjected to Security Transaction Tax and proceeds of the sales, after deduction of such expenses, were credited to the bank accounts of the assessee. The authorities below has not commented on the veracity of such crucial evidence filed by the assessee and they have disallowed the claim of the assessee by holding that the broker, through whom the assessees had sold shares, was a tainted stock broker who was banned by SEBI in 2010. However, while holding so the authorities below has further observed that such ban was revoked by the SEBI and the only order remained in force was that the broker was not allowed to trade in its proprietary name. The findings of the Assessing Officer in the assessment order demonstrates that the ban was only for its proprietary trades and there was no ban on the transactions for clients, therefore, the reliance placed by Revenue on this order of SEBI is misplaced. Moreover, we find that the ban was imposed by SEBI in 2010 (which was later on revoked also) and assessees had sold the shares in the year 2016 i.e. after a gap of about six years and in the meantime the Investigation Wing of the Income Tax Department had carried out investigation and vide report dated 27/04/2015 had identified 84 companies which were engaged in the business of providing accommodation entries and name of the scrip on which the assessee had earned capital gain does not find its name in that list and neither name of broker finds place in the list of broker investigated by the Investigation Wing of the Department. Denial of claim u/s 10(38) of the Act is not justified and the orders of learned CIT(A) are reversed and Assessing Officer is directed to allow the claim of the assessee u/s. 10(38) of the Act. As we have allowed relief to the assessee on account of denial of long term capital gain the addition on account of assumed commission which the Revenue has assumed to have been paid to the brokers is also deleted - Decided in favour of assessee.
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2021 (12) TMI 300
Rejection of books of accounts - NP rate determination - higher NP determination - HELD THAT:- As assessee has maintained cash book, ledger, journal, purchase and sales register, bank book, salary wages register. The books of accounts have been maintained during the course of business. All the receipts are vouched. Books of accounts have been audited and a copy of audit report u/s 44AB has been furnished along with return of income. The auditors have not given any adverse remarks regarding the maintenance of the books of accounts. During the course of assessment proceedings, the books of account were produced before the A.O. and no serious defect was pointed out. In view of this the A.O. was not justified in rejecting the books accounts. Rejection of books of account is no ground for application of higher net profit even if books of accounts are rejected on one or the other ground, this in itself does not give liberty to the A.O. for making trading addition unless something specific is pointed out. There is no case for applying higher NP rate. There is totally no justification for making any trading addition. The ld. CIT(A) has given part relief out of the addition made by the AO. The ld. CIT(A) has not given any cogent reason for not accepting the assessee s plea completely. The ld. CIT(A) has held that the AO should be considered and taken into the account the explanation furnished by assessee in respect of fall in NP rate instead of simply applying the NP rate. But the ld. CIT(A) further has not substantiate for applying the GP rate of 3.70% without pointing out any specific defect or commenting on the expenditure debited in P L A/c specifically. Average rate of last two years can be applied in case of GP application only. But where application of NP rate is concerned then you have to pointed out specific defect for the expenditure debited in P L A/c which has not been done by the ld. AO as well as ld. CIT(A). Therefore, considering the totality of the facts and circumstances, we direct to delete the addition sustained by the ld. CIT(A) Addition u/s 69 r.w.s. 115BBE - HELD THAT:- CIT(A) has himself held that addition u/s 69 cannot be made on the basis estimate - AO did not bring any evidence on record to substantiate his claim that the assessee has made more investment in house construction then what was explained him. The submission of the assessee was only on estimated basis. CIT(A) has confirmed the addition on the basis of source of investment not explained by the assessee for construction. Before the AO the assessee has also submitted that the cash withdrawal of family members during the financial year 2010-11 to 2013-14 when the construction was started and completed. During the financial year 2013-14 then the house was on the finishing stage and payments of many vendors were made after completion of construction was not considered by the AO and CIT(A) which are more than ₹ 16,15,000/-. AO has not given credit for more than 14,45,165/- only because withdrawals were after completion of the house. The payments were made after the completion. Therefore without making any further enquiry the claim of the assessee could not be rejected and addition so sustained on this account for ₹ 892473/- deserves to be deleted. Therefore, in view of the principles of natural justice as well as considering the totality of facts and circumstances, we direct to delete the addition sustained qua this issue. Appeal of the assessee is allowed.
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2021 (12) TMI 299
Denial of the exemption u/s 54 - Nature of property sold - assessee has not shown any income from house property which has been sold and in respect of which the deduction u/s 54 has been claimed by the assessee - HELD THAT:- As assessee has sold an immovable property situated at plot no. C-219, Siddharth Nagar, Jaipur consisting of shops, basement, a room (kotari) surrounded by a boundary wall. The same is evident from the perusal of the sale deed duly executed by the assessee as well as from the photographs annexed with the sale deed - as far as shops are concerned, even where they are built on a residential plot of land (land use not being changed in local municipality records), the nature of property for tax purposes cannot by any stretch of imagination be treated as property used for residential houses and are thus commercial in nature. Regarding the claim of basement and a kotari being used by one of the staff members for residential purposes, there is nothing on record to demonstrate the existence of the basic facilities of a residential house in terms of washroom, kitchen, electricity and sewerage connection and therefore, an affidavit so filed without any corroborative evidence on record which demonstrate the physical attributes of a residential/dwelling unit cannot come to the aid and assistance of the assessee and thus, the alternate contention so raised that atleast a part of the property being used for residential purposes cannot be accepted and is hereby dismissed. Therefore, we find that the instant case, the property which was sold was clearly not a residential house and thus, the basic condition for claiming exemption u/s 54 has not been satisfied in the instant case. Whether the property is actually let out or not, barring exceptions, the annual value of the property has to be determined and the income to be offered to tax under the head Income from house property . There could be actual usage of the house for residential purposes either in terms of let out or being self-occupied and there could be potential usage of house for residential house, thus bringing in complete flexibility for the purposes of section 54 of the Act. The basic nature, attributes and character of the property being a residential house however need to be satisfied to qualify for claim of deduction u/s 54 which, as we have noted above, has not been satisfied in the instant case and thus, the claim of deduction has been rightly denied by the AO and confirmed by the ld CIT(A) and we are thus not inclined to interfere with the said findings. The ground no. 1 is thus dismissed. Claim of cost of construction - as submitted that the construction was carried out in year 1992 and the cost of construction has been duly disclosed in the audited financial statements of the relevant year so furnished by the assessee before the revenue authorities - HELD THAT:- Where the audited accounts have been furnished by the assessee, the same are thus part of the records and the cost of construction can be verified therefrom. The matter is accordingly set-aside to the file of the AO to verify the same and where found in order, allow the same to the assessee after due verification and examination. In the result, the ground of appeal is allowed for statistical purposes.
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Benami Property
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2021 (12) TMI 298
Benami transaction - joint family property - Whether the plaintiff proves that the suit schedule property is the joint family property of the plaintiff and the defendants? - HELD THAT:- The first defendant - mother is also no more and she also passed away on 24.08.2017 and this application is filed prior to death of the mother and the reasons assigned in the application that by oversight she was not made as a party to the proceeding. It has to be noted that the appellant claims that the suit schedule property belongs to the joint family and other respondents have also not disputed the fact that she is not the daughter of Kumaran Nair and also the first defendant - Thangamma. When the suit is filed for the relief of partition and separate possession, the appellant ought to have made her a party to the proceeding but there was a delay in filing the application. It is also not in dispute that the matter was also remanded from the Apex Court. But on perusal of the entire objection statement except stating that there was a delay in filing the application, whether she is necessary party or not has not been disputed by the proposed respondent in the objection statement. Hence, the appellant has made out a ground to allow the application filed under Order 1 Rule 10(2) read with Section 151 of CPC to implead his sister as respondent No.5. Plaintiff proof that he has got 1/5th share in the suit property - HELD THAT:- As noted that the suit is filed for the relief of partition and also the suit was dismissed prior to execution of these documents. In order to decide the issue whether the suit schedule property is the joint family property or not, these documents are not necessary and germane issues are involved between the parties only whether the suit schedule properties are the joint family properties or not even if any documents are created during the pendency of the appeal that will not take away the case of the appellant/plaintiff. While allowing the application filed under Order 41 Rule 27 read with Section 151 of CPC, the Court has to be kept in mind whether those documents are necessary to adjudicate the issues involved between the parties. I have already pointed out that the issue involved between the parties is whether the plaintiff is entitled for the relief of partition in proving the suit schedule property is the joint family property or not. Hence, we do not find any ground to allow the application filed Order 41 Rule 27 read with Section 151 of CPC permitting him to produce the additional documents. Hence, answered point No.2 as 'negative'. Whether the first defendant proves that the suit property belongs to her exclusively? - HELD THAT:- As in this case, document - Ex.P1 - Agreement to Sell was in the name of the father. Sale Deed was in the name of the mother and all are family members. Hence, the question of Benami transaction does not arise. Only the mother is the name lender and the mother also may be contributed by selling her native place property which was given to her, but that does not mean that all the family members have not joined in purchasing the property and making the construction. Admittedly, the plaintiff also joined the Police Department in the year 1972 and the house was constructed in the year 1978-79 and D.W.1 also though contend in her evidence that he was residing separately, but in the cross-examination categorically admitted that she was stayed along with her husband and the plaintiff in Bengaluru. Hence, it is clear that the plaintiff also residing along with the family till his marriage i.e., 1980. When such being the case, the question of Benami transaction does not arise and the property was only purchased in the name of the mother. Hence, the material available on record in toto both oral and documentary evidence placed on record is clear that it was the joint family property and the plaintiff also substantiated before the Court by marking Ex.P4-Canara Bank Pass Book in which an amount of ₹ 500/- was paid to the Vendor. Trial Court failed to consider both oral and documentary evidence placed on record and committed a material illegality in considering the evidence and material evidence also not considered and lost sight particularly, documents - Exs.P1 to P5 and also the conduct of the defendants i.e., DWs.1 and 2 and mainly carried away accepting the case of the defendants that she has sold the property belongs to her native place property and failed to take note of the evidence available on record in toto. Hence, it requires an interference of this Court. The subsequent development mother is no more and she passed away during the pendency of this appeal and one of the sister of the plaintiff is also brought on record by allowing the application - I.A.No.1/2013. Hence, the plaintiff is entitled for 1/5th share in the suit schedule property. Order: - The impugned judgment and decree passed on the file of the XV Additional City Civil Judge at Bengaluru City, is set aside.The plaintiff is entitled for 1/5th share in respect of suit schedule property.
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Customs
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2021 (12) TMI 297
Permissibility of Merchanting Trade Transactions - sale of PPE products by a supplier in China to a buyer in the United States - prohibition on export of PPE products through a series of notifications - genesis of the case lies in an international MTT contract which the appellant obtained to serve as an intermediary between the sale of PPE products by a supplier in China to a buyer in the United States - HELD THAT:- Adequate stocks of PPE products are critical for the healthcare system to combat the COVID-19 pandemic. The State s aim of ensuring supplies is in furtherance of the right to life under Article 21 and the Directive Principles of State Policy mandating the State s improvement of public health as a primary duty under Article 47. The appellant has not challenged the legitimacy of this aim of ensuring adequate PPE in India. The RBI, at the time of filing its affidavit on 30 January 2021, had elaborated on the state of the pandemic in the country and the necessity of ensuring adequate stock of PPE products. The executive s aim to ensure sufficient availability of PPE products, considering the ongoing pandemic, is legitimate - the impugned measure is enacted in furtherance of a legitimate aim that is of sufficient importance to override a constitutional right of freedom to conduct business. Suitability - HELD THAT:- It is evident that the role of an intermediary in MTTs was earlier only considered as providing a service. However, this has now evolved, where the intermediary is considered to be the owner of the goods during their transit from the supplier to the buyer. Hence, goods under MTTs are recorded as negative and positive exports from the intermediary s resident country, even when they never physically enter their territory - the international opinion favours the position taken by the respondents that MTTs are analogous to traditional imports and exports. Therefore, it was suitable for the RBI to link the permissibility of MTT in goods to the permissibility of their import/export under the FTP. As noted earlier, the appellant has not challenged notifications prohibiting the export of PPE products under the FTP. Hence, the prohibition of their MTT under Clause 2(iii) of the 2020 MTT Guidelines is also considered suitable. The necessity of the measure - HELD THAT:- First, while MTTs in PPE products may not directly reduce the stock of these products in India, it still does contribute to their trade between two foreign nations. In doing so, it directly reduces the available quantity of PPE products in the international market, which may have been bought by India, if so required. As such, MTTs contribute to reducing the available stock of PPE products in the international market that India could have acquired. Second, the UOI s policy to ban the export of PPE products reflects their stance on the product s non-tradability during the COVID-19 pandemic. It highlights a clear policy choice under which Indian entities shall not be allowed to export these products outside of India, in all probability to the highest buyers across the globe who may end up hoarding the global supply - banning MTTs in PPE products was critical in ensuring that Indian foreign exchange reserves are not utilized to facilitate the hoarding of PPE products with wealthier nations. A mere ban on exports would not regulate the utilisation of Indian foreign exchange. Hence, in order to keep India s policy position consistent across the board, the prohibition of MTTs in respect of PPE products was necessary and the only alternative of ensuring the realisation of legitimate State interest. Balancing fundamental rights with State aims - HELD THAT:- This Court must be circumspect that the rights and freedoms guaranteed under the Constitution do not become a weapon in the arsenal of private businesses to disable regulation enacted in the public interest. The Constituent Assembly Debates had carefully curated restrictions on rights and freedoms, in order to retain democratic control over the economy. Regulation must of course be within the bounds of the statute and in conformity with executive policy. A regulated economy is a critical facet of ensuring a balance between private business interests and the State s role in ensuring a just polity for its citizens - The right to equality and the freedom to carry on one s trade cannot inhere a right to evade or avoid regulation. In liberalized economies, regulatory mechanisms represent democratic interests of setting the terms of operation for private economic actors. This Court does not espouse shunning of judicial review when actions of regulatory bodies are questioned. Rather, it implores intelligent care in probing the bona fides of such action and nuanced deference to their expertise in formulating regulations. A casual invalidation of regulatory action in the garb of upholding fundamental rights and freedoms, without a careful evaluation of its objective of social and economic control, would harm the general interests of the public. In the instant case, the RBI has demonstrated a rational nexus in the prohibition of MTTs in respect of PPE products and the public health of Indian citizens. The critical links between FTP and MTTs have been established by the respondents. Facilitating MTTs in PPE products between two distinct nations may prima facie appear as having no bearing on the availability of domestic stocks - it is not this Court s stance that judicial review is stowed in cold storage until a public health crisis tides over. This Court retains its role as the constitutional watchdog to protect against State excesses. It continues to exercise its role in determining the proportionality of a State measure, with adequate consideration of the nature and purpose of the extraordinary measures that are implemented to manage the pandemic. Democratic interests that secure the well-being of the masses cannot be judicially aborted to preserve the unfettered freedom to conduct business, of the few. Clause 2(iii) of the 2020 MTT Guidelines was a proportionate measure in ensuring the availability of sufficient domestic stock of PPE products. The measure was validly enacted, in pursuance of legitimate state interest and did not disproportionately impact the fundamental rights of the appellant. Hence, Clause 2(iii) passes muster under Articles 14, 19(1)(g) and 21 - Appeal dismissed.
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2021 (12) TMI 296
Levy of late fee charges - provision for purging the Bill of Entry either under the provisions of the Customs Act, 1962 or under the Provisions of aforesaid Regulations - validity of second Bill of Entry - Section 46 of the Customs Act, 1961 - HELD THAT:- Regulation 4 of the Bill of Entry (Electronic Integrated Declaration and Paperless Procession) Regulations, 2018 has been framed to implement Section 46(3) of the Customs Act, 1962. The practice of purging of Bill of Entry appears to be based on the practice adopted in various ports on account of the architecture of the ICEGATE. There is however no provision either under the Customs Act, 1962 or under the provisions of Regulation which contemplates purging of the Bill of Entry. In the facts of the case, the petitioner has filed a second Bill of Entry on 12.07.2021 and said the necessity for filing second Bill of Entry arose only on account of the fact that the earlier Bill of Entry dated 20.04.2021 got erased in the ICEGATE or the customs system. Therefore, the petitioner could not comply with the requirements regarding the query raised on 20.04.2021. It cannot be ignored that the entire world was under the second wave of Covid 19 lockdowns were being imposed to protect the humanity from the throes of death. India was no exception, only few essential services were allowed to operate. In fact, the expression purging is neither found in the Act nor in the aforesaid Regulation. Therefore, question of imposing late fee chargers merely because an importer files a second Bill of Entry on account of the factors mentioned above would not justify the levy of late fee charges on the petitioner. Further it is noticed that in the impugned communication dated 12.07.2021 an amount of ₹ 8,25,000/- was being demanded as a fine amount and not a late fee in terms of Regulation 4(3) of the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018 and Section 46(3) of the Act. This is also clearly contrary to the scheme of the Customs Act, 1962 and Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018. This writ petition is allowed by quashing the impugned order seeking to levy fine late fee on the petitioner under the provisions of Regulation 4(3) of the Act and Section 46(3) of the Act. The respondents are directed to release the goods which are lying under their control immediately subject to the petitioner paying the requisite Customs duty and the applicable taxes within a period of ten days from the date of receipt of a copy of this order.
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2021 (12) TMI 295
Seizure of goods - Jurisdiction - power of Investigating Officer under the Customs Act, 1962 - HELD THAT:- It is unfortunate that despite a clear enunciation and pronouncement of the law on the aspect of Proper Officer under Section 110 of the Customs Act, the concerned officials of the Respondents are repeatedly seizing goods without having the authority and jurisdiction to do so. Perhaps, the judgment in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] , has not been either read by the concerned officials or has not been understood in the correct perspective. As a result, this Court is flooded with litigation on the same issue and we cannot help but observe that it is the action of the Respondents in not applying the binding dicta of the Hon ble Supreme Court, which is breeding unnecessary litigation. It is directed that the Registry of this Court to send a copy of the judgment dated 09.03.2021, passed by the Hon ble Supreme Court in Canon India to the Respondents herein, through electronic mode, so that corrective measures and steps are taken, in accordance with the judgment and citizens are not put to mental and financial harassment by filing petitions before this Court. List on 29.10.2021.
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2021 (12) TMI 294
Levy of penalty u/s 112(a) of the Customs Act on the exporter company (appellant), registered in Dubai - mal-practices in India through their Agent located in India and working for them in India - rejection of transaction value and re-valuing the same as per the actual value - HELD THAT:- The charge of aiding and abetting have been established against the appellant company. Further it is found that the appellant company, though it was registered having Head Office in Dubai, but it was very much present in India through its Indian Representative - Sh. Prakash Menon. It is further found that through its Indian Representative, the appellant company have actively colluded and abetted with the Indian importers by various acts of commission and accordingly penalty has been rightly imposed under Section 112(a) of the Act. The facts before the Hon‟ble Supreme Court in the ruling of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] are very different, inasmuch as there was no case of fraud and the original Bill of Entry was assessed on first check basis. Wherein in the present case there is admitted case of collusion and forgery plus concoction of documents, including presenting and filing of false and incorrect documents (invoice), to evade Customs duty by the importer and the appellant company. Further, the present proceedings are for imposition of penalty and not for demand of duty under Section 28(4). The show cause notice on this appellant is not under Section 28(4) of the Customs Act. Fraud vitiates everything. Appeal dismissed - decided against appellant.
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2021 (12) TMI 293
Rejection of the request for conversion of free shipping bills to drawback shipping bills - Board Circular No. 36/2010-Cus. dated 23.09.2010 - Section 149 of the Customs Act, 1962 - HELD THAT:- The Board Circular No. 36/2010-Cus dated 23.09.2010 allows conversion of free shipping bills into drawback shipping bills. The above Circular states that if the Commissioner is satisfied that the exporter failed to comply with the provisions of Rule 13 of the Drawback Rules, 2017 (filing drawback shipping bill) for reasons beyond his control, the amendment can be allowed - It is clear from the provisions as well as the Circular that the amendment of free shipping bills to drawback shipping bills can be allowed. The appellant has been able to sufficiently establish that they did not file the drawback shipping bill at the time of export for the reason that the merchandiser who was handling the exports did not have knowledge about the benefit that could be claimed. On similar set of facts, when there was an inadvertent omission to claim drawback by filing drawback shipping bills, the request for conversion of the shipping bills was considered by the Tribunal in the case of M/S. AUTOTECH INDUSTRIES (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS CHENNAI IV COMMISSIONERATE [ 2021 (11) TMI 518 - CESTAT CHENNAI] , the Tribunal held that if the request is made within reasonable time of three years, the conversion of free shipping bills to drawback shipping bills can be allowed. The request for conversion of free shipping bills to drawback shipping bills has to be allowed. However, since the application for conversion is filed on 23.11.2017 in regard to the shipping bills for the period 2013-14 to 2016-17, the period of limitation as set out in the decision of the Tribunal in M/s. Autotech Industries (India) Pvt. Ltd. will apply. Hence, the shipping bills beyond the period of three years will not be eligible for conversion. For the limited purpose of looking into the shipping bills which are beyond the limitation period of three years, when computed from the date of application i.e., 23.11.2017, the matter is remanded to the Adjudicating Authority. Appeal allowed by way of remand.
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2021 (12) TMI 292
Levy of Anti-Dumping Duty - import of float glass of thickness 3.8mm - tolerance of thickness of goods - N/N. 48/2014-Customs (ADD) dated 11th December 2014 - HELD THAT:- As nominal thickness has not been defined in BIS and moreover when actual thickness is available, then nobody can extend the tolerance to demand anti dumping duty from the appellant. Moreover, for earlier imports, the goods have been verified and allowed to be cleared by the customs authorities. In that circumstances, it is held that the demand against the appellant is not sustainable and accordingly, the same is set aside. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 291
Levy of penalty u/s 112(b) of the Customs Act - Smuggling - Gold Bars - foreign origin goods or not - un-reliable and inadmissible evidence or not - case of town seizure - absolute confiscation - HELD THAT:- The appellant is not at all involved in the smuggling in gold, and therefore, penalty against the appellant under Section 112(b) of the Customs Act, 1962 has been wrongly imposed by the learned Commissioner (Appeals) Customs, Lucknow. The learned Commissioner (Appeals) Customs, GST Central Excise, Lucknow, has also failed to appreciate that there is not a single piece of evidence to establish that the Gold was smuggled on the behest of the appellant, and the appellant is actively involved in the smuggling of aforesaid Gold bars. The order of the Adjudicating Authority as well as Commissioner (Appeals), is totally based on assumptions and presumptions and hence liable to be set aside. It is well settled principle of law that only on the basis of the statement of co-accused penal provision of under Section 112(b) of the Customs Act cannot be held sustainable in eyes of law. No evidence whatsoever has been brought on the record to prove that the appellant is somehow concerned with the said smuggled gold, in keeping, transporting or having possession of said smuggled gold. The Learned Commissioner (Appeals) Customs, Lucknow without considering the said facts imposed a heavy penalty against the appellant under Section 112(b) of the Customs Act, 1962. Penalty cannot be imposed against the appellant without any concrete evidence to prove indulgence of the appellant in smuggling of the gold - the provisions of Section 112(b) of the Customs Act are not applicable on the appellant, since the gold was neither found in the possession of the appellant nor was the appellant found to have been carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing of the alleged smuggled gold. It is an admitted fact that nothing incriminating was recovered from the appellant or from his business and residential premises. Following facts have been established in the case: (i) Admittedly, it is a case of town seizure; (ii) In view of foreign markings on 11 out of 13 gold bars seized, the appellant M.K. Bajpai failed to discharge the onus under Section 123. (iii) The allegation of smuggling through Bangaladesh border is only presumption by Revenue, not established. (iv) Mr. Bajpai admittedly received delivery at Kolkata, which is not disputed. (v) Appellant Mr. Bajpai remained in jail for about 18 months (From 1 February 2018 to July 2019). The order in original was passed on 29.3.2019, thus Mr. Bajpai did not have proper opportunity to defend himself. (vi) Two of the gold bars (as per seizure list, and show cause notice paras 2 and 4) are of Indian Brand MMTC, total weight 1999.100 gms, valued at ₹ 61,37,237/-. (vii) Mr. Bajpai is a person of small means, and was only a carrier. (viii) The reliability of statement of Mr. Bajpai recorded during investigation is doubtful, as he has alleged coercion and duress. (ix) The complicity of Mr. G. Agarwal is not established. Only evidence brought on record is the evidence of frequent calls (as per CDR) between the appellants, and the statement of co-accused, which cannot form the sole basis of imposing penalty. (x) Mr. G. Agarwal has disowned the seized goods at the first instance, and also denied any connection of employer-employee or Principal Agent with Mr. M.K. Bajpai. (xi) Nothing incriminating was found from Mr. G. Agarwal in the follow up search at his residence and business premises. (xii) only Oppo Mobile phone was recovered by GRP at Mughalsarai Jn., Panchnama of Customs, showing recovery of two mobile phones (Oppo Samsung), raises doubt as to the genuineness of Samsung mobile phone. (xii) Although the CDR raises a strong suspicion, but in absence of details of conversation, no allegation is established against Mr. G. Agarwal. (xiv) No case of penalty under Section 112(b) is made out against Mr. G. Agarwal. (xv) Section 111(d) is not attracted on the facts herein. The absolute confiscation of 11 gold bars (excluding the two with MMTC markings), is upheld under Section 111(b) of the Act - Penalty under Section 112(b) on Mr. Girish Agarwal is set aside - penalty under Section 112(b) on Mr. M.K. Bajpai is reduced to ₹ 2,50,000/-, as he is only a carrier, and a person of small means - confiscation of two gold bars-MMTC marking/brand, weighing 1999.100 gms, valued at ₹ 61,37,237/- is set aside. Revenue is directed to return these two gold bars or the sale value (if disposed of) to Mr. M.K. Bajpai (from whose possession these were seized). Appeal allowed in part.
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2021 (12) TMI 290
Absolute Confiscation - import of shoes - goods have violated the IPR - mis-declaration of the goods in terms of quantity and value - Man and Horse logos used on the shoes were not registered with the custom or not - prohibited goods or not - Were the goods which were confiscated absolutely prohibited goods under Section 11 of the Customs Act read with Rule 6? - HELD THAT:- The goods have some non-registered logos and trademarks and also have certain registered IPR on them. A plain reading of Rule 6 shows that import of goods is prohibited if the registered IPR is violated and it does not make any exception to goods which also have some other logos. It is immaterial how many logos are on the goods. If they violate any IPR, their import is prohibited, and not otherwise. In this case, the shoes with Man and Horse logos also had device mark FORM strip besides Puma on the flap of the shoes - the impugned goods have, therefore, violated the IPR and the import of these goods was, therefore, prohibited under Rule 6 read with Section 11. Were the goods seized by the Deputy Commissioner on his own initiative under Rule 7(1)(b) or on the basis of a registered right holder under Rule 7(1) (a)? - HELD THAT:- Rule 7(1)(b) deals with cases where the IPR has not been registered with the Customs and in such a case, the Rights holder has to give notice and fulfill obligations for registration within five days. On the other hand, Rule 7(1)(a) deals with cases where the Rights have already been registered with the Customs and in cases of suspension of clearance, the Rights holders have to join the proceedings within ten working days. In this case, the clearance of the goods was suspended on receiving information regarding some mis-declaration and on the request of the appellant, the goods were warehoused and thereafter a Panchnama was drawn after detailed examination which revealed that the goods had also logos of popular brands - As the seizure of the goods and suspension of the clearance was based on the IPR already registered with the Customs, it is covered under Rule 7(1)(a) and not under Rule 7(1)(b). Therefore, the assertion of the learned counsel that the clearance of the goods was suspended by the Deputy Commissioner on his own initiative is not correct. Have the Right Holders joined the proceedings within the time frame set out in the Rules or not and consequently are the proceedings vitiated as asserted by the appellant? - HELD THAT:- Rule 7(3) requires the Rights holders to join the proceedings within 10 days. It does not require any bond to be executed within 10 days. Once they join the proceedings, they can examine the goods, take samples for detailed examination and report back as to which of the goods have violate their IPRs and why. The question of execution of a bond comes thereafter. There is no requirement of execution of a consignment specific bond within 10 days in Rule 7(3) and we cannot read into it words which do not exist. It is therefore found that the Rights Holders have joined the proceedings within the time of ten days and the proceedings are NOT vitiated on this ground. Was the rejection of the declared value of the impugned goods under section 14 of the Customs Act, 1962 correct? - HELD THAT:- After examining the goods, the Customs officers summoned the appellant. Shri Farooque, Director of the appellant appeared and gave a statement accepting that the goods which were imported do not match with the description in the documents. He also contacted his Chinese supplier and confirmed that the goods were sent by mistake of labour at the suppliers end. Since the goods which were imported were different from those which were declared in the Bill of Entry and in the invoice, the question arose as to how to assess the value of the goods. Shri Farooque suggested that a joint market survey be conducted to determine the market price and the assessable value can be deduced from it. On his suggestion, a joint market survey was conducted by the Customs officers and Shri Farooque and the market price of the imported goods was determined. From this market price, 15% was deducted as the Retailer s margin and a further 15% was deducted as the importer s margin. Another 5% was deducted towards the post-importation costs which the importer would have to incur. The price after these deductions was reckoned as the cum-duty price and the assessable value was calculated therefrom. We find no force in the argument of the learned counsel that the transaction value should have been accepted. Was the re-determination of assessable value under section 14(1) of the Customs Act, 1962 correct? - HELD THAT:- There is no force in the submission of the counsel that the invoice value should have been accepted as the assessable value without re-determining through the deductive method. Was the confiscation of goods under section 111(d) (m) of the Customs Act, 1962 correct? - HELD THAT:- As far as the goods infringing the IPR (counterfeit goods) are concerned, once they are found to have violated the Rights of the rights holder, as per Rule 6, they become prohibited goods under section 11 of the Customs Act, 1962. Section 111(d) squarely applies to prohibited goods which are imported. It was also evident that these goods were not included in the entry made in the Bill of Entry. In fact, Shri Farooque, Director of the appellant firm has, after checking with his overseas Chinese supplier, confirmed that the goods were not even ordered by them and were sent by mistake of the labourers. Therefore, confiscation of these goods under section 111(l) in the order of the original authority affirmed in the impugned order is correct and proper - As regards the goods which were not found to infringe any IPR, the same were found to be of not the value which was declared. Their value was reassessed as per the suggestion of Shri Farooque, Director of the appellant firm through a joint market survey. Therefore, these goods were correctly confiscated under section 111(l) and (m). Was the absolute confiscation of goods having men mark, horse mark and three stripes is illegal, as these two marks were not registered with the customs but which also had the three stripes and Trefoil mark? - HELD THAT:- Learned counsel relies on the judgment of the General Court of EU to assert that three parallel lines in any direction are not the registered trade mark of Adidas. It is his assertion that unless the shoes also have Adidas written on them, they have not violated the IPR - In the photographs of the shoes produced by parties before us, the three lines are not vertical lines but are at an angle as is well-known on the Adidas shoes. For these reasons, we are convinced that the judgment of the General Court of EU will apply to this case. So long as the IPR of another person are violated, it does not matter even if they contain some unregistered trade marks. We find in favour of the Revenue on this count. Was imposition of redemption fine of ₹ 15,000/- under section 125(1) and penalty of ₹ 3,93,133/- upon the goods under section 114A of the Customs Act, 1962 correct? - HELD THAT:- The impugned order has upheld the order of the original authority whereby he confiscated goods (other than counterfeit goods) valued at ₹ 14,25,462/- under section 111(l) and (m) of the Customs Act and allowed their redemption on payment of a fine of ₹ 15,000/- which is about 1% of the value - there are no reason to interfere with this redemption fine. Was the simultaneous imposition of penalty under section 112 and 114 valid? - HELD THAT:- Penalty of ₹ 3,93,133/- has also been imposed under section 114A of the Customs Act and penalty of ₹ 2,20,000/- has been imposed under section 112. These two sections are mutually exclusive by virtue of the fifth proviso to Section 114A - imposition of both penalties is not sustainable. The penalty imposed under section 114A of the Customs Act is set aside. Appeal allowed in part.
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Insolvency & Bankruptcy
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2021 (12) TMI 289
Validity of termination of work orders - consistency and prohibition as per Section 20 of Insolvency and Bankruptcy Code, 2016 (IBC) and Section 238 of IBC - whether termination proceeding could not be initiated or continued under bar of moratorium of Section 14 of IBC? - invocation of performance bank guarantees. Whether termination of Work Order No. 1 is in violation of provisional extension letter dated 30.03.2020 and/or Government s order dated 08.06.2020? - HELD THAT:- The Corporate Debtor was awarded this work order on 20.03.2017 and has to complete the work within 15 months whereas after lapse of three years the construction has not been completed and thereafter, another three months upto 30.06.2020 was extended even though till 11.06.2020 the Corporate Debtor has completed only 76% of the work (See Pg. 29 of the Rejoinder). In exercise of the power given in clauses 59, 60 61 of the agreement, the Corporation terminated the contract. In the termination letter it is also mentioned that the provisional time extension vide office letter dated 30.03.2020 upto 30.06.2020 shall be treated as null and void after termination of work - There is nothing on record to presume that the clauses 59, 60 61 of the agreement were deleted, modified or varied. Thus, the termination of Work Order No. 1 is not in violation of extension order dated 30.03.2020. Whether the termination of Work Order No. 2 is inviolation of Government Order dated 08.06.2020? - HELD THAT:- In the Government order 6 months extension is granted to discharge the obligation under the contract to those awardees of contracts who are not in default for their obligation prior to 19.02.2020, whereas, the Corporate Debtor is defaulter prior to 19.02.2020. Therefore, the Corporate Debtor is not entitled to get the advantage of aforesaid Government order. Thus, it is not convincing that the termination of Work Order No. 2 is in violation of Government order. Whether termination of work orders are in violation of provisions of Sections 14 238 of IBC? - HELD THAT:- Admittedly, the Appellant (Corporation) is neither supplying any goods or services to the Corporate Debtor in terms of Section 14(2) nor is it recovering any property that is in possession or occupation of the Corporate Debtor as the owner or lessor of such property as envisioned under Section 14(1)(d). This is not a case in which IRP/RP considers that the supply of goods or services critical to protect and preserve the value of the Corporate Debt or and managed the operations of such Corporate Debtor as a going concern, then supply of such goods or services shall not be terminated - In the present case, the Appellant (Corporation) was availing the services of the Corporate Debtor for construction of building. Thus, Section 14 is indeed not applicable to the present case. In the present case, there is no factual analysis on how the termination of work orders would put survival of the Corporate Debtor in jeopardize - the termination of work orders are not in violation of government order dated 08.06.2020 and Section 14 and 238 of IBC. Hence, the Adjudicating Authority does not have any residuary jurisdiction under Section 60 (5) (c) of IBCE to entertain the contractual dispute between the Appellant (Corporation) and the Corporate Debtor. Whether the invocation of bank guarantee was illegal? - HELD THAT:- As it is already held that the termination of work orders are not in violation of provisional extension letter dated 30.03.2020 and Government order dated 08.06.2020, so also in violation of provisions of Sections 14 and 238 of IBC, the findings of Ld. Adjudicating Authority are erroneous.Resultantly, the invocation of bank guarantee by the Appellant was not illegal. In the present facts, the Adjudicating Authority cannot exercise the jurisdiction under Section 60(5) (c) of IBC in relation to contractual dispute between the Appellant (Corporation) and the Corporate Debtor - Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 288
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - main contention of the Financial Creditor is that the IBMS charges have not been properly used for the purposes for which they have been charged under clause 11.2 of the agreement - existence of debt and dispute or not - HELD THAT:- The provision for IBMS has been made in order to pay maintenance bills, other charges raised by the maintenance agency, etc. It has been stated said in clause of the agreement that the IBMS charges cannot be utilised for any other purposes other than that has been mentioned in the said clause. The Corporate Debtor has himself admitted that the amount has been utilized for the purpose of construction of a club, restaurant, swimming pool and 62-seatermini theatre. Since, the financial creditor satisfies all the requirement of section 7 of IBC, 2016, it is satisfying that the applicant/Financial Creditor has made out a case under Section 7 IBC for admission and a clear case of default has been established. Hence, the Corporate Insolvency Resolution Process of Corporate Debtor is initiated from the date of this order and the captioned application filed by Financial Creditor is admitted. Application admitted - moratorium declared.
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2021 (12) TMI 287
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has taken objection regarding some pre-existing dispute between the parties regarding services provided by the Applicant. Further, it is stated by the Corporate Debtor that it had suffered losses due to conduct of the Applicant during his tenure. It is further submitted by the Corporate Debtor that no amount is due towards the Corporate Debtor since a sum of ₹ 15 Lakhs in cash has already been paid to the Applicant - there is no necessity of going into the issues alleged by the Corporate Debtor as there is a specific admission made by the Corporate Debtor as regards to the undisputed debt of ₹ 9 Lakhs which is due and payable by it to the Applicant and which is more than the threshold limit ₹ 1,00,000/-. The same is clearly recorded in the order of this Adjudicating Authority dated 27.01.2021. Since the admission of debt made on part of the Corporate Debtor is for an amount, which is more than ₹ 1,00,000/-, therefore the same is sufficient to trigger CIR Process against the Corporate Debtor. Thus it is concluded that a default has occurred on part of the Corporate Debtor and the same has also been admitted by the Corporate Debtor - application admitted - moratorium declared.
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2021 (12) TMI 286
Validity of ex-parte order - rule 11 of NCLT Rules, 2016 - whether inherent power u/r 11 can be used when alternate remedy is available? - HELD THAT:- The present Application has been filed by the Corporate Debtor on 10.6.2019 i.e., after two months after the date of admission of CIRP. On careful reading of the present Application, it is more than clear that the applicant seeks to recall/review of the Admission Order dated 10.4.2019 along with the ex-parte order dated 8.2.2019. Both the said orders have been passed by this Authority after careful consideration of facts and circumstances including the credible evidence placed in support of the fact that Corporate Debtor has been properly served with notice under section 8 of the IB Code, the main petition seeking initiation of CIRP as well as further dates of hearings before this Authority. The Operational Creditor has relied upon various case laws which deal with power of review of orders passed by this Authority and powers available under Rule 11 of the NCLT Rules, 2016. The facts and circumstances of the present Application clearly indicate that the Applicant is effectively seeking recall/setting aside of ex-parte order dated 8.2.2019 and CIRP admission order dated 10.4.2019. It is noted that the said orders have been passed after due consideration of facts and circumstances of the case. Therefore, there is no substance in the arguments advanced by Corporate Debtor that the said Orders can be recalled/reviewed by this Tribunal. The Hon'ble Allahabad High Court in the matter of Khan Enterprises Vs. National Company Law Tribunal and Ors. M/S KHAN ENTERPRISES VERSUS THE NATIONAL COMPANY LAW TRIBUNAL AND 4 OTHERS [ 2018 (9) TMI 1908 - ALLAHABAD HIGH COURT] has inter alia, held that it is admitted that there is no provision in I.B.C. for review of the order admitting a petition filed under Section 9 of the I.B.C. It is also not disputed in law that the power to review cannot be exercised unless there is specific provision for the same. Similar views have been propounded in various other case laws by the Hon'ble NCLAT and relied upon by the Operational Creditor. Application dismissed.
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Central Excise
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2021 (12) TMI 285
Entitlement to interest on refund - claim of interest rejected on the ground that at the time of sanction of refund and appropriation thereof, there was a confirmed demand - mandatory pre-deposit required under Section 35F in respect of appeal pending before the Commissioner (Appeals) - HELD THAT:- There is chequered history of the entire case however, the case can be decided brief. The refund of the appellant was appropriated against the confirmed demand. The said confirmed demand order was under challenge in appeal before the Commissioner (Appeals). The dispute was that whether the appellant s payment of pre-deposit through cenvat account is legal and correct for entertaining the appeal. The Commissioner (Appeals) was of the view that the appellant was supposed to make pre-deposit payment in cash. This issue has been taken to the Hon ble Gujarat High Court. The Hon ble Gujarat High Court in CADILA HEALTH CARE PVT LTD. VERSUS UNION OF INDIA [ 2018 (11) TMI 80 - GUJARAT HIGH COURT ] held that the appellant s payment of pre-deposit through cenvat in appeal filed before the Commissioner (Appeals) is acceptable. The appeal filed before Commissioner (Appeals) along with the pre-deposit, the demand amount of the said case could not have been adjusted against the sanctioned refund, therefore, the refund ought to have been paid on the date of sanction itself - Since the refund was payable on the date of sanction, the appellant is entitled for the interest from the date of sanction till the date of payment of refund amount. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 284
Refund of amount deposited as pre-deposit - amount deposited in excess of the mandatory pre-deposit shall be treated as deposit under section 35 F of the Central Excise Act or not? - para 3 of Circular No.984/08/2014 dated 16.09.2014 - HELD THAT:- The impugned refund cannot be called as refund of amount of pre-deposit nor has been claimed so by the appellant. The amount to the extent of pre-deposit out of aforesaid ₹ 66 Lakhs was ₹ 44 Lakhs which has already been refunded in favour of the appellant. The proposals of duty demand have been set aside. Hence, it becomes clear that appellant was not liable to pay ₹ 66 Lakhs. ₹ 44 Lakhs whereof were required as an amount of pre-deposit till the appeal of the appellant was not decided by the Tribunal. Once the Tribunal s order setting aside the demand had attained finality, the amount equivalent to the 10% of the impugned duty was calculated as ₹ 44 Lakhs, hence, was refunded. However, ₹ 21 Lakhs is also part of such money of appellant for which he was never liable towards the Department. Accordingly, Department is not entitled to retain the same or to become unjustly rich by retaining the money of the assessee. Once the proposed duty demand against the appellants stands set aside, the entire basis of deposit as was made by the appellant fails to survive. Department cannot be allowed to retain any part of the said amount. The amount of ₹ 21 Lakhs is an amount of deposit made under protest it cannot be called as duty. Question of applicability of section 11B of Central Excise Act does not at all arise. The findings of Commissioner (Appeals) to this effect are, therefore, held to be wrong. Rejection to the extent of ₹ 6 Lakhs on the ground of no proof for said amount to be debited from the credit ledger - HELD THAT:- It is observed from the record that the said amount of ₹ 6 Lakhs is depicted in ER-1 for the period June, 2017 as a closing balance. The GST regime was introduced w.e.f. July 1, 2017. It is also observed that the said amount has not been claimed as credit under GST through form GST TRAN-1. Hence, it was the amount which is standing as a closing balance in ER-1 as on June 30, 2017 which was not transferred to GST Regime. Hence, is as good as the cash lying with the Department and has to be treated as equal to the debit of the Cenvat account in terms of Section 142 of GST Act. The said amount has mandatorily to be refunded to the assessee in cash. It stands clear that appellant is entitled for refund of ₹ 15 Lakhs as were paid in cash by him at the time of the investigation of the impugned proceedings and is also entitled for refund of ₹ 6 Lakhs in cash as was being paid from his Cenvat Credit Account at the same stage as mentioned above and that appellant has been held to not to be liable to pay the alleged amount of duty which includes said ₹ 21 Lakh also. Accordingly, the refund claim of ₹ 21 Lakhs has wrongly been rejected by the Adjudicating Authority below. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 283
Rejection of application for rectification of mistake - HELD THAT:- While rejecting the application for rectification of mistake which is filed on frivolous ground there is a requirement of putting a restraint on such unethical practice of casting aspersions on the findings of the Tribunal without basis in terms of the judgment of this Tribunal passed in the case of COMMISSIONER OF C. EX., JAIPUR-I VERSUS MELCON [ 2007 (3) TMI 459 - CESTAT, NEW DELHI] which is filed by learned AR Shri Sanjay Hasija at Annexure-H of his additional submission dated 10.02.2021 and in imposing a cost on the Commissioner Manpreet Arora for filing such frivolous application stating that the Commissioner (Appeals) had dismissed the appeal at the admission stage on limitation and maintainability and not on merits despite the fact that the merit of the case was heard during personal hearing dated 05.12.2018 as referred in para 4 and 5 of his order dated 10.05.2019 and a finding to that effect was also given which was noted by this Tribunal in para 3 and 4 of its order dated 16.04.2021. The rectification application is, therefore, dismissed with a cost of ₹ 10,000/- to be paid by the applicant to the Government Treasury within a month of communication of this order.
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CST, VAT & Sales Tax
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2021 (12) TMI 282
Revival of second composite ex-parte assessment order - by composite order dated 18.07.2014 the third ex-parte assessment order had been framed against the petitioner - mistake apparent on the face of record or not - Section 31 of the U.P.V.A.T. Act, 2008 - HELD THAT:- Considering that language of the proviso to Section 6 of the Land Acquisition (Amendment) Act, 1894 and the complete absence of any statutory remedy of appeal etc. provided against a declaration made under Section 6 of the Act, the Supreme Court reasoned - it was a distinctive feature viz-a-viz Section 132(5) read with Section 132 (11) of the Income Tax Act, 1961. It was held, under the Income Tax Act, a power existed to remit a case to the original authority or, for a fresh order to be passed. Thus, besides the distinction arising on account of lack of consent or waiver granted by the petitioner (in that case), it was recognized, even otherwise, the period of limitation may survive in the context of a proceeding under Section 132 (5) of the Income Tax Act. It cannot be disputed, the petitioner had a remedy of appeal against the orders dated 16.08.2016. Therefore, it also cannot be further disputed, if those appeals had been filed, the appellate authority would have been within its jurisdiction to set aside the orders dated 16.08.2016 on a reasoning similar to that adopted by this Court, in its order dated 21.02.2017. The consequence of such a finding would naturally be - the matter would have been remitted to the assessing authority to pass a fresh order. Merely because the petitioner chose to approach this Court under Article 226 of the Constitution of India against the order dated 16.08.2016, it can never be said, the petitioner was entitled to any better or other relief or rights - In the present case, undisputedly, the prior notices leading to the orders dated 16.08.2016 were issued well within time. Those were not quashed by this Court in Writ Tax No. 97 of 2017. Such notices were therefore valid. Thus, the jurisdiction had been exercised within time prescribed by law. It is not found that the proceedings instituted by notice dated 29.05.2017 or the consequent order dated 28.07.2017 to be lacking in inherent jurisdiction, on account of the bar of limitation. Validity of second ex-parte order - HELD THAT:- If the second or any subsequent ex-parte assessment order was set aside (under Section 32 of the Act), on or before 30th September of an Assessment Year, the limitation to pass a fresh assessment order thereafter, would exist up to 31st March of that Assessment Year. If, however, the order to set aside the second or the subsequent ex-parte assessment order was passed on or after 1st October of an Assessment Year, the limitation to pass the fresh assessment order would stand extended up to 30th September of the next Assessment Year. There is nothing in the language of Section 32 and/or Section 29(6) of the of the Act as may be read to introduce a time limit on the power of the assessing authority to deal with and/or allow an otherwise validly filed application. In the instant case, it is not even alleged by the revenue that the application filed by the petitioner to recall the ex parte order dated 18.09.2013 was filed beyond thirty (30) days of that order being served. Therefore, it may be safely assumed that that application was filed in time. Consequently, it had to be dealt with and decided on its own merits, unaffected by any other or further consideration of limitation to frame a fresh assessment order. Thus, both for reason of grammar as also to keep the provision workable, the interpretation made by the assessing authority and as canvassed by the learned Standing Counsel cannot be accepted. An interpretation that makes the provision unworkable or leads to absurd results must always be rejected. In view of the above, we find that the assessing authority had not committed any mistake less so a mistake apparent on the face of record in passing the order dated 22.02.2014. The fact that in the instant case the assessment proceedings for A.Y. 2008-09 (U.P., Central and, Entry Tax) became time barred on 30.09.2016 or that no assessment order came to be passed in the case of the petitioner and therefore taxable transactions performed by the petitioner may have remained from being assessed, is of no concern to this Court, in the facts of the present case. In a proverbial cat-andmouse game enacted by the revenue and the taxpayer, the Writ Court sits an umpire. It may be guided strictly by the law alone. Equity has less or no role to play - the fact that revenue has suffered a loss due to an error on its part, falls outside the domain of this Court, in these proceedings. Remedial action lies elsewhere. Petition allowed - decided in favor of appellant.
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2021 (12) TMI 281
Levy of tax - Chewing Tobacco manufactured by the petitioners - Assessment Year 2007-2008 - applicability of limitation period of five years - error apparent on the face of record or not - Section 84 of the TNVAT Act - HELD THAT:- The product called 'Chewing Tobacco', admittedly manufactured by these petitioners from 2006-07 was not at all included as one of the item scheduled in TNVAT Act as a taxable item. Realising this omission or lacuna or with the wisdom of the legislature, Act 30 of 2011 was brought in, under which, the TNVAT Act, 2006 underwent amendment, wherein as per Section 3 of the Amending Act, after Serial No.12 to second schedule Serial No.13 was inserted, whereas, one of the item in Serial No.(vii)-'Chewing Tobacco' also has been mentioned. Admittedly, the said amendment has come into the effect only from 12.07.2011, therefore, the product 'Chewing Tobacco' has become a taxable item only from 12.07.2011. It is a definite case of the petitioners that because of the said product, namely, 'Chewing Tobacco', which they manufactured in the year 2007-2008, excess tax had been calculated by the first respondent, as if that, it is a taxable item, however, the fact remains that the product has become a taxable item only from 12.07.2011 and therefore, these apparent mistake available on the face of the record has to be rectified, that is the reason why, they filed the rectification applications, which are admittedly pending before the first respondent. Time Limitation - HELD THAT:- The five years limitation period is no doubt starts from the order passed by the authorities, which was passed sometime in 2009, however, from October 2011, there has been a stay, which was in operation for all these years up to 03.10.2019, the date on which, those writ petitions were disposed of. Therefore, the period between 15.09.2011, the date on which originally interim stay was granted till the disposal of the writ petition, that is, dated 03.10.2019 has to be excluded. If that period is excluded, certainly the present rectification petitions, dated 19.07.2021 and 15.07.2021, filed by the petitioners would be within the time of five years limitation period, as contemplated under Section 84 of the TNVAT Act. Therefore, that objection raised by the learned Government Advocate cannot be countenanced. This Court feel that, unless the rectification petitions filed by the petitioners is decided by taking into account the aforesaid factual as well as the legal aspects projected by the petitioners, the first respondent cannot proceed further pursuant to the alleged due for the Assessment Year 2007-2008. In that view of the matter, the impugned orders requiring the bank authorities to recover the amount and to pay it in favour of the first respondent may not be justifiable and accordingly, those orders are liable to be interfered with. The matters are remitted back to the first respondent, where the rectification petitions filed by the petitioners, dated 19.07.2021 and 15.07.2021, shall be considered first and orders shall be passed - Petition allowed by way of remand.
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Indian Laws
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2021 (12) TMI 280
Dishonor of Cheque - guilty of having committed offence punishable under Section 138 of the Negotiable Instruments Act - HELD THAT:- Having taken note of the fact that entire amount of compensation stands received by the respondent-complainant and respondent has no objection in compounding the offence, this Court sees no impediment in accepting the prayer made on behalf of the petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon'ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] , wherein it has been categorically held that court, while exercising power under Section 147 of the Act, can proceed to compound the offence even after recording of conviction by the courts below. The petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act - present matter is ordered to be compounded and impugned judgments of conviction and sentence passed by the courts below are quashed and set-aside - petition disposed off.
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2021 (12) TMI 279
Dishonor of Cheque - discharge of legal debt and liability - rebuttal of presumption - offence under Section 138 of NI Act - reversal of the order of acquittal of accused - HELD THAT:- It is settled law that when an appeal against acquittal is being considered, the appellate Court shall not reverse the order of acquittal only because another view in the matter was possible on the basis of the material on record, when the view adopted by the Court below while acquitting the accused was a reasonable and possible view. Therefore, the test to be satisfied by the appellant while seeking reversal of the order of acquittal is a stringent test and the material on record will have to be appreciated in that context. In the present case, the Magistrate has acquitted the respondent no. 1 on the basis that the complaint filed by the appellant for dishonour of the three cheques pertained only to the alleged liability towards bus stand fees for the Panaji bus stand. The Magistrate found that the oral and documentary evidence placed on record by the appellant pertained not only to the Panaji bus stand but also to other bus stands where respondent no. 1 had been engaged for collection of bus stand fees and parking fees. On this basis, the Magistrate found that the extent of dues and/or liability was not clear and that amounts stated in the cheques were far more than the debt or liability as projected by the appellant, thereby justifying the acquittal of respondent no. 1. There can be no doubt that under Section 139 of the aforesaid Act, a presumption operates in favour of the appellant and against the respondent no. 1 (accused). But, the presumption arises when foundational facts are proved by the complainant i.e. appellant in the present case. The documentary material on record was used on behalf of the respondent no. 1 to confront the witnesses in cross examination, which brought on record material that effectively rebutted the presumption that could have operated in favour of the appellant under Section 139 of the aforesaid Act. The appellant while challenging an order of acquittal has to pass a stringent test to successfully demonstrate that the order of acquittal deserves to be reversed. Appeal dismissed - decided against appellant.
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2021 (12) TMI 278
Dishonor of cheque - denial of reasonable opportunity to explain the incriminating circumstances - rebuttal of statutory presumptions - burden of proof on the complainant or not - HELD THAT:- In the present case, the complainant has presented a probable story supported by evidence. It stands established that he developed a relationship with the accused who was a cashier at the Kailashahar branch of SBI where the complainant used to come for drawing his pension. It is not denied that as an employee of the bank the accused maintained a bank account in the said branch of the bank. The fact that the accused visited the house of the complainant and requested him to give loan of ₹ 4,50,000/- also stands established. PW-2 has supported the evidence of complainant PW-1 that in his presence the complainant gave the loan in cash to the accused and in turn the accused had issued the impugned cheque to the complainant and requested him to present the cheque at the bank at the end of the month. During cross examination of PW-1 and 2, accused did not deny the cheque nor he disowned his signature thereon. During his examination under Section 313 Cr.P.C. also he did not project any defence case. He simply stated that the evidence of PW-1 and 2 were false. The statutory presumption under Section 139 read with the Rule of Evidence as provided under Section 118 NI Act with regard to the existence of debt or liability is not a discretionary presumption, it is a statutory presumption which is obligatory on the part of the court. A huge burden is cast on the accused to rebut such presumption by adducing reasonably probable defence. It cannot be rebutted by merely offering an explanation - In the instant case, apparently the accused petitioner did not lead any evidence in rebuttal of such statutory presumptions. He has also failed to bring on record such facts and circumstances which would make the courts believe that the liability, attributed to the accused petitioner was improbable or doubtful. This court is of the view that there is no reason to interfere with the concurrent findings of the courts below with regard to conviction of the petitioner under Section 138 NI Act. As a result, his conviction under Section 138 NI Act is upheld. Petition disposed off.
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2021 (12) TMI 277
Dishonor of Cheque - insufficiency of funds - expiry of statutory period - acquittal of the accused mainly on the grounds that cognizance of the offence under Section 138 NI Act was taken before expiry of the statutory period of 15 days commencing from the date of receipt of the demand notice - condonation of delay in terms of the proviso to clause (b) of sub-section (1) of Section 142 NI Act - HELD THAT:- In the case of YOGENDRA PRATAP SINGH VERSUS SAVITRI PANDEY ANR. [ 2014 (9) TMI 1129 - SUPREME COURT] , appellant filed a complaint under Section 138 NI Act against respondent No. 01 before expiry of the statutory period of 15 days and the Magistrate took cognizance of offence and issued summons to the accused who assailed the order in a petition under Section 482 CrPC before the High Court. The High Court held that since the complaint was filed within 15 days of the service of the demand notice, the same was premature and the order passed by the Magistrate taking cognizance was quashed against which the appellant came to the Hon'ble Supreme Court. In the present case, for same cause of action complainant private respondent filed a complainant under Section 138 NI Act in the court of the CJM, South Tripura, Belonia which was registered as CR(NI)23 of 2013 in which evidence was taken and learned CJM by his judgment and order dated 11.04.2016 found the petitioner not guilty and acquitted him of the said charge on various grounds - It is thus clear that accused was once tried in NI 23 of 2013 for the same cause of action in which evidence was taken and after full trial he was acquitted because the complainant could not establish the charge against him. Order of his acquittal still remains in force. In these circumstances, learned trial court committed error by entertaining a fresh complainant for the same cause of action between the same parties. The Criminal Revision Petition stands allowed.
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2021 (12) TMI 276
Equitable Mortgage - seeking to direct the petitioner Bank to deposit before the court the whole of the auction amount received in the SARFAESI sale proceedings - HELD THAT:- To enable the decree holder to participate in the assets of a judgment debtor, the following conditions are to be satisfied by the decree holder; namely, (i) decree holder claiming share in the rateable distribution should have applied for execution of his decree to the appropriate Court, (ii) such application should have been made prior to the receipt of the assets by the Court, (iii) the assets of which a rateable distribution is claimed must be assets held by the Court, (iv) the attaching creditor as well as the decree holder claiming to participate in the assets should be holders of decrees for the payment of money, and (v) such decrees should have been obtained against the same judgment debtor. Therefore, no rateable distribution can be claimed unless all the aforesaid conditions are fulfilled. All the aforesaid conditions have not been satisfied and so the learned Munsiff could not have passed Exts.P7 order on that ground also. Even otherwise, the attachment which has been affected after the mortgage has been created in respect of the property, will have no effect and hence on the said ground alone, the order is liable to be set aside - Petition allowed - decided in favor of appellant.
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2021 (12) TMI 275
Dishonor of Cheque - signatories of the defaulted cheque - Liability of Chairman / Managing Director - burden to establish the applicability of the exemption created by the second proviso to Section 141 of the Act - case of applicants is that no proceedings may continue against any of the accused persons/applicants by virtue of the bar created by the second proviso to Section 141 of the Act - HELD THAT:- In the context of the present facts, none of the applicants namely Krishan Mohan Pandey, Manoj Kumar Pathak, Bhikari Singh and Yogesh Shukla are shown to be either officers of the Central Government or the State Government or a Financial Corporation owned or controlled either by the State Government or Central Government. It is also not shown that they had been nominated as Directors of the Corporation by virtue of that office held. On the contrary, it does appear that all the applicants were appointed as officers of the Corporation itself. The burden to establish the applicability of the exemption created by the second proviso to Section 141 of the Act was on the applicants. That burden not discharged, at present, no good ground is made out to offer any interference on such count. It is however made clear that the Court has not adjudicated the rights of the applicants on this issue. It may therefore remain open to the applicants to raise proper objection before the learned Magistrate, if such facts exist. Prima facie case is made out against applicant nos. 1 and 2 at this stage. Therefore, the application filed on behalf of applicant nos. 1 and 2 is dismissed. At the same time, it may be noted that the present application was filed in the year 2009 and there is an interim order operating in favour of the applicants since 03.06.2009. More than 12 years have passed - in absence of any specific allegation made against applicant no. 3-Bhikari Singh, the complaint may not be prosecuted further against him. Having done that there was no liberty available to the complainant and there was no requirement in law to implead the Managing Director. The Corporation is a juridical person, which was required to be impleaded (in the complaint lodged) to fulfill the requirement of law. That requirement however does not create any offence by its Managing Director. The entire proceedings of Complaint Case No. 283 of 2007 (Dinesh Tyagi Vs. Manoj Pathak), under Section-138 Negotiable Instruments Act, 1881, pending in the court of Special Chief Judicial Magistrate, Meerut against applicant no. 3 and Yogesh Shukla are quashed - Application allowed in part.
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2021 (12) TMI 274
Dishonor of Cheque - existence of legal debt/liability or not - guilty of offence under Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- There cannot be any quarrel with the proposition that the jurisdiction being exercised by this Court in revision necessarily limits the scope to interfere in concurrent findings rendered by the two Courts below against the applicants. Nonetheless, if the applicants are able to demonstrate that the findings rendered by the two Courts below are erroneous, perverse and wholly unsustainable, the impugned judgments and orders can certainly be interfered with. A perusal of the nature of cross examination of the witnesses of the respondent and the manner in which defence evidence was led by examining witnesses, it becomes clear that the material brought on record fell way short of rebutting the presumption that operated against the applicants. The elaborate submissions sought to be made before this Court on behalf the applicants on the aspect of the alleged failure of the respondent to give details of the account and crystalized form of legal debt or liability is not supported by the material available on record - In fact, with the nature of stand taken before the Magistrate and the manner in which oral and documentary evidence was led on behalf of the applicants, it becomes clear that there is no scope for the applicants to raise such a contention in revisional jurisdiction before this Court. This Court finds that no case for interference is made out on behalf of the applicants in revisional jurisdiction - the revision application is found to be without any merits and it is dismissed.
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2021 (12) TMI 273
Dishonor of cheque - denial of issuance of cheque and signatures - presumption as available under Section 118 and 139 of NI Act - HELD THAT:- This court finds no force in the submission made by learned counsel for the petitioner that the learned courts below have misread the evidence, as a consequence of which findings, detrimental to the accused have come on record, rather, careful perusal of evidence led on record by the parties clearly proves that the accused with a view to discharge his liability issued cheque in the sum of ₹ 50,000/- to the complainant, but the same was dishonoured on account of insufficient funds in his bank account. Once there is no denial of issuance of cheque and signatures thereupon, presumption as available under Ss. 118 and 139 comes into play. Section 118 and 139 of the Act clearly provide that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. True, it is that to rebut aforesaid presumption accused can always raise probable defence either by leading some positive evidence or by referring to the material, if any adduced on record by the complainant - Once issuance of cheque and signatures thereupon are not denied, presumption starts in favour of holder of cheque and once such presumption starts, onus shifts upon the person issuing the cheque. This court is convinced and satisfied that complainant has successfully proved by leading cogent and convincing evidence that the accused issued cheque in question in discharge of his lawful liability, but the same came to be dishonored. Since despite issuance of legal notice, accused failed to make good the payment, learned court below, in the totality of evidence led on record by the complainant, rightly held accused guilty of having committed offence punishable under Section 138 of act and as such, no interference in the impugned judgment/order of conviction and sentence is called for. The present revision petition is dismissed being devoid of any merit.
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