Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 1, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of Interest and penalty - reversal of transitional credit - no records to show utilization of such credit - invocation of Section 74 of the TNGST Act, 2017, justified or not? - Before levying penalty or interest, a proper excise was required to be made by a proper officer under Section 74(10) after ascertaining whether the credit was wrongly availed and wrongly utilised. - Imposition of interest or penalty either u/s 73 or 74 stand attracted only where such credit was not only availed but also utilised for discharging the tax liability. - HC
Income Tax
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Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. - HC
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Addition u/s 68 - unexplained Cash Credit - Though the transactions of the loan received by the assessee are not free from any doubt but in either of the case, once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. - CIT(A) rightly deleted the addition - AT
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Penalty u/s. 271(1)(c) - disallowance of expenses - Proof of bonafied error - there was wrong claim in the return of income filed by the assessee which cannot partake the characteristics of furnishing in-accurate particular of income. Therefore, we delete the levy of penalty considering it as bona fide error - AT
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Depreciation claim made by the assessee on spectrum fee - on merits the assessee’s claim for depreciation on “spectrum fee” is allowable under section 32 of the Act as the provisions contained under section 35ABB of the Act being not applicable to the issue at hand. Hence, the order passed by the AO is not erroneous. So we are of the considered view that the AO has rightly allowed the claim by virtue of the assessment order framed under section 143 of the Act. - AT
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Reopening of assessment u/s 147 - taxability of transfer of immovable property - There was no failure on part of the assessee at least for AY 2005-06, in disclosing fully and truly all material facts, as there was no Transfer u/s 2 (47), nothing was chargeable u/s 45 and therefore no computation was to be made u/s 48 and therefore there is no applicability of section 50C in the year which is reopened by AO. - AT
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Revision u/s 263 - When the provision contained under Section 92CA(4) of the Act makes it mandatory upon the Assessing Officer to compute the total income of the assessee in conformity with the order of the TPO and the Assessing Officer has computed the total income following the statutory mandate, the assessment order cannot be considered to be erroneous. Even, assuming that some prejudice might have been caused to the Revenue, nevertheless the twin conditions of 'erroneous' and 'prejudicial' to the interest of the revenue as provided under section 263(1) of the Act have to be fulfilled to enable the Revisionary Authority to assume jurisdiction under the said provision. - AT
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Deduction u/s 54 - belated filing of return - amount of capital gain invested for new asset purchased or construction of new asset - It is clear that the deduction under section 54F of the Act can be claimed to the extent of amount of capital gain utilized till the filing of the return under Section 139(4) of the Act. - AT
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Admission of additional grounds - Addition made under MAT provisions - The assessee can raise legal grounds at any stage of the appellate proceedings. In view of above facts and circumstances and in the interest of substantial justice, we find it appropriate to admit the grounds related to additions made under MAT provisions as additional ground and remit the issue back to the file of the Ld CIT(A) for adjudication afresh - AT
Customs
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Classification of imported goods - freely importable Waste Paper - There are no cogent reasons with clear evidences are adduced on record by Revenue for discarding pre-shipment inspection certificate in toto. In absence of any inculpatory statements and there being no deliberate mis-declaration on the part of Appellants, confiscation of goods, and penalty are not sustainable, in the facts of these cases - the appellants are admittedly engaged in the manufacture of craft paper and other paper products and the imported goods i.e. paper waste in question is meant for use as raw material in their production. On this fact also it cannot be alleged that appellant has not imported the paper waste and something else. - AT
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Maintainability of appeal - non-compliance with the statutory pre-deposit -The Customs Act does not provide for waiver of this mandatory deposit before filing appeal. - Following the decision of SC, appeal is held to be dismissed for non-compliance of the statutory requirement and is dismissed. - AT
Indian Laws
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Validity of bail granted - siphoning of funds - While releasing Respondent no.2 on bail, the High Court has not at all considered the relevant factors including the nature and gravity of accusation; the modus operandi and the manner in which the offences have been committed through shell companies and creating the false/forged documents and/or misusing the PAN Cards, Aadhar Cards and KYCs of the employees and showing them as Directors of the fake and shell companies - the High Court has not at all considered and taken into consideration the status report and the evidence collected during the course of the investigation. - SC
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Appointment of a arbitrator - requirement of sufficient stamping of documents - Although we agree that there is a need to constitute a larger Bench to settle the jurisprudence, we are also cognizant of time sensitivity when dealing with arbitration issues. All these matters are still at a preappointment stage, and we cannot leave them hanging until the larger Bench settles the issue. In view of the same, this Court – until the larger Bench decides on the interplay between Sections 11(6) and 16 – should ensure that arbitrations are carried on, unless the issue before the Court patently indicates existence of deadwood. - SC
IBC
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Validity of Direction to place Settlement Proposal, sent by Respondent No. 1 before the CoC for its consideration - Considering the ratio of the Judgement of the Hon'ble Supreme Court in the case of Ebix Singapore, "there was no scope for negotiations between the parties once the CoC has approved the Resolution Plan. Thus, contractual principles and common law remedies, which do not find a rope in the wording or the intent of the IBC, cannot be imported in the intervening period between the acceptance of the CoC Approved Resolution Plan and the Approval by the Adjudicating Authority. - AT
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Seeking extension of four weeks’ time for making payment - Appellant failed to adhere to its commitment in Resolution Plan - by granting 30 days’ time to Appellant to comply its all financial obligations in Resolution Plan and make payment of balance of ₹ 30 crores shall not cause any prejudice to Financial Creditors, who have already been denied the said payment for a long period of time. In event, the Appellant is unable to make the payment as prayed for, it shall be open to proceed with the liquidation, no option being left thereafter. - AT
Service Tax
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Refund of Service tax paid by mistake - amount mistakenly paid was thus a deposit or not - refund rejected observing that the appellant were registered with the Department and was aware that they are required to deposit service tax on the taxable services - - Refund allowed - Limitation u/s 11B will not be applicable as the amount deposited is not tax and, at best, revenue deposit. - AT
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Valuation of services - support services of business or commerce [BSS] or not - treatment of mark up, being, difference between the amount paid by the Appellant to the Shipping Lines/Airlines - The decision in D. Pauls Consumer Benefit Ltd. [2017 (3) TMI 1019 - CESTAT NEW DELHI] was overruled by Larger Bench of the Tribunal in Kafila Hospitality & Travels Pvt. Ltd. v/s Commissioner, Service Tax, Delhi 2021 (3) TMI 773 - CESTAT NEW DELHI] - Demand set aside - AT
Central Excise
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Clandestine removal - Invocation of extended period of limitation - It is held that apparently and admittedly appellant was regularly filing the returns. Hence, the facts were regularly brought to the notice of the Department. But there is nothing produced on record by the Department to show any positive act on part of the appellant which may amount to suppression of relevant facts. Resultantly, the demand for a period of more than one year could not have been made - AT
Case Laws:
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GST
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2022 (1) TMI 1214
Refund of the accumulated credit - rejection on the ground of time limitation - vires of Section 54 of the Central Goods and Services Tax Act, 2017 and Rajasthan Goods and Services Tax Act, 2017 - HELD THAT:- The Supreme Court in the Union of India and others Vs. VKC Footsteps India Pvt. Ltd., [ 2021 (9) TMI 626 - SUPREME COURT ] has upheld the vires of the statutory provisions under consideration - that being the situation, the petitioner s challenge to the statutory provisions must come to an end. However at this stage, learned counsel for the petitioner argued that the COVID related extensions would apply to time limit provisions contained in the statutes for refund also. At the stage, there is neither pleading nor corresponding prayer for declaration to this effect. We therefore refuse to go into this question in the present petition. In view of the facts and material on record, let the assistant commissioner decide the petitioner s refund claim bearing in mind the reply of the petitioner, copy of which is produced as annexure A/4 - petition disposed off.
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2022 (1) TMI 1213
Levy of Interest and penalty - reversal of transitional credit - no records to show utilization of such credit - invocation of Section 74 of the TNGST Act, 2017, justified or not? - HELD THAT:- The facts on record indicates that though an improper attempt was made by the petitioner to transition the aforesaid credit. The petitioner had however not utilized the same and had also reversed the same on 10.02.2020 after a Show Cause Notice were issued within a period prescribed under Section 73 of TNGST Act, 2017 by invoking Section 74 of the TNGST Act, 2017. However, the Show Cause Notice does not invoke the ingredients to justify the invocation of Section 74 of the TNGST Act, 2017 against the petitioner. Be that as it may, if the Show Cause Notice issued to the petitioner on 09.05.2019 is to be construed as a notice under Section 74 of the TNGST Act, 2017, the Show Cause Notice should have specifically invoked the ingredients of Section 74(1) of the TNGST Act, 2017. However, the said notice merely states that due to the unavailability of documents to prove admissibility of the ITC, Assessment under Section 74 is proceeded. Thus, the Show Cause Notice dated 31.12.2019 does not meet the requirements of Section 74(9) of the TNGST Act, 2017. Before levying penalty or interest, a proper excise was required to be made by a proper officer under Section 74(10) after ascertaining whether the credit was wrongly availed and wrongly utilised. Though under Sections 73(1) and 74(1) of the Act, proceedings can be initiated for mere wrong availing of Input Tax Credit followed by imposition of interest penalty either under Section 73 or under Section 74 they stand attracted only where such credit was not only availed but also utilised for discharging the tax liability. The proper method would have been to levy penalty under Section 122 of TNGST Act, 2017 - the petitioner is not liable to penalty imposed. At the same time, since there was an attempt to wrongly avail credits and utilise the same as and when the tax liability would have arisen, the petitioner is held liable to a token penalty. Petition allowed in part.
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Income Tax
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2022 (1) TMI 1212
Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT:- As the first proviso to Section 149(1) provides that no notice under Section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 01.04.2021 if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of Section 149 as they stood immediately before the commencement of the Finance Act, 2021. As per this proviso thus no notice under Section 148 would be issued for the past assessment years by resorting to the larger period of limitation prescribed in newly substituted clause (b) of Section 149(1). This would indicate that the notice that would be issued after 01.04.2021 would be in terms of the substituted Section 149(1) but without breaching the upper time limit provided in the original Section 149(1) which stood substituted. This aspect has also been highlighted in the memorandum explaining the proposed provisions in the Finance Bill. If according to the revenue for past period provisions of section 149 before amendment were applicable, this first proviso to section 149(1) was wholly unnecessary. Looked from both angles, namely, no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. Whether the explanations contained in the CBDT circulars dated 31.03.2021 and 27.04.2021 are legal and valid? - Subordinate legislation does not enjoy same level of immunity as the law framed by the Parliament or the State Legislature. The law framed by the Parliament or the State Legislature can be challenged only on the grounds of being beyond the legislative competence or being contrary to the fundamental rights or any other constitutional provisions. Third ground of challenge which is now recognized in the judgment in case of Shayara Bano Vs Union of India [ 2017 (9) TMI 1302 - SUPREME COURT] is of legislation being manifestly arbitrary. A subordinate legislation can be challenged on all these grounds as well as on the grounds that it does not conform to the statute under which it is made or that it is inconsistent with the provisions of the Act or it is contrary to some of the statutes applicable on the subject matter. As under sub-section (1) of Section 3 of the Relaxation Act, 2020 while extending the time limits for taking action and making compliances in the specified Acts upto 31.12.2020 the power was given to the Central Government to extend the time further by issuing a notification. This was the only power vested in the Central Government. As a piece of delegated legislation the notifications issued in exercise of such powers, had to be within the confines of such powers. In plain terms under sub-section (1) of Section 3 of the Relaxation Act, 2020 the Government of India was authorized to extend the time limits by issuing notifications in this regard. Issuing any explanation touching the provisions of the Income Tax Act was not part of this delegation at all. The CBDT while issuing the notifications dated 31.03.2021 and 27.04.2021 when introduced an explanation which provided by way of clarification that for the purposes of issuance of notice under Section 148 as per the time limits specified in Section 149 or 151, the provisions as they stood as on 31.03.2021 before commencement of the Finance Act, 2021 shall apply, plainly exceeded its jurisdiction as a subordinate legislation. The subordinate legislation could not have travelled beyond the powers vested in the Government of India by the parent Act. Even otherwise it is extremely doubtful whether the explanation in the guise of clarification can change the very basis of the statutory provisions. If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid. We are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.
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2022 (1) TMI 1211
Addition of investments not disclosed in the books of accounts as required under section 69B - addition based on the statement recorded in the course of survey operation under section 133A at the premises of the third party - HELD THAT:- The impugned amount was offered to tax before the settlement commission which was accepted therein. In this regard, we note that the proceedings before the settlement commission were of M/s Phulchan Exports Pvt. Ltd. and M/s Advance Lifestyle Ltd and the assessee was not connected with such proceedings. Thus the decision of the Hon ble Settlement Commission in the case of a third party cannot bind the assessee - See VINEETA GUPTA AND ANOTHER [ 2014 (5) TMI 543 - DELHI HIGH COURT] In the present case, admittedly, the assessee acquired the shares of M/s Advance Life Space Pvt. Ltd from M/s Advance Lifestyle Ltd for certain value. Once the transaction on hand was not connected to M/s Phulchand Export Pvt. Ltd, then there was no reason for it (M/s Phulchand Export Pvt. Ltd.) to offer the income for the same transaction before the settlement commission for the transactions in which it was not party. Thus a doubt arises why Phulchand Export Pvt. Ltd has made a disclosure before the settlement commission in the transaction in which it was not the party even if it was the majority shareholder in the advance lifestyle Ltd. Therefore, we are not convinced with the finding of the AO. There were certain loose papers/diary found during the survey operation containing certain date wise amount. On confrontation, one Shri Pradeep Aggarwal son of Shri Phulchand Aggarwal who was neither director in M/s Phulchand Export Pvt. Ltd or in M/s Advance Lifestyle Ltd stated that noting represent cash received from the assessee on hand against sale of the property at New Manik Mills. However, the name of the assessee, signature and address of the assessee was not appearing therein i.e. on the seized documents. Accordingly, we are of the view that such documents in the absence of other corroborative materials cannot substitute the evidence. Hon ble Supreme Court in case of Common Cause (A registered society) vs. Union of India[ 2017 (1) TMI 1164 - SUPREME COURT] held that noting on loose sheet/diary does carry any evidentiary value under the provision of section 34 of the Evidence Act - Also find that Hon ble Supreme Court in CBI vs. V.C. Shukla [ 1998 (3) TMI 675 - SUPREME COURT] held that entry can be made by any person against the name of any other person in any sheet, paper or computer, but the same cannot be the basis of making charges against the person whose name noted on sheet without corroborating the same. - Decided against revenue. Addition u/s 68 - unexplained cash credit - assessee has not filed any confirmation, addresses, PAN of the debtors except a list containing the name of the debtors/members - HELD THAT:- Assessee has also furnished the booking receipts and service tax paid on such booking advance. It is also not out of place to mention that in majority of the cases the PAN of the sundry debtors representing the advance booking were available on record. As far as the details as discussed aforesaid, there is no dispute. DR at the time of hearing has also not brought anything on record contrary to the impugned details placed in the paper book. Thus, it appears that the assessee has discharged its primary onus imposed under section 68 of the Act. Thus the onus has been shifted upon the revenue to disprove the contention of the assessee and that too based on the cogent materials. It is also pertinent to note that the AO has not carried out any exercise by resorting to the provisions of section 133(6) and 131 of the Act in order to dig out the truth from the submissions filed by the assessee. As such, all the details furnished by the assessee cannot be brushed aside without assigning any reason. Accordingly, the provisions of section 68 of the Act cannot be invoked in the given facts and circumstances - Decided in favour of assessee. Addition consequent to survey proceedings - loose sheets found - Addition to sum as admitted by the assessee during survey - HELD THAT:- We are of the view that there cannot be any addition merely on the basis of loose papers found during the survey operation until and unless there were some corroborating evidences found. The revenue is authorized record the statement under section 133A(3)(iii) of the Act during the survey operation. There is no provision for recording the statement under section 131(1) in survey operation except the circumstances provided under subsection 6 to the section 133A of the Act - revenue can resort to the provisions of section 131 of the Act if the assessee doesn t co-operate during the survey proceedings or tries to evade the relevant formations. However in the case on hand, we note that there is no such allegation that the assessee was not cooperating during the assessment proceedings. Thus we hold that the revenue has acted beyond the jurisdiction by recording the statement under section 131 of the Act. Accordingly, no reference can be made to such statements. There was a loose paper containing the figure of construction cost which the assessee had made for the purpose of the bank loan. Such information was improperly written on a piece of paper which is nothing but a dumb documents. Therefore, it cannot be said that such information was furnished to the bank - we disagree with the order of the authorities below. Accordingly we set aside the finding of the Ld. CIT-A, and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed whereas the ground of appeal of the Revenue is dismissed. Income recognition - sales valuation - assessee has shown revenue in the financial statements based on percentage completion method - HELD THAT:- There is no reference to be made to the value of the sales - under percentage completion method, income of the assessee is computed based on cost incurred to date in proportionate with total estimated cost and total estimated revenue. This method of recognizing the profit is very well accepted by the industries engaged in the business of construction of the projects. There was no defect pointed out by the AO in the method adopted by the assessee. The assessee has shown revenue in the financial statements based on percentage completion method despite the fact that there was no actual sales made by the assessee in the year under consideration. The question of making the sale arises when the project/the property is handed over to the prospective buyer and the conveyance deed is registered in favour of the party. But no such conveyance deed has been registered in the year under consideration. This fact was brought to the notice of the AO in response to the notice issued under section 142(1) There is no whisper about the sales of the area as alleged by the AO. At the time of hearing, the learned DR has also not brought anything in support of the order of the AO. Accordingly we are not convinced with the finding of the AO. In view of the above and after considering the facts in totality, we set aside the finding of the authorities below and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Addition of expenses incurred for getting the property vacated from the occupants/shopkeepers - AO was not satisfied with the contention of the assessee on the reasoning that as per the agreement between the assessee and the vendor, it was the duty of the vendor to incur such expenses, as proposed by the AO that the assessee has not incurred such expenses in the course of the business - HELD THAT:- From the above discussion, it also appears that the assessee was not under the obligation to incur such expenses. As such it was the duty of the other party to handover the land to the assessee free from all encumbrances. We note that the other party failed to do so. Under the situation the assessee has to incur the expenses which was supposed to be borne by the other party. Provisions of section 37 Act deals for the admissibility of the expenses which have been incurred for the purpose of the business. The expenses which are personal and capital in nature, and not incurred for the purpose of the business cannot be allowed as deduction under section 37 the Act. In such facts and circumstances, the assessee at the best of his wisdom has decided to incur the expenses which are purely for the purpose of commercial expediency. We are inclined to hold that the expenses incurred by the assessee are in course of the business and therefore the same are eligible for deduction under section 37 of the Act. Hence, we set aside the finding of the learned CIT-A, and direct the AO to delete the addition made by him. Hence the ground of appeal raised by the assessee is allowed. Addition u/s 68 of the Act on account of low creditworthiness of the loan parties - HELD THAT:- The assessee has discharged its onus by furnishing the necessary details such as a copy of PAN, bank details, and ITR etc. in support of identity of the parties, genuineness of transaction and creditworthiness of the parties. Admittedly the learned CIT-A has not doubted on the identity and genuineness of transaction but doubted the credit worthiness of the all parties. Hence the learned CIT(A) sustained the addition made by the AO by holding that the assessee has not discharged the primary onus cast under section 68 . Now coming to the third condition, i.e. creditworthiness of the parties, regarding this we note that the assessee has submitted that the fund was received through the through banking channel from all the parties. In support, the assessee has submitted their bank accounts, copy of retunred and annual accounts. Once the assessee has filed primary details evidecing the identity of the party, genuineness of transaction and credit worthiness of the party, the authorities should have made enquiry from the parties who have advanced the loan to find out the sources of funds in their respective hands. As such, the assessee has explained the sources of fund in its hands by producing the identity and bank statement demonstrating that the funds were received through banking channel, which means that at the time of advancing the the laon there was suffient amount in their banks accounts. If the revenue authorities have doubt with respect to the capacity of lender then it should have carried out necessary investigation as provided under the provision of the Act. The assessee on hand is only libale to explain the sources of credit in its hand only but not labile to explain the sources of source. Therefore in our considered view, the assessee has discharged its onus imposed under section 68 - Decided in favour of assessee.
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2022 (1) TMI 1210
Validity of Reopening of assessment u/s 147 - jurisdictional notice u/s. 148 as issued to a dead person - addition of Long Term Capital Gain [LTCG] in as much as the fair market value as on 01-04-1981 should have been adopted as per Registered Valuer Report - HELD THAT:- In the present case the defect in not confined to notice not being issued in the name of the legal heirs only but has also not been served or received by them. The legal heirs are in fact not even aware of the proceedings being undertaken on them. The question of waiver of notice u/s 148 therefore cannot arise where the person concerned has no knowledge of the proceeding initiated. Being a jurisdictional notice, these defects cannot be termed as mere irregularities which can be cured by participation of the assesses/legal heirs,. The Hon ble jurisdictional High Court in the case of P.V Doshi vs Commissioner of Income Tax [ 1977 (8) TMI 29 - GUJARAT HIGH COURT] has held that provisions conferring jurisdiction cannot be conferred on the authority by mere consent. The jurisdictional notice u/s 148 of the Act having been issued to a dead assessee and the defect therein being not curable by waiver or consent of the legal heirs, the said notice is an invalid notice and the proceedings conducted in pursuance thereof are not sustainable in the eyes of law. The assessment order passed therefore, we hold, is null and void and thus set aside. - Decided in favour of assessee.
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2022 (1) TMI 1209
Addition u/s 68 - unexplained Cash Credit - CIT- A deleted the addition - HELD THAT:- With respect to the identity of the party, we find that the AO in his order has given categorical finding that the assessee has furnished the details such as copy of ledger account, bank statements, income tax return, balance sheet etc. It is also pertinent to note that based on such information notice under Section 133(6) of the Act was issued to the above parties which was duly responded by them. From the above, there remains no doubt that the identity of the loan parties is not in disputed, as it has been proved beyond doubt. With respect to the genuineness of transaction, we note that the assessee has submitted that all the transaction are carried out through banking channel and in support has furnished the copy of bank statement showing the transaction and the same were transferred out of fund received by those company as share capital. However, it is important to highlight that in the assessment of the loan parties, genuineness of the fund received by them were not established. As such these companies were acting as a conduit to convert the unaccounted money into accounting form. In the given facts and circumstances the genuineness of the transactions is not free from doubts. Once the genuineness of the transaction is not free from doubt, it is implied that the creditworthiness of the parties was not satisfactory so as to advance the loan to the assessee. The undisputed fact that the amount of loan received by the assessee was refunded to the loan parties. It implies that the assessee was not the beneficiary of the loan received by it as alleged by the AO. Though the loan has been repaid by the assessee in the subsequent year, but it is difficult to hold that the assessee was the ultimate beneficiary of the impugned amount. Thus, we can assume that the impugned transaction was the business transactions between the assessee and the loan parties. There was a response from the loan parties in response to the notice issued under Section 133(6) of the Act wherein it was confirmed that these companies have advanced loan to the assessee. This reply of the loan parties cannot be brushed aside merely on the ground that the directors were not produced by the assessee during the assessment proceedings. It was the revenue which wanted to verify the directors of the loan companies. For this purpose, lot of powers were available with the revenue such as issuing notice under Section 131 of the Act for inviting the personal attendance of the directors. But the AO has not exercised such power in the given facts and circumstances. Though the transactions of the loan received by the assessee are not free from any doubt but in either of the case, once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, we hold that there is no infirmity in the order of the Ld. CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed. - Decided in favour of assessee.
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2022 (1) TMI 1208
Penalty u/s. 271(1)(c) - disallowance of expenses - Proof of bonafied error - as per DR non-striking off the irrelevant portion in the notice u/s. 274 r.w.s. 271(1)(c) of the Act dated 03.03.2015 does not create any ambiguity as the assessee was well aware that the proceedings have been initiated for furnishing inaccurate particulars of income - HELD THAT:- It is not disputed that the assessee is eligible for the claim of the expenses but it was disallowed to the extent of ₹ 91,96,966/- out of the total claim of the assessee. We have also considered that the Ld. CIT(A) has observed that the assessee realized the mistake and filed revised statement of income at para 5.2 in quantum appeal. Therefore, the claim made by the assessee was not wrongfully but was on account of bona fide error to the extent for which the amount is added in the total income. This error in making the claim of expenses cannot be equated with the furnishing of inaccurate particular of income. Considering, the above finding and observations made by the lower authorities and following the decision of Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] - thus we hold that there cannot be a penalty where there was bond fide error in the claim. We hold that there was wrong claim in the return of income filed by the assessee which cannot partake the characteristics of furnishing in-accurate particular of income. Therefore, we delete the levy of penalty considering it as bona fide error. Hence, the ground of appeal of the assessee is allowed.
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2022 (1) TMI 1207
Revision u/s 263 by CIT - As per CIT AO has neither questioned nor examined nor verified qua the issue of depreciation claim made by the assessee on spectrum fee and as such depreciation claim allowed by the AO is incorrect being not examined in accordance with provisions contained under section 35ABB - PCIT sought to amortize spectrum fee on pro-rata basis over the period of license under section 35AB of the Act and held the assessment order erroneous insofar as prejudicial to the interest of the revenue - HELD THAT:- AO has allowed the depreciation @ 25% claimed by the assessee company on spectrum fees by treating the same as intangible assets under section 32 of the Act by making a discreet enquiry and as such it is neither a case of non application of mind on the part of the AO nor a case of inadequate enquiry. Hence, invoking revisionary jurisdiction by the Ld. PCIT under section 263 of the Act is not sustainable in the eyes of law and the question No.I framed in the preceding para is answered in favour of the assessee, that the assessment order passed by the AO under section 143(3) of the Act allowing depreciation claimed by the assessee @ 25% on spectrum fee under section 32 of the Act was not erroneous in so far as prejudicial to the interest of revenue the issue as to the allowability of depreciation on spectrum fee as claimed by the assessee under section 32 of the Act and the provisions contained under section 35ABB are not applicable has already been decided in favour of the assessee by the Tribunal, the order of the Tribunal cannot be allowed to be disobeyed by Ld. PCIT merely on the pretext that the department has not accepted the said decision and appeal has already been filed before the Hon ble High Court. In order to maintain judicial discipline Ld. PCIT had no option but to follow the order. Even on merits the assessee s claim for depreciation on spectrum fee is allowable under section 32 of the Act as the provisions contained under section 35ABB of the Act being not applicable to the issue at hand. Hence, the order passed by the AO is not erroneous. So we are of the considered view that the AO has rightly allowed the claim by virtue of the assessment order framed under section 143 of the Act. So the question No.II framed is also decided in favour of the assessee and against the Revenue. Impugned order passed by the Ld. PCIT under section 263 of the Act by invoking revisionary jurisdiction is not sustainable in the eyes of law, hence hereby quashed. Resultantly, appeal filed by the assessee is allowed.
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2022 (1) TMI 1206
Income from house property - deduction under section 24 denied - HELD THAT:- We note that the learned CIT (A) had confirmed the order of the AO denying the deduction under section 24 of the Act after placing reliance on the order of Chennai tribunal in case of of Anjuman-E Himayath- E-Islam [ 2021 (4) TMI 1176 - MADRAS HIGH COURT ] for A.Y.2009-10. However we find that the order which has been relied upon by the learned CIT (A) has been challenged before the Hon ble Madras High Court, [ 2021 (4) TMI 1176 - MADRAS HIGH COURT ]where Hon ble bench reversed the order of the Tribunal. Thus deduction u/s 24(a) is allowable to the assessee. Hence, the ground of appeal of the assessee is allowed.
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2022 (1) TMI 1205
Reopening of assessment u/s 147 - taxability of transfer of immovable property - HELD THAT:- The provisions of Section 50 C of the income tax act clearly provides that fair market value of the property is required to be substituted as consideration received or accruing as a result of the transfer of a capital asset by the assessee where the actual sale consideration received or accruing is less than the value adopted or assessed by an authority of state government for the purpose of payment of stamp duty in respect of such transfer. The value so adopted or assessed shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for the purposes of computation of capital gain u/s 48. Accordingly for computation of capital gain according to the provisions of Section 48 of the income tax act which is chargeable according to the provisions of Section 45 of the act, the difference between the actual sale consideration and fair market value of the property as described u/s 50C of the income tax act is required to be used. In the present case for assessment year 2005 - 06 there is no transfer of asset, and therefore, there is no chargeability of capital gain u/s 45 of the act. Thus the provisions of Section 48 are also not triggered for this year. Therefore for assessment year 2005 06 there is no implication of provisions of Section 50C. The learned dispute resolution panel in paragraph number 2.5 has noted that assessee has failed to provide evidence to substantiate its claim of transfer of possession and final receipt of money in assessment year 2004 05 and as the property was registered on 23/4/2000 for i.e. during assessment year 2005 06, therefore, it confirmed the action of the learned assessing officer to tax capital gain in the assessment year 2005 06. DRP ignored the agreement to sell entered into by the assessee. Further if the learned DRP was of the view that capital gain is chargeable to tax in assessment year 2005 06, they should have directed the learned assessing officer to make the total addition of the capital gain in assessment year 2005 06. Even for ld AO and ld DRP it cannot act as deterring fact that capital gain is offered by assessee in AY 2004-05, those authorities are required to tax correct income in right hands for right assessment year. Therefore, there is a contradiction in the direction of the learned dispute resolution panel. No reason to uphold the reopening of the assessment as well as addition on merits for the reason that:- i. there was no transfer of any capital asset during assessment year 2005 06 but in assessment year 2004 05. j. The capital gain has already been charged to tax by the learned assessing officer by passing an order u/s 143 (3) of the act for assessment year 2004 05. k. The provisions of Section 50 C can be applied in the year in which provisions of Section 45, 48 read with Section 2 (47) of the act are triggered. In this case the provisions of Section 45, 48 and 2 (47) of the act are triggered in assessment year 2004 05 whereas the learned assessing officer has invoked the provisions of Section 50 C of the act for assessment year 2005 06. l. There was no failure on part of the assessee at least for AY 2005-06, in disclosing fully and truly all material facts, as there was no Transfer u/s 2 (47), nothing was chargeable u/s 45 and therefore no computation was to be made u/s 48 and therefore there is no applicability of section 50C in the year which is reopened by AO.
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2022 (1) TMI 1204
Revision u/s 263 by CIT - Reopening of assessment u/s 147 - assessment order being held erroneous for non-initiation of penalty proceedings u/s. 271(1)(c) - HELD THAT:- It is clear that post amendment to section 271(1)(c) w.e.f. 1-4-2002 authorizing the commissioner also initiate penalty u/s 271(1)(c), the CIT still cannot direct the Assessing Officer to initiate penalty proceedings while exercising his revisionary power u/s. 263 of the act. The decision of the Jurisdictional High Court in the case of CIT vs. Parmanand M. Patel [ 2005 (7) TMI 72 - GUJARAT HIGH COURT] still holds fort. The order of the PCIT exercising revisionary powers for directing initiation of penalty proceedings is therefore held to be not in accordance with law and is accordingly set aside. In view of the above, the exercise of revisionary powers by the Ld. PCIT on account of non-inquiry of the cash deposits in the bank account of the assessee and the interest income earned by the assessee is upheld, while on the aspect of initiation of penalty proceedings is set aside. The exercise of revisionary powers by the Ld. PCIT on account of non-inquiry of the cash deposits in the bank account of the assessee and the interest income earned by the assessee is upheld, while on the aspect of initiation of penalty proceedings is set aside.- Decided in favour of assessee.
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2022 (1) TMI 1203
Levy of penalty u/s.271(1)(b) - assessee did not comply to the notice u/s.142(1) and 143(2) and apart from filing the bank details did not appear - HELD THAT:- We find the assessment in the instant case was completed u/s.143(3)/153A - find an identical issue had come up before the Tribunal in the case of Odimco Technologies Pvt. Ltd. [ 2018 (5) TMI 2108 - ITAT DLEHI] wherein deleted the penalty levied u/s.271(1)(b) wherein do not find cogent reason to observe any willful default on the part of the assessee or non co-operative attitude with the department. Therefore, we find no justification to sustain the penalty imposed u/s. 271(l)(c) - Decided in favour of assessee.
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2022 (1) TMI 1202
Penalty u/s. 271(1)(c) - Bar of limitation for imposing penalties - HELD THAT:- Proviso in section 275(1)(a) of the Act was inserted in the statute by the Finance Act 2003 w.e.f. 01.06.2003, meaning thereby, the same would be applicable for all penalties levied on or after 01.06.2003. In the instant case, the order of ld. CIT(A) in quantum proceedings was passed on 19.01.2010 and hence the maximum time limit for passing the penalty order would expire by 31.3.2011 in normal course and by 31.03.2012 in abnormal course of delay in receipt of order of ld. CIT(A) by the ld. AO. Hence either way, the penalty order passed on 30.08.2012 would be squarely barred by limitation. Decisions relied supra by the ld. DR are factually distinguishable as they were rendered for the Asst Years 2001-02 and 2000-01. Admittedly the law prevailing for the Asst Years 2000-01 and 2001-02 for levy of penalty would be governed by section 275(1)(a) of the Act, where the ld. AO could keep the penalty proceedings in abeyance till the order of tribunal was received. But due to insertion of proviso with effect from 01.06.2003, the ld. AO would be entitled to keep the penalty proceedings in abeyance only till the disposal of the first appeal by the ld. CIT(A). Hence the reliance placed on the decisions by the ld DR would not advance the case of the revenue. Accordingly, as rightly pointed out by the ld. AR before us, the time limit for passing the penalty order would expire by 31.03.2011 i.e one year from the end of the financial year in which the order of ld. CIT(A) is passed is received by the ld. Administrative Commissioner having jurisdiction over the assessee - we hold that the penalty order passed by the ld. AO on 30.08.2012 is squarely barred by limitation in view of proviso to section 275(1)(a) of the Act. Hence levy of penalty is hereby cancelled. - Decided in favour of assessee.
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2022 (1) TMI 1201
Revision u/s 263 - Disallowance u/s 14A r.w.r. 8D - HELD THAT:- No addition has been made on account of reverse merger which would support the argument of Ld. AR that original assessment order would could not be termed as erroneous and prejudicial to the interest of the revenue on this count. We concur with these arguments and would accordingly, hold that revision u/s. 263 was not justified on this issue. So far as the disallowance u/s. 14A is concerned, it is quite discernible that this disallowance was subject matter of original assessment proceedings and Ld. CIT(A) had already deleted the disallowance vide order dated 30.01.2019. The revenue's ground of appeal, on this issue, stood dismissed by Tribunal vide order dated 08.09.2021. Nevertheless, it could not be said that Ld. AO failed to make proper enquiries as to disallowance u/s. 14A as alleged by Ld. Pr. CIT. As on the date of revisions, the issue of disallowance u/s. 14A was already adjudicated by learned first appellate authority and the order of Ld. AO stood merged with the appellate order on that date. Therefore, revision of order, on this issue, would have no legs to stand and are liable to be quashed.
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2022 (1) TMI 1200
TP adjustment made to the international transaction relating to purchase of medical equipments - assessee entered into international transaction with its overseas Associated Enterprise (AE) of providing business support services and marketing support services - HELD THAT:- As decided in own case [ 2021 (11) TMI 401 - ITAT DELHI] equipment would not have been -/imported at NIL price even in an independent scenario. Moreover, we do not find that the TPO has applied any method to benchmark the said transaction, which action of the TPO is in violation of Rule 10B of the Income Tax Rules. We find that while treating the purchase of capital goods as NIL, the TPO failed to provide any comparable data which would have suggested that the arm's length price for the purchase of capital goods can be NIL. In our understanding, no third party would have sold such goods free of cost. In our considered opinion, arm's length price could be lower or higher but cannot be NIL, as the goods have been imported. Incidentally, the same products purchased from the same AE, for the same price, in the same year, cannot be held to be at arm's length for trading goods and not at arm's length for capitalised goods at the same time and in the same breath. Considering the facts of the case in totality, we direct the Assessing Officer to allow the claim of depreciation on the purchase of fixed sub grounds is, accordingly, allowed. Adjustment towards interest on outstanding receivables - delay in receivables from the AE - HELD THAT:- The reason for delay in receiving outstanding invoices has to be looked into. Further, it has been submitted before us that as a matter of principle, the assessee has not charged interest on outstanding receivables, either from AE or non AE. This fact has not been factually examined, either by the TPO or learned DRP. It has to be ascertained, what is the average delay in case of AE and non AE transactions. Similarly, assessee's contention that on outstanding payables to the AE no interest has been charged, requires to be considered and, in case, there are outstanding payables, it has to be set off against outstanding receivables and interest has to be charged on net receivables. As regards, the contention of the assessee that working capital adjustment subsumes outstanding receivables, in our view, this may be correct in so far as receivables remaining outstanding at the end of the year. However, the invoices raised and realized during the year, but, beyond the credit period cannot get subsumed in the working capital adjustment. Since, all these factors have not been considered by the Departmental Authorities, we are inclined to restore this issue to the Assessing Officer for fresh adjudication. As far as the rate of interest is concerned, it is open to the assessee to furnish material before the Assessing Officer to demonstrate that the rate of interest, if any, chargeable on the outstanding receivables, would be less than, what has been determined by learned DRP. Addition of mark-up of 5% on recovery of expenses from AE - HELD THAT:- We find that certain expenses incurred by the assessee on behalf of the AE have been reimbursed on cost to cost basis. Similarly, certain expenses incurred by the AE on behalf of the assessee, have also been reimbursed on cost to cost basis. Learned counsel for the assessee has demonstrated before us that invoices towards the cost incurred have been raised on back to back basis on the AE. Thus, in our view, there is no need to charge any mark-up on such reimbursement of expenses, more so, when the AE is not charging any mark-up on the cost incurred by it on behalf of the assessee. In view of the aforesaid, we delete the adjustment. Non-grant of set-off of brought forward unabsorbed depreciation against the addition made to the total income on account of transfer pricing adjustment - HELD THAT:- We direct the Assessing Officer to grant set-off of brought forward unabsorbed depreciation after the issue is crystallized in the preceding assessment years. This ground is allowed for statistical purposes.
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2022 (1) TMI 1199
Penalty u/s. 271(1)(c) - assessee stated to have been admitted additional income in survey conducted u/s. 133A - CIT-A deleted the addition - HELD THAT:- As relying on S.S.M. AHMED HUSSAIN [ 2017 (8) TMI 929 - MADRAS HIGH COURT] , VIPUL LIFE SCIENCES LTD. MUMBAI [ 2015 (2) TMI 941 - ITAT MUMBAI] and VASAVI SHELTERS [ 2013 (4) TMI 485 - ITAT BANGALORE] when assessment is completed on the basis of income declared which is inclusive of additional income declared in the course of survey without making any addition thereon, the penalty u/s. 271(1)(c) of the Act for concealment of income is not warranted. The ld. DR did not dispute that the AO completed assessment on the basis of return of income which is inclusive of the additional income said to have been offered to tax during the course of survey u/s. 133A of the Act. Therefore, we do not find any infirmity in the order of CIT(A) and it is justified. - Decided against revenue.
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2022 (1) TMI 1198
Revision u/s 263 - as per CIT neither the TPO, nor the Assessing Officer had made any inquiry in respect of various models of earth moving equipments, except 3DX model - CIT was of the view that the orders passed by the TPO and the Assessing Officer are erroneous and prejudicial to the interest of Revenue - TPO determined the ALP of royalty to the AE at 2% in respect of 3DX model, however, he has not suggested any adjustment on other models, like 2DX, excavators, JCB Earth Movers, JCB Heavy Wheel loader etc - HELD THAT:- Notice issued under Section 263 of the Act as well as the order passed under the said provision would make it clear that learned PCIT has considered the assessment order to be erroneous and prejudicial to the interest of revenue, since, the TPO has not examined the arm's length nature of royalty paid to the AE in respect of other models of earth moving equipment. The show-cause notice issued under Section 263 of the Act and the order passed there under would leave no room for doubt that the shortcoming, according to the PCIT, is in the order passed by the TPO under section 92CA(3) of the Act due to non-inquiry/non-examination of certain transaction. However, section 263(1) empowers the Revisionary Authority to revise any order passed by the Assessing Officer, if in his opinion, such order is erroneous and prejudicial to the interest of Revenue. Thus, due to restriction imposed under section 263(1) of the Act, learned PCIT has no administrative power to revise the order passed by the TPO under section 92CA(3) of the Act. Therefore, the question arising for consideration is, when the PCIT has no power to revise the order passed by the TPO under section 92CA(3) of the Act, can he revise the assessment order which has been passed in conformity with the order of the TPO, as mandated under Section 92CA(4) of the Act? Our answer to the question is in the negative. When the provision contained under Section 92CA(4) of the Act makes it mandatory upon the Assessing Officer to compute the total income of the assessee in conformity with the order of the TPO and the Assessing Officer has computed the total income following the statutory mandate, the assessment order cannot be considered to be erroneous. Even, assuming that some prejudice might have been caused to the Revenue, nevertheless the twin conditions of 'erroneous' and 'prejudicial' to the interest of the revenue as provided under section 263(1) of the Act have to be fulfilled to enable the Revisionary Authority to assume jurisdiction under the said provision. Thus, once learned PCIT has no administrative power under Section 263(1) of the Act to revise the order of the TPO, he cannot revise the assessment order passed thereafter in compliance to the provision contained under Section 92CA(4) - See ESSAR STEEL LIMITED VERSUS ADDL. COMMISSIONER OF INCOME TAX, MUMBAI [ 2014 (4) TMI 809 - ITAT MUMBAI] Non-examination of royalty payment on other models of earth moving equipment - Facts on record clearly reveal that every details relating to the royalty paid on all models, including 3DX model was furnished before the TPO and were examined by him. The reason for him to accept the royalty paid on other models is, similar payments were accepted consistently in the preceding assessment years. Therefore, the view of the TPO in accepting the royalty paid in respect of other models is a possible view considering the past history of such payment. That being the case, the orders passed by the TPO and thereafter by the Assessing Officer in conformity thereof, cannot be considered to be erroneous and prejudicial to the interest of the Revenue. In any case of the matter, neither in the show-cause notice, nor in the order passed under Section 263 of the Act, learned PCIT has provided any valid reason to demonstrate the prejudice caused to the Revenue. He has not pointed out even a single reason how the royalty paid on other models is not at arm's length, except, saying that the TPO has not inquired into and examined the royalty paid on other models. Thus as a natural corollary, the impugned order passed under Section 263 of the Act has to be declared as invalid and quashed. Accordingly, we do so. Resultantly, assessment order is restored.- Decided in favour of assessee.
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2022 (1) TMI 1197
Short term capital gain on transfer of shares - taxable event arose in the year under appeal or not? - Transfer of capital assets during the financial year in terms of the provisions of section 2(47) - transfer of shares is complete between transferor and the transferee in terms of amended provisions of section 2(47) - CIT(A) held that the transfer is not complete in the year under appeal and gain arising out transfer of shares can be subjected to tax - whether the capital gain arising out of transfer of shares in question cannot be taxed in the year under appeal? - HELD THAT:- Agreement between the parties did not attain finality during the year under consideration hence, the impugned transaction in part ought not to have been taxed in the year under consideration. In our considered view, the Agreement is to be a read as a whole, the transfer of shares under dispute cannot be read into isolation. Moreover, one of the challenge before the Hon'ble High Court [ 2018 (4) TMI 549 - DELHI HIGH COURT] was regarding legality of MOU dated 03.03.2008. It was categorically prayed that MOU was void being contrary to the provisions of section 297 of the Companies Act, 1956. Therefore, under the peculiarity of the facts where the legality and validity of Agreement was under challenge, we do not see any infirmity into the order of Ld. CIT(A) to the extent it is held that the transfer of shares cannot be subjected to capital gain tax in the year under consideration on the ground that the entire transaction has not fructified - Decided against revenue.
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2022 (1) TMI 1196
Deduction u/s 54 - Belated filing of return u/s 139(4) - amount of capital gain invested for new asset purchased or construction of new asset within the time prescribed - whether the deduction under Section 54 can be claimed to the extent of amount of capital gain invested for new asset purchased or construction of new asset within the time prescribed under Section 54F(4) of the Act, till the filing of the Income Tax Return under Section 139(4)? - HELD THAT:- Hon'ble Punjab Haryana High Court in the case of CIT Vs. Jagriti Aggarwal [ 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] dealt with an identical issue and while relying upon Hon'ble Gauhati High Court judgment in the case of CIT Vs. Rajesh Kumar Jalan [ 2006 (8) TMI 126 - GAUHATI HIGH COURT] held and justified the utilization of the capital gain for purchase of property before the extended due date under Section 139(4). It is clear that the deduction under section 54F of the Act can be claimed to the extent of amount of capital gain utilized till the filing of the return under Section 139(4) of the Act. As in the instant case, the ld. Commissioner allowed the deduction under Section 54 of the Act to the extent only which was invested/utilized by the Assessee till the due date of filing the return under Section 139(1) of the Act and therefore, respectfully following the mandates of the Hon'ble High Courts, we are inclined to allow the deduction under Section 54F of the Act to the extent of amount of capital gain invested/utilized till the filing of the return by the Assessee on 29th March, 2014 under Section 139(4) - Decided in favour of assessee.
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2022 (1) TMI 1195
Exemption u/s 11 - assessee has not specified the purposes for which the surplus accumulated would be utilized - HELD THAT:- A perusal of the Resolution exhibited clearly shows that the assessee has set apart to be utilized on or before 31/3/2020 for the education purpose towards purchase of land construction of building/other fixed assets. A perusal of the statement of accounts as on 31/3/2017 which are exhibited we find that under the statement of utilization of income for the Financial Year 2016-17 at Item E, the assessee has specifically mentioned the total amount has been spent during the previous year from which it has deducted brought forward balances of previous years and for Assessment Year 2015-16. The assessee has shown the utilization. The above evidences clearly demonstrates the utilization of fund set apart in the year under consideration. Considering the totality of the facts, we do not find any reason to interfere with the findings of the CIT(A) filed by the Revenue is dismissed.
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2022 (1) TMI 1194
Late payments towards EPF and ESI under section 36(1)(va) - HELD THAT:- Since the facts involved in the present case are identical to the facts involved in the case of Raja Ram Vs. ITO, Yamunanagar [ 2021 (11) TMI 370 - ITAT CHANDIGARH] . So respectfully following the aforesaid referred to order of the Coordinate Bench of the Tribunal, the disallowances sustained by the Ld. CIT(A) are deleted. - Decided in favour of assessee.
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2022 (1) TMI 1193
Benefit of 'Vivad Se Vishwas' Scheme - Both the quantum and the penalty appeals were treated as withdrawn having been settled under 'Vivad Se Vishwas' Scheme - However, qua the two appeals listed today, the common fact remains that in 2013-14 and 2014-15 assessment years, the quantum appeals were never settled in Vivad Se Vishwas Scheme and hence have been incorrectly treated as withdrawn - HELD THAT:- As in 2013-14 assessment year, the penalty appeal which has been settled in Vivad as Vishwas Scheme is instead erroneously shown to be pending and the quantum appeal which is pending is held to be withdrawn. Form No. 35 filed before the CIT(A) were specifically highlighted which were copy of Form No. 5 uploaded by the Pr. CIT, copy of withdrawal of penalty appeal filed by the assessee and copy of Form No. 35 (Pages 16-18) filed before the CIT(A). We have heard the rival submissions and perused the material available on record. In the light of the facts as borne out from record which we have seen, we deem it appropriate to set aside the impugned orders and set aside the issues back to the file of the CIT(A) with a direction to pass the orders denovo in accordance with law considering the correct facts and after hearing the assessee. Said order was pronounced in the presence of parties via Webex.
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2022 (1) TMI 1192
Validity of Reopening of assessment u/s 147 - submission of non providing sufficient opportunity to the assessee - information was received that the assessee had made investment in shares of M/s. Mirzapur Chemicals Works Pvt. Ltd - on the basis that the Directors of M/s. Mirzapur Chemicals Works Pvt. Ltd. fail to attained the office of the AO made addition - HELD THAT:- Addition was made purely on the basis that the Director of M/s. Mirzapur Chemicals Works Pvt. Ltd. failed to attend the office of the assessing authority. It is seen that the Authorized Representative had categorically stated before the Assessing Officer that the Directors of M/s. Mirzapur Chemicals Works Pvt. Ltd. were out of station. The Assessing Officer had not given other opportunity to the assessee to support its contention. Under these circumstances the assessee was not provided adequate opportunity by the Assessing Authority. Therefore, the impugned assessment order is set aside and assessment is restored to the file of the AO to make it denovo assessment after giving sufficient opportunity to the assessee. Further, the Assessing Officer would also advert to the objections of the assessee against the reopening of the assessment. The grounds raised by the assessee are allowed for statistical purpose
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2022 (1) TMI 1191
Revision u/s 263 by CIT - AO has erred in not referring case of the assessee to the Transfer Pricing Officer - HELD THAT:- It is undisputed fact that the issue involved in the present appeal is for A.Y. 2016-17. Vide Finance Act, 2017 the Statute was amended by the Legislature, wherein clause (i) of section 92BA was omitted from the statute and the said omission of section is applicable retrospectively and therefore even for the A.Y. 2016-17 non reference to the TPO is not prejudicial to the interest of the revenue. In this regard, we draw strength from the decision of Coordinate Bench of this Tribunal in the case of M/s. S.B. Cotgin Pvt. Ltd. [ 2021 (7) TMI 283 - ITAT NAGPUR ]. Thus by following the order of the Coordinate Bench of this Tribunal above, we quash the impugned order passed U/s. 263 of the Act and the assessment framed by the A.O. U/s. 143(3) of the Act is upheld. - Decided in favour of assessee.
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2022 (1) TMI 1190
Revision u/s 263 - not allowing deduction claimed by the assessee u/s. 54F - Whether Principal Commissioner of Income Tax-2, Nagpur erred in not allowing relief u/s. 54 as well as index cost of acquisition, improvement and also purchase cost, which was allowed by the assessing officer and considered in the original assessment passed u/s. 143(3) of the Income Tax Act, therefore ex-party order passed is unjustified, unwarranted and excessive? - HELD THAT:- The sale consideration got by the assessee is only by way of book adjustment towards the cost of apartment No. 102 in the proposed scheme on the above said plot to be constructed by the vendee i.e. M/s Green City Builders (purchaser) and in this way, the assessee had sold the plot in question vide sale deed dated 06/06/2014 to M/s Green City Builders for ₹ 61.00 lacs. However, instead of getting the said amount in cash, the assessee had agreed to get one flat No. 102 in the proposed scheme on the above said plot to be constructed by the said M/s Green City Builders i.e. the purchaser. The said recitals in the sale deed proposed that the assessee had got the sale consideration only by way of book adjustment towards cost of apartment No. 102 and the entire amount of the sale consideration was invested by the assessee in purchase of apartment No. 102 in lieu of sale of the property in question and in this way, the entire amount was invested and no amount was received by the assessee. All those facts were placed on record by the assessee before the A.O. and thus in this way, the A.O. had passed the order of assessment after considering the facts placed on record by the assessee. In view of the above all the details were duly furnished by the assessee during the course of assessment proceedings alongwith the supporting documents and same aspect were also examined by the A.O. in the assessment order and the A.O. has also calculated computation of capital gain in the assessment order itself and the entire consideration were directly invested for purchase of residential apartment, which is evident from the sale deed, therefore there is no question of any irregularity in order passed U/s. 143(3) As assessee has fully explained his entire case and we agree with the ld. AR s submission and entire details were duly examined by the A.O. which were evident from the assessment order U/s. 143(3) of the Act and no ambiguity has been found by us. Therefore, the order passed by the ld. Pr. CIT u/s. 263(1) of the Act is hereby quashed and the assessment framed by the A.O. U/s. 143(3) of the Act is upheld. - Decided in favour of assessee.
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2022 (1) TMI 1189
Admission of additional grounds - Addition made under MAT provisions of the Act consisting of profit on sale of vessels and disallowance under section 14A - HELD THAT:- These were not challenged before the Ld. First Appellate Authority in quantum proceedings, and therefore the Ld. Assessing Officer did not give any relief on said additions. The additions under MAT provisions have been raised for first time before us. The assessee in ground No. 2 (two) of the appeal has raised the issue that Ld. CIT(A) has not considered those ground as additional ground and not considered the decision of the Hon ble Supreme Court in the case of National Thermal Power Company Ltd Vs CIT [ 1996 (12) TMI 7 - SUPREME COURT] . The Ld. Counsel accordingly prayed orally for admitting the grounds challenging the additions as additional grounds. The Ld. departmental representative did not object for the oral plea of the assessee for admitting those grounds as additional ground. The assessee can raise legal grounds at any stage of the appellate proceedings. In view of above facts and circumstances and in the interest of substantial justice, we find it appropriate to admit the grounds related to additions made under MAT provisions as additional ground and remit the issue back to the file of the Ld CIT(A) for adjudication afresh- Appeal filed by the assessee is allowed for statistical purposes.
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2022 (1) TMI 1188
Addition u/s 40(a)(ia) - scope of amendment to section 40(a)(ia) - whether the disallowance of the expense should be restricted to 30% by virtue of the amended provisions of section 40(a)(ia) of the Act which was brought in the statute by the Finance Act (No. 2) 2014 - HELD THAT:- Admittedly, as per the provision of section 40(a)(ia) of the Act, the disallowance has to be restricted to the tune of 30% in respect of the expenses on which TDS was not deducted by the assessee. Such amendment was retrospective as held by the Delhi Tribunal in the case of Muradul Haque [ 2020 (6) TMI 504 - ITAT DELHI] . Likewise, the Ahmedabad Tribunal in the case of Electronic Instrumentation Control Pvt. Ltd. [ 2019 (12) TMI 141 - ITAT AHMEDABAD] has held that the amendment brought under the provisions of section 40(a)(ia) of the Act by the Finance Act (No. 2) 2014 is applicable retrospectively. Thus, in view of the above provisions, the 100% of the expenses incurred by the assessee without incurring the TDS cannot be disallowed. Rather disallowance shall be restricted to the tune of 30% only of such expenses. Accordingly, we direct the AO to restrict the disallowance to the tune of 30% of the interest expenses, as discussed above, incurred by the assessee. Hence, the ground of appeal of the assessee is partly allowed.
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2022 (1) TMI 1187
Deduction u/s. 80P(2)(d) - interest from Co-operative Apex Bank and National Bank - contention of the ld. DR is that interest from co-operative bank is not entitled for deduction u/s. 80P(2)(d) - HELD THAT:- This is issue is already settled by various decisions of the Tribunal wherein it was held that Co-operative Apex Banks are Central Co-operative Banks and is a co-operative society when it is registered under Cooperative Societies Act and interest received from such co-operative bank is eligible for deduction u/s. 80P(2)(d) - See M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., VERSUS DCIT CIRCLE-06 JAIPUR AND VICE-VERSA. [ 2019 (10) TMI 759 - ITAT JAIPUR] . There is no merit in the argument of the ld. DR and the amount of interest received by the assessee from Co-operative Apex Bank is entitled for deduction u/s. 80P(2)(d) of the Act. Only the interest received from National Bank is not entitled for deduction u/s. 80P(2)(d) of the Act. We dismiss the miscellaneous petition filed by the revenue.
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Customs
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2022 (1) TMI 1186
Maintainability of petition - availability of alternative remedy of appeal - alternate remedy under Section 128 of Central Customs Act, 1962 within 60 days or not - Confiscation - seized goods - Indian Currency - penalty u/s 114AA of CA - scope of 'proper officer' - HELD THAT:- Sub para (iii) and para 42 have not been printed in the notice and on the next para 43 to para 47 are there, it appears that due to inadvertently typographical/ printing error para 41(iii) and 42 could not be typed as in case of other seven others notices all these provisions are there. Despite missing of these paras in the show cause notice issued to the petitioner he has submitted a detailed reply in respect of the proposed penalty. Hence no prejudice has been caused to him. The petitioner has understood that the penal provisions have also been invoked against him by respondent No.4 by way of show-cause notice. The petitioner is challenging the final order by way of writ petition wherein undisputedly, the petitioner is having remedy of appeal under Section 128 of the Customs Act, against the said order and thereafter further remedy of appeal under Section 129 before the Customs, Excise and Service Tax Appellate Tribunal. All the grounds raised in this petition are available to the petitioner to be raised before the Appellate Authority as well as Tribunal. The Appellate Authority as well as Tribunal are competent to appreciate the technical grounds raised by the petitioner, therefore, we do not find any ground to interfere with the impugned in the writ petition filed under Article 226 of the Constitution of India. The Writ Petition is dismissed for want of alternative and efficacious remedy of appeal.
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2022 (1) TMI 1185
Classification of imported goods - freely importable Waste Paper - to be classified under CTH 47079000 or otherwise? - reasons to justify seizure and confiscation of consignments importedor not - confiscation - penalty - HELD THAT:- In the present case, the entire consignment of goods in question have been detained/seized on the basis that on visual inspection and in presence of 2 panchas on 30-01-2020, foul smell was coming out; that cargo was found wet and containing mud and filth; that traces of plastic bottle of floor cleaner, Corrugated Box, Craft Paper, putrefied material, plastic waste, empty cans of soft drink and packaged water, thermocol plates, old cloths are found in representative containers opened for examination. However, no actual quantification of such traces of plastics and other materials has been made in goods in question and there is no dispute that goods in question are predominantly waste paper imported by these Appellants. It is found that CTH 47079000 also covers unsorted waste and scrap. There is no whisper by Revenue against fact of waste papers pre-dominantly contained in whole consignment of goods in question. Having not disputed this factual position by Revenue, seizure/confiscation of consignment is not justified. It is also settled law that entire consignment cannot be seized/confiscated on unjustified assumptions and presumption and in absence of evidences. In the facts of this case, revenue has not adduced clinching evidences to justify seizure and confiscation of consignments imported by these Appellants. This being case of appreciation of facts, there is no need to go into the case laws relied upon by the Appellants. Authorities have not considered facts and have not given judicious findings on the facts in these cases. The goods in question are not Municipal Waste and hence provisions of Hazardous and Other Wastes (Management and Trans boundary Movement) Rules, 2016 are not applicable in absence of sufficient and clear evidences. There are no cogent reasons with clear evidences are adduced on record by Revenue for discarding pre-shipment inspection certificate in toto. In absence of any inculpatory statements and there being no deliberate mis-declaration on the part of Appellants, confiscation of goods, and penalty are not sustainable, in the facts of these cases - the appellants are admittedly engaged in the manufacture of craft paper and other paper products and the imported goods i.e. paper waste in question is meant for use as raw material in their production. On this fact also it cannot be alleged that appellant has not imported the paper waste and something else. The order for re-export of goods and imposition of penalty on all the Appellants deserves to be set aside - appeal allowed - decided in favor of appellant.
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2022 (1) TMI 1184
Maintainability of appeal - non-compliance with the statutory pre-deposit - HELD THAT:- Section 129E of the Customs Act deals with deposit of a certain percentage of duty demanded or penalty imposed before filing appeal. It provides that the Tribunal shall not entertain any appeal unless the appellant has deposited 7.5% or 10% of the duty demanded or penalty imposed. The Customs Act does not provide for waiver of this mandatory deposit before filing appeal. The Supreme Court in NARAYAN CHANDRA GHOSH VERSUS UCO BANK [ 2011 (3) TMI 1478 - SUPREME COURT] , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre-deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. Thus, appeal is held to be dismissed for non-compliance of the statutory requirement and is dismissed.
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Corporate Laws
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2022 (1) TMI 1183
Validity of sale certificate issued by the Official Liquidator - valid sale of property or not - right to ownership and possession - whether the applicant was the owner and this is a fact that none of the respondents have disputed? - time limitation - HELD THAT:- The applicant has made out a good case on merits. He has explained the various steps that he undertook right from the outset. After purchasing the property and having been put in possession, he applied on 20th May, 1990 requesting the Talathi to enter his name in the 7/12 extracts. Copy of his application is annexed at Exhibit C. None of the respondents have assailed this document. While this remains pending, he has explained that in 1992 he was unaware of the suit. He learnt of the attachment which was obviously incorrectly levied after the suit was filed in January 1990, since by then the property had already been sold to the applicant. The order of attachment of this property would obviously have been incorrect since late Chudasama was divested of all right title and interest upon execution of the Sale Deed in 1989. The attachment was allowed only on 16th January, 1991 and it is in those circumstances, apparently unknown to the applicant vide mutation entry dated 15th February, 1992 against the bank s name to be entered in the 7/12 extract under the column of other rights . There is no wanton delay in approaching this court. The objections on the basis of the application being time barred, raised by Mr. Narvekar and Mr. Salunke cannot deprive the applicant of his rights. A suit must not necessarily be filed in view of Section 31 of the Specific Relief Act in the facts and circumstances of the case. The transaction as between late Chudasama and respondent nos.3 to 5 has its foundation in a classic case fraud viz. suppressio veri and suggestio falsi . Late Chudasama suppressed the truth of having sold the plot to the applicant for the respondent nos.3 to 5 and probably the liquidator. He falsely suggested that he was competent to sell the plot and he acted in this false statement by consenting to the sale. The fraud not only misled the Liquidator but also the court. The court was not appraised true set of facts. The Liquidator sought to rely upon the orders passed in other Liquidator s Reports whereby in order to arrive at a settlement of the claims against the company, a comprise proposed was accepted by the court. The very foundation of the Sale Certificate was the order of this court passed on the Liquidator s Report. If that order is set aside as having been obtained by fraud, the principles culled out in the various judicial pronouncements such as those in Chengalvaraya Naidu [ 1993 (10) TMI 315 - SUPREME COURT ] and that line of judgments will apply - On the aspect of limitation, even the suit will be time barred if the period of three years is computed from the date of knowledge or if this application appears barred by limitation, fraud permeates this transaction and vitiates all acts. Application allowed.
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Insolvency & Bankruptcy
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2022 (1) TMI 1182
Validity of Direction to place Settlement Proposal, sent by Respondent No. 1, i.e. Kapil Wadhwan before the CoC for its consideration - Approval of Resolution plan - during the pendency of the present Appeal, Adjudicating Authority has passed an Order approving the Resolution Plan - appellant contended that only a Resolution Plan compliant with the provisions of the Code or an Application under Section 12A of the IBC could be placed before the CoC, and here it is undisputed that the Second Offer is neither a compliant Resolution Plan nor an application under Section 12A. Whether after Approval of the resolution plan by the COC and pending Approval, the Adjudicating Authority can direct the COC to convene a meeting and place the settlement proposal as offered for consideration, decision and voting on that within a certain period? HELD THAT:- Admittedly in the instant case, the Adjudicating Authority vide the Impugned Order had directed the COC to consider the 'IInd Settlement Offer of Ist Respondent when the Resolution Plan after Approval from CoC was pending adjudication u/s 31 of the Code - the CoC contends that the settlement offer was neither submitted in compliance with the RFRP nor with Section 12 A of the I B Code and related Regulations. Such a direction of the Adjudicating Authority was passed despite that the CoC of the corporate debtor had by an overwhelming majority approved the Resolution Plan of DHFL. The Administrator had already filed the plan approval application, and that application was heard and reserved for orders by the learned Adjudicating Authority. It is pertinent to mention that the Hon'ble Supreme Court in the case of Ebix Singapore Private Limited versus Committee of Creditors of Educomp Solutions Ltd, [ 2021 (9) TMI 672 - SUPREME COURT ], has very recently dealt with the same issue which has arisen in this appeal where it was held that In this case, if Resolution Applicants are permitted to seek modifications after subsequent negotiations or a withdrawal after a submission of a Resolution Plan to the Adjudicating Authority as a matter of law, it would dictate the commercial wisdom and bargaining strategies of all prospective Resolution Applicants who are seeking to participate in the process and the successful Resolution Applicants who may wish to negotiate a better deal, owing to myriad factors that are peculiar to their own case. The broader legitimacy of this course of action can be decided by the legislature alone, since any other course of action would result in a flurry of litigation which would cause the delay that the IBC seeks to disavow. In the instant case, it is found that after Approval of the Resolution Plan by the Committee of Creditors, the application was pending before the Adjudicating Authority under Section 31 of the Insolvency and Bankruptcy Code, 2016, for Approval of the resolution plan the Adjudicating Authority accordingly while disposing of the Interim Application, directed the CoC to consider the 'IInd Settlement Proposal' of the First Respondent, i.e. Applicant/ Promoter, within ten days and take an appropriate decision. Considering the ratio of the Judgement of the Hon'ble Supreme Court in the case of Ebix Singapore, there was no scope for negotiations between the parties once the CoC has approved the Resolution Plan. Thus, contractual principles and common law remedies, which do not find a rope in the wording or the intent of the IBC, cannot be imported in the intervening period between the acceptance of the CoC Approved Resolution Plan and the Approval by the Adjudicating Authority. The said exercise was beyond the jurisdiction of the Adjudicating Authority hence unsustainable and liable to be set aside - appeal allowed - decided in favor of appellant.
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2022 (1) TMI 1181
Seeking Liquidation of Corporate Debtor - no resolution plan has been received by him in spite of publication of Form 'G' - HELD THAT:- Vide order dated 25/02/2020 this Adjudicating Authority has extended the CIRP period by 90 days from 25/02/2020. Vide order dated 26/03/2021 passed in IA/176(KB)2021, this Adjudicating Authority excluded 369 days from the CIRP period and further extended the CIRP period by 60 days thereby the CIRP period came to an end on 28/07/2021 - It appears that the last available Balance Sheet on the MCA Portal was only up to 2013-14. The RP has filed an application being IA (IB) No. 315 (KB) 2021 under sections 43, 45 and 66 for preferential, undervalued and fraudulent transactions. The Resolution Professional has given his consent to act as the Liquidator of the Corporate Debtor and has annexed with the application as Annexure - 5 . Section 33(1)(a) of the Code mandates that the Adjudicating Authority shall pass an order of liquidation where no resolution plan is received before the expiry of the CIRP. Sub-section (2) thereof requires the Adjudicating Authority to pass the liquidation order where the Resolution Professional intimates to the Adjudicating Authority the decision of the Committee of Creditors approved by not less than 66% of the voting share to liquidate the Corporate Debtor. Reading these two provisions together, this Adjudicating Authority is left with no option but to order liquidation of the Corporate Debtor. The Corporate Debtor is ordered to be liquidated - application allowed.
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2022 (1) TMI 1180
Seeking extension of four weeks time for making payment - Appellant failed to adhere to its commitment in Resolution Plan - HELD THAT:- There is no dispute that even after extension granted by Adjudicating Authority till 31.10.2021 the Appellant could not make the payment and filed another Application No.115 of 2021 for granting extension of 30 days for making payment, which came to be rejected, giving rise to this Appeal. The Application No.115 of 2021 has been rejected by the impugned order on 24th November, 2021. The Adjudicating Authority has referred to its order dated 12th April, 2021 and has observed that Appellant has failed to comply its order dated 12th April, 2021 and last opportunity was granted till 31.10.2021, hence, it has failed to comply the order and conduct of the Successful Resolution Applicant is completely lacking in its bona fide - There is no dispute that Appellant failed to adhere to its commitment in Resolution Plan and also failed to comply order dated 12th April, 2021 and 20th September, 2021. The extension of 30 days was sought by the Appellant by its Application dated 29th October, 2021. The Adjudicating Authority ought to have adverted to the grounds and reasons given in the Application to find out as to whether there is any ground to grant any extension of time of 30 days as prayed for. It is well settled that time line in IBC proceedings has its salutary value and Resolution Applicant has to adhere to its commitment as made in the Resolution Plan, when it is approved by the Adjudicating Authority. Whether Adjudicating Authority erred in exercising its jurisdiction in refusing to grant extension by 30 days as prayed by Resolution Applicant or not? - HELD THAT:- The judgment of the Hon ble Supreme Court in the EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. [ 2021 (9) TMI 672 - SUPREME COURT] thus, does not support the submission of learned Counsel for the State Bank of India that Adjudicating Authority has no jurisdiction to extend the time for complying the financial obligations in the Resolution Plan. The facts and materials on record as noted clearly indicate that although the Appellant had failed to make payment as per Resolution Plan, but it is not a case that efforts has not been made by the Appellant to make payment. Admittedly, payment of ₹ 15 crores out of ₹ 45 crores to the Financial Creditor has already been made apart from other payments - by granting 30 days time to Appellant to comply its all financial obligations in Resolution Plan and make payment of balance of ₹ 30 crores shall not cause any prejudice to Financial Creditors, who have already been denied the said payment for a long period of time. In event, the Appellant is unable to make the payment as prayed for, it shall be open to proceed with the liquidation, no option being left thereafter. The order dated 24th November, 2021 passed by the Adjudicating Authority is set aside and grant 30 days time to the Appellant from today to make the payment of balance amount of ₹ 30 crores to the Financial Creditors on or before 20th February, 2022, failing which, it shall be open to proceed with the liquidation of Corporate Debtor - Appeal allowed.
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2022 (1) TMI 1179
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - services provided by the Operational Creditor to Corporate Debtor - existence of debt and dispute or not - Service of demand notice - HELD THAT:- As per Section 8(2) of the IBC, 2016, the Corporate Debtor had to bring the existence of any dispute if any or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice of the Operational Creditor within 10 days of receipt of such notice i.e. 25.11.2019. But the Corporate Debtor sent the reply to the demand notice to the Operational Creditor on 28.12.2019, which is beyond the stipulated time period. Therefore, the said letter would not be considered as notice sent by the Corporate Debtor to the Operational Creditor showing the existence of any dispute or record of the pendency of the suit of arbitration proceedings filed before the receipt of such notice as per the IBC, 2016. Pre-existing dispute - HELD THAT:- Corporate Debtor has failed to satisfy that there is a pre-existing dispute. The mails which the corporate debtor is annexing is with respect to the rejection of the reports, which operational Creditor has resubmitted but Corporate debtor has concealed the fact of resubmission. As per the clauses mentioned in the Purchase order, for every failed report, Corporate debtor is entitled for resubmission and if there is delay in resubmission, there are provisions of Penalty which according to us does not negates the existence of default and Operational Creditor has sufficiently placed all the records, accounts, bank statements, invoices raised and summary of outstanding dues and establishes the existence of default as per the provisions of Section 9 of the IBC, 2016. The Application is complete in respect of Sec. 9(5)(i) of the provisions of Insolvency and Bankruptcy Code, 2016 and liable to be ADMITTED. Application admitted - moratorium declared.
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2022 (1) TMI 1178
Maintainability of application - initiation of CIRP - non-payment of short-term loan by Corporate Debtor - Financial Creditors - whether the amount paid by the applicant as short term loan without claiming any interest comes under the definition of the Financial Debt or not? - HELD THAT:- Similar issue decided in the case of M/S. ORATOR MARKETING PVT. LTD. VERSUS M/S. SAMTEX DESINZ PVT. LTD. [ 2021 (8) TMI 314 - SUPREME COURT ] where where the issue was whether the term loan advanced to meet the working capital requirement of the Corporate Debtor which did not carry interest, comes under the definition of Financial Debt or not? and it was held that The definition of Financial Debt in Section 5(8) of IBC does not expressly exclude an interest free loan. Financial Debt would have to be construed to include interest free loans advanced to finance the business operations of a corporate body. In the case in hand also, as per the Board Resolution, the applicant has paid the amount to the corporate debtor without claiming any interest on that amount to meet the working capital requirements of the Corporate Debtor. But the amount has not been paid back by the Corporate Debtor to the applicant. Therefore, in terms of the decision referred, the defaulted amount comes under the definition of Financial Debt and the applicant is a Financial Creditor. Application allowed - List the matter on 14/02/2022.
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PMLA
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2022 (1) TMI 1177
Seeking quashing the lookout circular - It is contended that the petitioner has always cooperated in the investigation and no ground for opening of the LOC or the continuation thereof is made out - HELD THAT:- Moin Akhtar Qureshi and Pradeep Koneru are the main accused against whom lookout circulars have been recalled, whereas statement of the petitioner in the above-noted FIR was recorded under Section 164 Cr.P.C. as a witness. Though in the reply affidavit, the respondent claims that the petitioner is an accused however, till date neither he has been arrested nor any charge-sheet filed against the petitioner. The petitioner was arrested in the ECIR recorded by the Enforcement Directorate wherein while granting bail to the petitioner, passport of the petitioner has already been deposited with the Court. Even if the petitioner is chargesheeted in the above-noted FIR, the trial in the complaint filed by the Enforcement Directorate and the charge-sheet filed pursuant to the abovenoted FIR would have to be conducted together in terms of Section 45 of the Prevention of Money Laundering Act, 2002, and the petitioner would be bound to seek permission before travelling abroad. The petitioner thus satisfies the test laid down by this Court in SUMER SINGH SALKAN VERSUS ASSTT. DIRECTOR ORS. AND COURT ON ITS OWN MOTION VERSUS STATE VS. GURNEK SINGH ETC. [ 2010 (8) TMI 1083 - DELHI HIGH COURT] as he has neither deliberately evaded arrest nor failed to appear before the Trial Court despite the non-bailable warrants nor has any coercive action been taken against him and he has travelled abroad number of times with the permission of the Court, which concession he did not misuse and therefore there is no justification in continuing with the LOC opened against the petitioner. Hence the respondent is directed to recall its request for opening the LOC against the petitioner - Application disposed off.
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Service Tax
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2022 (1) TMI 1176
Refund of Service tax paid by mistake - amount mistakenly paid was thus a deposit or not - refund rejected observing that the appellant were registered with the Department and was aware that they are required to deposit service tax on the taxable services - claim has been filed after more than one year from the date of deposit of the tax - Applicability of time limitation - Applicability of unjust enrichment - HELD THAT:- The service tax was not leviable on the services provided by the appellants, which was paid by mistake by the appellants, thus, it will be treated as deposit, ipso facto, and are entitled for refund - This fact is more evident as the services provided by the appellants are - route survey, design, supply of material for construction, erection and commissioning of 33KV D/C Line on Panther Conductor for 2.5 km from 132 KV GSS, Equipment for the work of urban focus programme, equipment for providing HVD/LVD system, etc. Time Limitation - HELD THAT:- Limitation u/s 11B will not be applicable as the amount deposited is not tax and, at best, revenue deposit. Applicability of unjust enrichment - HELD THAT:- In view of the work orders, which were issued to the appellants in competitive open bid, as per contract it is clear that the prices are Firm in all respect and Independent of any variation. It is also not in dispute that the appellants have not charged any service tax in their invoices. I am of the view that unjust enrichment is also not applicable.
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2022 (1) TMI 1175
Valuation of services - support services of business or commerce [BSS] or not - treatment of mark up, being, difference between the amount paid by the Appellant to the Shipping Lines/Airlines and the amount recovered by the Appellant from the customers (exporter/importers) - applicability of negative list regime - HELD THAT:- Reliance placed in the case of BHUVANESWARI AGENCIES (P) LTD. VERSUS COMMR. OF C. EX., BANGALORE [ 2007 (7) TMI 665 - CESTAT BANGALORE] where it was held that It cannot be broad enough to bring in a specified activity which has been delineated under steamer agent under the definition of Steamer Agent under Section 65(100) which specifically covers in its item 2. i.e., to book, advertise or canvas for cargo for or on behalf of a shipping line . This decision was distinguished by the Commissioner (Appeals) in the case of the appellant where it was held that Appellants are neither booking nor advertising nor canvassing for cargo for and on behalf of shipping line. Their activities are confined to mere purchase and sale of space on board a ship which alone will not make the Appellants a steamer agent. Therefore, the ratio of the Hon'ble CESTAT decision in the case of Bhuvaneshwar Agencies (P) Ltd. Vs.CCE is not applicable in the present case. The decision in D. Pauls Consumer Benefit Ltd . [ 2017 (3) TMI 1019 - CESTAT NEW DELHI] was overruled by Larger Bench of the Tribunal in Kafila Hospitality Travels Pvt. Ltd. v/s Commissioner, Service Tax, Delhi 2021 (3) TMI 773 - CESTAT NEW DELHI] . It has been stated that the aforesaid order of appellant own case was accepted by the Department and no appeal was filed - appeal allowed - decided in favor of appellant.
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2022 (1) TMI 1169
Levy of service tax - ocean freight paid for imported goods - HELD THAT:- On the identical issue this Tribunal in the case of COROMANDEL INTERNATIONAL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2021 (10) TMI 1289 - CESTAT AHMEDABAD] where it was held that The judgment of Gujarat High Court in the case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] only after the proceedings concluded by the lower authority i.e. sanctioning authority. This judgment was challenged before the Hon ble Supreme Court by the Revenue but no stay was granted, since the judgment was not delivered before passing the adjudication order and by the Commissioner (Appeals). In the present case also being identical issue involved, following the aforesaid decision, the appeal is allowed by way of remand to the adjudicating authority to pass a fresh order - appeal allowed by way of remand.
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Central Excise
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2022 (1) TMI 1174
CENVAT Credit - inputs - M.S. Grating - M.S. Stair Case - LED Street Light, etc. - inputs used for generating power, as part of power is supplied to the residential colonies/staff quarters of the appellant - extended period of limitation - HELD THAT:- The Court Below has totally mis-conceived the issue, and there is failure to exercise the jurisdiction vested in them. A point of law or an alternative plea can be taken, at any stage, and the Adjudicating Authority or Appellate Authority is bound to decide the same - considering the admitted facts on this issue that the items in dispute have been used in the factory of production, it is held that the cenvat credit is allowable on these items under dispute as inputs, as defined in Rule 2 (k) of CCR, 2004. Disallowance of proportionate credit on inputs and input services used in the captive power plant - HELD THAT:- In all the Audit reports, the issue of proportionate disallowance for power supply from captive generation to the staff quarters was not raised. In spite of the fact that in the Audit report dated 4.5.2016 by way of objection no.5, expenses on the security services relating to the residential colony was taken, and the cenvat credit was proposed to be denied. Extended period of limitation - HELD THAT:- This issue has been raised by way of change of opinion and as such, there being no suppression or malafide on the part of the appellant/assessee, accordingly, the extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.
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2022 (1) TMI 1173
Clandestine removal - bars/ rods - demand on the basis of the loose documents recovered from the premises - corroborative evidences or not - Burden to prove - invocation of extended period of limitation - HELD THAT:- It is observed that the premises of SSSRM were search on 10.09.2005. The documents recovered from the premises, based whereupon the show cause notice was issued, admittedly are in the form of loose parchies and in the form of hand written ledger book that too those which got recovered from the premises of SSSRM. There appears neither corroborative evidence to support those loose handwritten documents nor any evidence to connect them to the alleged guilt of the appellant or to the alleged guilt of M/s. RIGL where the appellant is director. The statement of appellant, Smt. Sunita Devi, was recovered in June, 2005. There appears no acknowledgement on her part about she being involved in the alleged collusion with SSSRM for the alleged clandestine removal except for the raw material to have been delivered to SSSRM - the entire burden was that of the Department to prove that the appellant have been clearing the raw material from their premises and were getting the same delivered to M/s.SSSRM without discharging their liability. It becomes clear that there is no admission by the appellant for the alleged clandestine removal. Hence, the onus was upon the Department to produce the positive evidence from the appellant s record and premises. But, it is simultaneously clear that no other evidence from the transporter or raw-material provider or the purchaser has been collected by the Department - The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Invocation of extended period of limitation - HELD THAT:- It is held that apparently and admittedly appellant was regularly filing the returns. Hence, the facts were regularly brought to the notice of the Department. But there is nothing produced on record by the Department to show any positive act on part of the appellant which may amount to suppression of relevant facts. Resultantly, the demand for a period of more than one year could not have been made. Department could not have invoked the extended period of limitation. Show cause notice issued invoking the greater period is therefore, held to be barred by time. The adjudication based thereupon cannot sustain. The order under challenge fails on merits as well as on technical issue of limitation - Appeal allowed - decided in favor of appellant.
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Indian Laws
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2022 (1) TMI 1172
Validity of bail granted - siphoning of funds - shell companies - by the impugned judgment and order, the High Court has directed to release Respondent No.2 on bail merely on the ground that the case arises out of a commercial transaction and is based on documents already seized - proper investigations not carried out by High Court - HELD THAT:- While releasing the Respondent No.2 on bail the High Court has not at all adverted to and/or considered the nature of accusation and the material found/collected during the course of investigation and the serious allegations of siphoning off the huge amount through various shell companies. The High Court has not at all dealt with and/or considered any of the allegations and/or material collected during the course of the investigation which were specifically pointed out and mentioned in the status report filed by the I.O. From the status report and even the charge sheet/supplementary charge sheet papers it has been found during the course of the investigation that a sum of ₹ 25 crores was disbursed by the complainant to Respondent No.2 and its company M/s LMJ Logistics Limited. The said amount was disbursed for its own use. All these allegations and the material collected during the course of the investigation which are being part of the charge sheet and supplementary chargesheet are not taken note of by the High Court and the High Court has just simply ignored the same and has released Respondent No.2 on bail by simply observing that case arises out of a commercial transaction and the dispute is of a civil nature. Therefore, the High Court has not at all taken into consideration the relevant considerations while grant of bail. Even the High Court has not at all taken note of the reasoning given by the learned Sessions Court while rejecting the bail application of Respondent No.2. Whether the High Court is at all justified in releasing Respondent No.2 on bail? - HELD THAT:- In the instant case, while dealing with the application of the accused for grant of bail, the High Court completely lost sight of the basic principles enumerated above. The accused, in the present case, is alleged to have committed a heinous crime of killing an old helpless lady by strangulation. He was seen coming out of the victim's house by a neighbour around the time of the alleged occurrence, giving rise to a reasonable belief that he had committed the murder - under the given circumstances, it was not the stage at which bail under Section 439 of the Code should have been granted to the accused, more so, when even charges have not yet been framed - The High Court has also not taken into consideration the status report filed by the I.O. in which in detail it has been pointed out how systematically the accused have committed the offence and misappropriated/siphoned off the huge sum through shell companies. Thus, it appears that the High Court has not adverted to the relevant considerations and has granted the bail mechanically by observing that the case arises out of a commercial transaction. While releasing Respondent no.2 on bail, the High Court has not at all considered the relevant factors including the nature and gravity of accusation; the modus operandi and the manner in which the offences have been committed through shell companies and creating the false/forged documents and/or misusing the PAN Cards, Aadhar Cards and KYCs of the employees and showing them as Directors of the fake and shell companies - the High Court has not at all considered and taken into consideration the status report and the evidence collected during the course of the investigation. Therefore, the impugned judgment and order passed by the High Court releasing Respondent No.2 on bail is unsustainable as the High Court while releasing Respondent No.2 on bail has not exercised the jurisdiction judiciously and has not considered the relevant factors which are required to be considered while grant of bail. The impugned judgment and order passed by the High Court releasing Respondent No.2 on bail deserves to be quashed and set aside and is accordingly quashed and set aside - Appeal allowed.
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2022 (1) TMI 1171
Appointment of a sole arbitrator - Section 11(6) r/w 11(12)(a) of the Arbitration Conciliation Act, 1996 - arbitration to the Singapore International Arbitration Centre (SIAC) was rejected, stating that the notice of arbitration was defective and was not curable - requirement of sufficient stamping of documents - Hotel Management Agreement (HMA) sufficiently stamped or not - HELD THAT:- This Court s jurisdiction to adjudicate issues at the preappointment stage has been the subject matter of numerous cases before this Court as well as High Courts. The initial interpretation provided by this Court to examine issues extensively, was recognized as being against the proarbitration stance envisaged by the 1996 Act. Case by case, Courts restricted themselves in occupying the space provided for the arbitrators, in line with party autonomy that has been reiterated by this Court in VIDYA DROLIA AND OTHERS VERSUS DURGA TRADING CORPORATION [ 2020 (12) TMI 1227 - SUPREME COURT] , which clearly expounds that Courts had very limited jurisdiction under Section 11(6) of the Act. Courts are to take a prima facie view, as explained therein, on issues relating to existence of the arbitration agreement. Usually, issues of arbitrability/validity are matters to be adjudicated upon by arbitrators. The only narrow exception carved out was that Courts could adjudicate to cut the deadwood . In N.N. GLOBAL MERCANTILE PVT. LTD. VERSUS INDO UNIQUE FLAME LTD. AND ORS. [ 2021 (1) TMI 1121 - SUPREME COURT] this Court was of the opinion that the utility of the doctrine of separability overrides the concern under the respective Stamp Acts. Any concerns of nonstamping or under stamping would not affect the validity of the arbitration agreement. Although we agree that there is a need to constitute a larger Bench to settle the jurisprudence, we are also cognizant of time sensitivity when dealing with arbitration issues. All these matters are still at a preappointment stage, and we cannot leave them hanging until the larger Bench settles the issue. In view of the same, this Court until the larger Bench decides on the interplay between Sections 11(6) and 16 should ensure that arbitrations are carried on, unless the issue before the Court patently indicates existence of deadwood. Whether the issue of insufficient stamping raised by the respondent is deadwood and clearly indicative of an unworkable arbitration agreement, or there are deeper issues which can be resolved at a later stage? - HELD THAT:- Having perused Clause 22.1, it is necessary to note that the respondent is under an obligation to ensure that the agreement would be legally valid in India. If such an obligation was undertaken by the respondent, the extent to which the petitioners can rely on the respondent s warranty, is clearly a debatable issue. Further, it is also a matter of adjudication whether the respondent could have raised the issue of validity of the arbitration agreement/substantive contract in view of the warranty. This aspect clearly mandates that the aforesaid issue is not deadwood. The issues whether the respondent is estopped from raising the contention of unenforceability of the HMA or the issue whether the HMA is insufficiently or incorrectly stamped, can be finally decided at a later stage. Moreover, the petitioners have reiterated that without prejudice, they have paid the required stamp duty, including the penalty that may be accruable and sought appointment of a sole arbitrator in light of the same. On the contrary, the respondent, in rebuttal to the payment of stamp duty, has challenged the same, contending that payment of stamp duty has been wrongly classified and stamp duty has been paid against Article 5(j) under the schedule of the Karnataka Stamp Act, 1957, which is erroneous. Therefore, the respondent contends that the HMA has not been properly stamped. It is deemed appropriate for this matter to be referred to arbitration, in terms of Clause 18.2 of the arbitration agreement - arbitration petition is allowed.
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2022 (1) TMI 1170
Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - failure of producing documentary evidence - HELD THAT:- It is apparent that in case of failure of producing documentary evidence, it cannot be considered in respect of proprietor that he is the sole proprietor of Firm and on that basis, the complaint under Section 138 of the NI Act is not maintainable. No documentary evidence in respect of being a sole proprietor of the Firm on behalf of complainant-appellant has been produced before the Court and from the record, it reveals that the cheque in question has been issued in the name of complainant- Firm and the only bill Ex.P6 whose authenticity has been denied by the accused- respondent because it does not either bear the signature of complainant or accused. On that basis, no presumption can be drawn against the accused. As per the provisions of Section 138(b) of the NI Act, it is the statutory duty of the complainant that after dishonour of cheque, information regarding dishonour/return of cheque should be furnished by giving a written notice to the accused within a period of thirty days. In the present matter, although a notice was issued by the complainant but it has been reflected from the impugned judgment that consideration amount of ₹ 50,000/- has been shown as due against the respondent- accused which is under suspicion and no evidence in this regard has been produced before the Court on the behalf of the complainant to establish his case beyond reasonable doubt. Therefore, the learned JMFC has rightly acquitted the respondent-accused of offence under Section 138 of the NI Act. Appeal dismissed.
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