TMI Tax Updates - e-Newsletter
February 2, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Wealth tax Indian Laws

TMI Short Notes

1. Goods and Service Tax

  Bill:

2. AMENDMENTS IN THE CGST ACT, 2017

  Bill:

3. AMENDMENTS IN THE IGST ACT, 2017

  Bill:

Articles

1. REJECTION OF APPLICATION FOR INITIATING ‘CIRP’ BY OPERATIONAL CREDITORS

   By: DR.MARIAPPAN GOVINDARAJAN

2. HALWA CEREMONEY indicates fighting attitude by tax department with tax payers and also government with public at large. We need to change to co-operative mode – sukh, shanti, viswas and Shraddha.

   By: DEVKUMAR KOTHARI

3. Budget-20-21 - QUICK LOOK

   By: CSSwati Rawat

4. Their lordships need careful and competent personal secretaries to avoid mistakes in orders and judgments – discussion in view of glaring mistake observed in order of the Supreme Court digitally signed only by the court Master.

   By: DEVKUMAR KOTHARI

5. More time must be allowed to small and medium organizations for compliance without adverse impact.

   By: DEVKUMAR KOTHARI

6. VALIDITY OF RE-OPENING OF WEALTH TAX ASSESSMENT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST Revenue collection for January 2021 almost touches ₹1.20 lakh crore

2. Central Excise - Notifications - Budget 2021-22

3. Customs Notification - Budget 2021-22

4. Budget 2021-22 + FINANCE Act, 2021

5. Summary of the Budget 2021-22

6. KEY HIGHLIGHTS OF UNION BUDGET 2021-22

7. WELLBEING ALONG WITH HEALTH FORMS ONE OF THE 6 CRUCIAL PILLARS OF AATMA NIRBHAR BHARAT

8. SHARP FOCUS ON HEALTH & WELLBEING IN INDIA’S 2021-22 BUDGET REFLECTING DEEP IMPRINT OF GLOBAL PANDEMIC

9. CONCILIATION MECHANISM TO BE SET UP FOR QUICK RESOLUTION OF CONTRACTUAL DISPUTES WITH GOVERNMENT/CPSEs

10. 34.5 % INCREASE IN CAPITAL EXPENDITURE WITH BE OF ₹ 5.54 LAKH CRORE

11. FDI LIMIT IN INSURANCE SECTOR INCREASED FROM 49% TO 74% AND FOREIGN OWNERSHIP AND CONTROL ALLOWED WITH SAFEGUARDS

12. GOVERNMENT TO INTRODUCE SINGLE SECURITIES MARKETS CODE

13. PANDEMIC’S IMPACT ON ECONOMY: WEAK REVENUE FLOW COMBINED WITH HIGH EXPENDITURE ON ESSENTIAL RELIEF

14. POLICY OF STRATEGIC DISINVESTMENT ANNOUNCED; CLEAR ROADMAP FOR STRATEGIC AND NON-STRATEGIC SECTORS

15. KEY INITIATIVES IN PETROLEUM & NATURAL GAS SECTOR

16. ₹ 3, 05,984 CRORE SCHEME TO BE LAUNCHED FOR A REVAMPED REFORMS -BASED RESULT-LINKED POWER DISTRIBUTION SECTOR

17. ₹ 1,18,101 crore outlay for Ministry of Road and Transport and Highways

18. RECORD OUTLAY OF ₹ 1,10,055 CRORE FOR RAILWAYS, OF WHICH ₹ 1,07,100 CRORE FOR CAPITAL EXPENDITURE

19. UNION BUDGET FOR 2021-22 GIVES BOOST TO PUBLIC TRANSPORT IN URBAN AREAS

20. GOVERNMENT TO STEP UP FUNDING FOR NATIONAL INFRASTRUCTURE PIPELINE

21. FINANCE MINISTER PROPOSES 9 MEASURES FOR AGRICULTURE AND ALLIED SECTORS, FARMERS’ WELFARE AND RURAL INDIA AS PART OF INCLUSIVE DEVELOPMENT FOR ASPIRATIONAL INDIA

22. ONE NATION ONE RATION CARD UNDER IMPLEMENTATION BY 32 STATES AND UTS REACHING 69 CRORE BENEFICIARIES: FINANCE MINISTER

23. BUDGET PROPOSES QUALITATIVE STRENGTHENING OF 15,000 SCHOOLS TO INCLUDE ALL COMPONENTS OF NATIONAL EDUCATION POLICY

24. NATIONAL RESEARCH FOUNDATION OUTLAY TO BE ₹ 50,000 CRORE, OVER 5 YEARS

25. COMMITMENT OF FINANCIAL OUTLAY OF ₹ 1.97 LAKH CRORE IN THE NEXT 5 YEARS STARTING FY 2021-22 FOR PLI SCHEMES IN 13 SECTORS

26. ₹ 1000 CRORE TO BE PROVIDED FOR WELFARE SCHEME FOR TEA WORKERS OF ASSAM AND WEST BENGAL ESPECIALLY WOMEN AND CHILDREN

27. DECRIMINALISATION OF THE LIMITED LIABILITY PARTNERSHIP (LLP) ACT, 2008 PROPOSED

28. SENIOR CITIZENS ABOVE 75 YEARS OF AGE, HAVING PENSION & INTEREST INCOME EXEMPTED FROM FILING TAX RETURN

29. UNION FINANCE MINISTER SAYS EVERY POSSIBLE MEASURE SHALL BE TAKEN TO SMOOTHEN THE GST

30. Public Private Patnership Mode for Operational Services at Major Ports

31. Budget Speech 2021-2022

32. Finance Bill 2021

Notifications

Central Excise

1. 07/2021 - dated 1-2-2021 - CE

Seeks to amend notification Nos. 10/2018-Central Excise, 11/2018-Central Excise, 12/2018-Central Excise and 13/2018-Central Excise, all dated 2nd February, 2018

2. 06/2021 - dated 1-2-2021 - CE

Seeks to exempt E-20 fuel from Road and Infrastructure Cess.

3. 05/2021 - dated 1-2-2021 - CE

Seeks to exempt M-15 fuel from Road and Infrastructure Cess.

4. 04/2021 - dated 1-2-2021 - CE

Seeks to amendment in Notification No. 28/2002-Central Excise, dated the 13th May, 2002

5. 03/2021 - dated 1-2-2021 - CE

Seeks to exempt Agriculture Infrastructure and Development Cess on blended fuels.

6. 02/2021 - dated 1-2-2021 - CE

Seeks to amendment in Notification No. 05/2019-Central Excise, dated the 6th July, 2019

7. 01/2021 - dated 1-2-2021 - CE

Seeks to amendment in Notification No. 11/2017-Central Excise, dated the 30th June, 2017

Customs

8. 07/2021 - dated 1-2-2021 - ADD

Seeks to amend notification No. 16/2020 – Customs (ADD) dated 23rd June, 2020 so as to temporarily revoke the operation of the said notification for the period from 2nd February, 2021 to 30th September, 2021.

9. 06/2021 - dated 1-2-2021 - ADD

Seeks to amend notification No. 38/2019 – Customs (ADD) dated 25th September, 2019 so as to temporarily revoke the operation of the said notification for the period from 2nd February, 2021 to 30th September, 2021.

10. 05/2021 - dated 1-2-2021 - ADD

Seeks to amend notification No. 54/2018 – Customs (ADD) dated 18th October, 2018 so as to temporarily revoke the operation of the said notification for the period from 2nd February, 2021 to 30th September, 2021.

11. 15/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 82/2017-Customs, dated 27.10.2017.

12. 14/2021 - dated 1-2-2021 - Cus

Seeks to exempt Social Welfare Surcharge leviable on Crude or roughly trimmed or Blocks Marble or travertine.

13. 13/2021 - dated 1-2-2021 - Cus

Seeks to exempt Social Welfare Surcharge leviable on Agriculture Infrastructure and Development Cess on Gold and Silver.

14. 12/2021 - dated 1-2-2021 - Cus

Seeks to rescind notification No. 12/2018-Customs, dated 02.02.2018.

15. 11/2021 - dated 1-2-2021 - Cus

Effective rate of Agriculture Infrastructure and Development Cess for specified goods prescribed.

16. 10/2021 - dated 1-2-2021 - Cus

Seeks to amend notification No. 230/86-Customs dated 03.04.1986 so as to notify National High Speed Rail Corporation Ltd. as Sponsoring Authority for High Speed Rail projects.

17. 09/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 42/1996-Customs, dated 23.07.21996 so as to make suitable amendments to the list of specified projects under heading 9801 of the First Schedule to the Customs Tariff Act.

18. 08/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 153/94-Customs dated 13th July, 1994 so as to include temporary imports of costumes and props for film-making, in the goods exempted by the said notification.

19. 07/2021 - dated 1-2-2021 - Cus

Seeks to rescind notification Nos. 1/2011-Customs, dated the 6th January, 2011, 34/2017-Customs, dated the 30th June, 2017 and 75/2017-Customs, dated the 13th September, 2017

20. 06/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 08/2020-Customs dated 2nd February, 2020 so as to exempt the medical devices imported by international organizations and diplomatic missions, from the levy of Health Cess.

21. 05/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 24/2005-Customs dated 1st March, 2005 so as to clarify the scope of exemption under entry at S. No. 13S of the said notification.

22. 04/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 25/99-Customs dated 28th February, 1999 so as to withdraw BCD exemption on the specified parts of transformers

23. 03/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 57/2017-Customs dated 30th June, 2017 so as to prescribe effective BCD rate on IT/Electronics items

24. 02/2021 - dated 1-2-2021 - Cus

Seeks to further amend notification No. 50/2017-Customs dated 30th June, 2017 so as to prescribe effective rate of Basic Customs Duty (BCD)

25. 12/2021 - dated 1-2-2021 - Cus (NT)

Seeks to further amend Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 to provide for the manner of application of safeguard measures including tariff-rate quota and make certain other miscellaneous changes.

26. 11/2021 - dated 1-2-2021 - Cus (NT)

Seeks to further amend Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules, 1995 to enable provisional assessment in anti-circumvention investigation and make certain other miscellaneous changes.

27. 10/2021 - dated 1-2-2021 - Cus (NT)

Seeks to further amend Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 to enable provisional assessment in anti-circumvention investigation and make certain other miscellaneous changes.

28. 09/2021 - dated 1-2-2021 - Cus (NT)

Seeks to further amend Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.

29. 02/2021-CUSTOMS (CVD) - dated 1-2-2021 - CVD

Seeks to amend notification No. 01/2017 – Customs (CVD) dated 7th September, 2017 so as to temporarily revoke the operation of the said notification for the period from 2nd February, 2021 to 30th September, 2021.

30. 01/2021-CUSTOMS (CVD) - dated 1-2-2021 - CVD

Seeks to rescind notification No. 02/2020 – Customs (CVD) dated 9th October, 2020.

Income Tax

31. 04/2021 - dated 31-1-2021 - IT

Seeks to amendment in Notification No. 85/2020, dated the 27th October, 2020

Circulars / Instructions / Orders

Customs

1. D.O. F. No. 334/02/2020-TRU - dated 1-2-2021

Changes in Customs, Central Excise, GST law and rates have been proposed through the Finance Bill, 2021.

Highlights / Catch Notes

GST

• Court Denies Bail; Challenge to Sections 132 and 69 Not Sufficient; No Interrogation Argument Rejected.

  Case-Laws - HC : Grant of Bail - petitioner is in custody since 5th December, 2020 and that no interrogation is done - The bail cannot be granted solely on the ground that vires of Section 132 and 69 of the Act are under challenge - The factual error pointed out in impugned order cannot in itself be a reason for allowing the prayer. The Court below had given other reasons also for denying the bail. - HC
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• Court Orders Reopening of Portal or Manual Filing for GST TRAN-1 Correction Due to Human Error.

  Case-Laws - HC : Seeking to modify/revise Form GST TRAN-1 - The difficulty faced by the Petitioner was a genuine one. Due to an inadvertent human error and oversight on the part of the Petitioner, its substantive right should not be denied. - The Respondents are directed to open the online portal so as to enable the Petitioner to re-file the rectified TRAN-1 form electronically, or, accept the same manually with the corrections within a period of three weeks from today. - HC
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Income Tax

• Reopening Tax Assessments Requires Valid Reason, Not Just Opinion Change: Section 147 Interpretation Clarified in Recent Case.

  Case-Laws - HC : Reopening of assessment u/s 147 - change of opinion - "Reason to believe" based on mere change of opinion - the decision in the case of Rinku Chakraborthy does not lay down correct position law to the extent to which it follows what is held in clause (2) of paragraph 13 of the decision of the Apex Court in the case of Kalyanji Mavji and Company (supra). - HC
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• High Court Confirms Eligibility for Section 80IA Tax Deduction for Cargo Handling Contract with BIAL.

  Case-Laws - HC : Deduction u/s 80IA - cargo handling contract entered into with BIAL by assessee - the assessee is engaged in development operation and maintenance of an infrastructure facility in the light of provisions of SPRH agreement. The aforesaid finding has been affirmed in appeal by the Tribunal. The aforesaid findings are concurrent findings of fact which do not suffer from any perversity. - HC
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• Tribunal Rules No Agricultural Income for Assessee Due to Lack of Agricultural Land and Activities.

  Case-Laws - HC : Receipt or accrual of any real income - Agricultural income - the tribunal has recorded the finding that the assessee was neither in possession of the agricultural land nor he performed any agricultural activity. Therefore, the question of earning any agricultural income does not arise. - The aforesaid findings are pure findings of facts which have been recorded on meticulous appreciation of evidence on record. - HC
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• Cloud Hosting Income Misclassified as Royalty; No Tax in India per Indo-US DTAA, Lacks Permanent Establishment.

  Case-Laws - AT : Income accrued in India - tratement of Income from cloud hosting services as royalty - income from cloud hosting services has erroneously held as royalty within the meaning of explanation (2) to section 9(1)(vi) of the Act as well as Article 12(3)(b) of the Indo-USA DTAA by the AO and DRP. Even otherwise, there is no PE of the assessee in India and hence, no income can be taxed in India in term of Indo-US DTAA. - AT
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• Commissioner Invokes Section 263, Orders Fresh Inquiry After AO's Failure to Probe Account Discrepancies.

  Case-Laws - AT : Revision u/s 263 - the ld.AO has not conducted an inquiry which was required after taking into consideration the discrepancies in the accounts, and therefore the ld.Commissioner has rightly taken cognizance under section 263 and set aside the assessment for conducting fresh inquiry and for passing of fresh assessment order. - AT
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• Court Rules TDS on Leave Fare Concession Invalid; Employer's Income Estimation Found Reasonable u/s 192.

  Case-Laws - AT : TDS u/s 192 - leave fare concession [LFC] provided by the appellant to its employees - The estimation of income, in the hands of the employees under the head' income from salaries', by the employer was bonafide and reasonable, the very foundation of impugned demands raised under section 201 r.w.s 192 ceases to hold good in law. - AT
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• Section 68 Dispute: Tax Assessments Questioned Due to Lack of Evidence; Loan Creditors' Source Explanations Overlooked.

  Case-Laws - AT : Addition u/s 68 - each of the parties are assessed to Income Tax and as many of the loans have been repaid - The loan creditors in this case have also explained sources of sources. AO as well as the Ld. CIT(A) based their decisions on conjectures and surmises. - AT
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• Section 68: Share Application Money Found Legitimate; CIT(A) Confirms Sufficient Funds and Genuine Transaction.

  Case-Laws - AT : Addition u/s 68 - share application monay - unaccounted money has been laundered by creating fagade of paper work - shares issued to sister concern i.e., sole share applicant/ subscriber - there can be no doubt against the identity, creditworthiness and genuineness - CIT(A) has clearly given a finding a fact that the share applicant company had enough fund for subscribing for shares in the assessee-company which factual finding have not been challenged by the Revenue/Department in this appeal, so this finding of fact crystallizes. - AT
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• Income Tax Act: Statements u/ss 153A and 132(4) require proof and cross-examination to affect third parties.

  Case-Laws - AT : Assessment u/s 153A - admission made u/s 132(4) - The fundamental difference between evidentiary value of statement under S. 132(4) against the maker of statement vis-a-vis a third party has not been recognised by the revenue. The statement of the maker may possibly operate as estoppel against him in certain circumstances. However, truthfulness thereof is required to be proved beyond doubt for it to bind a third party. The deptt. was duty bound to give cross examination of the maker where it seeks to rely upon it. - AT
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• Taxpayer Can Claim Acquisition Costs Despite Reporting Errors, Officer's Rejection Deemed Incorrect by Law.

  Case-Laws - AT : Capital gain computation - Failure of the assessee to offer capital gains in the appropriate year will not disentitle the assessee to claim cost of acquisition. Accordingly, we are of the view that the AO was also not right in law in rejecting the said claim of the assessee for deduction of correct amount of cost of acquisition/indexed cost of acquisition. - AT
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• Overdue Interest from FY 1996-97 Not Recognized as Income Due to Uncertainty in Collection; Not Claimed as Bad Debt.

  Case-Laws - AT : Income accrued or received by assessee - overdue interest income - Under mercantile system, interest income accrues with the time. In such cases, interest charged and debited to account as income as recognized under the accrual system but in cash system it is not so. In the present case, it is an overdue interest and it is not collectable from the Financial Year 1996-97 and as a prudent businessman, following AS 9 issued by ICAI the assessee has not recognized the said income. In the present case, there is no question of claiming as a Bad Debt because it is not accountable as there was uncertainty of collection. - AT
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Customs

• Significant Delays in Container Release Affect Exporters and Revenue: Impact on Drawbacks, ROSL, and IGST Refunds.

  Case-Laws - AT : Seeking provisional release of container - Let the things be as they are we are not in position to find any reason for the enormous delay in handling of the goods which were cleared for export and subsequently called back. Also we are unable to find any reason for this delay when the revenue itself contends the outflow of the drawback, ROSL and IGST Refund. Do these delays not hamper the interest of the revenue itself - in view the failure on the part of revenue to complete the proceedings early within the prescribed time frame has not only affected the interests of the exporters, but has also impacted the revenue interests - AT
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Wealth-tax

• No Penalty Imposed for Late Wealth Tax Disclosure u/s 18(1)(c) Explanation 3 of the Wealth Tax Act.

  Case-Laws - AT : Concealment of wealth - assessee has not filed wealth tax return u/s.14 - penalty proceedings u/s.18(1)(c) - The component of wealth based on the admission of return of wealth after the issuance of notice for reopening could not fall within mischief of explanation 3 of section 18(1)(c) of the Act. - No penalty - AT
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Service Tax

• High Court Invalidates CAG's Authority to Audit u/r 5A of Service Tax Rules, Quashes 2019 Audit Notice.

  Case-Laws - HC : Power of CAG to conduct service tax audit of private party - Central Excise Revenue Audit (CERA) - Admittedly, in the present case the impugned notice / intimation dated 10.01.2019 seeking audit of petitioner’s accounts is not contemplated under the provisions of Rule 5A of the Service Tax Rules, 1994. - Notice for audit quashed - HC
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• High Court Rules CAG Cannot Conduct Service Tax Audits on Private Companies u/s 16 of CAG Act 1971.

  Case-Laws - HC : Power of CAG to conduct service tax audit of private party - Central Excise Revenue Audit (CERA) - Validity of notice intimating that petitioner’s case has been selected for scrutiny / audit - In view of the mandate of Section 16 of the CAG’S (DPC) Act, 1971, CERA audit cannot be extended to call for audit of a private entity such as the petitioner company. - HC
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• Court Urges Liberal Approach in Sabka Vishwas Scheme Application Rejections, Highlights Natural Justice and Intent of Scheme.

  Case-Laws - HC : Rejection of SVLDRS application for non-payment of dues (service tax) - Adjustment of pre-deposit made by the petitioner while the appeal is pending - This is a beneficial scheme for settlement of legacy disputes. Therefore, the officials while considering declarations made under the scheme must have the broad picture in mind. The approach should be to ensure that the scheme is successful and, therefore, a liberal view embedded with the principles of natural justice is called for. - HC
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• Appellant's Service Tax on Ad Space Sales: No Suppression Found, Bona Fide Belief Justified, Extended Limitation Not Applicable.

  Case-Laws - AT : Service tax Liability - extended period of limitation - The bona fide belief with regard to non taxability of sale of space for advertisement gets clearly established. The appellant were regularly filing their ST-3 returns. It was known to the department that the appellant was paying Service tax prior to 01.07.2012 and also started paying Service Tax from 01.10.2014 and interregnum period the entry of space for advertisement was under Negative List. Therefore, we do not see any suppression of fact or the mala fide intention on the part of the appellant for non-payment of service tax. - AT
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• Penalty on Executives u/s 78A of Finance Act Deemed Unjustified Due to Lack of Intentional Breach.

  Case-Laws - AT : Levy of personal penalty - Levy of penalty of ₹ 1 Lakh each on the Managing Director as well as Chief Financial Officer under Section 78A of the Finance Act, 1944 - These officers have merely complied with the agreement entered into between the parties and no knowledge can be imputed on them that they have deliberately violated the provisions of the Act. - The imposition of penalty on the appellants is not justified - AT
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• Tata Steel's Eligibility for CENVAT Credit on Input Services via Mumbai ISD Under Service Tax Regulations.

  Case-Laws - AT : CENVAT credit - input services or not - Input service distributor (ISD) - The company is Tata Steel Limited, which is incorporated and registered under the Companies Act, 1956 as a public limited company. It has various divisions/units situated in various parts of the country, as detailed hereinabove. The registered and Head Office of the company, including of the said divisions/units, is at Mumbai, the ISD in the instant case. - AT
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Case Laws:

• GST

• 2021 (2) TMI 42
  Permission for withdrawal of application - sale of plots, commercial or residential by the developer applicant to the buyers - taxable supply of goods or service under section 7 of CGST Act, 2017 read with clause No. 5 of schedule Ill? - appropriate classification / HSN code / SAC Code for sale of land (plots) and applicable rate of GST - input tax credit - HELD THAT:- The authorized signatory of the applicant, vide letter dated 05.08.2020 addressed to this authority which was received in this office on 11.08.2020, has requested to withdraw their application without any personal hearing. Their request to withdraw the application is considered.

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• 2021 (2) TMI 41
  Grant of Bail - petitioner is in custody since 5th December, 2020 and that no interrogation is done - HELD THAT:- It was held that power to arrest under Sections 69 and 132 of the Act should not be exercised for terrorizing or creating atmosphere of fear. Illustrative circumstances where arrest be made were mentioned - The judgment of Gujarat High Court in VIMAL YASHWANTGIRI GOSWAMI VERSUS STATE OF GUJARAT [ 2020 (11) TMI 40 - GUJARAT HIGH COURT] is of no avail to the petitioner. It was held that power of arrest under Section 69 read with Section 132 of the Act can be invoked before completion of adjudication of process. The prerequisite being that Commissioner has reasons to believe that person had committed offence under clauses (a) to (d) of sub clause (1) of Section 132 of the Act. In case in hand reasons were recorded for arresting the petitioner. The bail cannot be granted solely on the ground that vires of Section 132 and 69 of the Act are under challenge. There is always presumption of validity of the provision. The operation of the provisions has not been stayed - In the case in hand, bills were being procured from the firms based at Delhi who had no purchases. The tax which was not deposited for these transaction was utilized by the firms for not only availing ITCs but for getting the refunds by showing the sales to export units. In other words, the refund was received for the tax which was actually never received by the Revenue. The factual error pointed out in impugned order cannot in itself be a reason for allowing the prayer. The Court below had given other reasons also for denying the bail. While deciding the present petition, the facts have been re-considered and this court has reached the same conclusion that the prayer of petitioner for grant of bail is liable to be rejected - Petition dismissed.

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• 2021 (2) TMI 40
  Violation of principles of natural justice - no opportunity of personal hearing was given to the writ applicant by the authority concerned before passing the impugned order - HELD THAT:- The writ applicant did file his replies to the different notices issued by the respondents, however, the picture is not clear whether any opportunity of personal hearing was given to the writ applicant or not. Mr. Dave shall take appropriate instructions in this regard and revert to us with the necessary information by the next date of hearing. If any notice was issued to the writ applicant for personal hearing, the copy of the same shall be placed on record along with the proof of receipt of such notice by the writ applicant. Post this matter on 04.02.2021 on top of the Board.

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• 2021 (2) TMI 39
  Seizure of two trucks - trucks were not in transit carrying any goods - Section 129 of GST Act, 2017 - HELD THAT:- It is observed that at the end of the inquiry or investigation, if anything incriminating surfaces which may warrant issuance of MOV-10 to the writ applicant under Section 130 of the Act, the authority may do so in accordance with law. However, today, for the purpose of such inquiry or investigation, the two trucks may not be kept in the custody of the department. In such circumstances, we direct the respondent to release both the trucks on the writ applicant furnishing an undertaking in writing on oath before the concerned authority that till the conclusion of the inquiry or investigation, he shall not transfer the two trucks in favour of any other person or shall not part with the possession of the same or create any encumbrance upon the same. It shall be open for the writ applicant to use the two trucks in his normal course of business. We are saying so because in the event if the department deems fit to issue MOV-10 under Section 130 of the Act, 2017, then at least the goods should be secured for that purpose. Application disposed off.

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• 2021 (2) TMI 38
  Seeking to modify/revise Form GST TRAN-1 filed by it, either by opening the GST portal or by permitting submission of manual modified/rectified Form - HELD THAT:- On perusal of the record, it emerges that Petitioner has filed TRAN-1 form within the time prescribed by the Respondents under the rules. Petitioner is holding documents evidencing payment of tax by it on such inputs / input services received under the erstwhile tax regime. It is thus eligible to carry forward the credit from erstwhile tax regime to the GST regime under Section 140 of the CGST Act read with Rule 117 of CGST Rules. Petitioner claims that this error has occurred because of the introduction of new and vastly different tax regime (GST) of which the Petitioner had no prior experience whatsoever, and thus it was new to the filing of Form GST TRAN-1 as well. For the aforesaid bona fide human error, inadvertently, it failed to take into account certain invoices, on which service tax amounting to Rs. 40,36,542/- was not reflected in TRAN-1 Form. The difficulty faced by the Petitioner was a genuine one. Due to an inadvertent human error and oversight on the part of the Petitioner, its substantive right should not be denied. Petitioner should therefore not be precluded from having its claim examined by the authorities in accordance with law - there are no hesitation in allowing the request of the Petitioner and accordingly the present petition is allowed. The Respondents are directed to open the online portal so as to enable the Petitioner to re-file the rectified TRAN-1 form electronically, or, accept the same manually with the corrections within a period of three weeks from today. Petitioner s claim shall thereafter be processed in accordance with law and Respondents shall be at liberty to verify the genuineness of the claim of the Petitioner - petition allowed.

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• Income Tax

• 2021 (2) TMI 37
  Reopening of assessment u/s 147 - change of opinion - Reason to believe based on mere change of opinion - erroneous exercise of jurisdiction and the change of opinion - whether the Division Bench of this Court in the case of Rinku Chakraborthy [ 2011 (1) TMI 1160 - KARNATAKA HIGH COURT] has laid down the correct law wherein held that there is no change of opinion before reopening assessment? HELD THAT:- AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the assessing officer - after 1-4- 1989, assessing officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 - Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words reason to believe , Parliament reintroduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers in the assessing officer. As decided in M/S. KELVINATOR OF INDIA LIMITED [ 2010 (1) TMI 11 - SUPREME COURT] when a power under Section 147 is to be exercised, concept of change of opinion must be treated as an inbuilt test to check abuse of power of the Assessing Officer. Further, it is held that after 1st April 1989, the Assessing Officer has power to reopen provided there is a tangible material to come to the conclusion that there is escapement of income from assessment. The Apex Court held that mere change of opinion on consideration of the same material is no ground to invoke Section 147 of the said Act. The decision in the case of Rinku Chakraborthy (supra) is based only on what is held in Clause (2) of paragraph 13 of the decision in the case of Kalyanji Mavji and Company [ 1975 (12) TMI 2 - SUPREME COURT] . Subsequently, a larger Bench of three Hon ble Judges in the case of M/s. Indian and Eastern Newspaper Society [ 1975 (12) TMI 2 - SUPREME COURT] has clearly held that oversight, inadvertence or mistake of the Assessing Officer or error discovered by him on the reconsideration of the same material does not give him power to reopen a concluded assessment. It was expressly held that the decision in the case of Kalyanji Mavji and Company (supra), on this aspect does not lay down the correct law. The decision in the case of Rinku Chakraborthy (supra) is based solely on the decision of the Apex Court in the case of Kalyanji Mavji and Company (supra) and in particular what is held in Clause (2) of paragraph 13. The said part is held as not a good law by a subsequent decision of the Apex Court in the case of M/s. Indian and Eastern Newspaper Society (supra). Therefore, in the light of law laid down in the case of M/s. Indian and Eastern Newspaper Society (supra), the first question will have to be answered in the negative by holding that the decision in the case of Rinku Chakraborthy does not lay down correct position law to the extent to which it follows what is held in clause (2) of paragraph 13 of the decision of the Apex Court in the case of Kalyanji Mavji and Company (supra). Reason to believe in the context of Section 147 of the Income Tax cannot be based on mere change of opinion of the Assessing Officer, the third question will have to be answered in the negative.

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• 2021 (2) TMI 36
  Deduction u/s 80IA - cargo handling contract entered into with BIAL by assessee - agreement with a statutory body - Whether contract is with statutory body satisfying condition set forth in section 80IA(4) when BIAL is only a Company whose motive only making profit and is only a instrument of State? - HELD THAT:- Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. In CHETTINAD LIGNITE TRANSPORT SERVICES P. LTD [ 2019 (4) TMI 684 - MADRAS HIGH COURT] it has been held that proviso intends to extend the benefit of deduction under Section 80IA of the Act even to a transferee or a contractor who is approved and recognized by the concerned authority and undertakes the work of development of infrastructure facility or only operates or maintains the same. In view of aforesaid enunciation of law, it has rightly been concluded by the Appellate Authority that the assessee is engaged in development operation and maintenance of an infrastructure facility in the light of provisions of SPRH agreement. The aforesaid finding has been affirmed in appeal by the Tribunal. The aforesaid findings are concurrent findings of fact which do not suffer from any perversity. Revenue was unable to point out any perversity in the findings of fact recorded by the Commissioner of Income Tax (Appeals) as well as by the Tribunal. It is well settled in law that the concurrent findings of fact do not suffer from any perversity warranting interference of this court in exercise of powers under Section 260A of the Act. [SEE: SYEDA RAHIMUNNISA VS. MALAN BI BY L.RS. AND ORS. [ 2016 (10) TMI 1233 - SUPREME COURT] and PRINCIPAL COMMISSIONER OF INCOME TAX, BANGALORE ORS. VS. SOFTBRANDS INDIA P. LTD. [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] - Decided in favour of the assessee.

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• 2021 (2) TMI 35
  Receipt or accrual of any real income - Agricultural income - income returned as income from other sources which are unexplained - HELD THAT:- As submitted that from perusal of the agreement it is clear that the land is earmark for growing / developing of land for different crops and no trees of any kind were found on the land prior to execution of the lease agreement. It has further been found that the buildings or animal sheds were not constructed on the lands which was leased out to the assessee as the possession of the land in question was never handed over to the assessee. Similarly, the tribunal has recorded the finding that the assessee was neither in possession of the agricultural land nor he performed any agricultural activity. Therefore, the question of earning any agricultural income does not arise. The aforesaid findings are pure findings of facts which have been recorded on meticulous appreciation of evidence on record. The aforesaid findings have not been shown to be perverse. It is well settled that this court in exercise of powers under Section 260A of the Act cannot interfere with the finding of fact until and unless the same is demonstrated to be perverse. [See: SYEDA RAHIMUNNISA VS. MALAN BI BY L.RS. AND ORS. [ 2016 (10) TMI 1233 - SUPREME COURT] and PRINCIPAL COMMISSIONER OF INCOME TAX, BANGALORE ORS. VS. SOFTBRANDS INDIA P. LTD [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] ] In view of preceding analysis, the substantial questions of law are answered accordingly.

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• 2021 (2) TMI 34
  Non filling of appeal electronically within the period of limitation - prayer made by the assessee to reckoned the date of filing as on date on which the appeal was actually filed - Whether Tribunal was right in holding that there is no delay in filing of e-appeal since the date of filing of belated e-appeal relates back to the date of filing of manual appeal? - HELD THAT:- Issue held in favour of the assessee and against the Revenue in the decision in the case of CIT Vs. A.A.Antony others [ 2021 (1) TMI 170 - MADRAS HIGH COURT] taking into consideration the Circular issued by CBDT, which in our opinion, appears to be a one time measure, the substantive right of appeal should not be denied to the assessee on hand on a technical ground. We make it clear that this observation cannot be taken advantage by the assessee as of now, when the procedure has been in vogue ever since the year 2016 and stood the test of time and in all probabilities, as of now, all teaching problems would have been solved. Bearing in mind the fact situation in the year 2016, we are of the view that the appeals need not have been rejected by the CIT-A on the ground that they were not e-filed within the period of limitation.

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• 2021 (2) TMI 33
  Income accrued in India - Income from cloud hosting services as royalty within the meaning of explanation 2 to section 9(1)(vi) - India-USA DTAA - retrospective amendment in the royalty definition - PE in India - HELD THAT:- As decided in own case [ 2020 (2) TMI 63 - ITAT MUMBAI] Services provided by Rackspace USA to that Indian customers are not covered by the definition of royalties provided in the India USA Tax Treaty since Rackspace USA is providing hosting services to the Indian customers and does not give any equipment or control over the equipment. Equipments are not used by the customers and the same are used by Rackspace USA to provide service to the customers. The services provided by the Rackspace USA are in the nature of cloud hosting, data warehousing services etc. which are standard services provided to customers. There is no agreement to hire or lease out any equipment but only a service level agreement. We are of the view that the amendments in the domestic tax law cannot be read into the tax treaty as there is no change in the definition of royalties under the India-USA Tax Treaty. Therefore, the retrospective amendment in the royalty definition under the Act does not impact the definition of royalties in the India-USA Tax Treaty. The agreements entered into the service level agreements. The agreement is to provide hosting services simpliciter and is not for the purpose of giving the underlying equipment on higher or lease. The customer is not even aware of the specific location of the server in the Data Centre where the customer application, web mail, websites etc. In view of these facts, we are of the view that income from cloud hosting services has erroneously held as royalty within the meaning of explanation (2) to section 9(1)(vi) of the Act as well as Article 12(3)(b) of the Indo-USA DTAA by the AO and DRP. Even otherwise, there is no PE of the assessee in India and hence, no income can be taxed in India in term of Indo-US DTAA. - Decided in favour of assessee

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• 2021 (2) TMI 32
  Revision u/s 263 - differences between the balance sheet filed by the assessee after auditors reports vis- -vis the balance sheet prepared by the special auditor - HELD THAT:- During the course of hearing, we have put to the ld.counsel for the assessee that any of the authority had an occasion to conclusively deal with the incompleteness of its accounts even in 2012-13 and 2013-14, because in those years, the assessee has already settled the issue under Kar Vivad Samadhan Scheme. In the present year, impact percolating to this year has not been assessed by the AO. This act of non-adjudication of the issue at the end of the AO brand his order as erroneous which has caused prejudice to the Revenue. AO has expressed his desire to get the accounts audited by the special auditor in this year also. But, all of a sudden he dropped his idea without assigning any reason. This aspect has also been looked into by the ld.Commissioner while assessing the fact, whether the assessment order is erroneous or not. When a conclusion had been reached on an appreciation of number of facts established by evidence, whether that was sound or not must be determined not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. We have to appreciate the impugned order of the ld.Commissioner by looking into the facts and circumstances and not in a mechanical way that these very details were considered by the AO, therefore, the ld.CIT is precluded to look into this aspect while exercising power under section 263 of the Income Tax Act, 1961. As observed earlier, the ld.AO has not conducted an inquiry which was required after taking into consideration the discrepancies in the accounts, and therefore the ld.Commissioner has rightly taken cognizance under section 263 and set aside the assessment for conducting fresh inquiry and for passing of fresh assessment order. We do not find any merit in this appeal. Appeal of the assessee is dismissed.

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• 2021 (2) TMI 31
  Short-term capital loss - loss originated from India bulls infrastructure Ltd on forfeiture of share warrants disallowed - HELD THAT:- During the course of hearing, on looking at the strange set of facts, the information was called from the assessee with respect to the corporate restructuring and business justification for layering of the funds. Assessee merely submitted that the issue is squarely covered in favour of the assessee by several decisions and once again relying on the decision of the learned CIT A. As far as the scheme of things goes, it is evident for everybody. Nothing is further required to be mentioned that who is the beneficiary and who is the conduit. Further, it is not the assessee who is to be taxed in its hands, as the real beneficiary is India bulls Power Ltd, which further went into restructuring and scheme of amalgamations. So far as the issue for taxation in the hands of the assessee is squarely covered in favour of the assessee by the decision in case of CIT versus Chand Ratan Bagri [ 2010 (1) TMI 123 - DELHI HIGH COURT] wherein the addition was made in the hands of the assessee on protective basis and the addition was made on substantive basis in the hands of the company who forfeited the shares. In paragraph number 2 there was also an allegation of tax evasion tactic prohibited by law employed by the assessee. It is also the allegation in the impugned case. In paragraph number 12 14 clearly clinches the issue in favour of the assessee. The honourable High Court held that the issue as to whether the forfeiture of the convertible warrant amount to a transfer within the meaning of Section 2 (47) of the said act has now been made clear by the Supreme Court in the case of Grace Collis [ 2001 (2) TMI 9 - SUPREME COURT] as also by the Karnataka High Court in BPLSanyo finance Ltd [ 2008 (2) TMI 386 - KARNATAKA HIGH COURT] and the honourable High Court also followed the same. In paragraph number 14 the honourable High Court held that forfeiture of the convertible warrant has resulted in extinguishment of the right of the assessee to obtain a share in the issuer company.

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• 2021 (2) TMI 30
  Upward transfer price adjustments - Provisions contemplated u/s. 144C was not followed - assessee contended that the AO has failed to follow the mandatory provisions of section 144C of the Act, without issuing any draft assessment order, passing of final assessment order suffers from infirmity and to be treated the same as bad in law - HELD THAT:- This Tribunal discussing the provisions u/s. 144C of the Act and held the final assessment order passed by the AO without issuing draft assessment order is against the provisions of the Act. As decided in LIONBRIDGE TECHNOLOGIES PVT. LTD., [ 2018 (12) TMI 764 - BOMBAY HIGH COURT] draft assessment order is necessary in terms of section 144C(1) of the Act before the AO can proceed to pass final assessment order. Assessee accepted the upward TP adjustment in relating to international transactions by way of vide its communication as that of in the present case involving A.Ys. 2010-11 and 2011-12. This Tribunal considered the submissions of Revenue that having participated for the assessment proceedings the assessee is estopped from challenging the action of AO for non-issuance of draft assessment order. The Tribunal discussed the same and observed where mere consent of parties does not bestow the jurisdiction if the order is beyond jurisdiction. As relying on assessee s own case [ 2019 (8) TMI 763 - ITAT PUNE] the said order being against provisions of section 144C of the Act. In view of our setting aside the assessment order passed in the case under section 143(3) of the Act, the grounds of appeal raised by assessee on merits and the grounds of appeal raised by Revenue become academic in nature - Decided in favour of assessee.

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• 2021 (2) TMI 29
  Revision u/s 263 - revisionary jurisdiction u/s 263 against reassessment order passed by AO u/s 147 read with Section 143(3) - Computation of LTCG - assessee has claimed cost of conversion of land from leasehold to freehold and indexation by applying cost inflation index towards such freehold charges was also claimed which is not correct - HELD THAT:- AO has made proper enquiries in the instant case. There was assessment proceedings going on for ay: 2013-14 and during the assessment proceedings for ay: 2013-14, two references were made by ITO Allahabad to ACIT both u/s 144A in connection with sale/transfer of this property , which references were disposed of by Addl. CIT which ultimately led to reopening of the assessment u/s 147/148 for the impugned ay: 2012-13. As gone through the reassessment order passed by AO we are of the considered view that the AO has applied his mind before passing reassessment order. Also we are in agreement with ld. CIT-DR that mistake has crept in reassessment order as cost of improvement is indexed by taking cost inflation index base of financial year 2012- 13, while the entire payments were made for freehold charges / stamp duty etc in fy:2011-12. Thus, the cost inflation index base for fy: 2012-13 to be 852 was adopted while computing income from long term capital gains, while the cost inflation index for fy: 2011-12(ay:2012-13) was 785 which ought to have been applied to cost of improvement being freehold conversion charges, stamp duty etc. Since the payment for freehold conversion charges, stamp duty etc. is made in the previous year relevant to impugned AY , there is no necessity of applying cost inflation index and actual payment made towards freehold conversion charges, stamp duty etc. ought to had been claimed/deducted while computing income chargeable to tax under the head income from long term capital gains. Similar , error crept in while indexing the cost of acquisition of the property by applying cost inflation index of 852 instead of 785 . Thus, to this extent the reassessment passed by AO was erroneous so far as prejudicial to the interest of Revenue which requires to be revised by AO and proceedings u/s 263 - Decided partly in favour of assessee.

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• 2021 (2) TMI 28
  TDS u/s 192 - leave fare concession [LFC] provided by the appellant to its employees - whether the action of the employer in not deducting tax at source from the leave travel facility in question could be said to be reasonable or bonafide? - HELD THAT:- We have our prima facie reservations on the coordinate benches decisions holding taxability of these amounts in the hands of the employees concerned, because that aspect of the matter is not really relevant as on now. We leave it at that for the time being. The coordinate bench decisions deal with only the issue of taxability of leave travel facility under section 10(5) and not with the broader question about the nature of tax deduction at source liability under section 192, as also the issue about bonafides of the stand of the assessee employer. These decisions, therefore, do not come in the way of our present decision. Once we hold, as we do in this case, that estimation of income, in the hands of the employees under the head income from salaries , by the employer was bonafide and reasonable, the very foundation of impugned demands raised under section 201 r.w.s 192 ceases to hold good in law. We must, therefore, vacate these demands. Bearing in mind entirety of the case, we cancel the impugned demands under section 201 r.w.s. 192 as unsustainable in law.

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• 2021 (2) TMI 27
  Reopening of assessment u/s 147 - information received by the A.O. regarding search operation conducted in the case of Jain Group of companies and information of which was available to the A.O - Bogus purchases - HELD THAT:- Reasons recorded or the material available on record must have nexus to the subjective opinion formed by the A.O. regarding the escapement of the income but then, while recording the reasons for belief formed, the A.O. is not required to finally ascertain the factum of escapement of the tax and in our view, it is sufficient for the A.O. in case he had cause or justification to know or suppose that income had escaped assessment. It is also well settled that the sufficiency and adequacy of the reasons which have led to formation of a belief by the A.O. that the income has escaped assessment cannot be examined by the Court. Therefore, in view of above discussion, we are of the view that the A.O. had specific information based on which and after recording of reasons and approval, the assessment has been reopened. Therefore, up uphold the decision on ld. CIT(A) on this ground and dismissed the ground raised by the assessee. Estimation of income - bogus purchases - rejection of books of accounts u/s. 145(3) on account of alleged unverifiable purchases - directing application of G.P. rate of 12% on declared turnover on this count - HELD THAT:- In view of difference in the circumstances, the results of this year i.e. A.Y. 2010-11 cannot be compared to the results of earlier year as the complete nature of business is changed from this year. In view of the above facts, the allegation of reducing profit by obtaining non-genuine bogus purchase bills is wrong and not sustainable. There is increase in total gross profit and thus results can be held as progressive and therefore, in such circumstances, no additions are called for. Even the Coordinate Bench of Jaipur ITAT in assessee s own case [ 2020 (5) TMI 481 - ITAT JAIPUR] having similar facts, deleted the entire addition confirmed by the ld. CIT(A). Therefore, keeping in view the above facts and circumstances and discussion, we are also of the view that the additions confirmed by the ld. CIT(A) by applying G.P. rate of 12% as against the declared G.P. rate of 9.34% is uncalled for and bad in law and deserves to be deleted and hence the same is directed to be deleted.

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• 2021 (2) TMI 26
  Non issuance of notice u/s 143(2) - Unsecured loans u/s 68 - HELD THAT:- The assessment order passed by the DCIT, Circle-11(1), Kolkata, without issuance of notice u/s. 143(2) of the Act, is bad in law. If it is held that the ITO Ward-3(3), Kolkata, has jurisdiction over the assessee, then the assessment order passed by the DCIT, Circle-11(1), Kolkata, would become bad in law as it would be an order passed by an officer who has no jurisdiction. Looking at it either way, we find that the assessment is bad in law. Addition u/s 68 - On examining the above voluminous records and documents produced by each creditor in support of the genuineness of the transaction and as interest has been paid on all these loans and as TDS has been deducted on these interest payments and as the Assessing Officer nor the Ld. CIT(A) have any adverse material to controvert the evidence filed by each of these creditors and also looking at the fact that each of the parties are assessed to Income Tax and as many of the loans have been repaid, we come to a conclusion that the addition made u/s. 68 of the Act, on the ground that these are unexplained cash credits, is bad in law. The loan creditors in this case have also explained sources of sources. Assessing Officer as well as the Ld. CIT(A) based their decisions on conjectures and surmises. Thus, this addition made u/s. 68 of the Act, is hereby deleted. Consequently, the interest expenditure disallowed on these cash credits is also directed to be deleted - Decided in favour of assessee.

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• 2021 (2) TMI 25
  Validity of assessment - non-issue of notice u/s 143(2) - Curable defect u/s 292BB - HELD THAT:- Issue is covered by the judgment of Supreme Court in the case of Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] in favour of the assessee. Thus, all the objections of the Ld. DR are overruled. Since, no notice u/s 143(2) has been issued by the AO at reassessment proceedings which is mandatory for completion of assessment, therefore, reassessment order is bad in law, illegal and void ab initio and, as such, liable to be quashed - Appeal of assessee is allowed.

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• 2021 (2) TMI 24
  Exemption u/s 11 12 denied - Registration u/s 12AA has been allowed to the appellant by Hon ble Allahabad High Court - Addition of surplus in infrastructure reserve fund by treating it revenue receipts - HELD THAT:- We find that the registration under section 12A of the Act has been restored by the Tribunal and till date said order has not been reversed by higher appellate forum, therefore, the assessee is entitled to the benefit of exemption under section 11 to 13 of the Act. Respectfully following the finding of the Tribunal in own case we are reminding matter back to the file of the Assessing Officer to compute the income in accordance with section 11 to 13 of the Act, after examining the records and after providing the opportunity of being heard to the assessee. The ground No.1 of the appeal is accordingly allowed for the statistical purposes. Addition made on account of infrastructure fund - HELD THAT:- As decided in own case [ 2019 (4) TMI 361 - ITAT DELHI ] there may not be any profit element in receipt of infrastructure fund from state authorities for infrastructure development activities. The Tribunal has held that it is difficult to believe that part amount could be capital receipt and part would be revenue in nature. Respectfully following the finding of the Tribunal (supra), we set aside the order of the authorities below on the issue of the infrastructure fund and restore the matter to the file of the Assessing Officer with the direction to decide the issue in accordance with law after giving adequate and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

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• 2021 (2) TMI 23
  Addition u/s 68 - share application monay - unaccounted money has been laundered by creating fagade of paper work - shares issued to sister concern i.e., sole share applicant/ subscriber - HELD THAT:- We note that in this assessment year (2012-13) the assessee-company has issued 47,500 numbers of equity shares of face value of Rs. 10 each at premium of Rs. 1,990 per share to another private limited company M/s. Saibaba Finvest Pvt. Ltd. which is a sister concern as brought to our notice wherein we noted that in this relevant assessment year common director was there in assessee-company and holding company of M/s. Saibaba. We note that Sri Utkarsh Suresh Shelar was common director of the assessee-company as well as the holding company of share-subscribing company in the assessment year 2012-13 as we noted in detail at para 14 (supra) ; and Shri Ashish Kumar Pathak who was the director of the assessee-company was inducted as director of M/s. Saibaba in the assessment year 2013-14 which is evident from the master data of shareholder company M/s. Saibaba. M/s. Saibaba had creditworthiness as on March 31, 2012 to invest Rs. 9.5 crores in the assessee-company - copy of bank statement of M/s. Saibaba reveals that the share application money has been transferred from bank account of M/s. Saibaba to the assessee-company. Thus, there can be no doubt against the identity, creditworthiness and genuineness of M/s. Saibaba. Commissioner of Income-tax (Appeals) has clearly given a finding a fact that the share applicant company M/s. Saibaba had enough fund for subscribing for shares in the assessee-company which factual finding have not been challenged by the Revenue/Department in this appeal, so this finding of fact crystallizes. - Decided against revenue.

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• 2021 (2) TMI 22
  Assessment u/s 153A - admission made under section 132(4) - statement recorded under section 132(4) - loose paper notings relied upon - cross examination of the maker not provided - unaccounted cash receipts - HELD THAT:- It is well settled that where the evidence adverse to assessee is brought on record, the assessee must be given opportunity to rebut it. It is also well settled that AO is not entitled to make a pure guess while making an assessment. There must be more than bare suspicion to support an assessment. As observed earlier, the loose paper does not categorically identify the name of the recipients of cash payments allegedly given by the purchaser of various parcels of land. The statement in corroboration also continues to remain silent on the specific details. A basic enquiry towards flow of payments is absent. The initial onus was always on Revenue to justify its allegation of payment of on-money by the sellers to the assessee. The decision of Hon ble Supreme Court in K. P. Verghese vs. ITO [ 1981 (9) TMI 1 - SUPREME COURT] may be referred in this regard. This primary onus could never be shifted upon the assessee successfully in the instant case. The Revenue has not adduced any cogent material which could expose the falsehood in the records of the assessee Despite drastic action of search on a third party, no material other than the loose document of inexplicable nature whose author is not known and which does not bear any material particulars, was brought on record to implicate the assessee. A lump sum figure of Rs. 5.30 crores written in summary manner in bottom side of loose paper is the basis for whole action. CIT(A) itself has recorded that a direction was given to the AO to record fresh statement of the witness of the department, i.e. purchaser Mehul G. Patel and also grant cross-examination thereon to the assessee in case of any adverse inference. Needless to say, when a statutory direction has been given to do an act in a particular manner, the AO could not have refused to do so. Apart from loose paper and an obscure statement of third party, there is nothing else in the possession of the AO. The primary onus which lay upon the AO to support its allegation against the assessee was never shifted. In such a situation, in the absence of any demonstrable evidence, the stage for cross examination never arose. Assessee on its part, has demonstrated from the loose paper itself that apart from the land owners i.e. appellants herein, there were other stakeholders too who received money from the purchasers for execution of sale to sail through. Thus, an evident uncertainty doubt had crept in about actual recipient of purported cash component. Before the CIT(A), the assessee also filed duly sworn affidavit of Mehul G. Patel whereby he affirmed on oath that the cash payments were not made to the assessee and other appellants herein but was paid to some old land owners/ banakhat owners/( bharward /farmers) (i.e. Ganotia) and others, who were claiming ownership in the said land CIT(A) has approved the action of AO despite complete defiance of statutory directions as well as natural justice. Needless to say that proper opportunity to an affected party is not a gift but an absolute and salutary right which cannot be simply bye-passed. The legitimate expectation of the assessee to seek cross-examination of a person who supposedly made adverse comment against the assessee, to enable it to traverse the assertions, cannot be shunted in subversion of judicial propriety while weighing the issue. The infringement of basic principle of natural justice has thus vitiated order of the AO to the core The fundamental difference between evidentiary value of statement under S. 132(4) against the maker of statement vis-a-vis a third party has not been recognised by the revenue. The statement of the maker may possibly operate as estoppel against him in certain circumstances. However, truthfulness thereof is required to be proved beyond doubt for it to bind a third party. The deptt. was duty bound to give cross examination of the maker where it seeks to rely upon it. Failure to do so has resulted in serious flaw and has rendered the action a nullity as ruled by the Hon ble Supreme Court in the case of Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] . Year of assessment - On the face of such tell tale facts, the unaccounted consideration cannot be said to have accrued in a preceding Assessment year for the purpose of its taxability on the basis of assumptions and presumptions. The co-ordinate benches of the Tribunal have held in so in chorus in D R Construction vs. ITO [ 2011 (4) TMI 1343 - ITAT AHMEDABAD] Ranade Dighe and Associates [ 2011 (8) TMI 1183 - ITAT PUNE] . Thus when tested on the touchstone of year of taxability also, the action of the AO is unfounded. We however do not seek to delineate any further as the we see no merits in additions in either of the years owing to failure of the AO to shift its onus on assessee - Decided in favour of assessee.

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• 2021 (2) TMI 21
  Capital gain computation - Cost of acquisition of flats sold - JDA entered by assessee along with another brother and 2 sisters with M/s. Kuteer Builders to develop the land - assessee had handed over his possession of the land on the date of entering into JDA and in return the assessee had received 5 flats individually and 4 flats jointly in the Financial year 2011-12 - HELD THAT:- In the instant cases, the assessee herein have sold part of the constructed area received by them in the form of flats. When the capital gain is assessed/assessable at the time of entering the JDA, sale consideration has to be determined by taking Fair market value of the constructed area that will be received by the assessees. Since the fair market value so determined is liable for capital gains taxation, the said Fair Market Value shall become cost of the constructed area. When the constructed area in the form of flats are sold subsequently, the cost of acquisition/indexed cost of acquisition of flats are required to be deducted in order to ascertain the capital gain, which shall be the Fair market value. AO did not allow the deduction of cost of acquisition of flats solely for the reason that the assessees have not declared capital gains in the year in which JDA was entered. It is well settled proposition of law that the income of a particular year is assessable in that year only. Hence the capital gain arising on entering JDA is assessable only in the year in which the JDA was entered. If the assessees have not declared capital gains in the appropriate year, the AO may take appropriate action to tax the same in accordance with the law. Failure of the assessee to offer capital gains in the appropriate year will not disentitle the assessee to claim cost of acquisition. Accordingly, we are of the view that the AO was also not right in law in rejecting the said claim of the assessee for deduction of correct amount of cost of acquisition/indexed cost of acquisition. The issue of computation of capital gains, particularly the claim for deduction of cost of acquisition of flats, requires to be examined afresh by the AO. Appeals of the assessee allowed for statistical purposes.

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• 2021 (2) TMI 20
  Income accrued or received by assessee - overdue interest income - recovery of outstanding dues in lieu of unaccomplished contract with M/s Engineering Industry Commission (EIC), Ministry of Defence, Government of Ethiopia - outstanding interest due from the EIC in the form of Notes forming parts of account , indicating that the amount relates to overdue interest due from February 1991, which has not been accounted for in the books of account - HELD THAT:- In the present case, the said overdue interest income is not accrued by the assessee or received by the assessee from the Financial Year 2002-03 and the position remained to be the same. The overdue interest is not recovered by the assessee from February 1991 and the assessee stopped recovering of overdue interest from the Financial Year 1996-97 and stopped accounting from the Financial Year 1996-97. There is uncertainty in the collection of this overdue interest. When the overdue interest partakes the character of uncertain income, it cannot be brought within the purview of taxable income, unless and until it comes to the hands of the assessee. Under mercantile system, interest income accrues with the time. In such cases, interest charged and debited to account as income as recognized under the accrual system but in cash system it is not so. In the present case, it is an overdue interest and it is not collectable from the Financial Year 1996-97 and as a prudent businessman, following AS 9 issued by ICAI the assessee has not recognized the said income. In the present case, there is no question of claiming as a Bad Debt because it is not accountable as there was uncertainty of collection. The same cannot be recognized as income accrued till it is realized by the assessee. It is not correct to say the judgment of Delhi High Court in the case of Vasisth Chai Vyapa [ 2010 (11) TMI 88 - DELHI HIGH COURT] is not applicable. In this judgment, it considered the AS 9 along with other provisions of the Act while deleting the addition. We find no merit in the argument of DR that that judgment is not applicable. Accordingly, we do not find any infirmity in the order of CIT(A) in allowing the appeal of the assessee on this issue.

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• Customs

• 2021 (2) TMI 19
  Seeking provisional release of container - Since appellants found the conditions of provisional release to harsh, they requested the concerned authorities to allow the goods to be exported without insisting on the conditions of Bank Guarantee or to reduce the amount of bank guarantee - HELD THAT:- Nearly fifteen months have elapsed since the issue of the investigation report on 18.10.2019, and matter has not still been adjudicated, when appellant has waived the requirements of Show Cause Notice and Personal Hearing. Can there be any explanation for such a delay in the adjudication proceedings, total failure of supervisory control to get the proceedings completed. Had the matter been adjudicated within time the entire litigation which went even before the Hon ble High Court could have been avoided. Urgency shown by the appellant by waiving the requirement of show cause notice and personal hearing, is being used a defence by the revenue for not having followed the procedure prescribed by the Section 110 of Customs Act, 1962. In view of the clarification Vide Circular No 01/2011-Customs dated 4th January 2011, there cannot be much justification for the delay in the issue of provisional release order vide the communication dated 13.06.2019, nearly two months after completion of examination of the goods and drawing of representative samples. Let the things be as they are we are not in position to find any reason for the enormous delay in handling of the goods which were cleared for export and subsequently called back. Also we are unable to find any reason for this delay when the revenue itself contends the outflow of the drawback, ROSL and IGST Refund. Do these delays not hamper the interest of the revenue itself - in view the failure on the part of revenue to complete the proceedings early within the prescribed time frame has not only affected the interests of the exporters, but has also impacted the revenue interests - In case revenue is not in position to complete the entire proceedings within one month time, then they should allow the provisional release of the detained export goods immediately within a week from the date of receipt of this order, on execution of the bond equivalent to the value of the goods and security in form of Bank Guarantee of Rs. 20,00,000/-. Detention and demurrage charges - HELD THAT:- These charges should be waived and proper certificate in this regards be issued by the concerned authorities. Appeal disposed off.

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• Corporate Laws

• 2021 (2) TMI 18
  Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The provisions pertaining to restoration name of the Company are provided in the Section 252(3) of the Companies Act, 2013, which, inter alia, includes that if a company is carrying out its business or in operation or otherwise it is just that the name of the company be restored, this Tribunal can order the RoC to restore the name of the company in the Register of Companies. It would be just and equitable to order restoration of the name of the Company in the register of RoC to enable the Appellant Company to carry on business as per its objects - the Appeal is allowed subject to payment of costs of Rs. 50,000/- to the Prime Minister s Relief Fund, the proof of which will be furnished by the Appellant to the Registry of this Tribunal within 07 days. The Registrar of this Tribunal shall maintain the information about such deposits in a separate E-register.

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• 2021 (2) TMI 17
  Approval of scheme of amalgamation - seeking various directions regarding holding and convening of various meetings as well as directions regarding issuance of various notices - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- Having heard the Applicant Companies and by considering the consent affidavits filed on behalf of the shareholders, secured creditors as well as by the majority in debts value of unsecured creditors of the Applicant Companies to approve the proposed Company Scheme and by waiving their rights to participate in such meeting, the meetings of the Shareholders, Secured and Unsecured Creditors of the Applicant Companies are hereby dispensed with. The present Company Application deserves to be allowed - Application allowed.

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• 2021 (2) TMI 16
  Seeking to wind up the respondent company - seeking direction to existing management of the Respondent No. 1 Company to peacefully cooperate with the Provisional Liquidator to carry out his duties under the Companies Act, 2013 - Jurisdiction of this Tribunal to deal with the subject matter - HELD THAT:- The Tribunal is conferred with exclusive jurisdiction to deal all matters arise out of provisions of Companies Acts, 1956/2013, as case may be. Section 430 ousts jurisdiction of Civil Court over the matters, the Tribunal is having jurisdiction. By perusal of investigation reports by CBI and the actions taken by other statutory Authorities, the incorporation of R1 Company and obtaining a contract in a fraudulent manner that too within a short time, without having requisite experience, would not justify its continuance on the rolls of Registrar of Companies, Bangalore. Though various proceedings are pending against the Award in question, there is no bar to initiate the present proceedings. It is unheard that a Company incorporated hardly one and half months earlier, can able to get a Contract from the Govt. of India, that too without having any technical experience in the relevant field. Therefore, without prejudice to the rights of Parties in the litigation pending before the Hon ble High Court of Delhi and the Hon ble Supreme Court, the Tribunal can exercise its powers conferred on this Tribunal, under Chapter XX Part 1 of Companies Act, 2013, to appoint provisional Liquidator before passing final winding up order, which would be decided after hearing the Parties. Since the R1 Company has suffered various adverse findings with cogent evidence at the hands of various Statutory Authorities, as detailed supra, it would not be proper to permit R1 Company to continue its name on the rolls of Registrar of Companies, Bangalore. Therefore, in terms of provisions of Section 283 of Companies Act, 2013, it would be just to permit Provisional Liquidator to forthwith take into his or its custody or control all the property, effects and actionable claims to which the R1 Company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the R1 Company and to avoid misuse of its property. It is settled position of law that principles of natural justice mandates judicial forums to afford reasonable opportunity to other side before passing any order by judicial Authorities. However, Courts/Tribunal are empowered to pass appropriate Ad Interim/interim order at the stage of admission itself, if circumstances, in a case justifies for passing such interim order(s). In the instant case, it is not in dispute that R1 Company was given notice though it was short for duration and thus their Counsels appears before the Tribunal and advanced their arguments on merits of the case. Prima facie case is made out by the Petitioner in favour of granting interim order as prayed for. It is just and proper to appoint Provisional Liquidator to take control of the affairs of R1 Company pending final adjudication of main petition for winding up. Petition admitted.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 15
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - service of demand - Demand Notice u/s 8 of the Code was not served on the Corporate Debtor - deemed delivery or not - Claim of the Applicant Operational Creditor was seriously disputed - HELD THAT:- Admittedly, the Demand Notices sent u/s 8 of the Code to the registered address, and functional address of the Corporate Debtor met with the remarks addressee moved and unclaimed respectively. Unclaimed, will also have to be treated as Service of Notice. Again one set of Demand Notice was duly served upon one of the Directors of the Corporate Debtor. The legislative intent of issuance of Demand Notice under Section 8(1) is not a mere formality but a mandatory provision. Only after service of notice under Section 8(1) and on completion of 10 days, if payment towards the demand is not made, an Operational Creditor gets right to apply under Section 9 and not before such date. Upon perusal of the record, it is apparent that the Demand Notice was duly served on the functional address as well as Director of the Corporate Debtor. Under Section 2(59) of the Companies Act, 2013 Director is included in to definition of Officer. Under Section 20 of the Act a document served on a Company or on Officer thereof is service recognized. Going from Principles of Natural Justice, in terms of Section 424 of Companies Act read with above provision of Service of Notice on Director must be held to be good service. Therefore, in our opinion, the mandate u/s 8 of the Code was fulfilled, and the Adjudicating Authority has rightly admitted the application u/s 9 filed by the Operational Creditor for initiating Corporate Insolvency Resolution Process against the Corporate Debtor. Despite service of Demand Notice u/s 8 of the Code and service of the application u/s 9 of the Code, the Corporate Debtor did not appear before the Adjudicating Authority - the Adjudicating authority had not erred in proceeding exparte in the matter. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity - Appeal dismissed.

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• 2021 (2) TMI 14
  Maintainability of application - initiation of CIRP - outstanding dues - suppression of facts - applicant turned into non-performing asset (NPA) as on 9-12-2013 and on account of default, legal action was initiated under DRT Act and SARFAESI Act, 2002 - HELD THAT:- On perusal of the record it is found that no Board Resolution is ever passed by the company authorising Mr. Sanjay Gupta to file the instant application. Further, on perusal of the record it appears that the applicant company has held one Extraordinary General Meeting (EGM) flouting all the norms of the Companies Act, 2013, thereby the very power given in favour of Mr. Sanjay Gupta is bad in the eye of law and as such the application is not maintainable for want of proper authorisation. Admittedly, as also matter of record that, the applicant is not a corporate applicant as per Form 6, clause 3. The applicant is not a director and is disqualified under section 168 of the Companies Act, 2013 wherein the name and address of the Director is shown as All directors on the Board has already resigned and vacated office pursuant to resignation u/s 168 of the Companies Act, 2013 and a situation of deadlock has emerged. However, clause 3 of Form 6 further discloses that the list of promoters along with their address attached - As per the list of promoters/shareholding pattern as on 30-6-2018 (page 11), Mr. Sanjay Gupta holds 23,15,714 shares of the company. Further, the applicant has not filed/disclosed the details of the unsecured financial creditors. However, there are as many as 427 operational debtors as per the list annexed to the application at page Nos. 24-32. However, while going through the records it is found that there is no whisper about the outstanding amount. It is also pertinent to note that if the company is really insolvent, applicant could have opted for winding up/dissolution application. Further, affairs of the company is managed by the Directors and not by the promoters. Since the Directors are already disqualified, the applicant has no authority to file the instant application. It is also a matter of record that objector(s)/banks have already initiated proceedings under RDDB Act, 1993 and SARFAESI Act, 2002 and to install the said proceedings, the applicant has filed the instant application, so as to initiate moratorium and to get stayed the proceedings initiated by the banks - Company Petition stand dismissed as not maintainable.

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• 2021 (2) TMI 13
  Implementation of Resolution Plan - seeking directions to be given to the Sugar Commissioner, Maharashtra State, to the Collector/Sub-Divisional Officer/Gram Panchayat/Talathi of Sakharwadi for removing the entry of Government of Maharashtra - HELD THAT:- The alleged act on the part of Respondent in not withdrawing and/or recalling its order of issuance of R.R.C. is causing enormous harm, loss and injury to the Applicant. The said immoveable property vests and/or stands transferred in favour of the Applicant in furtherance of the said Order dated 11-11-2019 of this Tribunal. The Applicant is deprived of the effective use of the said immoveable property on account of the aforesaid act on the part of the Respondent despite the Applicant having paid the entire amount of consideration. Also, the Applicants title to the said immoveable shall continue to be defective till such time the said Order of R.R.C. continues to be operative and/or not withdrawn. Further, on account of non-removal and/or continuance of R.R.C. on the immoveable property, prejudice is caused to the Applicant not only in carrying on, running and operating the said sugar plant, payment of wages and salaries to workers and labourers, procurement of sugarcane from the farmers but also implementations and giving effect to the approved Resolution Plan. This non-implementation of the Resolution Plan is also causing great prejudice to the poor farmers and therefore, keeping their interest in view along with the interest of the Corporate Debtor Company and according to the provisions of law, this application needs to be allowed. Once the Resolution Plan is approved under section 31 of the Code, all the assets and benefits of the contracts of the Corporate Debtor stands unconditionally transferred and assigned and vested in the Successful Resolution Applicant free from all encumbrances. Further, all persons including Central and State Government as well as the Local Authorities are bound by the said Order. However, Respondent No. 1 despite being bound by the said Order dated 11-11-2019 did not recall his orders dated 26-4-2018 and 18-9-2019 issuing Revenue Recovery Certificates (RRCs) of the sum of Rs. 4783.98 lakhs and Rs. 138.92 lakhs aggregating to Rs. 4925.80 lakhs creating a charge on the immoveable property of the Corporate Debtor in the land revenue records. The Respondent has mentioned that this Tribunal has no jurisdiction to entertain this application as there is an alternate remedy available. But Section 60(5) of the Code read with Rule 11 of the NCLT Rules, 2016 which deals with the inherent powers of the NCLT very well empowers this Tribunal entertain and adjudicate this application as it directly relates to the CIRP of the Corporate Debtor. It is pertinent to note here that under section 3 of the Sugarcane Control Order, 1966, titled Fair and Remunerative Price of Sugarcane payable by producer of sugar including sub-sections 3(8) 3(9), provides that the Collector merely acts as an authority to recover from the said producer of sugar in a case where the producer of sugar has defaulted in paying the whole or any part of the price of sugarcane to the growers of sugarcane - It is clear that the later non-obstante clause of the Parliamentary enactment will also prevail over the limited Vnon-obstante clause contained in Section 4 of the Maharashtra Act. For these reasons, we are of the view that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process under the Code. It is clear that Section 238 of the Code is an overriding provision and has an overriding effect on all the other laws. The company is already into CIRP and therefore, no question as to the jurisdiction of this Bench to hear and decide this matter arise - it is believed that the amount specified in the certificate has already been paid directly to the farmers in accordance and in furtherance of the Order of this Tribunal approving the Resolution Plan. Therefore, there appears no apparent reason to keep these properties as a charge/encumbrance on the past dues of the Corporate Debtor. This is merely delaying the process of CIRP and causing prejudice to the interests of the farmers. Application allowed.

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• Service Tax

• 2021 (2) TMI 12
  Power of CAG to conduct service tax audit of private party - Central Excise Revenue Audit (CERA) - Validity of notice intimating that petitioner s case has been selected for scrutiny / audit - petitioner s primary assertion is that the impugned notice / intimation seeking audit of petitioner s accounts is without jurisdiction i.e it has been issued without invoking the provisions of statutory laws under which a special audit, as purported, can be conducted - interpretation and application of Section 16 of the CAG s (DPC) Act read with Articles 148, 149 and 151 of the Constitution of India dealing with CAG - HELD THAT:- It may be mentioned that the accounts will be audited by a Chartered Accountant or a Cost Accountant to be appointed by the Commissioner. In Clause (2) to Section 72A, it is stated that the Chartered Accountant or Cost Accountant will submit a report duly signed and certified by him to the Commissioner. In Clause (4), it is stated that the person liable to pay tax shall be given an opportunity of being heard in respect of any material gathered on the basis of the audit under sub-section (1) and proposed to be utilized in any proceeding. Copy of the audit report may be made available to the assessee and a proper opportunity will also be provided to him, as per law. Rule 5A sub-rule (2) states that every assessee shall, on demand, make available to the officer authorised or the audit party, records, trial balance and income-tax audit report, if any. The officer may demand the documents to ensure correctness of the books of accounts and ultimately, the audit will be conducted by the audit party headed by the Chartered Accountant/Cost Accountant, as the case may be, deputed by the Commissioner. It is Commissioner on whose behalf the officer will collect the material and the auditor will perform the audit. In any case, the final report duly signed by the Chartered Accountant will be submitted to the Commissioner. In case of government autonomous bodies, the function of audit has been assigned to CAG - From the above, it is crystal clear that in case of a private assessee, Commissioner will refer the matter to an officer to collect the material or Chartered Accountant for the purpose of audit. Thus, for the purpose of audit, material can be collected either by the officer authorized by the Commissioner or by the auditor himself. But, audit will be performed only by the Chartered Accountant. It is the pious duty of the assessee to make available the record as mentioned in Rule 5A i.e. trial balance or its equivalent; and the Income-tax audit report, if any, under Section 142(2A) of the Income Tax Act, 1961, for the scrutiny of the officer or the audit party, as the case may be. Admittedly, in the present case the impugned notice / intimation dated 10.01.2019 seeking audit of petitioner s accounts is not contemplated under the provisions of Rule 5A of the Service Tax Rules, 1994. On the contrary, it is the assertion of the respondents that these have been issued under section 16 of CAG s (DPC) Act. Interpretation and application of Section 16 of the CAG s (DPC) Act read with Articles 148, 149 and 151 of the Constitution of India dealing with CAG - whether CERA, an audit wing of the Principal Director of Audit (Control), Kolkata under the CAG, has power to and / or authority and / or jurisdiction to audit the account, of the petitioner company under Section 16 of the CAG s (DPC) Act, where admitedly the petitioner company is not an undertaking of the Central Government or of any State Government and is prely a private entity? - HELD THAT:- It is clear that the statutory responsibility of the CAG is to audit receipts of the Union and States. These receipts include both direct and indirect taxes. It is duty of the Central Excise Revenue Audit (CERA) to see that sums due to the Government are properly assessed, realized and credited to the Government account. The scheme enacted and envisaged in Chapter III of the CAG s (DPC) Act, 1971 begins with the word Comptroller or Auditor General to compile accounts of Union and or States. The statutory scheme clearly states that the CAG shall from the accounts compiled by him or by the Government or any person responsible prepare in each year accounts showing under the respective heads, the annual receipts and disbursement for the purpose of the Union, each State or each Union Territory and shall submit the same to the President or the Governor or the Administrator, as the case may be. It is in such context that the provisions of Section 16 pertaining to audit of all receipts which are payable into the Consolidated Fund of India and each State and of each Union Territory is required to be construed with respect to the accounts maintained in the Government departments / Corporations belonging to the Government. In view of the mandate of Section 16 of the CAG S (DPC) Act, 1971, CERA audit cannot be extended to call for audit of a private entity such as the petitioner company. Petition allowed.

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• 2021 (2) TMI 11
  Rejection of SVLDRS application for non-payment of dues (service tax) - Principles of Natural Justice - seeking direction to the respondents to afford an opportunity of hearing to the petitioner and thereafter pass appropriate order in terms of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - non-consideration of the CENVAT credit as pre-deposit made by the petitioner while granting tax relief under the scheme. Personal hearing denied to the petitioner - HELD THAT:- What transpires is that when the amount estimated to be payable by the declarant, as estimated by the designated committee, exceeds the amount declared by the declarant in the declaration then the designated committee shall issue in electronic form an estimate of the amount payable by the declarant within 30 days. After such estimate is issued in the prescribed format, the designated committee shall give an opportunity of hearing to the declarant if he so desires before issuing the statement indicating the amount payable by the declarant. However, as per the proviso on sufficient cause being shown by the declarant only one adjournment may be granted by the designated committee. While giving an opportunity of hearing to the declarant by the designated committee when its estimation exceeds that of the declarant has been made mandatory, granting of adjournment of such opportunity of hearing or confining the same to only one adjournment by the designated committee has been made discretionary. Elaborating further we may say that on sufficient cause being shown the hearing may be adjourned. Thus, discretion has been vested on the designated committee to grant adjournment of personal hearing in an appropriate case. Such discretionary power has to be exercised in a just, fair and judicious manner. But if on the adjourned date, for reasons beyond the control of either the designated committee or of the declarant or for any act of God, say for example, there is fire or flood or an earthquake or a pandemic as in the present case, the hearing cannot take place, can it be construed that there can be no further hearing beyond the date of hearing fixed. Such a view besides being too narrow and rigid would also be opposed to the very principles of natural justice which is nothing but fair play in action. In our view, in such a situation the adjourned date of personal hearing would not be considered as the date of hearing and, therefore, a fresh date of personal hearing would have to be granted - coming to the facts of the present case, we find that designated committee had initially fixed personal hearing on 19.03.2020. Petitioner while objecting to the estimated amount determined by the designated committee urged adjournment of the personal hearing fixed on 19.03.2020 on account of short notice and due to the situation arising out of Covid-19 pandemic. While petitioner suggested 06.04.2020 as the adjourned date of hearing, respondent No.4 fixed the personal hearing on 30.03.2020. Non-consideration of the CENVAT credit as pre-deposit made by the petitioner while granting tax relief under the scheme - HELD THAT:- Since we have taken the view that the impugned decision contravenes the principles of natural justice causing prejudice to the petitioner and consequently the matter is required to be remanded back to the designated committee, it is not necessary to delve into the second grievance of the petitioner i.e., to treat the CENVAT credit amount of Rs. 3,28,49,069.00 as pre-deposit of the petitioner while granting relief under the scheme - there is one more aspect which we would like to briefly dilate upon. In their affidavit, respondents have stated that designated committee (respondent No.4) has limited the pre-deposit of the petitioner to cash payment of Rs. 1,11,25,000.00 and thus denying the benefit of CENVAT credit on the basis of reports received from the Deputy Director, DGGI Zonal Office, Mumbai dated 04.03.2020 and 16.03.2020. Neither of the two reports have been annexed to the impugned order dated 05.05.2020 nor furnished to the petitioner. The said reports have also not been annexed to the reply affidavit. It is a settled proposition of law that when an authority relies upon a document to take a decision which is adverse or prejudicial to a party, principles of natural justice demands that copy of such document or the essence thereof should be furnished to the affected party before the decision is taken so that the affected party can properly defend its case. Failure to do so would result in violation of the principles of natural justice and fair play in action which would vitiate the decision making process and ultimately the decision taken. Matter is remanded back to respondent No.4 to consider the declaration of the petitioner vis-a-vis claim of CENVAT credit of Rs. 3,28,49,069.00 as pre-deposit in addition to the cash deposit of Rs. 1,11,25,000.00. While doing so respondent No.4 shall provide an opportunity of hearing to the petitioner and thereafter pass a speaking order with due intimation to the petitioner - petition allowed by way of remand.

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• 2021 (2) TMI 10
  Rejection of SVLDRS application for non-payment of dues (service tax) - Seeking to reconsider its declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by allowing pre-deposit made by the petitioner while the appeal is pending - basic grievance of the petitioner is non-acceptance or rather disallowance by the designated committee i.e., respondent No.3 of two payments made by the petitioner through its client M/s. Walchandnagar Industries Limited and additional payment as pre-deposit made by the petitioner thus resulting in the amount payable by the petitioner which it says is not required to be paid under the scheme - HELD THAT:- What is deducible is that service tax department had initiated investigation against the petitioner on the ground of alleged non-payment of service tax dues covering the period from 01.04.2006 to 31.03.2011. During the investigation period, petitioner had made a deposit of Rs. 1,30,00,000.00. This is admitted by the respondents and accepted as a pre-deposit while determining the outstanding dues payable by the petitioner. After issuance of the show cause-cum-demand notice dated 20.04.2012, petitioner has stated that it had made further payments of Rs. 46,44,094.00 covering the period under investigation through its client M/s. Walchandnagar Industries Limited; in addition further sum was paid which pertained to the period from 01.04.2011 to 31.03.2012 which was beyond the period of investigation. This amount was not accepted as payments made on behalf of the petitioner by the adjudicating authority i.e., the Commissioner on the ground that no evidence was submitted to that effect. Regarding the further payments made by the petitioner to the extent of Rs. 56,11,819.00, stand taken by the respondents is that the challans pertaining to payment of the aforesaid amount were from August, 2013 to April, 2015. Designated committee could not ascertain whether the said payment was for the period covered by the investigation or for the period beyond the investigation. Therefore, designated committee could not provide relief to the petitioner vis-a-vis the amount of Rs. 56,11,819.00. In paragraph 21 of the reply affidavit, it is stated that designated committee could not ascertain with confidence whether the said payment pertained to the period covered by the investigation i.e., by the order-in-original or pertained to period post 2012. Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 has been introduced primarily for liquidation of past disputes pertaining to central excise and service tax so that trade and industry can move ahead so also the tax administration which can then fully focus on the smooth implementation of goods and services tax (GST). Basic thrust is to unload the baggage of pending litigations centering around service tax and excise duty which stood subsumed in GST. As an incentive those making the declaration and paying the declared tax verified and determined in terms of the scheme would be entitled to certain benefits in the form of reduced tax liability, waiver of interest, fine, penalty and immunity from prosecution. This is a beneficial scheme for settlement of legacy disputes. Therefore, the officials while considering declarations made under the scheme must have the broad picture in mind. The approach should be to ensure that the scheme is successful and, therefore, a liberal view embedded with the principles of natural justice is called for. In the instant case, as against the petitioner s claim of pre-deposit of two amounts of Rs. 46,44,094.00 and Rs. 56,11,819.00, designated committee did not accept payments of the two amounts as pre-deposit. In fact in the impugned order dated 25.02.2020, which is in Form No.SVLDRS-3, no reasons have been assigned for exclusion of the two amounts - In so far the second amount of Rs. 56,11,819.00 is concerned, stand taken is that though the said amount has been received by the department, it could not be verified with confidence whether the said payment pertained to the period covered by investigation i.e., by the order-in-original or for the period post the period of investigation. Since the verification carried out by respondent No.3 cannot be said to be a full and complete verification in terms of section 126(1) and rule 6(1), we are of the considered opinion that the matter is required to be remitted back to the designated committee for taking a fresh decision in the matter after giving an opportunity of hearing to the petitioner and thereafter to pass a speaking order with due intimation to the petitioner. Matter is remanded back to respondent No.3 for taking a fresh decision in the matter after giving due opportunity of hearing to the petitioner which shall be informed about the place, date and time of hearing. Respondent No.3 shall thereafter pass a speaking order in accordance with law with due intimation to the petitioner - Petition allowed by way of remand.

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• 2021 (2) TMI 9
  Maintainability of petition - declaration of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, which have since been subsumed under the goods and services tax (GST) - HELD THAT:- We allow withdrawal of the two writ petitions pertaining to the orders-in-original dated 09.10.2001 relating to the factories at Thane. Accordingly, the writ petitions are disposed of on withdrawal.

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• 2021 (2) TMI 8
  Requirement of showing the trading turnover and non-taxable services in the periodical ST-3 returns - Existence of column in ST- 3 form dealing with non-taxable turnovers under the Finance Act, 1994 - HELD THAT:- When there is no such column in ST-3 returns dealing with non-taxable turnovers , petitioner cannot be blamed by the respondents for not indicating the non-taxable turnovers in the ST-3 return and it cannot be penalized for the same ignoring all the other material evidence which has already been submitted by the petitioner to the respondents on various occasions as mentioned in para 13 of the affidavit filed in support of the Writ Petition and also the letters dt.10.04.2017 and dt.17.10.2017 including the audit reports relating to the audit of their accounts, work sheets, etc. The 4th respondent ought to have examined the said material which was already available with the 1st respondent-department to test the petitioner s defence i.e., that for the financial year 2011-12, petitioner had executed only irrigation and canal projects, which were exempt vide Notification No.41/2009/ST dt.23.10.2009, and that from 2012-13 onwards, petitioner was executing electrical works also and was discharging service tax liability on the taxable turnover, and the difference between the Balance Sheet and the ST-3 returns is because of this reason - the 4th respondent could also have asked the petitioner to furnish such material, if he could not find it in the file during the course of the personal hearing, and he could not have penalized the petitioner on the said ground. Such action of the 4th respondent vitiates the impugned order. In M.P. Special Police Establishment v. State of M.P. [ 2004 (11) TMI 524 - SUPREME COURT] the Supreme Court held that non-consideration of material on record by an authority would vitiate the exercise of power by the said authority. The impugned Order passed by the 4th respondent cannot be sustained and that the matter must be remitted to the 4th respondent to consider afresh - Petition allowed by way of remand.

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• 2021 (2) TMI 7
  Service tax Liability - selling/renting of bare spaces to their clients and also providing additional services to its customers for displaying their advertisements on the hoardings and kiosks - inclusion of the service in the expression of selling of space of time slots for advertisement other than advertisements broadcast by Radio or Television as placed in the negative list of service provided under Section 66D of the Finance Act, 1994 with effect from 01.07.2012 or not - extended period of limitation. HELD THAT:- The making of advertisement includes basic planning of advertisement For eg: How to advertise, where to advertise, mode of advertisement, etc. which are decided on the basis of the requirement of the client. Preparation of advertisement includes preparing the detailed execution program for advertisement on the basis of planning, printing of the material for display or exhibition. Display/exhibition includes displaying the advertisement through various mode such as hoardings, kiosk, etc. - as regard the disputed amount on which the Service Tax was demanded does not relate to making of advertisement or preparation of advertisement. The appellant s activity is covered under the display of the advertisement through various modes such as hoardings, display board, kiosk, etc. this can be further get cleared from the invoices of the service raised by the appellant. The appellant is charging fixed amount on monthly basis towards display charges and the description provided in the invoice is media space. In the invoice there is no charges for the services such as making of advertisement or preparation of advertisement example for visualizing, conceptualizing, designing, etc. of the advertisement therefore, it is clear that the invoices raised by the appellant is not for making or preparation of advertisement but only for the display charges for the space used for display of such advertisement. The appellant has submitted that the printed material/flex is provided by the client therefore, there is no question of including the cost thereof in the media space invoice of the appellant. The appellant s service is confined to display of advertisement on the hoardings, boards, kiosk, etc. and charge for the same is as per the space provided - As per the advertising service display of advertising (in this case sale of space for advertisement) is one of the various advertising service but by virtue of entry provided in the negative list selling of space for advertisement is not taxable. If providing space for advertisement is taxed then the entry provided in the negative list under Section 66D (g) will become redundant. The appellant can be charged service tax only in case where they themselves developed printed vinyl/flex and display the same on their hoardings, board, kiosk, etc. - Whereas, as per the facts available on record the concept of visualization, conceptualization, preparation of advertisement were done by some other persons and the appellant only provided the space for displaying such advertise therefore, the appellant s activity is clearly limited to Selling of space or time slots for advertisements other than advertisements broadcast by radio or television . As per the facts, we find that in the present case Customers who intend to advertise their product/service do approach to the advertising agency to advertise their product by providing duration and the time during which their advertisement should be displayed. If the advertising agency designs, visualizes, of conceptualizes advertisement to be displayed or exhibited then he will be covered under the scope of taxable service. The appellant have categorically asked for the cross examination of the witnesses who have given the statements but the adjudicating authority giving a lame excuse rejected the request for the cross-examination. Section 9D mandatorily put obligation on the adjudicating authority to examine the witness before relying on the statements recorded during investigation - even if, the appellant does not ask for the cross-examination, the adjudicating authority is duty bound that he must examine each and every witness whose statement he is going to rely upon for adjudication of the case. Since witnesses were not cross examined, their statement cannot be used as evidence. In that case only other documents available on record can be used for deciding the case. As per the documents as discussed above, we do not find that the appellant are engaged in visualizing, conceptualizing , creating, making, preparing the advertisement, these activities are done by advertising agencies who in turn provide the readymade advertising material to the appellant only for displaying on their hoardings. Therefore, firstly the statements particularly in the nature of the present case is not very relevant, secondly the same cannot be relied upon as the same has not passed the test of examination as mandatorily required under section 9D of the Central Excise Act, 1994 which is applicable in the case of Service Tax as per Section 83 of the Finance Act, 1994. The appellant has provided service of sale of space for advertisement on their hoardings/bill boards, kiosk, etc. and it is clearly covered under Negative List during the period 01.07.2012 to 30.9.2014, accordingly demand for this period is set aside. Demand for the period 01.10.2014 to March, 2016 - HELD THAT:- The appellant has repeatedly submitted that from 01.10.2014 they have been paying Service tax regularly and there is no short payment of Service Tax rather there may be excess payment. It is observed that from the submission made by the appellant before the learned adjudicating authority and the finding in the impugned order that some service of sale of space was provided during the period 01.07.2012 to 30.09.2014 but the invoices were raised on or after 01.10.2014. The Adjudicating Authority since decided the matter on merit that service of the appellant is taxable he has not gone into the issue that in case service was provided prior to 30.09.2014 and invoices were raised after 01.10.2014, Whether the service tax should be chargeable considering the date of service or the date of the invoices. The bona fide belief with regard to non taxability of sale of space for advertisement gets clearly established. The appellant were regularly filing their ST-3 returns. It was known to the department that the appellant was paying Service tax prior to 01.07.2012 and also started paying Service Tax from 01.10.2014 and interregnum period the entry of space for advertisement was under Negative List. Therefore, we do not see any suppression of fact or the mala fide intention on the part of the appellant for non-payment of service tax. Therefore, the demand for extended period is not sustainable not only on merit but also on limitation. Having held so no penalty is imposable on the appellant for the same reason. Appeal allowed - decided in favor of appellant.

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• 2021 (2) TMI 6
  Levy of personal penalty - Levy of penalty of Rs. 1 Lakh each on the Managing Director as well as Chief Financial Officer under Section 78A of the Finance Act, 1944 - allegation is that Chief Financial Officer of the company and Managing Director both were well aware of the fact of service tax charged and collected in full but not paid to the Government Account - HELD THAT:- During the pendency of these three appeals, the company as well as the Managing Director and the Chief Financial Officer applied under the Sabka Vishwas Legal Dispute Resolution Scheme but only the application filed by the company was cleared by the Department and Discharge Certificate was issued and accordingly the appeal of the company is dismissed as withdrawn but the applications filed by the individuals were rejected. Further, on merit also, there are no material which was considered by both the authorities below while imposing the penalties on these two officers under Section 78A of the Finance Act. The only ground on which both the authorities have imposed penalties is that these officers were negligent whereas there are no material to substantiate that allegation against these officers. These officers have merely complied with the agreement entered into between the parties and no knowledge can be imputed on them that they have deliberately violated the provisions of the Act. In the case of HINDUSTAN STEEL LIMITED VERSUS STATE OF ORISSA [ 1969 (8) TMI 31 - SUPREME COURT] , wherein it was held that penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of it obligation - Further, in the SCN also, it has not been established that these individuals have acted in contumacious manner so as to impose penalty. The imposition of penalty on the appellants is not justified - appeal allowed - decided in favor of appellant.

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• 2021 (2) TMI 5
  CENVAT credit - input services or not - Input service distributor (ISD) - service rendered by Tata Sons Ltd. under BEBP agreement dated 18.12.1998 between Tata Steel Ltd. and Tata Sons Ltd. - service tax paid as per the BEBP Agreement dated 18.12.1998 between itself and Tata Sons Ltd. exclusively to its Steelworks at Jamshedpur and not to other units of TSL - time limitation. Whether the service rendered by Tata Sons Ltd. under BEBP agreement dated 18.12.1998 between Tata Steel Ltd. and Tata Sons Ltd. is eligible as input service for TSL and the service tax paid is available as cenvat credit to TSL under the Cenvat Credit Rules, 2004? - HELD THAT:- The BEBP Agreement allows user by TSL of the Tata brand name, on its products/goods manufactured at its factory in Jamshedpur. Such user of the brand name enhances the marketability of the said goods. Hence, the services have been used by TSL, the manufacturer, indirectly in relation to the manufacture of final dutiable products in its factory at Jamshedpur. This satisfies the requirement of the main part of Rule 2(l) of the Cenvat Credit Rules. The said service is also a service used in relation to TSL s business of manufacture of final products indirectly. The requirement of the inclusive part of the definition of Rule 2(l) of the Cenvat Credit Rules, as it then was, is also therefore satisfied. Hence, the said service is input service on which TSL is eligible to avail cenvat credit. A similar issue arose in the case of JUBILANT LIFE SCIENCES LTD. VERSUS C.C.,C.E S.T NOIDA [ 2017 (8) TMI 358 - CESTAT ALLAHABAD] . In this case input services were received and consumed in providing Scientific and Technical Consultancy Services by the R D centres of the assessee to its own units for manufacturing drugs and it was held that t he appellant have rightly taken cenvat credit as permissible under Rule 3 read with Rule 2(1) of CCR, 2004 as the services in question have been admittedly used by the manufacturer indirectly in relation to manufacture of final dutiable products. We also find that there is no dispute with regard to the distribution of the credit as permitted in the scheme of the Act and the Rules. The service involved is an input service under the Cenvat Credit Rules for TSL and the tax paid on such service is available as cenvat credit to TSL - Issue is amnswered in favor of appellant. Whether TSL as ISD was entitled to, during the relevant period, distribute under the Cenvat Credit Rules, 2004, the credit of service tax paid as per the BEBP Agreement dated 18.12.1998 between itself and Tata Sons Ltd. exclusively to its Steelworks at Jamshedpur and not to other units of TSL? - HELD THAT:- TSL have rightly contended that there is no Tata Steel Group Companies . The company is Tata Steel Limited, which is incorporated and registered under the Companies Act, 1956 as a public limited company. It has various divisions/units situated in various parts of the country, as detailed hereinabove. The registered and Head Office of the company, including of the said divisions/units, is at Mumbai, the ISD in the instant case. No evidence to the contrary is disclosed in either the show cause notice or in the impugned order, as well as in the instant proceedings. It is settled proposition of law that divisions and units of a company are not separate legal entities/persons. They are part and parcel of the same legal entity, the company, of which they are divisions/units. None of them can be termed as a company as per the Companies Act, 1956. Registration separately as per the provision of the Central Excise Act, 1944 or the Finance Act 1994 as per the requirement of the said statutes and the rules framed thereunder cannot and does not alter this settled legal position. This issue also decided in favor of appellant - TSL as ISD was entitled to distribute the credit of the service tax paid in respect of the service rendered under the BEBP Agreement exclusively to its Jamshedpur Steelworks during the relevant period - issue covered by the decision in the case of MAHINDRA LOGISTICS LTD. VERSUS COMMISSIONER OF CUSTOMS, EXCISE SERVICE TAX, NAGPUR [ 2012 (12) TMI 880 - CESTAT MUMBAI] where it was held that Mahindra and Mahindra Limited is a legal entity which is having two separate divisions. Merely by taking two separate service tax registrations, it cannot be said that both are separate legal entitled. Therefore, demand for the period 15.12.2007 to 10.9.2008 is not sustainable. The CENVAT credit amount involved has been correctly availed, distributed and utilised by the appellants. The tax demanded and penalties imposed upon the appellants are thus unsustainable. The impugned order cannot be sustained - The issue of time limitation need not be considered. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 3
  Issuance of demand notice - attachment of bank account of the assessee in a case in which the assessee has filed an appeal together with a stay application against an order of assessment - Section 44 of the Gujarat Value Added Tax Act, 2003 - HELD THAT:- It appears that against the order of assessment passed by the Assessing Authority, the writ applicant has filed an appeal before the First Appellate Authority. Let Notice for final disposal be issued to the respondents, returnable on 13.01.2021. Having regard to the settled position of law, the respondents would be well advised if they deem fit to revoke the attachment in the meantime. On the returnable date, notify the matter on top of the Board. It is clarified that no amount shall be appropriated from the current bank account of the writ applicant to the State Treasury.

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• Wealth tax

• 2021 (2) TMI 2
  Concealment of wealth - assessee has not filed wealth tax return u/s.14 - penalty proceedings u/s.18(1)(c) of the Act was initiated - when notice was issued u/s.17(1) of the Act, return of wealth declaring taxable wealth has been filed along with payment of consequent taxes - HELD THAT:- Presumption of automatic levy of penalty is completely unsustainable in law, while such presumption of the department negated the discretion vested with the original authority for levying or not levying of such penalty depending upon the facts and circumstances of the case. Further, the deemed concealment of wealth or furnishing of inaccurate particulars of wealth as per Explanation 3 should be subject to the discretion vested with the authority in the matter of levying or not levying of penalty. Levy of penalty u/s.18(1)(c) of the Act, after completion of reassessment in accepting return of wealth would deserves exercise of discretion vested with the authority for not levying penalty - levy of penalty u/s.18(1)(c) of the Act without exercising discretion is not sustainable in law, more particularly, when the assessee has explained the reasons for not filling return of wealth for the concerned assessment year within the time limit as per section 14 of the Act and such reasons are bonafide. In this case, although the assessee has not filed return of wealth under the provisions of section 14 of the Act, but subsequently on issue of notice u/s.17 for reopening of assessment, return of wealth disclosing correct taxable wealth has been filed along with payment of taxes. AO has accepted the return of wealth filed by the assessee without any modification. Even though the deeming provision of Explanation 3 to section 18(1)(c) would come into operation in the event the assessee has not complied with the provisions of section 14 or section 17(1) of the Act, but because the assessee has disclosed taxable net wealth in the return filed in response to notice u/s.17(1) of the Act and paid taxes thereon, the authority would have accepted the explanation furnished by the assessee that he has not filed return of wealth for concerned assessment year within the time limit specified u/s.14 of the Act, on the bonafide presumption that there is no taxable wealth for the relevant assessment years on the disputed land, jewellery and cash on hand. We, further, are of the opinion that Assessing Officer would also have considered the fact that surrender of taxable wealth in the reassessment proceedings would not automatically lead to levy of penalty under consideration and the bonafide understanding of the assessee on the non-taxability cannot be ruled out or negated mechanically by imposing penalty in relation thereto. The component of wealth based on the admission of return of wealth after the issuance of notice for reopening could not fall within mischief of explanation 3 of section 18(1)(c) of the Act. We are therefore of the considered opinion that the Assessing Officer and CWT (A) were erred in levying penalty u/s.18(1)(c) - Decided in favour of assessee.

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• Indian Laws

• 2021 (2) TMI 4
  Maintainability of petition - Jurisdiction - liquor shop license - power of licensing authority to cancel both the licenses of the petitioner without any prior notice proposing to cancel the Majhenpurwa license. Maintainability of petition - HELD THAT:- The preliminary objection raised as to maintainability of the present petition is found not acceptable as a question of law does appear to exist as to the true meaning to be given to section 34(2) of the Act. Also, the proceeding for cancellation of the Gehrukheda license that occasioned the present proceeding has been remitted to the appeal authority by a separate order passed in Writ Tax No. 227 of 2020 on 19.01.2021. As, stated by both sides, the fate of the present petition hangs, at least partly, on the fate of the Gehrukheda license. Then affidavits have already been exchanged - No useful purpose may be served in requiring the petitioner to approach the revising authority at this stage, in such facts. Inherent lack of Jurisdiction - HELD THAT:- It appears that the same may not be entirely correct, in the face of the proceedings as they stand today. Though it is true, no prior notice had been issued to the petitioner to cancel his Majhenpurwa license before the order dated 28.05.2019 came to be passed, two different appeals were filed by the petitioner against that order- one against the cancellation of the Gehrukheda license (Excise Appeal no. 31 of 2019) and the other against the cancellation of the Majhenpurwa license (Excise Appeal no. 32 of 2019). While allowing appeal no. 32 of 2019 on 10.08.2019, the appeal authority specifically observed that the licensing authority may issue a fresh notice to the petitioner to cancel the Majhenpurwa license. That order has attained finality. The ground of patent lack of jurisdiction to cancel the Majhenpurwa license may have existed with the petitioner, when that license came to be cancelled first, on 28.05.2019. Upon order dated 10.08.2019 passed in Excise Appeal No. 32 of 2019, the licensing authority issued the notice dated 29.08.2019. On that date the Gehrukheda license of the petitioner stood cancelled. As further discussed later, the jurisdictional fact to proceed against the Majhenpurwa license, under section 34(2) of the Act, thus arose on 28.05.2019 and it existed on 29.08.2019 - The present proceedings arise solely from that notice. Hence, the challenge raised as to lack of jurisdiction does not survive for consideration in this writ petition. At present, the proceedings instituted after issuance of the notice dated 29.08.2019 alone are to be tested, on their merits. That notice was within jurisdiction. Giving full play to the provisions of section 34(1) and (2) of the Act, in case a licensee commits separate violations with respect to each or more than one license held by him, he may stand exposed to proceedings for cancellation of each such license under section 34(1) of the Act, exclusively. If, however, one out of more license held by a licensee is cancelled, either under clause (a) or (b) or (c) of section 34(1) of the Act, it would expose such a licensee to cancellation of his another/other license/s, irrespective of a complete absence of any violation committed in the operation of the another/other license/s. That is the plain meaning of section 34(2) of the Act - Other than excluding the contingencies specified under clauses (d) (e) of section 34(1) from the scope of applicability to the power conferred under section 34(2) of the Act, the legislature has vested a wide discretion on the licensing authority, in that regard. Thus, the legislative intent, is to confine the power under section 34(2) of the Act to situations involving specified violations - as to payment of fee, breach of any express or implied terms and conditions and conviction for any of the specified offences. Unless a license of a licensee is first cancelled for any such ground, another/other license/s of that licensee cannot be cancelled under section 34(2) of the Act. The proceedings under section 34(2) may arise purely in the core interests of revenue, owing to the deliberate violation committed by the licensee, as may have been found/proven in an earlier proceeding of cancellation of any other license issued under the Act. Yet, no further and other violation may exist as a pre-condition to be satisfied or proven before action may be taken under section 34(2) of the Act to cancel any other license of that licensee. Therefore, the proceedings for cancellation of an earlier license must itself bring out existence of reason/s so grave and serious as may give rise to a satisfaction with the licensing authority, that all or any other license of that licensee be also cancelled in the interest of revenue. Illustratively, but not in any way exhaustively, those may be cases of large scale or organized evasion or avoidance of excise duty; breach of terms and conditions made by way of a regular business practice adopted by the licensee; disentitlement earned to hold any excise license, due to any of the specified convictions or operation of law or any other reason/ground that may spring form the facts already proven in the earlier proceeding, to cancel one or more licence of the same licensee, under section 34(1)(a) or (b) or (c) of the Act - oming to the facts of the present case, it would be wholly pre-mature to reach a conclusion that the ground specified in the showcause notice is wholly insufficient or is sufficient for the purposes of examining the correctness or otherwise of the cancellation of the Majhenpurwa licence. It is so because the basic facts giving rise to the cancellation of the Gehrukheda licence, have yet not attained finality. By the order passed in Writ Tax No. 277 of 2020, decided on 19.01.2021, those proceedings have been remanded to the Appeal Authority to examine the same afresh and to record it s conclusions whether the petitioner was in possession of tampered QR Code and Caps. Till the Appeal Authority reaches a firm conclusion as to that, in the facts of the present case, the cancellation of Majhenpurwa licence may not be examined, simultaneously. Thus, for the purpose of clarification, it is stated that in case the petitioner succeeds in establishing that his Gehrukheda licence was not liable to be cancelled as he had not violated either section 34(1) (a) or (b) or (c) of the Act, the present proceedings to cancel the Majhenpurwa license would necessarily fall. However, if the Appeal Authority does reach a conclusion adverse to the petitioner (in that case), it would be for the Licensing Authority to then examine the existence or otherwise of an adequate reason or ground to exercise his extraordinary discretionary power to cancel the Majhenpurwa licence of the petitioner under Section 34(2) of the Act. Once the license of the original licensee was restored, the replacement licensee was found to have no rights surviving with him to claim continuance of his license. Such is not the case here. As observed above, the Gehrukheda license stands cancelled and also, it is not clear if the Majhenpurwa license had ever been renewed for the Excise Year 2018-2019. In any case, that Excise Year is long over - revival of that license is not warranted, at this stage. Petition allowed in part.

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• 2021 (2) TMI 1
  Dishonor of Cheque - insufficiency of funds - Seeking four months time to be granted to the petitioner to pay compensation amount - HELD THAT:- Taking into consideration the affidavit that has been furnished by the petitioner undertaking that he will make the deposit of Rs. 4 lakhs immediately and the balance amount of Rs. 11 lakhs will be paid within a period of 15 days, this Court deems it appropriate to extend the time to make the complete payment upto 12.02.2021. Needless to say that the petitioner will put in appearance before the Sessions Court, Faridabad on 29.01.2021 and make a deposit of Rs. 4 lakhs through demand draft and for depositing the remaining amount of Rs. 11 lakhs, the petitioner is granted time upto 12.02.2021. The arrest of the petitioner is, therefore, stayed till 12.02.2021. In case, the petitioner fails to deposit the amount of Rs. 4 lakhs with the Sessions Court, Faridabad as undertaken in the affidavit on 28.01.2021, the interim relief allowed to him shall be deemed to be vacated. It is also made clear that in case the petitioner does not deposit the amount of Rs. 11 lakhs before the Sessions Court on or before 12.02.2021, any concession allowed to him will also deemed to be vacated, apart from that the petitioner would also face the perjury proceedings for non-compliance of the affidavit as furnished to the 4 of 5 High Court. Petition disposed off.

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