Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 23, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Validity of final order of confiscation - ex-parte order - this writ application is not entertained on the short ground that the writ applicant has a statutory remedy of filing an appeal before the Appellate Authority under Section 107 of the Act. If any appeal is filed, the writ applicant can take up, as one of the grounds while challenging the final order of confiscation, that the same is ex-parte, or to put it in other words, no opportunity of hearing was given to the dealer. - HC
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Cancellation of registrations of petitioner - Non-payment of GST dues alongwith interest and penalty - Upon such determination the petitioner firm shall pay the determined monthly installments within the 7th of every month - it is further provided that if the petitioner firm do not comply with the requirement of paying the determined monthly installment within the 7th of every month, there shall be a periodical review by the departmental authority every month and in the event of default, the earlier order of cancellation may be revived by the department without any further reference. - HC
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Refund of input service Credit - transitional provision under Section 142(3) of Central Goods and Service Tax Act, 2017 read with Section 11-B of Central Excise Act, 1944 and Rule 2(l) and Rule 3 of the CENVAT Credit Rules, 2004 - the petitioner never had a right to claim refund under the existing law and had failed to exercise their right to claim CENVAT Credit as per law and wrongly claimed the impugned amount as credit in Service Tax Return (S.T. 3 return). - There are no reason to interfere with the findings and reasons assigned by the adjudicating authority as well as the appellate authority rejecting the application for refund filed by the petitioner under section 11B of Central Excise Act read with Section 142(3) and 174 of CGST Act - HC
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Cancellation of GST Registrations - returns not filed for a continuous period of 6 months - Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, the impugned orders are liable to be quashed and with few safeguards - these petitioners deserve a chance and therefore should be allowed to revive their registration so that they can proceed to regularize the defaults. - HC
Income Tax
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Benefit of Vivad se Vishwas Scheme - the stand taken by the department is not sustainable. To begin with the act was framed for resolution of the disputed taxes and the matters connected therewith and thereto. The resolution of disputed taxes is thus prime purpose of enactment of the act. We would therefore adopt an interpretation which would further this intention instead of restricting its scope. More importantly what the CBDT had done under its circular dated 04.12.2020 was to issue a clarification. A clarification by its very nature is declaratory. If for applicability of such clarification a cut off date is introduced it would run counter to the very concept of a clarification. If the CBDT circular is not read-down as to remove the rigors of the cut off date by holding that the same is not sacrosanct the same may suffer from vice of arbitrariness.- HC
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Revision u/s 263 by CIT - All particulars were available before the PCIT in respect of such income and the PCIT upon being satisfied, accepted such declaration. Thus, if the contention of the revenue is accepted that the PCIT has power to invoke Section 263 of the I.T. Act, the same, in our considered view, would frustrate the object behind introduction of such Scheme. The PCIT was not justified in invoking the power under Section 263 of the I.T. Act as it would amount to revising a decision taken by the PCIT on such declaration by the assessing officer which is not contemplated under the Income Tax Act. - HC
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Provisional attachment of the subject land u/s 281B - Rights of transferee or a partner’s interest - The assessee in the case on hand is Inviddual / Partner. The provisional attachment is of the property, which belongs to the writ-applicant (Partnership Firm). The plain language of the provision of Section-281B is plain and simple. It provides for the attachment of the property of the assessee only and of no one-else. The golden rule of interpretation of the statutes is that the statute has to be construed according to its plain, literal and grammatical meaning, unless it leads to absurdity. The subject land i.e. Block No.142 not being the property of the assessee as such, was not open to provisional attachment. - HC
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Exemption u/s 11 - Inadequate rent received by the respondent/assessee - The submission of the learned counsel for the appellant (Revenue) that the respondent had not taken any security deposit from Hamdard Dawakhana (Wakf) and thereby violated Section 13(2)(b) of the Act, has also been stated only to be rejected. Security Deposit may be one of the factors to be taken into consideration by the Assessing Officer for coming to a conclusion if the rent was “adequate”, however, it cannot be a sole determinative factor. - HC
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Validity of Reopening of assessment u/s 147 - notice issued to dead person - curable defect u/s 292B or not ? - The assessee on whom the notice must be sent must be a living person i.e legal heir of the deceased assessee, for the same to be responded. This in fact is the intent and purpose of the Act. Therefore, Section 292B of the Act cannot be invoked to correct a foundational / substantial error as it is meant so as to meet the jurisdictional requirement. - HC
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Penalty levied u/s 271 (1) (c) - As the appellants had disclosed the income, after detection by the department and as per the terms of settlement, the assessing officer initiated the penalty proceedings, to which, the appellants / assesses did not submit any explanation to the effect that there was no concealment of income or furnishing of inaccurate particulars of such income, which culminated in imposition of penalties under section 271(1)(c), we do not find any infirmity or illegality in initiating the penalty proceeding - HC
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Reopening of assessment u/s 147 - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - In view of the ratio propounded by the Allahabad and Delhi High Courts on the subject, the reassessment notices under Section 148 of the Act of 1961 served on the petitioners on or after 1.4.2021 are set aside having been issued in reference to the unamended provisions and the Explanations are to be read as applicable to reassessment proceedings if initiated on or prior to 31.3.2021, but it would be with liberty to the assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making all the compliances as required by law, if limitation for it survives. - HC
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Validity of ex-parte impugned order - It is clear that on account of the inability and omission on the part of the petitioner to file his objections and produce documents etc., due to bonafide reasons, unavoidable circumstances and sufficient cause, the respondents have proceeded to pass the ex-parte impugned order which deserves to be set aside and the matter remitted back to the respondents for reconsideration afresh after giving one more opportunity to the petitioner. - HC
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Taxation of software reimbursements as Royalty - assessee strongly contends that reimbursements sought by the assessee represent recovery of expenses incurred by it, on behalf of Autoliv India, on an ‘at-cost’ basis - Since the term ‘Royalty’ has been defined in the DTAA, definition of the term ‘Royalty’ under the Act cannot be applied. Considering the facts of the case in totality, we hold that reimbursement towards software charges received by the assessee from Autoliv is not taxable since the same does not represent any income in the hands of the assessee - AT
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Penalty u/s 271(1)(b) - non-compliance of notices u/s. 142(1) - , ‘blind faith’ in his local consultant - There has been no explanation as to why the consultant, after being apologetic of his consent, continued to behave in such an irresponsible manner, amounting to gross professional misconduct, which cannot be lightly inferred. The other reason stated for the inordinate delay in filing the appeals is the non-connectivity with the Revenue's e-portal, which could at best explain the delay by a few days. Under the circumstances, find no merit in the assessee's case qua penalty u/s. 271(1)(b) as well. - AT
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Disallowance of interest expenses u/s. 36(1)(iii) - disallowance of financial cost attributable to capital work in progress and project work in progress - In case, the assessee has taken any loan for specific purpose of acquisition of asset or execution of project, then interest attributable to said purpose needs to be capitalized to work in progress account - AT
Indian Laws
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Dishonor of Cheque - acquittal of the accused - it is evident that the complainant has not approached the Court with clean hands. He has not referred the date of payment of loan and no reasons are given for charging no interest to such a huge amount, that too during pendency of the civil litigation between the parties. Further, there is no explanation from the complainant as to why he has issued two cheques on the same day for ₹ 2.00 Lakhs each, instead of one cheque. - the judgment of acquittal does not call for any interference by this Court. - HC
Service Tax
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Refund of service tax - Unjust enrichment - Period of limitation - Tax paid on self assessment basis - Claim of refund without challenging the assessment, to claim the benefit of exemption - Matter referred to Larger Bench to decide the issue, "Whether refund claim of service tax is maintainable in the absence of any challenge or assessment or self-assessment in appeal or not?" - AT
Central Excise
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SSI Exemption - clubbing of clearances of two units - dummy units - Use of trade name of other company - In fact, there is no specific allegation that TLGW is a dummy unit. The department has proceeded to club the clearances of both these units without raising such allegation. It is found that the department has miserably failed to establish any mutuality of interest or cash flow between both the units. Further, there is no show cause notice issued to M/s.TLGW which the department alleges to be a dummy unit. - AT
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Seeking for recovery of the short paid duty amount - clearances made to its other units - the principle or doctrine of revenue neutrality is applicable in the case in hand inasmuch as the higher duty amount payable by the appellant under Rule 4 ibid would be available to the sister’s unit as Cenvat credit. Furthermore, it is noticed from the available records that the department was in doubt with regard to applicability of the proper valuation rules to the facts of the present case. - it cannot be said that there is element of mens rea on the part of the appellant in defrauding the Government revenue and thus, the extended period of limitation, was not available to the department for initiation of the show cause proceedings. - AT
VAT
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Recovery of the alleged outstanding dues - Creation of charge over the land - The very action on the part of the department in creating a charge over the agricultural land owned by the writ applicant herein being the father of the dealer is without jurisdiction. If any charge has been created in the revenue record, the same shall stand cancelled. It shall be open for the department to proceed against the dealer. If the registered dealer has any immovable property of his ownership, it is always open for the department to attach such property and recover its dues- HC
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Suppression of tax - alleged unaccounted sales - scope of the word 'an estimate' - one need not dwell into all details furnished by the Intelligence Officer in Annexure-A order. It is not the case of dealer that the details, for any purpose, incorporated in the penalty order are incorrect, unrelated etc. The apportionment of profit, percentage, etc are again in line with the method adopted by the dealer. The Intelligence Officer has found out the suppression of sales turnover in a particular sale transaction through artificial and unacceptable apportionment of sale price between taxable item and exempt item. - The only ground raised by referring to estimation of suppressed turnover is equally untenable and accordingly rejected. - HC
Case Laws:
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GST
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2022 (2) TMI 948
Seeking grant of bail - availment and utilization of bogus input tax credit on the strength of fraudulent purchase invoices without any physical receipt or actual purchase of goods - evasion of tax - offences under Sections 132(1) (c), 132(1)(b) and 132(1)(i) of the OGST Act, 2017 - HELD THAT:- Bail, as it has been held in a catena of decisions, is not to be withheld as a punishment. Bail cannot be refused as an indirect method of punishing the accused person before he is convicted. Furthermore, it has to be borne in mind that there is as such no justification for classifying offences into different categories such as economic offences and for refusing bail on the ground that the offence involved belongs to a particular category. It cannot, therefore, be said that bail should invariably be refused in cases involving serious economic offences. It is not in the interest of justice that the Petitioners should be in jail for an indefinite period. No doubt, the offence alleged against the Petitioners is a serious one in terms of alleged huge loss to the State exchequer, that, by itself, however, should not deter this Court from enlarging the Petitioners on bail when there is no serious contention of the Respondent that the Petitioners, if released on bail, would interfere with the trial or tamper with evidence. Having regard to the entire facts and circumstances of the case, especially the fact that both the bread earning sons of a family have been in custody for over a year now, there are no justification for detaining the Petitioners in custody for any longer. As a side note it observed that more and more such cases are brought to the fore where the mere pawns who have been used as a part of larger conspiracy of tax fraud have been brought under the dragnet by the prosecution. It is perhaps time that the prosecution will do well to follow the trail upstream and bring the upstream parties who are the ultimate beneficiaries who are the gainers in these evil machinations. It is directed that the Petitioners in both the BLAPLs be released on bail on such terms and conditions as deemed fit and proper by him/ her with the conditions imposed - application allowed.
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2022 (2) TMI 947
Refund of ITC - inward supply charged by the supplier - Input Tax Credit is distributed by the input service distributor - HELD THAT:- The writ applicant received the aforesaid Input Tax Credit of the integrated tax from its ISD and ITC inward supply charged by the supplier as is permissible under the law. It is the case of the writ applicant that being a SEZ Unit making Zero Rated Supplies under the GST, the writ applicant has not been utilized the credit and the same is lying unutilized in the Electronic Credit Ledger. The writ applicant filed the refund application in Form GST RFD 01A on 3rd April 2019. No sooner the writ applicant filed the above refund application, a show cause notice in Form GST RFD 08 dated 17th May 2019 came to be issued calling upon the writ applicant to show cause. The Assistant Commissioner, thereafter, proceeded to pass an order in Form GST RFD 06 dated 27th May 2019 rejecting the refund claim of the writ applicant of ₹ 21,66,867/- under Section 54 of the CGST Act, 2017 - The writ applicant, thereafter, preferred an appeal before the appellate authority i.e. the Joint Commissioner (appeals). The Joint Commissioner dismissed the appeal. The issue raised in the present writ application is no longer res integra in view of the judgement and order passed by this Court dated 11th March 2020 in the case of M/S. BRITANNIA INDUSTRIES LIMITED VERSUS UNION OF INDIA [ 2020 (9) TMI 294 - GUJARAT HIGH COURT ] where it was held that the stance of the department that the petitioner is not entitled to seek the refund of the ITC paid in connection with goods or services supplied to SEZ unit is not tenable. The writ applicant could be said to be entitled to claim the refund of the IGST lying in the Electronic Credit Ledger as there is no specific supplier who can claim the refund under the provisions of the CGST Act and the CGST Rules as Input Tax Credit is distributed by the input service distributor - respondents are directed to process claim of refund made by the writ applicant for the unutilized IGST Credit lying in the Electronic Credit Ledger under Section 54 of the CGST Act 2017 - Application allowed.
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2022 (2) TMI 946
Permission to upload Form GST ITC-01 on the online portal - input tax credit under Section 18(1)(c) of the GST Acts - HELD THAT:- It appears on plain reading of the communication regarding submission of I.T.C. 01, that the department tried to upload the ITC 01, but due to technical glitch in the GSTN portal, the authority concerned was unable to upload the ITC 01. The authority, thereafter, inquired with the E.D.P. Cell Gujarat as to what can be done in the matter. The E.D.P. Cell Gujarat, in turn, asked the Assistant Commissioner to inform the GSTN through a Nodal Officer. The Assistant Commissioner informed the Nodal Officer. However, nothing could be worked out - the writ applicant also is at fault because while trying to upload the Form ITC 01, it appears that a wrong offline tool was used. It is evident from the affidavit-in-reply filed by the department. If the writ applicant is otherwise entitled to claim the Input Tax Credit under Section 18(1)(c) of the Act, a technical glitch in the portal should not deprive him of such a claim. It was within the capacity of the department itself to resolve the controversy and see to it that the needful is done - Mr. Uchit Sheth, the learned counsel appearing for the writ applicant is right in his submission that had the department at the earliest point of time brought to the notice of his client about wrong offline tool being used by the writ applicant, then probably, something could have been worked out. The respondents are directed to do the needful and see to it that the writ applicant is able to claim the Input Tax Credit by uploading the Form ITC 01. Let this exercise be undertaken at the earliest and completed within six weeks from the date of receipt of the writ of this order - application disposed off.
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2022 (2) TMI 945
Maintainability of application - availability of alternative remedy of appeal - Validity of final order of confiscation - ex-parte order - HELD THAT:- It appears that despite directing the authority not to proceed to pass the final order of confiscation, the authority, during the pendency of this writ application, proceeded to pass the final order in Form MOV 11. According to Mr. Sheth, the final order of confiscation in Form MOV 11 is ex-parte - this writ application is not entertained on the short ground that the writ applicant has a statutory remedy of filing an appeal before the Appellate Authority under Section 107 of the Act. If any appeal is filed, the writ applicant can take up, as one of the grounds while challenging the final order of confiscation, that the same is ex-parte, or to put it in other words, no opportunity of hearing was given to the dealer. This writ application is disposed off without expressing any opinion on the merits of the matter reserving the liberty in favour of the writ applicant to file an appropriate appeal before the Appellate Authority challenging the legality and validity of the final order passed by the authority of confiscation in Form MOV 11.
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2022 (2) TMI 944
Cancellation of registrations of petitioner - Non-payment of GST dues alongwith interest and penalty - security services to the outlets of the AIRCEL under a contract agreement - failure to pay the dues on the ground that AIRCEL itself were out of business, a huge amount of payment is due to the petitioner, and there is big loss in business - HELD THAT:- The petitioner firm express their willingness to pay the defaulted tax amount plus the interest and the penalty as may be assessed by the department but because of the precarious financial condition they are unable to pay it in one go and therefore, makes a request that the petitioner be allowed to make the necessary payments in 48 (forty eight) installments. A reading of paragraph 5 of the Circular dated 28.02.2015 would make it discernable that the Commissioner of GST is empowered and has the discretion of granting sanction to pay arrear of the GST in installments upto maximum of 24 (twenty four) monthly installments and the Chief Commissioners are given the jurisdiction and authority to sanction the payment of the arrears in monthly installments greater than 24 (twenty four) upto a maximum of 36 (thirty six) - the petitioner firm in this writ petition claims that as because the precarious financial condition it would not be possible for them to pay the entire amount due plus the interest and penalty within 36 (thirty six) installments, which is the maximum limit for the Chief commissioner and therefore, seeks to invoke the discretionary power of the Court in allowing them to pay the dues in 48 (forty eight) installments. Without taking any specific view and in order to provide some succor to the petitioner firm so that they can remain in the business they are presently undertaking, it is provided that the amount of ₹ 2,58,30,801/- plus the interest and the penalty that may be applicable under the law be evaluated by the department and the assessed amount be determined. The said amount be equally divided by 48 and the monthly amount payable by the petitioner firm be determined and communicated to the petitioner. Upon such determination the petitioner firm shall pay the determined monthly installments within the 7th of every month - it is further provided that if the petitioner firm do not comply with the requirement of paying the determined monthly installment within the 7th of every month, there shall be a periodical review by the departmental authority every month and in the event of default, the earlier order of cancellation may be revived by the department without any further reference. Petition disposed off.
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2022 (2) TMI 934
Refund of input service Credit - transitional provision under Section 142(3) of Central Goods and Service Tax Act, 2017 read with Section 11-B of Central Excise Act, 1944 and Rule 2(l) and Rule 3 of the CENVAT Credit Rules, 2004 - HELD THAT:- In a recent judgement of the Hon ble Supreme Court, in the case of UNION OF INDIA ORS. VERSUS VKC FOOTSTEPS INDIA PVT LTD. [ 2021 (9) TMI 626 - SUPREME COURT] , the Hon ble Supreme Court dealt with the provision of refund of tax under Section 54 of the CGST Act and has extensively dealt with the principles of refund in the matter of taxation. In the said case, the Hon ble Supreme Court was dealing with the conflicting view of Hon ble Gujarat High Court and Hon ble Madras High Court on the point of validity of Rule 89 (5) which provided a formula for a refund of ITC and the case of refund on account of inverted duty structure under sub-Section 3 and Section 54 inter alia dealing with credit accumulation on account of rate of tax on inputs being higher than the rate of tax on output supplies. The Hon ble Supreme Court ultimately held that refund is statutory right and the extension of the benefit of refund only to the unutilised credit that accumulates on account of rate of tax on input goods being higher than the rate of tax on output supplies, by excluding unutilised input tax credit that accumulated on account of input services, is a valid classification and a valid exercise of legislative power. Though in the instant case we are not dealing with section 54 of CGST Act but are concerned with transitional provisions dealing with refund under section 142(3) of the CGST Act in cash under certain circumstances in connection with taxes suffered under the previous regime. However, the fundamental concepts and the interpretation of law relating to refund would still be the same and what is to be seen is whether the petitioner qualifies for entitlement of refund under section 142(3) of CGST Act in the light of the facts and circumstances of this case. In the instant case the petitioner has failed to follow the prescribed procedure to avail such a credit and consequently having lost such a right, he cannot claim revival of such a right and claim refund of the same by virtue of transitional provisions under Section 140(3) of the CGST Act. The facts involved in the present case would demonstrate that the petitioner had no existing right on the date of coming into force of CGST Act to avail credit of the service tax paid on port services as CENVAT Credit and accordingly, the provision of Section 140(3) of the CGST Act cannot be construed to have conferred such a right which never existed on the date of coming into force of CGST Act. From the entire records of the case this court does not find any explanation from the side of the petitioner as to under what circumstances the Bill dated 23.05.2017 was received by them as late as on 20.09.2017 (although as per the petitioner the port services were availed and the payment including service tax was made to the port authorities in the month of April 2017), except the statement that delayed receipt of the bill was beyond their control. The provision of section 142(3) does not entitle a person to seek refund who has no such right under the existing law or where the right under the existing law has extinguished or where right under the new CGST regime with respect to such claim has not been exercised in terms of the provision of CGST, Act and the rules framed and notifications issued. Meaning thereby, section 142(3) does not confer a new right which never existed under the old regime except to the manner of giving relief by refund in cash if the person is found entitled under the existing law in terms of the existing law - the argument of the petitioner by referring to second proviso to section 142(3) of CGST Act that it indicates that section 142(3) would apply to the situations where the assessee has failed to take transitional credit under section 140(1), is also devoid of any merits. The second proviso only indicates that if the assessee has taken transitional credit he will not be entitled to refund. Certainly, an assessee cannot simultaneously claim transitional credit as well as refund of the same amount. The second proviso to section 143(2) cannot be said to be an eligibility condition to claim refund but is only a condition which governs refund as an assessee cannot be permitted to have transitional credit as well as refund of the same tax amount. It is apparent from the impugned orders that the specific case of the respondent is that the petitioner had claimed CENVAT Credit under ST-3 return thereby treating the services involved in the present case as their input services used for providing output service, whereas they are not output service provider and the same cannot be used for providing output services. Therefore, it cannot be their input services under Rule 2 (l) of CENVAT Credit Rules, 2004 - the authority has rightly held that petitioner had wrongly claimed Credit of the impugned service tax under ST-3 return and omitted to claim the impugned service tax as CENVAT Credit in ER-1 Return. The authorities have held in the impugned orders that in the instance case, the timeline for claiming CENVAT Credit qua the service tax paid on port services was not followed by the petitioner, although the services were availed, the entire payment was made and the bill was also generated in the month of April/May, 2017. Further, it has also been held in the impugned orders that the petitioner not only failed to claim the CENVAT Credit as per law, but illegally claimed the credit of the same while filing service tax return although the petitioner was not entitled to do so as the petitioner was not registered as a service provider. The authorities have also held that the service tax paid on port service was not eligible for refund under the existing law as the said services were not utilised for export - the petitioner never had a right to claim refund under the existing law and had failed to exercise their right to claim CENVAT Credit as per law and wrongly claimed the impugned amount as credit in Service Tax Return (S.T. 3 return). There are no reason to interfere with the findings and reasons assigned by the adjudicating authority as well as the appellate authority rejecting the application for refund filed by the petitioner under section 11B of Central Excise Act read with Section 142(3) and 174 of CGST Act - petition dismissed.
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2022 (2) TMI 933
Condonation of delay in filing appeal - only ground on which the impugned order has been passed is that the appeal was filed beyond the time limit prescribed under Section 117 of the TNGST Act, 2017 - Cancellation of GST Registrations - returns not filed for a continuous period of 6 months - Section 29 of the TNGST Act, 2017 r/w Rule 22 of TNGST Rules - HELD THAT:- As original or as appellate authority exercising power under the respective enactments, quasi judicial officers were bound by the provisions of the Act and the limitation under it, they have acted in accordane with law. They cannot look beyond the limitations prescribed under provisions of the Act. Therefore, no fault can be attributed to their action - Under these circumstances, no fault can be attributed to the impugned orders passed by the Appellate Commissioner inasmuch as they cannot exercise jurisdiction beyond the provisions of the Act and are bound to Act in accordance of the provisions of the Act. At the same time, it is found that there are overwhelming reasons for granting reliefs to these petitioners to restore their registration. Sub Section (2) to Section 29 deals with a situation where, a proper officer may cancel the registration of a person from such date, including a retroprospective date, as he may deem such. All the cases under consideration fall under situation under Sub Clause (2)(c) i.e where a registered person other than the person specified in Clause (b) has failed to furnish returns for a continuous period of 6 months - All these petitioners were issued with a proper notice as is contemplated under the aforesaid provision. The orders were also passed after giving petitioners sufficient opportunity of being heard. Majority of the petitioners failed to respond notices issued by the respondent State Tax Officer proposing the cancellation of the registration of the respective petitioners. The time for filing appropriate application for revoking the cancellation of registration was extended either from date of service of the said cancellation order or 31.08.2020 which was later - all these petitioners whose registration had been cancelled prior to 12.06.2020 were given a fresh opportunity to file an application for revocation of cancellation of registration in terms of the Central Goods and Services Tax (Removal of Difficulties) Order, 2020 vide Order No.01/2020-Central Tax, Central Board of Indirect Taxes and Customs, dated 25.06.2020. However, none of the petitioners opted to exercise the privilege. The provisions of the GST Enactments and the Rules made there under read with various clarifications issued by the Central Government pursuant to the decision of the GST Council and the Notification issued thereunder the respective enactments also make it clear, intention is to only facilitate and not to debar and de-recognised assesses from coming back into the GST fold. Thus, the intention of the Government has been to allow the persons like the petitioners to file a fresh application and to process the application for revocation of the cancellation of registration by the officers - no useful purpose will be served by keeping these petitioners out of the bounds of GST regime under the respective GST enactments other than to allow further leakage of the revenue and to isolate these petitioners from the main stream contrary to the objects of the respective GST enactments. Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, the impugned orders are liable to be quashed and with few safeguards - these petitioners deserve a chance and therefore should be allowed to revive their registration so that they can proceed to regularize the defaults. The authorities acting under the Act may impose penalty with the gravity of lapses committed by these petitioners by issuing notice. If required, the Central Government and the State Government may also suitably amend the Rules to levy penalty so that it acts as a deterrent on others from adopting casual approach. The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid - petition allowed.
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Income Tax
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2022 (2) TMI 943
Benefit of Vivad se Vishwas Schem e - declaration of the petitioner was rejected on the ground that the CBDT circular dated 04.12.2020 does not cover his case - assessee is not eligible to avail benefit under VSVS as there was no appeal pending as on 31.01.2020 - Condonation of delay - HELD THAT:- What hurts the petitioner is the portion of the clarification contained in the CBDT circular which provides that the application for condonation of delay must have been filed before the date of issuance of circular. The petitioner fulfills all other conditions namely the time for filing appeal has expired during the period from 1st April 2019 to 31st Jan 2020, that he had filed an application for condonation of delay which was pending. He had also filed an appeal before the date of filing of the declaration. We are informed that there is no stage of formal admission of the appeal or condonation application before the tribunal and therefore the reference to this term of admission of appeal in the circular is superfluous. In this context the question arises whether the specification of the filing of the application for condonation before the date of circular is sacrosanct as to destroy the right of assessee to apply for settlement if even though all other conditions are specified. This question has been examined by several High Courts. See case of the Telangana High Court in case of Boddu Ramesh v. Designated Authority [ 2021 (6) TMI 1054 - TELANGANA HIGH COURT] and MAHESHBHAI SHANTILAL PATEL [ 2021 (9) TMI 1237 - GUJARAT HIGH COURT] Independently also we are of the view that the stand taken by the department is not sustainable. To begin with the act was framed for resolution of the disputed taxes and the matters connected therewith and thereto. The resolution of disputed taxes is thus prime purpose of enactment of the act. We would therefore adopt an interpretation which would further this intention instead of restricting its scope. More importantly what the CBDT had done under its circular dated 04.12.2020 was to issue a clarification. A clarification by its very nature is declaratory. If for applicability of such clarification a cut off date is introduced it would run counter to the very concept of a clarification. If the CBDT circular is not read-down as to remove the rigors of the cut off date by holding that the same is not sacrosanct the same may suffer from vice of arbitrariness. We are informed that the scheme for settlement was extended from time to time and finally the last extension ended on 31.03.2021. The interpretation that we have adopted therefore does not make a right of a person to seek settlement open ended. It has a terminal point of 31.03.2021 in any case. In the result the petitions are allowed. Impugned orders dated 22.03.2021 are set aside. The declarations of the petitioners shall be accepted. The same would be thereafter dealt with as provided under the Act.
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2022 (2) TMI 942
Investments made in a subsidiary company - HELD THAT:- Identical question arose for consideration in the assessee s own case for the assessment years 1992-93 and 1993-94 which were also considered by the tribunal by the consolidated order dated 29th October, 2003 which is impugned before us for the assessment year 1994-95. For the assessment year 1994-95, the assessee carried the matter in appeal before this Court [ 2014 (11) TMI 1255 - CALCUTTA HIGH COURT ] and by judgment the appeal was allowed. The same judgment was followed in the assessee s own case for the assessment year 1993-94. Thus, we find that there is no distinguishing factor in the case on hand for not applying the decisions of this Court rendered for the earlier assessment years which also challenged the very same impugned order. - Decided in favour of assessee.
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2022 (2) TMI 941
Revision u/s 263 by CIT - benefit of Income Declaration Scheme Rules 2016 - whether Tribunal committed substantial error in holding that once the income offered is accepted by the IDS, the Department cannot revise the assessment order by invoking the power under Section 263 ? - HELD THAT:- This Court finds that Chapter IX of the Finance Act, 2016 is a complete code by itself. It provides an opportunity to an assessee to offer income, which was not disclosed earlier, to tax. Chapter IX provides for a special procedure for disclosure and charging income to tax. It lays down the procedure for disclosure of such income; the rate of income tax and the penalty to be levied thereupon and the manner of making such payment. Under the said scheme the competent authority has been vested with the power to accept the declaration made by the assessee and such power to be exercised only upon being satisfied with such disclosure. It is well settled that a statutory authority has to function within the limits of the jurisdiction vested with him under the statute. Thus, once the declaration is accepted by the PCIT such authority is estopped from taking any steps which would in effect amount to reopening and/or revising the decision already taken on such declaration. The said scheme was introduced in order to encourage an assessee to make a disclosure of the income not disclosed earlier. PCIT in the instant case invoked its power under Section 263 in respect of an item of income which was declared in terms of the said scheme. All particulars were available before the PCIT in respect of such income and the PCIT upon being satisfied, accepted such declaration. Thus, if the contention of the revenue is accepted that the PCIT has power to invoke Section 263 of the I.T. Act, the same, in our considered view, would frustrate the object behind introduction of such Scheme. The PCIT was not justified in invoking the power under Section 263 of the I.T. Act as it would amount to revising a decision taken by the PCIT on such declaration by the assessing officer which is not contemplated under the Income Tax Act. Thus, all materials were available before the PCIT when the declaration made under Section 183 of the Finance Act were considered and accepted. Therefore, the assumption of jurisdiction by the PCIT under Section 263 of the Act is wholly without jurisdiction. - Decided against revenue.
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2022 (2) TMI 940
Provisional attachment of the subject land u/s 281B - Rights of transferee or a partner s interest - Attachment of partnership Firm's property - distinction between a case where a partner of a firm assigns his/her share in favour of a third person and a case where a partner constitutes a sub-partnership with his share in the main partnership - whether the revenue could have proceeded to attach the subject property in the form of land, which indisputably is of the ownership of the writ-applicant - Partnership Firm? - HELD THAT:- The plain reading of Section-281B of the Act would make it clear that the same provides for the provisional attachment of the property belonging to the assessee for a period of six months from the date of such attachment unless extended, but excluding the period of stay of the assessment proceedings, if any. Under Subsection (1) of Section 281B of the Act thus, where during the pendency of any proceedings for assessment or reassessment, if the Assessing Officer is of the opinion that for the purposes of protecting the interest of Revenue, it is necessary so to do, he may with the previous approval of the higher authority pass an order in writing provisionally attaching the property belonging to the assessee. These are drastic powers permitting the Assessing Officer to attach any property of an assessee even before the completion of assessment or reassessment. These powers are thus in the nature of attachment before judgment. They have provisional applicability and in terms of sub-section (2) of section 281B of the Act, a limited life. Such powers must, therefore, be exercised in appropriate cases for proper reasons. Such powers cannot be exercised merely by repeating the phraseology used in the section and recording the opinion of the officer passing such order that he was satisfied for the purpose of protecting the interest of Revenue, it was necessary so to do. The assessee in the case on hand is Arnav Savaliya. The provisional attachment is of the property, which belongs to the writ-applicant Partnership Firm. The plain language of the provision of Section-281B is plain and simple. It provides for the attachment of the property of the assessee only and of no one-else. The golden rule of interpretation of the statutes is that the statute has to be construed according to its plain, literal and grammatical meaning, unless it leads to absurdity. The subject land i.e. Block No.142 not being the property of the assessee as such, was not open to provisional attachment. Even if we go by the case of the revenue that there is some interest of Savaliya involved in the land in question, the same will not make the subject land of the ownership of the assessee i.e. Arnav Savaliya. We once-again remind ourselves of the fine distinction drawn by the Supreme Court in the case of Sunil J. Kinariwala [ 2002 (12) TMI 5 - SUPREME COURT ] between a case where a partner of a firm assigns his/her share in favour of a third person and a case where a partner constitutes a sub-partnership with his/her share in the main partnership. The case on hand indisputably is not one of a sub-partnership though in view of Section-29(1) of the Partnership Act, Arnav Savaliya as an assignee may become entitled to receive the assigned share in the profits from the writ-applicant Firm, not as a sub-partner because no sub-partnership came into existence, but as an assignee to the share of profit of the assigner-partner viz. Nitaben Shaileshbhai Radadiya. In the overall view of the matter, we are convinced that the provisional attachment of the subject land under Section-281B of the Act at the instance of the revenue is not sustainable in law. WP allowed - The impugned order of provisional attachment dated 29.05.2021 to the extent it includes the subject land i.e.Block No.142, New Block No.166, T.P.-22, F.P.-53, admeasuring 11981 sq.mtrs. situated at Village Valak, Taluka Kamrej, District Surat, is hereby quashed and set aside.
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2022 (2) TMI 939
Disallowance u/s 40A(3) - cash payments for acquiring land - HELD THAT:- Undoubtedly, the issue is decided by the coordinate benches in 38 cases of the group concerns where the identical disallowance u/s 40 A (3) of the income tax act has been deleted. On perusal of the most of the decisions, it is found that the coordinate benches have followed the decision passed by the coordinate bench in case of M/s West Land Developers Private Limited [ 2014 (12) TMI 254 - ITAT DELHI] . DR could not show us any reason or fresh material that why should we deviate from the orders of the coordinate benches. Even otherwise, judicial discipline, rule of consistency and rule of precedence requires that unless those orders are upset, same should be followed. Therefore respectfully following the decision of the coordinate benches, we direct the learned assessing officer to delete the disallowance as under section 40A (3). Addition on account of interest on PDCs paid out of books of account - interest paid in cash outside the books of account on Post Dated Cheques (PDCs) - HELD THAT:- Undoubtedly, the issue is decided by the coordinate benches in cases of the group concerns COUNTRYWIDE PROMOTERS PVT. LTD. AND VICE - VERSA [ 2021 (5) TMI 897 - ITAT DELHI] where the identical addition made on account of PDCs Interest has been deleted on similar facts. DR was unable to bring on record any fresh evidence or material to show us any valid and justifiable reason to deviate from the earlier orders of the coordinate benches as discussed above. The judicial discipline, rule of consistency and rule of precedence requires that unless those orders on same facts in case of other group companies are upset or facts are different or any fresh material or any evidence is brought on record to deviate from earlier decisions, same should be followed. Therefore respectfully following the decision of the coordinate benches, we direct the learned assessing officer to delete the whole addition on account of PDC Interest . Disallowance of Additional Payment made in view of the provisions of Section 37(1) on the basis of violation of Stamp Duty Act, 1899 - HELD THAT: - Undoubtedly, the issue is decided by the Co-ordinate Benches in almost 30 cases of the group concerns. Further, the appeal of department stands dismissed by Hon ble Delhi High Court in case of one of Group Company of assessee on identical facts in case of Vasundhra Promoters Pvt. Ltd[ 2018 (6) TMI 74 - DELHI HIGH COURT] wherein the identical addition made on account of disallowance of additional payment has been dismissed. Considering most of the decisions of ITAT, it is found that Co-ordinate Benches have followed the decisions in the case of M/s West Land Developers Pvt. Ltd. [ 2014 (12) TMI 254 - ITAT DELHI] - CIT DR could not show us any reason or fresh material that why earlier decisions of the coordinate benches should not be followed.- Decided against revenue. Deemed dividend under section 2 (22)(e) - HELD THAT:- As the assessee is not share holder of payer group companies who paid loan/advance to the assessee and considering the legal position that dividend is to be received by shareholder only, the amount received by the assessee is not to be treated as deemed dividend in the hands of assessee. Moreover, this view is fully supported by decision of the Hon ble Delhi High Court in case of CIT vs. M/s Ankitech Pvt. Ltd. [ 2011 (5) TMI 325 - DELHI HIGH COURT] - Decided against revenue.
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2022 (2) TMI 938
Exemption u/s 11 - violation of section 13(3) r.w.s. 13(1)(c) and 13(2) - addition on account lease rent holding that the rent received is very low as compared to lease registration document - HELD THAT:- We note that the lease agreement was duly approved by the charity commissioner and bids for the lease have been obtained after due advertisement. On the touchstone of Hon ble Bombay High court decision in the case of Verendra Vs. Appropriate authority [ 2008 (9) TMI 515 - BOMBAY HIGH COURT] this now cannot be disputed by revenue Hence if the expenditure has been approved by appropriate authority, the AO cannot take the divergent view. Moreover, we also note that ld. CIT(A) has given the finding that the bid for the lease was obtained by due advertisement in news papers. There is also due provision for security deposit of ₹ 5 crores. In this regard assessee has also submitted valuation by a Government approved valuer report in this regard. Hence, these factors duly corroborate that the lease rent in this case is not only approved by the charity commissioner, but also supported by the other facts, which show that the lease was awarded after due advertisement and making provision for appropriate security deposit. Hence, in the background of aforesaid decision and the facts of the case, we do not find any infirmity in the order of ld.CIT(A) in this regard. Trustees are related to the party to whom lease has been awarded - We note that this issue will not arise once, it is held that it cannot be said that lease rent is undervalued. In any case, ld.CIT(A) has given the detailed finding, how the AO s finding in this regard is not correct. The revenue has not brought any cogent material to rebut these findings. Disallowance of reimbursement of expenses to/from PDNHRC - We note that similar issue has already travelled to the Hon ble Bombay High court in the case of PDNHRC [ 2019 (2) TMI 1454 - BOMBAY HIGH COURT] . In the said case of Hon ble High Court has held that these reimbursements do not attract TDS. Once, the payment has been subject matter of examination by the Ho nble Bombay High Court, AO has no jurisdiction to make any comment whatsoever. Moreover, the CIT(A) has given due finding that these are due reimbursement. This fact is also arising out of the detailed observation of the Hon ble Bombay High court referred in the order of Ld.CIT(A) above. Disallowance on account of religious expenditure - We note that it also comprised of ₹ 3,58,200/- given to ISKON. Ld. CIT(A) has given the detailed finding as to how these expenditures were for food programme and not meant for religious activity. No cogent material was brought to our notice rebutting the same. Hence, we do not find any infirmity in the order of ld.CIT(A) in this regard. On the basis of same transactions for a long time from earlier years, AO has not taken any adverse inference against the assessee. Without change in facts on law the AO is not justified to take a divergent view as held by various courts including the Hon ble Supreme court as referred above. Apart from the above three expenditures, the other aspect of AO s observation that the assessee is involved in profit motive is not at all sustainable and correct. These are only surmise and conjectures of the AO dehorse facts. In fact, Ld. Counsel of the assessee has pointed out that there is no element of suppression of profits as the assessee has actually incurred losses for the past several years. Further, the ld.CIT(A) has given due finding that assessee is duly utilizing the fund for the objects of the trust. No cogent rebuttal was made by the revenue in this regard. - Decided against revenue.
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2022 (2) TMI 937
Late payments towards EPF and ESI under section 36(1)(va) - Payment before furnishing the return of income under section 139(1) - HELD THAT:- As relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED [ 2021 (11) TMI 370 - ITAT CHANDIGARH] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2022 (2) TMI 932
Rejection of extension of time for payment of the last installment of Tax under Income Disclosure Scheme, 2016 (IDS) - Seeking to allow extension of time, for payment of the last installment of Tax under Income Disclosure Scheme, 2016 - seeking to direct to refund the tax amount paid in the first and second installment of IDS, 2016 - HELD THAT :- In the peculiar facts and circumstances of the instant case, we direct that the appellant be given benefit of the amounts deposited towards first two installments while reckoning the tax liability of the appellant after revised assessment. With these observations, the appeal stands disposed of without any order as to costs.
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2022 (2) TMI 931
Exemption u/s 1 1 - Inadequate rent received by the respondent/assessee - assessee offered substantial concession in rent to Hamdard Dawakhana in lieu of voluntary and corpus donations in return which is a clear violation of Section 13(2)(b) r.w.s. 13(3) (b) of the Act and hence assessee is not eligible for exemption u/s 11/12 - HELD THAT:- Under Section 13(2)(b), the burden of showing that the rent charged by the respondent/assessee was not adequate is on the revenue. Unless the price/rent was such as to shock the conscience of the Court and to hold that it cannot be the reasonable consideration at all, it would not be possible to hold that the transaction is otherwise bereft of adequate consideration. It is necessary for the Assessing Officer to show that the property has been made available for the use of any person referred to in Sub-section (3) of Section 13 otherwise than for adequate consideration. In order to determine the same, the context of the facts of the particular case needs to be appreciated. For determining Adequate consideration/rent, however, market rent or rate is not the sole yardstick; other circumstances of the case also need to be considered. Commissioner stressed that the adequacy of the price has to be judged only in the light of the market value of the property transferred and according to him, there is no other yardstick which could be applied to a situation like this. We are unable to agree. We may explain why we disagree with him by taking an example. Supposing an old lady who owns a neighbouring property, wants to part with it to a medical practitioner, so that the medical practitioner would be of immediate assistance to her as and when she needs it and she parts with the property at what the parties conceive to be a reasonable price, could it be said that there was a gift of the property to the extent of the difference between what is later taken to be the market value and what was conceived to be the reasonable price for the property. It has also to be remembered that the computation of market value is in most cases a matter of estimate, which may also vary. Such a variable concept would not have been made the yardstick. The investigation to be made in the case of such a transaction could only be to see whether there is any attempt at evasion of tax or whether it is a bona fide transaction. If there is any attempt at evasion of tax, then s. 4(1)(a) of the G.T. Act can be applied on the ground that the consideration stipulated in the document is inadequate. If, however, the consideration that passed between the parties can be considered to be reasonable or fair, it cannot be considered to be inadequate. In the present case, the learned ITAT has observed that the revenue had failed to bring on record any cogent evidence to show that the rent received by the respondent/assessee, in the facts of the case, was inadequate. It has held that the material collected from the internet as well as the estate agents cannot be termed as a corroborative piece of evidence in this regard. It has further held that the rent received by the respondent/assessee exceeds the valuation adopted by the Municipal Corporation of Delhi for the purpose of levying house tax. The submission of the learned counsel for theappellant that the respondent had not taken any security deposit from Hamdard Dawakhana (Wakf) and thereby violated Section 13(2)(b) of the Act, has also been stated only to be rejected. Security Deposit may be one of the factors to be taken into consideration by the Assessing Officer for coming to a conclusion if the rent was adequate , however, it cannot be a sole determinative factor. In the present case, the Assessing Officer, apart from relying upon some opinion of rent from property broker firms and websites, does not appear to have made any independent inquiry on the adequacy of the rent being charged by the respondent/assessee from Hamdard Dawakhana (Wakf). It is not shown that the Assessing Officer made any independent inquiry on the age and condition of the building of the assessee situated at Asaf Ali Road, New Delhi. In fact, as contended by the learned senior counsel for the respondent/assessee and taken note of by the learned ITAT and not denied by the appellant/revenue, the property at Rajdoot Marg was not even ready during Assessment Year 2008-09 and was lying vacant. In the absence of any such inquiry by the Assessing Officer, the invocation of Section 13(2)(b) of the Act was clearly flawed and rightly rejected by the learned ITAT. - Decided in favour of assessee.
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2022 (2) TMI 930
Validity of Reopening of assessment u/s 147 - notice issued to dead person - curable defect u/s 292B or not ? - HELD THAT:- The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not a merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Thus, a notice which has been issued in the name of the dead person is also not protected either by provisions of Section 292B or 292BB of the Act. This is so as the requirement of issuing a notice in the name of correct person is the foundational requirement to acquire jurisdiction to reopen the assessment. This is evident from Section 148 which requires that before a proceeding can be taken up for reassessment, a notice must be served upon the assessee. The assessee on whom the notice must be sent must be a living person i.e legal heir of the deceased assessee, for the same to be responded. This in fact is the intent and purpose of the Act. Therefore, Section 292B of the Act cannot be invoked to correct a foundational / substantial error as it is meant so as to meet the jurisdictional requirement. Therefore notice issued to a dead person is not valid. See LATE BHUPENDRA BHIKHALAL DESAI (SINCE DECD.) [ 2021 (9) TMI 431 - SC ORDER] - Decided in favour of assessee.
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2022 (2) TMI 929
Voluntary disclosures - Amount disclosed by the assessee in the return of income filed pursuant to notice under Section 158BC(a)(ii) - ITAT deleted the addition - HELD THAT:- This issue was not raised before the (Appeals)-VI, Kolkata when the assessee challenged the order of assessment dated 28th March, 2001 - assessee was on an appeal before the tribunal on the said issue. The tribunal considered the contentions of either side and set aside the finding of the assessing officer with regard to the addition of ₹ 7.10 crores and restored the matter back to the assessing officer to examine the seized materials and re-compute the income of the assessee for the block period. The learned counsel for the respondent/assessee submits that the order passed by the tribunal has been given effect to and the assessing officer has passed an order which is adverse to the interest of the assessee and the assessee is pursuing further remedies against the said order. Thus, in our considered view, there is no substantial question of law. Additions made towards contribution of share capital by the assessee to 117 companies - ITAT deleted the addition - HELD THAT:- Tribunal has re-appreciated the facts which were available on record while affirming the order passed by the CIT(A). In fact, it has rendered a finding that the assessing officer without bringing any evidence to show that the companies which are legal entities and assessed to tax every year have not disclosed the paid-up or less paid-up capital, the amount of paid-up capital which have been disclosed in its balance-sheet every year. There are other findings of fact as well. Thus, we find that there is no substantial question of law arising on the said issue. Unexplained cash deposits - ITAT deleted the addition - HELD THAT:- After analysing the facts, the tribunal concluded that addition made by the assessing officer is not on the basis of evidence or material to even remotely suggest that the cash deposited in bank accounts belongs to the assessee and the addition was totally contrary to the findings recorded at various places in the assessment order and accordingly deleted the addition. Here also we find that a thorough investigation of the factual position has been done by the tribunal while granting relief to the assessee and we do not find any substantial question of law arising for consideration on the said issue. Addition towards income out of shares dealing for assessment year 1992-93 which was confirmed by CIT(A) and which was in fact stated by the assessee himself as his income during recording of his statement - ITAT deleted the addition - HELD THAT:- AO himself has rendered a finding that the assessee is not a man of means and he has also accepted that he has engaged only in the name lending and providing accommodation entries for a small commission. Further, factual analysis have also been made and it has been held that addition based on statement alone which has been recorded when the assessee was mentally disturbed cannot be sustained. In this regard it will be beneficial to note the circular issued by the CBDT dated 10th March, 2003 wherein the Board has stated that confession during the course of search, seizure and survey operations did not serve any useful purpose and the assessing officers were advised that there should focus and concentrate on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Department. Further, it has been mentioned that while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income. Thus, we are of the clear view that no question of law as suggested in substantial question of law (d) arises
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2022 (2) TMI 928
Validity of Reopening of assessment u/s 147 - Capitalising the payment made - HELD THAT:- We do not understand how this amount paid as compensation could ever be capitalised in the books of petitioner. Be that as it may, during the assessment proceedings the details have been provided to the Assessing Officer regarding surrender of the lease and payments made - To the petition is annexed a letter addressed by Petitioner to ACIT to explain why payment of ₹ 10 crores towards lease land at Valsad is to be considered as revenue in nature and allowable u/s 37(1) and also explaining the back ground regarding surrender of lease to Atul Ltd and also providing a copy of the lease agreement. In the said letter, petitioner has also referred to almost 7 replies addressed to the notices received from respondent no.1. Therefore, this has been a subject of consideration during the assessment proceedings. As held in Aroni Commercials Ltd. Vs. Deputy Commissioner of Income Tax [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Claiming 15% depreciation on the block of office equipments against allowable rate of 10% - There can be no non disclosure on the part of petitioner at all. The assessment order dated 29th December 2009 contains a computation of depreciation - there can never be a situation of failure to disclose truly and fully all material facts by petitioner. AO stated that claim of assessee is not acceptable and the depreciation is recomputed as per the stand taken by the Department in earlier years as the issue has not yet been decided at various appellate stages - The Hon ble Apex Court in Indian Eastern Newspaper Society[ 1979 (8) TMI 1 - SUPREME COURT] has held that even if according to respondent no.1 there was an error discovered on a reconsideration of the same material (and no more) does not give power to the Assessing Officer to re-open the assessment Allowability of prior period expenses - Petitioner has addressed to the ACIT after referring to personal hearing as well as 7 earlier communications and notice issued by respondent no.1 under Section 142(1) of the Act, explained why the amount of ₹ 30,15,135/- reported by the Tax Auditor was part of the amount of ₹ 1,13,73,436/- as provisions for employee retention strategy and was rightly considered as disallowable in computing business income and hence the amount has not been separately disallowed as prior period expenditure. Therefore, once again this has been subject of consideration during the assessment proceedings and as noted earlier, once a query raised during the assessment proceeding and assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. Change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Reopening notice quashed - Decided in favour of assessee.
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2022 (2) TMI 927
Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. We are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.
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2022 (2) TMI 926
Penalty levied u/s 271 (1) (c) - rebates claimed by the appellants /assesses for the assessment years in question, were clearly the profits diverted by the fictitious claims and hence, the same were disallowed - HELD THAT:- Assesses had concealed income, which was accepted after detection and the assessment was completed as per the terms of the settlement, which stipulated minimum penalty under section 271(1)(c). Based on the same, the assessing officer initiated the penalty proceedings by issuing show cause notices, to which, the appellants/assesses did not file any reply to substantiate their stand that there was no concealment of income. Therefore, the assessing officer imposed penalties on the appellants, which were also confirmed by the appellate authorities As the appellants had disclosed the income, after detection by the department and as per the terms of settlement, the assessing officer initiated the penalty proceedings, to which, the appellants / assesses did not submit any explanation to the effect that there was no concealment of income or furnishing of inaccurate particulars of such income, which culminated in imposition of penalties under section 271(1)(c), we do not find any infirmity or illegality in initiating the penalty proceedings and the consequential orders passed by the assessing officer as confirmed by the appellate authorities. - Decided against assessee.
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2022 (2) TMI 925
Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - petitioner submitted that for the assessment period prior to 01.04.2021 notices issued after 2021 without following the procedure as provided under the substituted provisions for reassessment under the Income Tax Act, 1961 by the Finance Act, 2021 - HELD THAT:- As decided in SUDESH TANEJA WIFE OF SHRI CP TANEJA case [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. Also by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.
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2022 (2) TMI 924
Validity of assessment u/s 144C - Mandation of granting opportunity to file objections to the Draft Assessment Order - HELD THAT:- Section 144C of the Act mandates that an assessment order under Section 143(3) of the Act shall be passed only after the assessee is granted an opportunity to file objections to the Draft Assessment Order. The petitioner has filed its objections to Ext. P1 DAO, within the extended time as per Ext. P2 Circular, which is binding on the respondents. However, the 1st respondent without considering the same, has passed Ext. P3 final assessment order. I find that Ext. P3 is issued in violation of the principles of natural justice and against the provisions of Section 144C and Ext. P2 Circular issued by CBDT. Accordingly, Ext. P3 Final Assessment Order is set aside. During the pendency of this writ petition, the DRP, by Ext. P8 order, considered and rejected Ext. P4 objection to DAO on the ground that it has no jurisdiction to entertain the same since Ext. P3 Final Assessment Order has already been passed. Since Ext. P3 order is set aside, consequently, Ext. P8 also stands set aside. The 5th respondent shall consider Ext. P4 objection afresh in accordance with law, after affording an opportunity of hearing to the petitioner.
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2022 (2) TMI 923
Reopening of assessment u/s 147 - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021- identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Validity of re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - Validity of the re-assessment proceedings initiated against the individual petitioners, after 01.04.2021, having resort to the provisions of the Income Tax Act, 1961 as they existed, read with the provisions of Act No. 38 of 2020 and the notifications issued thereunder - issuance of notices u/s 148 of the Act and also with respect to completion of reassessment proceedings - HELD THAT:- When according to the petitioners themselves, if the limitation for issuance of notice under Section 148 of the Act of 1961 for reassessment pursuant to the amended provisions under the Finance Act, 2021 survives, the assessing authority would be competent to initiate the proceedings, we do not find any reason to deny the prayer made by learned Additional Solicitor General, because what exists impliedly can be given expressly. Therefore, while accepting the challenge to the reassessment notices under Section 148 of the Act of 1961, we hold that the Explanations A(a)(ii)/A(b) to the Notification No.20, dated 31.3.2021 and Notification No.38, dated 27.4.2021 must be read as applicable to the reassessment proceedings as on 31.3.2021 in view of the judgments of the different High Courts and we would grant liberty to the assessing authorities as prayed by learned Additional Solicitor General. In view of the ratio propounded in cases MON MOHAN KOHLI VERSUS ASSISTANT COMMISSIONER OF INCOME TAX ANR. [ 2021 (12) TMI 664 - DELHI HIGH COURT] and ASHOK KUMAR AGARWAL VERSUS UNION OF INDIA THROUGH ITS REVENUE SECRETARY NORTH BLOCK AND 2 OTHERS [ 2021 (10) TMI 517 - ALLAHABAD HIGH COURT] the reassessment notices under Section 148 of the Act of 1961 served on the petitioners on or after 1.4.2021 are set aside having been issued in reference to the unamended provisions and the Explanations are to be read as applicable to reassessment proceedings if initiated on or prior to 31.3.2021, but it would be with liberty to the assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act of 1961, as amended by the Finance Act, 2021, after making all the compliances as required by law, if limitation for it survives.
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2022 (2) TMI 922
Disallowance of exemption u/s 10B - assessee has flouted the prerequisite condition laid down for claiming due exemption u/s. 10B of the Act regarding authority granting approval as a 100% Export Oriented Undertaking (EOU) - Tribunal deleted the disallowance - HELD THAT:- So far as the question as regards the claim under Section 10B of the Act is concerned, the findings recorded by the Tribunal cannot be faulted. So far as the other questions as proposed by the Revenue are concerned, those are kept open for being considered in some appropriate matter. With the aforesaid, this appeal fails and is hereby dismissed.
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2022 (2) TMI 921
Validity of ex-parte impugned order - senior counsel for the petitioner submits that his authorized representative and Chartered Accountant had represented and acted on behalf of the petitioner in all correspondence, filing of returns etc.,who died on 30.11. 2019 - notices issued in the name of the petitioner and sent to the defunct / inoperative email address of the deceased CA - HELD HAT:- As material on record including the death certificate of Sri.K.V.Chandrappa, the Chartered Accountant and the Authorised Representative of the petitioner who had represented him before the respondents having expired on 30.11.2019, the petitioner did not have any knowledge of any correspondence addressed by the respondents to the email address of the said K.V.Chandrappa, which had become defunct and inoperative resulting in the petitioner not being in a position to suitably reply to any of the notices issued by the respondents and file his objections and documents, details, particulars etc., as sought for by the respondents. It is clear that on account of the inability and omission on the part of the petitioner to file his objections and produce documents etc., due to bonafide reasons, unavoidable circumstances and sufficient cause, the respondents have proceeded to pass the ex-parte impugned order which deserves to be set aside and the matter remitted back to the respondents for reconsideration afresh after giving one more opportunity to the petitioner.
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2022 (2) TMI 920
Addition as Fees for Included Services [FIS] - appellant is a company incorporated under the laws of the United States of America and is engaged in the business of providing design and development services and engineering services of vehicle safety systems - HELD THAT:- Technical knowledge or skills provided by the assessee should be imparted to and absorbed by the receiver Autoliv India Pvt. Ltd so that the receiver can deploy similar technology or technique in future without depending upon the assessee. Technology only will be considered as made available when the person acquiring such knowledge is possessed of the same enabling him to apply in future at his own. If the services are consumed in the provision without leaving anything tangible with the payer for use in future, then it will not be characterized as making available of the technical services notwithstanding the fact that its benefit flowed directly and solely to the payer of the service - What is necessary is that the service provider should transmit the technical knowledge to the payer so that the payer makes use such technology in future without involvement of the service provider. Considering the facts in totality in light of the relevant article of India US DTAA, we are of the considered view that the engineering fees received by the assessee are not taxable in India. Ground No. 2 with all its sub-grounds is allowed. Taxation of software reimbursements as Royalty - assessee strongly contends that reimbursements sought by the assessee represent recovery of expenses incurred by it, on behalf of Autoliv India, on an at-cost basis - HELD THAT:- Reimbursement towards software charges will not qualify as royalty u/s 9(1)(vi) of the Act as well as under DTAA for the simple reason that it is not a case of the assessee possessing any right for use or right to use computer software in the first place for it to transfer such right to Autoliv. Article 12(3A) of the India USA DTAA provides royalty which means consideration received inter alia for use or right to use any copyright of a literary, artistic or scientific work. We are of the considered view that the assessee has not received consideration for granting a right to use any copyright in computer software from Autoliv. We find that the lower authorities have heavily relied upon the amendment brought in the statute in 2012. But the facts of the case in hand are squarely covered in favour of the assessee and against the Revenue by the Hon'ble Supreme Court in a land mark judgment in the case of Engineering Analysis Center of Excellence Pvt Ltd [ 2021 (3) TMI 138 - SUPREME COURT ] Since the term Royalty has been defined in the DTAA, definition of the term Royalty under the Act cannot be applied. Considering the facts of the case in totality, we hold that reimbursement towards software charges received by the assessee from Autoliv is not taxable since the same does not represent any income in the hands of the assessee and further, in light the decision of the Hon'ble Supreme Court, in the case of Engineering Analysis Centre of Excellence Pvt Ltd [supra], reimbursement towards software charges are not taxable as royalty as well. We, accordingly, direct the Assessing Officer to delete the impugned addition. Ground No. 3, with all its sub grounds is allowed.
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2022 (2) TMI 919
Reopening of assessment u/s 147 - Eligibility of Reasons recorded for reopening of assessment - borrowed satisfaction - Non independent application of mind by AO - Unexplained deposits - HELD THAT:- The reasons recorded clearly state that the same was recorded merely on the basis of the information received by the AO from DIT(Investigation), Surat and Ahmedabad relating to the accommodation entries. AO has not recorded any other information that what extent of income which has escaped from the assessment for the Asst.Year 2009-10 in the case of the assessee by these accommodation entries. AO was not clear whether these entries in the receipt/income of the assessee. He simply repeated the information that he has received from the DIT(Investigation), Surat and Ahmedabad. As relying on MARIYAM ISMAIL RAJWANI case [ 2016 (8) TMI 1472 - ITAT AHMEDABAD] reopening of the assessment is bad in law, when the reassessment is based on borrowed satisfaction . In the present case also deposits made by Pioneer Mercantile Ltd. and Jupiter Business Ltd were towards share application money to the assessee-company which has been explained by the assessee before the ld.CIT(A) vide its letter dated 10.10.2017, the same was not considered by the ld.CIT(A) and however confirmed the additions - on the validity of re- assessment notice issued on the ground of borrowed reasons , the CIT(A) has not followed jurisdictional Tribunal s decision and upheld the reopening of the assessment, which is not in accordance with law and following judicial discipline. Appeal of the assessee is allowed
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2022 (2) TMI 918
Levy of penalty u/s 271F - non-furnishing of the return of income u/s. 139(1) - assessee s case is of a reasonable belief that his income for the year was below the maximum amount not chargeable to tax, so that there was in effect no violation of s.139(1) - HELD THAT:- The assessee had been filing income-tax returns, as stated, since 2012 (i.e., for AY 2012-13, and onwards), so that he cannot be unaware of the procedure for filing the same. Even if therefore no return was filed u/s. 139(1) because of low income not shown, implying of the assessee being aware of the provisions of law qua the obligation to file the return of income, he surely ought to have returned, at whatever income, in response to the notice u/s. 148(1). No tax consultant could be expected to advise his client to ignore the said notice. Shri Usrethe, on being so questioned by the Bench during hearing, would respond by submitting that the penalty u/s. 271F has not been levied for non-furnishing the return u/s. 148(1), but that u/s. 139(1). Sure, penalty u/s. 271F is only qua the non-discharge of the obligation u/s. 139(1), but section 148(1) is a para materia provision, casting, like-wise, an obligation to file the return of income, which is rather more compelling inasmuch as in such a case the Revenue has a reason to believe that the assessee s income chargeable to tax has escaped assessment. No wonder, then, that the AO refers to both the incidents while stating his reason for proceeding to issue the show cause notice for penalty u/s. 271F. The same is an allied and, to my mind, an important factor inasmuch as it is indicative of the assessee s conduct, which is, thus, of a conscious disregard of his statutory obligation/s. Bona fides , both of the assessee s explanation and conduct, is a prerequisite to save penalty. A compliance of the notice u/s. 148(1), furnishing a return of income, even if below the taxable limit, would have at once established the assessee s bona fides . Therefore, for the stated reasons, find the levy of impugned penalty as valid in law. Penalty u/s 271(1)(b) - non-compliance of notices u/s. 142(1) - in the assessee s words, blind faith in his local consultant who, for reasons best known to him, did not represent the assessee, as agreed to - HELD THAT:- As per the assessee, the consultant (unnamed) assured proper representation subsequent to the receipt of the assessment order on 11/12/2017. However, as afore-stated, there has been no representation before the AO in both the penalty proceedings, constraining him to levy the penalty/s and, in fact, even the filing of the first appeals has been with a delay of nearly 600 days! There has been no explanation as to why the consultant, after being apologetic of his consent, continued to behave in such an irresponsible manner, amounting to gross professional misconduct, which cannot be lightly inferred. The other reason stated for the inordinate delay in filing the appeals is the non-connectivity with the Revenue's e-portal, which could at best explain the delay by a few days. Under the circumstances, find no merit in the assessee's case qua penalty u/s. 271(1)(b) as well. Assessee appeal dismissed.
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2022 (2) TMI 917
TP Adjustment - Not granting adjustment for working capital and risk differential - HELD THAT:- In the case of Nagravision India Pvt. Ltd., [ 2020 (7) TMI 330 - ITAT BANGALORE] Tribunal held that the working capital adjustment should be allowed. For holding so, the Tribunal has followed the decision rendered by another Bench in the case of Huawei Technologies (India) Pvt. Ltd.[ 2018 (10) TMI 1796 - ITAT BANGALORE] . Thus we hold that the AO is not justified in denying the working capital adjustment to the assessee. We accordingly direct the AO to allow the working capital adjustment.
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2022 (2) TMI 916
Disallowance u/s. 40(a)(ia) - non-deduction of TDS under respective provisions of the Act - assessee claims that although it had not deducted TDS on those expenses which have been disallowed by the Assessing Officer, but payees have duly included sum paid by the assessee in return of income filed by them for relevant assessment year and also paid due taxes thereon - HELD THAT:- Since, the assessee was not given sufficient time to file necessary details, including income-tax returns and certificate from payees to prove that payment made by the assessee is part of their income tax returns, to invoke second proviso to section 40(a)(ia) of the Act, the issue may be set aside to the file of the Assessing Officer. We find that an identical issue has been considered by the Tribunal in the case of M/s. Mani Nagappa Motors Madurai P. Ltd [ 1998 (5) TMI 6 - SUPREME COURT] where under identical circumstances, the Tribunal set aside the issue to file of the Assessing Officer for verification of claim of the assessee that payees had duly offered payments in their income tax returns and paid due taxes thereon. In this view of the matter and consistent with the view taken by the co-ordinate Bench, we set aside order passed by the learned CIT(A) and restore the issue to file of the Assessing Officer and direct the Assessing Officer to reconsider the issue in light of claim of the assessee and also second proviso to section 40(a)(ia) - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (2) TMI 915
Disallowance of interest expenses u/s. 36(1)(iii) - disallowance of financial cost attributable to capital work in progress and project work in progress - Admittedly, the assessee has huge borrowings from banks and financial institutions and when the loan was not taken for any specific purpose of acquiring of asset or execution of any project, then interest need not be capitalized to the work in progress account - HELD THAT:- We do not subscribe to the arguments taken by assessee for simple reason that when the assessee is debiting all direct and indirect expenses to project work in progress account, then it ought to have capitalized interest attributable to said project work in progress, when there was no revenue generation from said project. We further noted that as per principles of matching concept of accounting, specific cost relatable to income revenue segment needs to be capitalized, including interest if any, incurred on said project. In this case, it was claim of the assessee that although it has paid huge interest on borrowings from banks and financial institutions, but said loans have not taken for any specific purpose. At the same time, the assessee is also unable to explain with necessary evidence to prove that loans taken from banks and financial institutions are not for any specific purpose of acquisition of any asset or execution of project. Therefore, we are of the considered view that the issue needs to go back to file of AO to ascertain correct facts with regard to nature of loan taken by the assessee and purpose for which such loans were taken. In case, the assessee has taken any loan for specific purpose of acquisition of asset or execution of project, then interest attributable to said purpose needs to be capitalized to work in progress account. Hence, we set aside the issue to file of the AO and direct to re-examine claim of the assessee in accordance with law - Assessee appeal allowed for statistical purposes.
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2022 (2) TMI 914
Bogus/unaccounted purchases - HELD THAT:- Apart from that Bll No. 1511 dated 06.07.2011 along with above said annexures were filed before the lower authorities bank payments details were falso filed by the assessee. In our considered opinion that assessee has discharged its onus merely on the information received from the Investigation Wing, addition cannot be made as assessee has filed all the relevant details which proved case of the assessee beyond any reasonable doubt that assessee has purchased the paddy after completing the formality and making the payment through banking channel and all relevant details were filed before the lower authorities. However, no unaccounted purchase has been made by the assessee. Addition on the basis of trade GP @ of 5% - assessee has sold paddy for which the assessee firm had received cash payment in lieu of that sales - A.R. filed an application under Rule 46A along with a certificate issued by the Punjab State Civil Supplies Corporation Ltd. dated 09.09.2021 wherein it is mentioned that as per record of this office rice mill named M/s. Tata Rice Mills, Zira was allotted to PUNSUP for custom milling during Crop year 2008-09 to 2020-21 and nothing is recoverable from said firm till date as per instruction/guidelines issued by Government and directions given by Honourable Courts - HELD THAT:- There is no dispute between PUNSUP and above said firm. The Ld. A.R. certified certificate true copy of the said letter, therefore we admit the same. Since no corroborated evidence has been cited against the assessee by the lower authorities and it was alleged by the Assessing Officer that unaccounted sales were made to PUNSUP Now certificate dated 09/09/2021has been issued by the District Manager PUNSUP, Ferozpur when both the parties are denying any transaction then how addition can be sustained. So in the absence of any concrete evidence against the assessee such addition cannot be sustained. Thus we allow this ground of appeal
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2022 (2) TMI 913
Unsecured loan treated as cash credit - unsecured loans received by the assessee from two brothers - HELD THAT:- One Lenders had attended before the AO and admitted that he himself as well as his brother had given loan to the assessee firm. Thus, this admission clearly establishes the genuineness of transaction and further that the assessee has fully discharged the burden of establishing the genuineness of loan transaction by both the parties. Moreover, both these persons are regularly assessed to income- tax and they have their independent source of income.. Thus, we note that both the Lenders are assessed to tax and the loan is taken through banking channel by RTGS and there is a categorical admission of loan being given to the assessee firm out of own funds and through banking channel and the same has been accepted by the AO also. The assessee need not prove the source of source . Once the existence of the person is proved and on the basis of relevant evidences it is proved that credit entry is not fake, the primary onus cast on the assessee is discharged and that assessee in such cases cannot be expected to prove the source of source. Thus, we note that assessing officer has failed to bring even an iota of evidence on record which indicates that loans received from above party actually emanated from the coffers of assessee. In the assessee`s case under consideration, there is no finding that any details, documents and evidences supplied by the assessee to the AO were found to be incorrect or erroneous or false. As such addition cannot be made u/s 68 of the Act. Hence we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition of ₹ 10,00,000/- so made is deleted. Hence this ground of the assessee is allowed.
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2022 (2) TMI 912
Belated contribution towards ESI/PF - assessee s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - Scope of amendment to section 36(1)(va) and section 43B - HELD THAT:- In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case. Addition towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee.
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Customs
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2022 (2) TMI 911
Jurisdiction - power of DRI to issue SCN - proper officer for the purpose of issuance of notices under Section 28 of the Customs Act, 1962 or not - HELD THAT:- The Show Cause Notices in these proceedings are dated 16.09.2013. The petitioners had earlier filed W.P.Nos.28574 28575 of 2013. These writ petitions were inspired earlier from the decision of the Hon'ble Supreme Court in COMMISSIONER OF CUSTOMS VERSUS SAYED ALI [ 2011 (2) TMI 5 - SUPREME COURT ] which view has been now confirmed by the Hon'ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT ] - it was held clearly in Canon India case that the Officers of the Directorate of Revenue Intelligence are not proper officers for the purpose of notices under Section 112 of the Customs Act, 1962. These writ petitions is disposed off without expressing any opinion on merits of the case by directing the petitioners to file appropriate written submission before the respondents - petition disposed off.
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2022 (2) TMI 910
Rejection of provisional release of seized goods - allegation of mis-declaration of goods - import of Animal Feed Compound (Residue of Coconut) - whether the goods imported were copra or not? - Confiscation - restraint order - HELD THAT:- Having regard to the fact that Ext.P14 order can be subjected to an appeal under Section 128 of the Act and also in view of the disputed questions of fact involved in this case, this Court in exercise of the powers under Article 226 of the Constitution of India ought not to interfere. However, since the petitioner has moved this Court through this writ petition on 20-4-2021 itself, petitioner is entitled to exclude the period from 20-4-2021 till today in pursuing this writ petition, for the purpose of condoning the limitation, as otherwise prejudice will be caused to the petitioner. If the petitioner files an appeal under Section 128 of the Act before the Appellate Authority within a period of three weeks from today, the said Appellate Authority shall condone the delay and consider the appeal on merits - this writ petition is disposed of reserving the liberty of the petitioner to raise all contentions before the Appellate Authority.
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2022 (2) TMI 909
Levy of penalty u/r 112(a) of the Customs Act, 1962 - evasion of anti-dumping duty (ADD) - Overvaluation of goods imported from China - power of DRI to issue SCN - HELD THAT:- It is a fact that the show cause notice was not issued to the appellant. It was issued only to five persons including Ankur Agarwal, who is the Director of the appellant. The appellant has stated that since it was not required to file reply to the show cause notice, no reply was filed - Show cause notice is the basis on which any order can be passed against a person. This is the basic requirement of the principles of natural justice. As the show cause notice was not issued to the appellant, the appellant did not file any reply. The appellant cannot be faulted for not filing a reply since the show cause notice did not call upon the appellant to file a reply. The impugned order against the appellant deserves to be set aside. It would, therefore, not be necessary to examine whether the Directorate of Revenue Intelligence had the jurisdiction to issue the show cause notice under section 28(4) of the Customs Act - impugned order dated 14.10.2019, in so far as it imposes a penalty of ₹ 10,00,000/- on the appellant under section 112(a) of the Customs Act, deserves to be set aside - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (2) TMI 908
Sanction of Scheme of Arrangement by way of Amalgamation - Sections 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013, read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to convening/holding or dispensing with the meetings of the Equity Shareholders, Secured and Unsecured Creditors are issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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Securities / SEBI
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2022 (2) TMI 907
Violation of PFUTP Regulations - Duty to Disclose Investigative Material - Exceptions to the Duty to Disclose - whether an investigation report under Regulation 9 of the PFUTP Regulations must be disclosed to the person to whom a notice to show cause is issued? - HELD THAT:- The findings of the investigation report are relevant for the Board to arrive at the satisfaction on whether the Regulations have been violated. Even if it is assumed that the report is an inter-departmental communication, as held in Krishna Chandra Tandon [ 1974 (4) TMI 103 - SUPREME COURT] there is a duty to disclose such report if it is relevant for the satisfaction of the enforcement authority for the determination of the alleged violation. In Natwar Singh [ 2010 (10) TMI 156 - SUPREME COURT] it was held that material which is relevant to the subject-matter of the proceedings must be disclosed, unless the scheme of the statute indicates to the contrary. The non-disclosure of such material is prima facie arbitrary. A deviation from this general rule was made based on the stage of the proceedings. It was held that it is sufficient to disclose the materials relied on if it is for the purpose of issuing a show cause notice for initiating inquiry. In the present case, since the report of the investigating authority under Regulation 9 enters into the calculus of circumstances borne in mind by the Board in arriving at its satisfaction under Regulation 10 for taking actions as specified in Regulations 11 and 12, it would be contrary to the Regulations to assert that the investigation report is merely an internal document of which a disclosure is not warranted. In any event, the language of Regulation 10 makes it clear that the Board forms an opinion regarding the violation of Regulations after considering the investigation report prepared under Regulation 9. Thus, the investigation report has to be duly disclosed to the noticee. However, the right to disclosure is not absolute. It needs to be determined if the non-disclosure of the investigative report is protected by any of the exceptions to the rule. Contention of the respondents that since the investigation report under Regulation 9 would also include information on commercial and business interests, documents involving strategic information, investment strategies, rationale for investments, commercial information and information regarding the business affairs of the entities/persons concerned affecting the privacy and the competitive position of other entities, it should not be disclosed - We cannot be oblivious to the wide range of sensitive information that the investigation report submitted under Regulation 9 may cover, ranging from information on financial transactions and on other entities in the securities market, which might affect third-party rights. The report may contain market sensitive information which may impinge upon the interest of investors and the stability of the securities market. The requirement of compliance with the principles of natural justice cannot therefore be read to encompass the right to a roving disclosure on matters unconnected or as regards the dealings of third parties. The investigating authority may acquire information of sensitive nature bearing upon the orderly functioning of the securities market. The right of the noticee to disclosure must be balanced with a need to preserve any other third-party rights that may be affected. We find that the appellant is unable to prove that the disclosure of the entire report is necessary for him to defend the case - The appellant did not sufficiently discharge his burden by proving that the non-disclosure of the above information would affect his ability to defend himself. However, merely because a few portions of the enquiry report involve information on third-parties or confidential information on the securities market, the respondent does not have a right to withhold the disclosure of the relevant portions of the report. The first respondent can only claim non-disclosure of those sections of the report which deal with third party personal information and strategic information on the functioning of the securities market. Board should determine such parts of the investigation report under Regulation 9 which have a bearing on the action which is proposed to be taken against the person to whom the notice to show cause is issued and disclose the same. It can redact information that impinges on the privacy of third parties. It cannot exercise unfettered discretion in redacting information. On the other hand, such parts of the report which are necessary for the appellant to defend his case against the action proposed to be taken against him need to be disclosed. The notice to show cause issued to the appellant is for violation of the provisions of the SEBI Act, SCRA and PFUTP Regulations. The show cause notice has specifically referred to what was revealed during the course of the investigation and has invoked the provisions of the PFUTP Regulations in the allegations against the appellant. Conclusion:- (i) The appellant has a right to disclosure of the material relevant to the proceedings initiated against him. A deviation from the general rule of disclosure of relevant information was made in Natwar Singh (supra) based on the stage of the proceedings. It is sufficient to disclose the materials relied on if it is for the purpose of issuing a show cause notice for deciding whether to initiate an inquiry. However, all information that is relevant to the proceedings must be disclosed in adjudication proceedings; (ii) The Board under Regulation 10 considers the investigation report submitted by the Investigating Authority under Regulation 9, and if it is satisfied with the allegations, it could issue punitive measures under Regulations 11 and 12. Therefore, the investigation report is not merely an internal document. In any event, the language of Regulation 10 makes it clear that the Board forms an opinion regarding the violation of Regulations after considering the investigation report prepared under Regulation 9; (iii) The disclosure of material serves a three- fold purpose of decreasing the error in the verdict, protecting the fairness of the proceedings, and enhancing the transparency of the investigatory bodies and judicial institutions; (iv) A focus on the institutional impact of suppression of material prioritises the process as opposed to the outcome. The direction of the Constitution Bench of this Court in Karunakar [ 1993 (10) TMI 310 - SUPREME COURT] that the non-disclosure of relevant information would render the order of punishment void only if the aggrieved person is able to prove that prejudice has been caused to him due to non-disclosure is founded both on the outcome and the process; (v) The right to disclosure is not absolute. The disclosure of information may affect other third-party interests and the stability and orderly functioning of the securities market. The respondent should prima facie establish that the disclosure of the report would affect third-party rights and the stability and orderly functioning of the securities market. The onus then shifts to the appellant to prove that the information is necessary to defend his case appropriately; and (vi) Where some portions of the enquiry report involve information on third-parties or confidential information on the securities market, the respondent cannot for that reason assert a privilege against disclosing any part of the report. The respondents can withhold disclosure of those sections of the report which deal with third-party personal information and strategic information bearing upon the stable and orderly functioning of the securities market. The Board shall be duty-bound to provide copies of such parts of the report which concern the specific allegations which have been levelled against the appellant in the notice to show cause. However, this does not entitle the appellant to receive sensitive information regarding third parties and unrelated transactions that may form part of the investigation report.
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Insolvency & Bankruptcy
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2022 (2) TMI 936
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - seeking interest part of the debt - malicious prosecution for which the Operational Creditor would be liable for punishment or not. Whether the application can be pursued for the interest part of the debt? - HELD THAT:- There is a stipulation about the interest in the tax invoice and that there is no agreement pertaining to the interest otherwise and the rate of interest mentioned in the tax invoice as already observed is given a go by, by the Operational Creditor when the interest is mentioned as 18% in the E-mail dated 28.09.2020. The E-mail dated 28.09.2020 would also show that the request made by the Corporate Debtor with regard to the settlement of the interest amount would be taken to the management of the poly pipes and shall be decided after receipt of the principal outstanding. But the subsequent letter only mentions that the waiver of interest would not be considered since, the Corporate Debtor claimed waiver though it diverted the funds of the company to semi business and also other business of the Corporate Debtor which are carried on by various entities. By making such allegations, the issue of interest becomes a contentious one between the parties which cannot be adjudicated by this tribunal. The principle that the operational debt does not include interest and hence a petition for interest alone cannot either be filed or be pursued is well settled and is well within the spirit of the IBC. This application which is being pursued only for the interest part of the debt cannot be admitted. Moreover the object of IBC is to keep the companies as ongoing concerns. The facts of this case would reveal that after filing of the Application, the Respondent cleared the principal amount. The defence taken in the counter is that the amounts due to the Operational Creditor were agreed to be paid after the Corporate Debtor receives the amounts from the Government. There is no denial of the said fact in the rejoinder filed by the Operational Creditor. Even in the E-mail which is relied upon by the Operational Creditor it is mentioned that the principal amount would be repaid immediately after receipt of payment from the Government of Andhra Pradesh which is expected to be in three to four months. There was no dispute raised with regard to the said undertaking given by the Corporate Debtor. The fact that the payment to the Operational Creditor is contingent on receiving the amounts from the Government would show that the Corporate Debtor is not an insolvent. Hence, on that ground also the Application fails. Malicious prosecution or not - HELD THAT:- This Tribunal is inclined to accept the argument of the Operational Creditor's Counsel that since the interest part of the debt is as huge as more than ₹ 1 Crore it cannot be said that the application is being pursued with malicious intention. He contends that in the judgments cited by the Corporate Debtors the amount of interest was meagre when compared to the amount of interest involved in this case and hence, it was held that the prosecution for interest was malicious. Hence, the application though is held as not malicious prosecution is rejected. Right of Operational Creditor to recover interest - multiplicity of proceedings - HELD THAT:- The Judgment of the Supreme Court in VIJAY INDUSTRIES VERSUS NATL TECHNOLOGIES LTD. [ 2008 (12) TMI 404 - SUPREME COURT ] by relying on several judgments observed that the term debt may refer not only to principal (value of goods or amount advanced) but also interest due thereon, where there is a contract to pay interest. It was also observed that where there is a bona fide dispute in regard to interest, the Court considering a Petition under Section 433(e) should not decide the issue, merely to avoid the multiplicity of proceedings. The purpose of winding up proceedings being completely different from the purpose of proceedings for recovery of a debt, winding up proceedings are not a substitute for a civil suit and therefore, relegating parties to the suit cannot be considered as resulting in multiplicity of proceedings. In this case there is a need to admit evidence with regard to the agreement of interest between the parties, since though the liability to pay interest is not denied, there is a request for reduction of rate of interest. The Operational Creditor agreed to look into the request but later rejected on certain grounds. Evidence pertaining to those grounds needs to be taken and evaluated, until which time no finding on the eligible rate of interest can be given. In the light of the above, the Operational Creditor is given liberty to claim interest if he is entitled for the same, before the appropriate forum. Petition dismissed.
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2022 (2) TMI 906
Seeking direction to suspended directors and management to handover the complete books of accounts and other financial records and information to Resolution Professional and further all the fixed assets which belong to the Corporate Debtor - seeking for clarification and explanation as to the financial transactions which have been reported in Provisional Transaction Audit Report - also, seeking full assistance and cooperation in complete harmony and peace to the Resolution Professional - Section 19 of IBC - HELD THAT:- The order impugned has been passed in exercise of power under Section 19(2) of the IBC. Section 19 of the IBC gives extensive power to the Adjudicating Authority to issue direction to the personnel of the Corporate Debtor to cooperate. The prosecution under Section 70 has to be on complaint filed by the Board or Central Government or person authorized by the Central Government. The submission of the Learned Counsel for the Appellant that Resolution Professional is not empowered to initiate the prosecution is correct. Learned Counsel for the Resolution- Resolution Professional has however, explained that no prosecution has been initiated under Section 70 by the Resolution Professional and he has only sent the information to the Board and it is for the Board to take appropriate action. It is thus clarified that any prosecution under Section 70 can be initiated only in accordance with the procedure as provided under Section 236(2) and not by the Resolution Professional - However, with regard to any other offences including the offences under Indian Penal Code, if any complaint is filed by the Resolution Professional before a Police Station that is separate issue and has no concern with the offences under Section 70 and the order impugned shall have no bearing on such proceedings by a Police Station and they are independent proceedings which has to be considered and decided in accordance with law. There is no ground to entertain this Appeal. The Appeal is disposed of
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2022 (2) TMI 905
Seeking liquidation of the Corporate Debtor - no resolution plan was received - section 33(1) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- On 28.01.2021, in the 6th meeting of the CoC, it was resolved that as there are no possible ways for revival of corporate debtor. Therefore, the CoC with 100% voting share recommended for liquidation of the Corporate Debtor and to appoint Mr. Alok Kumar Kuchhal as liquidator. Hence, the RP has filed the present application under section 33(1) of the Code, before this Adjudicating Authority for liquidation of the Corporate Debtor and appointment of RP as liquidator. The RP has given his consent to act as liquidator. He is stated to have a valid authorization for assignment - Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - Application allowed.
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2022 (2) TMI 904
Voluntary liquidation of Corporate Debtor - Section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- In the present case, it may be seen from the records the main intention for the company to wind up its services is that company decided to close down its business operations and doesn't intend to carry on its business operations and pursue objects for which it was incorporated. Further, the applicant has informed the concerned authorities i.e. IBBI, RoC and Income Tax Department and has also made paper publication in Form-A in two newspapers. The Liquidator has completed the final distribution of assets and has also closed the bank account. The Liquidator has also prepared and submitted the final report to the IBBI and RoC. The Application is duly supported by the affidavit of the Liquidator. It is submitted through the IBBI in its reply that the report under Regulation 38(2) of the IBBI (Voluntary Liquidation Process) Regulations, 2017 has been received and further the Board has no other role in the voluntary liquidation proceedings. The concerned RoC has also submitted in its report that as per data available and maintained, no inquiry/inspection/complaint/legal action has been proceeded/pending against the subject company - It is further submitted in Income Tax Department Report vide Diary No. 00366/3 that after consulting the record it has found that as of now, no demand is outstanding against the Petitioner Company nor any assessment/penalty/prosecution proceedings are pending as of now. The applicant Company is hereby dissolved in terms of Section 59(8) of the Insolvency Bankruptcy Code, 2016 with effect from the date of the present order - Application allowed.
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Service Tax
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2022 (2) TMI 903
Non-payment of service tax - purchasing and selling the SIM Cards and Recharge Coupons in the hands of subscribers of BSNL - petitioner made a submission that the issue was considered by this Court in number of writ petitions and decisions are rendered in favour of the persons, who all are similarly placed like that of the petitioner - HELD THAT:- It is left open to the writ petitioner to adjudicate the factual aspects before the authorities, enabling them to consider the same and pass order on merits and in accordance with law. Contrarily, the High Court need not entertain a writ petition against a show cause notice in a routine manner. The writ against a show cause notice may entertain only on exceptional circumstances where the authority without issuing such notice is incompetent under the provisions of the Statutes or the Rules. If there is an allegation of mala fide, then also writ can be entertained. In such circumstances, the authorities against whom such allegations on mala fide are raised is to be impleaded as a party respondent in his personal capacity in the writ proceedings - In the present case, the show cause notice itself was issued in the year 2011 and due to the pendency of the writ petition, the writ petitioner has not submitted the defence statement and the authorities have also not passed orders. This being the factum established, the petitioner is at liberty to submit his defence statement/explanation along with the documents as well as the judgments passed by the High Court in the subject, within a period of four weeks from the date of receipt of a copy of this order. On receipt of any such explanations/documents, etc., from the petitioner, the respondent is directed to consider the same on merits and in accordance with law - Petition disposed off.
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2022 (2) TMI 902
Refund of service tax paid - amount of tax was paid in mistake/erroneously - refund denied on the ground that the appellants were availing the benefit of Notification No.19/2003 dated 21.8.2003 and were paying service tax only on 33% of gross amount charged from their customer - Notification No.32/2007 dated 23.5.2007 is only prospective or not - HELD THAT:- From the records of the case, it is clear that the appellants have entered into works contract with KTPCL. It is not the case of the department that the contracts undertaken by the appellants are not works contract. Therefore, payment of service tax by the appellant under some other heading albeit by a mistake could not render the service taxable. The appellants have demonstrated that the works undertaken by them were under works contract and due VAT was paid on the very same work contracts. It is settled principle of law that if a new levy comes into existence on a specific date, the same set of activity cannot be held to be taxable under a different heading prior to the date of coming into existence of the levy. Apex Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] has categorically held that works contract cannot be taxed before 1.6.2007. The appellants were not required to pay service tax and any tax thus paid under a mistaken notion of law is refundable - Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 901
Nature of transaction - service or not - lease transaction - appellants have transferred the right of possession and effective control of the wagons leased out by them to the South Western Railways - appellants have also discharged applicable VAT / Sales Tax on such transaction - deemed sale or not - HELD THAT:- The wagons are purchased and provided by the appellants, the effective control of the wagons is with the Indian Railways. From the clauses of the agreement, it shows that the lessor-appellant need not pay for the standard maintenance; Indian Railways will be at liberty to make the necessary modifications/changes on the leased wagons and that Indian Railways are free to deploy the wagons as per their schedule and not necessarily only to the appellants. A combined reading of the same goes to prove that during the leased period, the effective control of the wagons is with the Railways. In the instant case, in terms of the agreement, right of possession and effective control of the wagons is with the Indian Railways and not with the appellants. Moreover, the transaction entered into by the appellants with the Indian Railways constitutes a deemed sale in terms of Clause 29(A) of Article 366 of the Constitution of India as the appellants have demonstrated that they have paid appropriate VAT along with penalties to the Karnataka State VAT Department. It is found from the records that the Government of India, Ministry of Railways have clarified vide letter dated 11.6.2014 that this is a case of deemed sales tax under Article 366 (29A) of Constitution of India; deemed sales shall attract provisions of VAT/CST Act, as applicable in that state and that there is no service tax payable on this in leased case. Though, it can be argued that the railways are no authority to clarify the matters in respect of excisability of certain service to the service tax or sales tax for that matter, it is understandable that such a clarification will not be issued by a Ministry in the Government without having due legal consultation. It is on record that the appellants have paid the relevant VAT for the impugned transaction along with penalty though in a belated manner, the agreement entered by the appellant with the Railways cannot be deemed to be a not sale by any standard. As the VAT stands paid in view of the provision of Section 65B(44) of the Finance Act, 1944, the transaction of the appellants constitutes a deemed sale and as such, the supply of wagons by the appellants in the impugned case will automatically go out of taxable service. In the impugned case, the appellants have transferred the right of possession and effective control of the wagons leased out by them to the South Western Railways. The appellants have also discharged applicable VAT / Sales Tax on such transaction, therefore, the activity undertaken by the appellants does not constitute a taxable service of Supply of Tangible Goods . Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 900
Refund of service tax - Unjust enrichment - Period of limitation - Tax paid on self assessment basis - Claim of refund without challenging the assessment, to claim the benefit of exemption - storage and warehousing services to Food Corporation of India (FCI) through HAFED, Hisar - failure to produce any conclusive/ substantial evidence to prove that the incidence of service tax had not been passed on by them to any other person and hence refund claims will be hit by doctrine of unjust enrichment - no substantial evidence to prove that they were providing storage or warehousing services of agriculture produce to claim the benefit - time limitation - refund claims filed beyond the specified period of one year - HELD THAT:- Undisputedly the refund claim has been filed by the Appellant on the basis of the legal opinion obtained by the FCI and not on the basis of any determination towards the tax liability by any authority, tribunal or court, in their case. During the period for which the refund claim has been filed, the Appellant was self assessing his tax liability and reflecting the same in the ST-3 returns filed by them with the department. Nothing has been brought on record to show that appellant has sought modification of the self assessed return by way of an appeal to Commissioner (Appeals) - the refund claim filed by the Appellant is not maintainable. Time limitation - HELD THAT:- It is quite evident that in the event were the refund claim has been made under the provisions of the Section 11B of the Central Excise Act, 1944, the period of limitation as provided by the said section will come into play, and refund claim needs to be examined for limitation as per the period of limitation laid down thereunder - Undisputedly CESTAT is the statutory body created under the provisions of the Act, and is not having any extraordinary jurisdiction as conferred by Article 226 of the Constitution - this issue has been considered in detail by the larger bench in case of M/S VEER OVERSEAS LTD. VERSUS CCE, PANCHKULA [ 2018 (4) TMI 910 - CESTAT CHANDIGARH] and by majority view it was held that the refund claim will have to be considered only if filed within the period of limitation as provided by the Section 11B of the Central Excise Act, 1944. Undisputedly the Appellants in the present appeals have filed the refund claims, under Section 11B of the Central Excise Act, 1944, as made applicable to service tax cases by virtue of Section 83 of the Finance Act, 1994, hence the refund claims have to be considered and decided as per the provisions of said section. The refund claims have been filed beyond the period of limitation as prescribed by the Section 11B, the refund claims are barred by limitation. Unjust enrichment - HELD THAT:- In the present case that the appellants have paid the service tax as per self assessment made by them and have filed ST-3 return accordingly. They have not filed any appeal to Commissioner (Appeals) for modification of the said assessment order claiming the benefit of exemption. They have claimed the benefit of exemption by way of these refunds claim - in case of in case of VIAVI SOLUTIONS INDIA PVT. LTD. VERSUS COMMISSIONER, CCE ST, GURGAON-I [ 2021 (10) TMI 1300 - CESTAT CHANDIGARH] referred the matter to Hon ble President for referring the issue to larger bench for resolution of difference in opinion expressed by the two bench. Since this goes to the root of the matter, this matter also be referred to Hon ble President for referring the matter to larger bench with following question of law: Whether refund claim of service tax is maintainable in the absence of any challenge or assessment or self-assessment in appeal or not?
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Central Excise
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2022 (2) TMI 899
Remanding the matter - whether the revenue is agreeable for remand of the matter? - HELD THAT:- In view of the instructions received by the learned counsel from the Authority vide email dated 18th February 2022, impugned Order dated 17th February 2021 confirming the demand raised vide the SOD dated 25th July 2019 is quashed and set-aside. The proceedings are restored before the Respondent No.2 for deciding the matter afresh in accordance with law and without being influenced by the observations made and the conclusions drawn in the impugned Order dated 17th February 2021. It is made clear that, all questions of fact and law are kept open. The Respondent No.2 is directed to decide the matter expeditiously and shall make an endeavour to dispose of the matter on or before 30th June 2022. The Order that would be passed by the Respondent No.2 shall be communicated to the Petitioner within one week from the date of passing of such Order - Petition allowed.
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2022 (2) TMI 898
Entitlement to interest on delayed amount - relevant date - Section 11BB of Central Excise Act - HELD THAT:- The issue decided in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] where it was held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. The liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act. Application allowed.
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2022 (2) TMI 897
CENVAT Credit - goods transport service - freight incurred for the outward transportation of the final products from factory to customers' premises and utilized the same for payment of duty on final products - place of removal - suppression of facts - applicability of time limitation - HELD THAT:- The issue involved herein has already been dealt with in THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, COIMBATORE. VERSUS PRICOL LIMITED, CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, SOUTH ZONAL BENCH CHENNAI [ 2019 (8) TMI 759 - MADRAS HIGH COURT ], wherein a Co-ordinate Bench of this Court, after following the decisions of the Hon'ble Supreme Court, namely, COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT] , and COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX, GUNTUR VERSUS M/S. THE ANDHRA SUGARS LTD. [ 2018 (2) TMI 285 - SUPREME COURT] , disposed of the appeal, by remitting the matter to the Tribunal for fresh consideration, in accordance with law, after hearing both the parties on the applicability of the two judgments of the Hon'ble Supreme Court. The matter is remanded to the Tribunal to decide the matter afresh in accordance with law, after hearing both the parties, on the applicability of the above referred two judgments of the Hon'ble Supreme Court - Appeal allowed by way of remand.
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2022 (2) TMI 896
SSI Exemption - clubbing of clearances of two units - dummy units - Use of trade name of other company - evidence for flow of cash between the two units, present or not - mutuality of interest - Department has merely relied upon rental agreement to allege that there is cash flow between the units - levy of penalty on Managing Director under Rule 26 (1) of Central Excise Rules, 2002 - HELD THAT:- The goods manufactured by both the units are different. M/s.TLPPL is engaged in producing laboratory products in the nature of laboratory furnaces, laboratory tray driers etc. M/s. TLGW is engaged in producing glass beakers and jars used in laboratories. The products being entirely different, it cannot be said that the trade name of one unit was used to market the products of the other unit - Further, there is no evidence brought forth from the records that the clearances made by one unit [M/s.TLGW] are in fact the goods clandestinely manufactured by M/s.TLPPL. Needless to say, when the products are entirely different, it cannot happen. The department has mainly relied on the rental agreement entered into between the two units. Being separate entities, there are no discrepancy in such rent agreement. There is proof that they have reflected payment of rent for the whole year by M/s.TLGW to TLPPL in their annual financial statement. Payment of rent cannot be considered as fund flow in respect of goods manufactured and cleared by the unit. There is no iota of evidence to show that the raw materials were purchased in the name of M/s.TLGW and that these raw materials were used for manufacturing goods which are cleared by TLPPL - it is found from the records that both the units are separately registered with the Central Excise department. One is the Private Limited Company and the other is a Proprietarship firm. Merely because the members of the family are owners of these two units, it cannot be said that there is mutuality of interest. In fact, there is no specific allegation that TLGW is a dummy unit. The department has proceeded to club the clearances of both these units without raising such allegation. It is found that the department has miserably failed to establish any mutuality of interest or cash flow between both the units. Further, there is no show cause notice issued to M/s.TLGW which the department alleges to be a dummy unit. Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 895
Benefit of SSI Exemption Notification no.08-03-CE dated 1.3.2003 - allegation is that the appellant has taken Cenvat credit before crossing limit of ₹ 150 lacs - HELD THAT:- There is no worksheet filed by the authorities while issuing show cause notice and there is no such allegation that the appellant has reversed less credit. Moreover, from the balance sheets and ER-3 returns, it is very much clear that at the end of financial year, the credit lying in cenvat account is having a nil balance. Same is evident from the ER-3 returns for the next financial year showing opening balance of Cenvat credit at nil. In that circumstance, the allegations made by the ld.AR during the course of argument, are not acceptable at this stage. The said calculation arrived by the ld.AR during arguments are based on record provided by the appellant during investigation but the show cause notice has not discussed any such discrepancy. Therefore, the argument of the ld.AR is only presumptive which is not required to be considered. The benefit of Notification No. 08/2003-CE dated 01.03.2003, the appellant has to fulfil the two conditions:- (a) the appellant has taken Cenvat credit on inputs lying in work in progress after crossing the exemption limit of ₹ 150 lacs and (b) the appellant has reversed the credit lying in their Cenvat credit account on closing of the financial year which is evident from the balance sheet as well as ER-3 returns. which has been fulfilled by the appellant. The appellant is entitled to avail SSI exemption under Notification No. 08/2003-CE dated 01.03.2003 for the period 2013-14 to 30.6.2017 - Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 894
Clandestine removal - clubbing of number of various units - demand mainly based on various documents and statements of various persons recorded under Section 14 of the Central Excise Act, 1944 - cross-examination of statements or not - HELD THAT:- The appellant have made a categorical request vide their letter dated 4.8.2008 wherein, they have requested for cross examining 17 persons whose statements were relied upon. As mandated under Section 39 of Central Excise Act, 1944, it is mandatory on the part of the Commissioner that to rely upon any statement, the witness has to be examined. In this case particularly, when the appellant have made a request for cross examining, he has no reason to deny cross examination before deciding the case. This issue has been consistently held in the various judgments as cited by the appellant that statements can be relied upon only after cross examining the witness who has given the statement. The learned Commissioner by rejecting the request for cross examination of the witness has violated the Principles of Natural Justice - Appeal allowed by way of remand.
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2022 (2) TMI 893
Seeking for recovery of the short paid duty amount - clearances made to its other units - Department has held that the valuation of goods cleared from the appellant s unit at B2 to its other manufacturing units should be done under Section 4(1)(b) ibid read with Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - extended period of limitation - HELD THAT:- It is an admitted fact on record that during the disputed period, the appellant had sold the excisable goods manufactured by it to the independent buyers and also stock transferred the same to its other manufacturing units for use/utilization in the further manufacture of value added products. The appellant in this case, had not disputed the fact that all the units belonging to it are interconnected/related and managed by one corporate entity. Thus, under such circumstances, the adjudicating authority finds that the valuation provisions contained in Section 4(1)(b) ibid read with Rule 4 ibid should be applicable for determination of the duty liability. However, on perusal of the impugned order, we find that the adjudicating authority has not specified as to why recourse to Rule 4 is required - there is no discussion as to whether all other parameters prescribed in Rule 4 ibid have also been considered. Hence, in absence of proper substantiation based on the material facts of the case, it is neither proper for the adjudicating authority to come to a conclusion and at the same time not possible to determine the true value of the impugned goods for ascertainment of the correct duty liability. The period of dispute involved in this case is from April, 2006 to March, 2007. By invoking the proviso appended to Section 11A ibid, the department had issued the show cause notice to the appellant, seeking for recovery of the adjudged demands. Insofar as recovery of short/non-levied or non-payment of duty is concerned, the said statute mandates that the Central Excise officer shall issue the show cause notice within one year from the relevant date on the person, requiring him to show cause as to why the duty amount shall not be recovered. The period of one year is prescribed for effecting recovery in the normal circumstances - the appellant had informed the department regarding the modus operandi adopted by it in sending the disputed goods to its sister s units and also reasonably believed that the valuation provisions contained in Rule 8 ibid should be available for such transactions. Thus, under such circumstances, the rigor itemized in the proviso clause under Section 11A should not be available to the department and accordingly, the demand, if any, should only be confined to the normal period of one year. In the present case, since the period of dispute is from 2006 to 2008 and the show cause notice was issued on 15-3-2010, we are of the considered view that confirmation of the entire adjudged demands are barred by limitation of time as per the aforesaid statutory provisions and as such, the impugned proceedings are not maintainable on the ground of limitation alone. Further, we find that the principle or doctrine of revenue neutrality is applicable in the case in hand inasmuch as the higher duty amount payable by the appellant under Rule 4 ibid would be available to the sister s unit as Cenvat credit. Furthermore, it is noticed from the available records that the department was in doubt with regard to applicability of the proper valuation rules to the facts of the present case. Extended period of limitation - HELD THAT:- It is noticed from the available records that the department was in doubt with regard to applicability of the proper valuation rules to the facts of the present case. This is evidenced from the show cause notice, where the proposals were made to confirm the duty demand by considering the provisions of Rule 8 ibid; whereas, the impugned order has confirmed the demand for contravention of the provisions of Rule 4 ibid. Hence, under such circumstances also, it cannot be said that there is element of mens rea on the part of the appellant in defrauding the Government revenue and thus, the extended period of limitation, was not available to the department for initiation of the show cause proceedings. In the case of NIRLON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (5) TMI 101 - SUPREME COURT ], the Hon ble Apex Court have ruled that something done with bona fide belief, without involvement of any mala fide intention to defraud the Government revenue, the proviso to Section 11A(1) ibid cannot be invoked. Further, it has also been held that when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty. Thus, in absence fulfilment of the ingredients mentioned in the proviso clause to Section 11A ibid, confirmation of the adjudged demands in the impugned order will not stand for judicial scrutiny. There are no merits in the impugned order insofar as it has confirmed the adjudged demands by invoking the extended period of limitation contained in the proviso appended to Section 11A ibid - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (2) TMI 892
Recovery of the alleged outstanding dues - Creation of charge over the land of the petitioners - calling for the papers and proceedings leading to the issuing the application dated March, 2013 issued by respondent No.2 - deletion of entry if any made in revenue records pursuant to the application - direction to respondents to forthwith refrain from initiating any steps against the petitioners or other properties for the recovery of the outstanding dues of respondent No.4 - HELD THAT:- It is by now well settled that the department can proceed only against the registered dealer. If it wants to recover the dues due and payable by the dealer, the department cannot proceed to attach any property of any individual or any of the family members of the dealer for the purpose of recovering the dues of the dealer. Having regard to the principles enunciated in KAPURCHAND SHRIMAL VERSUS TAX RECOVERY OFFICER, HYDERABAD, AND OTHERS [ 1968 (8) TMI 16 - SUPREME COURT ], it is well settled that the property of any member of the family of a registered dealer cannot be touched in any manner under any of the provisions of the Act, 2003. The very action on the part of the department in creating a charge over the agricultural land owned by the writ applicant herein being the father of the dealer is without jurisdiction. If any charge has been created in the revenue record with respect to the survey No.80, the same shall stand cancelled. It shall be open for the department to proceed against the dealer. If the registered dealer has any immovable property of his ownership, it is always open for the department to attach such property and recover its dues - Application disposed off.
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2022 (2) TMI 891
Suppression of tax - alleged unaccounted sales - scope of the word 'an estimate' - sales of exempted item suit length - It is alleged that as against the sales of suit length, the profit claimed to have been achieved by the petitioner is abnormal - whether in a narrow conspectus or in a broad perspective, the Intelligence Officer had estimated or guessed what could be or what might be the suppressed turnover through apportionment of total sale price between taxable goods and exempt goods? - HELD THAT:- The complaint against determination must satisfy anyone of the meanings attributed to the word to vitiate the penalty proceedings. To answer the above poser, one need not dwell into all details furnished by the Intelligence Officer in Annexure-A order. It is not the case of dealer that the details, for any purpose, incorporated in the penalty order are incorrect, unrelated etc. The apportionment of profit, percentage, etc are again in line with the method adopted by the dealer. The Intelligence Officer has found out the suppression of sales turnover in a particular sale transaction through artificial and unacceptable apportionment of sale price between taxable item and exempt item. We have difficulty in appreciating or accepting that, in the circumstances of the case on hand and particularly having regard to the business module implemented by the dealer, the working of details by the Intelligence Officer could be termed as an estimate or guess work. A principle is followed in determining the suppressed turnover - the conclusions recorded by the Tribunal are correct and available in the circumstances of the case. The only ground raised by referring to estimation of suppressed turnover is equally untenable and accordingly rejected. Revision dismissed.
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Indian Laws
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2022 (2) TMI 935
Restraint from interfering with the ownership and possession of the Plaintiff - bonafide purchaser of property or not - whether the second Defendant was not having any authority to sell the land owned by the Plaintiff - suit for rendition of accounts - non-production of the original power of attorney by the second Defendant - HELD THAT:- The argument of the Plaintiff that the non-production of the original power of attorney by the second Defendant, was fatal to a valid registration being effected, is rejected. The understanding of the Courts regarding Section 18A is also erroneous. Section 18A was enacted only to ensure that the copying process is hastened, as noticed from the Objects and Reasons. The Trial Court was right when it held that Section 18A is concerned only with the document which is presented for registration. The Trial Court clearly erred relying upon Section 18(A) to hold that certified copy however being produced of the power of attorney was in conformity with Section 18A and the High Court was equally in error to hold that Section 18A contemplated production of true copy of the power of attorney. Admittedly, the Plaintiff was the owner in possession of the property. It cannot be disputed that Plaintiff entered into an agreement with the first Defendant to sell the property. What is disputed is the price. On the one hand, the Plaintiff contends that the price was fixed at ₹ 55,000/-. The Defendants dispute the said version. According to them, the property was conveyed by the second Defendant acting as the power of attorney holder on behalf of the Plaintiff in favour of the first Defendant for a total consideration of ₹ 30,000/-. The execution of power of attorney dated 28.01.1987, by the Plaintiff in favour of the second Defendant is not in dispute. Re-appreciation of evidences - HELD THAT:- The High Court has overstepped its limits by reappreciating the evidence, a task which must be left to the First Appellate Court. It is true that the First Appellate Court did not fully conform to the requirements of Order XLI Rule 31 of the Code of Civil Procedure. The property is banjar land. Quite clearly, the Plaintiff wanted to sell the land. He has admittedly executed the Power of Attorney in favour of the second Defendant - The agreement dated 30.01.1987, was entered into and it refers to the power of attorney dated 28.01.1987. The power of attorney is, undoubtedly, registered. If the Plaintiff's case is believed, P-1 agreement is executed by the second Defendant, which recites that he has been appointed as the power of attorney. It is further recited that the second Defendant, on behalf of the Plaintiff, has made a deal to sell the property for ₹ 55,000/-. It is stated still further that the first Defendant did not have the total amount of consideration. He wanted a weeks' time to arrange the money. For this reason, it is finally stated that the Plaintiff had appointed him as the power of attorney because the Plaintiff had to urgently go to Kinnaur. Finally, it is stated in P-1 that therefore, he would now be able to sell the land only for ₹ 55,000/-, otherwise, he would be unable to sell. Since, it is not disputed that the Plaintiff did execute the power of attorney, empowering the second Defendant to sell the property and it is further not in dispute that the second Defendant has executed the sale deed in favour of the first Defendant, the only question which arises is whether the power of attorney was cancelled before the execution of the sale deed on 28.04.1987. Whether the cancellation was effected in a valid and legal manner? - whether it was made known to not only to the second Defendant but also to the first Defendant? - HELD THAT:- Section 201 of the Contract Act, dealing with termination of agency, declares that an agency can be terminated by the principal revoking the authority of the agent. An exception to the power of principal to revoke the agency is found in Section 202 of the Contract Act, which provides that where an agent has himself an interest in the property which forms the subject of the agency, in the absence of an express contract, the agency cannot be terminated to the prejudice of the agent's interest. In such cases, the agency would be clearly irrevocable. Section 207 of the Contract Act declares that revocation may be express or may be implied in the conduct of that principal or agent, respectively - It is no doubt true that the case of the Plaintiff is that the second Defendant was bereft of the authority to transfer the property as on 28.04.1987 in view of the fact that the second Defendant had surrendered the power of attorney dated 28.01.1987 on 02.02.1987 and the Plaintiff had produced the document. The second Defendant has denied the case of surrender before the execution of sale deed. It is apparent that whatever may be the state of the oral evidence and the difficulty in arriving at the truth on an appreciation of the same, the documents which we have adverted to, unerringly points to the following facts. Contrary to the case of the Plaintiff that the power of attorney stood cancelled on 02.02.1987, after it was surrendered to him on that day, it is that the Plaintiff writes to the second Defendant about having spoken to the second Defendant regarding the land in question at Mehre and also gave him the power of attorney. There is no mention about the power of attorney having been surrendered on 02.02.1987 or about the so-called cancellation of the same - the case of the Plaintiff that he had cancelled the power of attorney by writing the word 'cancelled' on 02.02.1987, upon it being surrendered by the second Defendant, cannot be accepted. The proceeding on the basis that the second Defendant had a duty to not sell the property below ₹ 55,000/-, in terms of P-1, the breach of duty to not sell below ₹ 55,000/-, when the second Defendant sold the property for ₹ 30,000/-, cannot invalidate the sale or render it null and void. A perusal of the power of attorney will make it clear that any restriction on the price is conspicuous by its absence in the power of attorney. Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 890
Dishonor of Cheque - amicable settlement between the parties arrived at - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- A perusal of the judgment in BALDEV CHAND BANSAL VERSSTATE OF HARYANA AND ANOTHER US [ 2019 (1) TMI 1949 - PUNJAB HARYANA HIGH COURT ] would show that in a similar case where the FIR had been registered under Section 174-A IPC in view of the order passed in proceedings under Section 138 of the Act, while declaring the petitioner therein as proclaimed offender in the said proceedings, a Co-ordinate Bench after relying upon various judgments observed that once the main petition under Section 138 of the Act stands withdrawn in view of an amicable settlement between the parties, the continuation of proceedings under Section 174-A IPC is nothing but an abuse of the process of law. The said aspect was one of the main consideration for allowing the petition and setting aside the order declaring the petitioner therein as proclaimed person as well as quashing of the FIR under Section 174-A IPC - A perusal of the relevant extract of the above judgment would show that where the main case was dismissed for want of prosecution, it was observed that the continuation of proceedings under Section 174-A IPC shall be an abuse of the process of court. In the present case, it is not in dispute that respondent No.2 had filed complaint under Section 138 of the Act of 1881 for dishonour of cheque dated 15.01.2013 amounting to ₹ 66,250/- and it is in the said proceedings that the order dated 15.11.2019 (Annexure P-4) was passed vide which the petitioner was declared as proclaimed offender and direction was given to SHO concerned to register an FIR and in pursuance of the said order, the present FIR No.691 dated 19.11.2019 (Annexure P-5) was registered under Section 174-A of the IPC - Since, the proceedings under Section 138 of the Act of 1881 have been withdrawn and the present FIR has been registered on account of non-appearance of the petitioner, this Court feels that continuance of the proceedings in the present FIR would be an abuse of process of the Court. The present petition is allowed.
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2022 (2) TMI 889
Smuggling - recovery of 750 tablets of Tramadol weighing 350 grams from a parcel given by the petitioner - retraction of statements - Section 37 NDPS Act - HELD THAT:- The argument of the Petitioner that the Petitioner has a valid Importer- Exporter Code and a GST registration number and further did not require any other licenses or permissions for sending a package of medicines to Myanmar does not impress this Court. There are force in the argument of the counsel for the respondent that the Petitioner would need a valid authorisation under Rule 58 of NDPS Rules 1985 and the license which was being used for selling medicines from his shop would not suffice as it authorises the sale and distribution of medicines domestically and locally - As per Notification S.O. 1760 (E.) dated 26.04.2018 issued by the Revenue Department amended S.O. 1055 (E) dated 19.10.2001 by inserting Tramadol as Entry 110Y to the Schedule of Psychotropic substances under the NDPS Act and specifies its commercial quantity to be 250gms. This makes it amply clear that the Petitioner ought to have had a valid authorization as per Rule 58 before exporting Tramadol. A perusal of the Status Report shows that 750 tablets of Tramadol weighing 350 grams were recovered from a parcel given by the petitioner herein at DHL Express Pvt. Ltd. which was to be dispatched to Myanmar and 300 tablets of Tramadol weighing 130 grams and 375 tablets of Clonazepam weighing 50.5 grams were recovered from the shop of the Petitioner. Furthermore, the seizures at both, DHL office and Petitioner s shop were done in the presence of independent witnesses - Even though there are prescriptions, it cannot be substantiate the presence of tablets at the shop of the petitioner. Further, in any event, the prescription amount does not match with the total number of tablets that have been recovered from the shop of the petitioner. This Court is not making any observations on this aspect lest it will prejudice the case of the petitioner. However, these facts are shows only to come to the conclusion that there are reasonable grounds to believe that the petitioner has committed an offence punishable under Sections 8, 22(c) and 23 NDPS Act and thereby the rigour of Section 37 of the NDPS Act will apply in the present case. This Court is not inclined to grant bail to the Petitioner at this juncture - Petition dismissed.
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2022 (2) TMI 888
Dishonor of cheque - failure to prove the ingredients of the offence under Section 138 of the N.I. Act against the accused/respondent herein - acquittal of the accused - presumptions not drawn - main contention urged by the learned counsel for the appellant is that, the accused had admitted her signature on the cheque and as such, the trial Court erred in not drawing presumption in favour of the complainant under Section 139 of the N.I. Act - section 138 of NI Act - HELD THAT:- It is evident that, the complainant is making the specific allegation that he had advanced hand loan of ₹ 4,80,000/-to the accused in the first week of December, 2015. At the outset, it is to be noted here that the complainant has no where pleaded the specific date of advancement of the loan amount. This material pleading is missing. Further, there are no specific pleadings in the complaint as to when exactly the alleged cheque was issued to the complainant, by the accused. The complainant has no where specifically asserted the dates in this regard. The cheque is dated 08.01.2016. But, the allegations were that, in the first week of December, 2015, the loan was advanced. Admittedly, the accused has not denied her signature on Ex. P1 (Cheque). But, the defence of the accused was that, she had chit transaction with the wife of the complainant and she was required to pay ₹ 40,000/-to the wife of the complainant and in respect of the said repayment, she had issued a blank cheque to the wife of the complainant - the cross-examination of the complainant discloses that, he was not possessing ₹ 4,80,000/-when he said to have advanced the loan. His own admission discloses that he was possessing ₹ 2,00,000/-with him and he had secured ₹ 2,80,000/-from his son. Admittedly, his pension is ₹ 16,000/-p.m., and he is retired 10 years earlier to the alleged transaction. He has not produced any document to show that, he was possessing hard cash of ₹ 2,00,000/-. Even otherwise, there is no evidence as to what his son was doing and what is his financial status - also, the complainant has withheld the best material evidence available to him and as such, an adverse inference is required to be drawn in this regard against him. There is material alteration of the date in Ex. P2 (endorsement) and it directly has bearing on the limitation issue. Merely because the notice has been served and the accused has not replied, it cannot be a ground to admit the claim of the complainant. Apart from that, the complainant himself has got marked Ex. P7 (statement) during cross-examination of accused, wherein there is undertaking given by accused in respect of she being indebted to the complainant and his wife to the tune of ₹ 3,00,000/-including the chit fund amount, hand loan and interest. This statement is recorded on 22.09.2016 and this transaction is of 2015 and that too during the pendency of the proceedings - the accused need not to prove her case beyond reasonable doubt and the accused is required to prove her defence on the basis of preponderance of probabilities. In the instant case, considering the conduct of PW. 1 and admissions made in Ex. P7 and alteration in Ex. P2, it is evident that the complainant has failed to prove the transaction of advancing hand loan of ₹ 4,80,000/-to the accused and in discharge of the same, the accused issuing cheque in question under Ex. P1. The trial Court has considered all these aspects in a proper perspective and has properly analyzed the oral and documentary evidence and after appreciating the oral and documentary evidence in a proper perspective, the trial Court has arrived at a just conclusion - appeal dismissed.
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2022 (2) TMI 887
Dishonor of Cheque - insufficiency of funds - petitioner has not been able to dislodge the presumption in view of inconsistency in his evidence - Section 138 of N.I. Act - HELD THAT:- Undoubtedly there is no proper application of mind to the facts and the evidence brought on record. Firstly if the premise on which the respondent initiated action against the petitioner is seen, it can be gathered from the averments made in the complaint that the respondent made payment of ₹ 19,50,000/- to the petitioner as per the terms of Ex. P.5. The respondent has stated that he and one Ananda Kumar made the payments, and to this effect there are endorsements made on different dates, and they show total payment of ₹ 19,50,000/-. But the terms of Ex. P.5 are that the petitioner and the respondent agreed to develop the property jointly, that the respondent undertook to pay the balance of ₹ 7,00,000/- to the land owner Ramakanth Revankar and bear other incidental expenses and that he also agreed to pay ₹ 5,00,000/- to the petitioner for his personal commitments - the petitioner admits to have received ₹ 3,50,000/- on 16.06.2006 and ₹ 1,00,000/- on 26.06.2006 and he admits the endorsement to this effect found in Ex. P.5. But he disputes all other endorsements and the signatures below them. Though it is possible to infer that signatures found below the endorsements are that of the petitioner despite their denial by him, and that there is no consistency in his defence, it is not possible to accept the respondent's case that the petitioner issued the cheque in question for discharging liability of ₹ 19,50,000/-. Ex. P.5 is the document that the respondent has relied upon to prove the existence of legally enforceable debt. This document shows liability of ₹ 12,00,000/- only. Payment of incidental charges did not arise because the sale deed was not executed. DW1, i.e., the petitioner has stated in para 4 of his affidavit that the respondent did not pay ₹ 2,50,000/-. The petitioner has admitted to have received only ₹ 4,50,000/-. The counsel for the respondent referred to one answer of D.W.1 in his cross examination that he received one payment from Ananda Kumar and submitted that this admission would prove the transactions. But this argument cannot be accepted, for it is just a stray answer. If the tenor of cross-examination of P.W.1 and questions put to D.W.1 are seen, what appears is that he has not accepted to have received ₹ 19,50,000/- except ₹ 4,50,000/- and at least in this regard his stand is consistent - there is no congruence in the averments made in the complaint and the evidence placed by him. Therefore presumption under Section 139 of N.I. Act cannot be drawn. In spite of inconsistency in the defence version of the petitioner the respondent's case does not stand on its own strength and therefore it is not possible to hold that the offence under Section 138 of N.I. Act is proved against the petitioner. Revision petition is allowed.
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2022 (2) TMI 886
Dishonor of Cheque - acquittal of the accused - discharge of a legally enforceable debt or not - main contention of appellant is that, when the signature on the cheques came to be admitted, the trial Court is not justified in acquitting the accused - HELD THAT:- In the entire complaint, the complainant has not at all specifically asserted about the specific date of advancement of the hand loan. It is important to note here that the loan is alleged to have been advanced in the 2nd week of January 2002, that too to the tune of ₹ 4.00 Lakhs. ₹ 4.00 Lakhs is a huge amount in 2002 and it is hard to accept the version of the complainant that he advanced such a huge amount without any security and without charging any interest. Further, he has not specifically stated the date of advancement of the alleged loan amount - according to the complaint, on the same date of advancement of loan amount, two post-dated cheques as per Exs. P1 P2 were handed-over to complainant, which were for ₹ 2.00 Lakhs each. If at all on the same day, both cheques viz., Exs. P1 P2 were handed-over, there is no explanation as to why the accused has issued two cheques rather than a single cheque, when the alleged loan transaction is for ₹ 4.00 Lakhs. At the out-set, the complainant has not produced any material to show that, he had the financial capacity and the cross-examination of PW. 1 clearly disclose that, his financial capacity is exposed by the accused. He has not produced any documents to show his income. Further, he claims that, he secured ₹ 3.00 Lakhs by sale of his Plot. But, no documents have been produced to substantiate this contention also - When the civil dispute between the accused and the complainant was pending, question of the complainant advancing loan does not arise at all. Apart from that, in the complaint itself no specific date of advancement of loan was given and it is evident that all along that there was a civil dispute between the parties. Further, the financial status of the complainant is also not established. Further, the accused has exposed the complainant in respect of his financial capacity. Though the complainant has claimed that he has accumulated the amount of ₹ 3.00 Lakhs by way of sale of site, but, no material is produced to substantiate this contention. On perusal of the entire records, it is evident that the complainant has not approached the Court with clean hands. He has not referred the date of payment of loan and no reasons are given for charging no interest to such a huge amount, that too during pendency of the civil litigation between the parties. Further, there is no explanation from the complainant as to why he has issued two cheques on the same day for ₹ 2.00 Lakhs each, instead of one cheque. In the decision reported in BASALINGAPPA VERSUS MUDIBASAPPA [ 2019 (4) TMI 660 - SUPREME COURT] , the Hon'ble Apex Court has clearly held that the prosecution is bound to establish its case beyond all reasonable doubt, but, the accused is required to rebut the presumption only on the basis of preponderance of probabilities - Admittedly in the instant case, the complainant has failed to establish his financial status. In such circumstances, the principles enunciated in the above cited decision are squarely applicable to the facts and circumstances of the case in hand. The complainant has failed to prove that the alleged cheques were issued in respect of a legally enforceable debt and that he has advanced the hand loan of ₹ 4.00 Lakhs to the accused. The trial Court has appreciated the oral and documentary evidence in a proper perspective and arrived at a just decision. In such circumstances, the judgment of acquittal does not call for any interference by this Court. As such, the appeal is devoid of any merits and needs to be rejected - Appeal dismissed.
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2022 (2) TMI 885
Dishonor of Cheque - insufficiency of funds - cheque bounce cases - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- In the present case, the records reveals that the accused were regular customers of the complainant and they used to supply medical surgical devices. The total cheque amount was ₹ 5,73,094/-. It is also evident from the evidence that, earlier also accused had transaction and purchased goods to the tune of ₹ 59 to 60 lakhs, which is evident from the cross-examination evidence. The records indicate that the respondents have not submitted any documents to show that the goods are defective. However, learned Sessions Judge keeping in mind the nature of transaction has imposed the said sentence by modifying the amount and has awarded fine amount of ₹ 6,00,000/- in default, directed the accused-proprietor to undergo simple imprisonment for a period of six months. Out of the above said fine amount of ₹ 5,95,000/- amount to be paid as compensation to the complainant and the remaining ₹ 5,000/- to the Government as fine. Looking into the nature of transaction and the value of the goods and the cheque amount, in my considered view, the said modification order passed by the learned Sessions Judge does not appear to be perverse or illegal. On the other hand, whatever goods purchased by the accused, goods supplied value has to be paid and some extra amount has also to be paid. The same is awarded as compensation in the order passed by the Session Court i.e., in the year 2015 itself. The revision petition being devoid of merits is liable to be dismissed - petition dismissed.
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2022 (2) TMI 884
Recovery of contraband - Smuggling - 600 grams of Ganja - commercial quantity or not - whether any offence under Section 20(b)(ii)(C) of the NDPS Act relating to illegal possession or transportation of commercial quantity of Ganja for which the F.I.R. was registered is made out or not? - HELD THAT:- The facts of the case clearly show that the total quantity of Ganja involved in this case is only 600 grams. Learned Additional Public Prosecutor also did not dispute the said fact. He fairly concedes that the total quantity of Ganja involved in this case is only 600 grams. Therefore, the facts of the case attract only an offence punishable under Section 20(b)(ii)(A) of the NDPS Act, as the said total quantity of Ganja is only a small quantity. Notification specifying small quantity and commercial quantity was issued by the Central Government in exercise of the powers conferred on it by clause (viia) and (xxiiia) of Section 2 of the NDPS Act. The said notification contains a table specifying the small quantity of Ganja and commercial quantity of Ganja. The quantity of Ganja shown in Column No.5 of the said table is specified as small quantity. Serial No.55 in the said table relates to Ganja. At Column No.5 of it, it is shown that 1000 grams of Ganja is a small quantity and in Column No.6 it is shown that 20 K.Gs. of Ganja is a commercial quantity. It is now evident from the aforesaid notification that Ganja upto 1000 grams is considered to be a small quantity. Only Ganja of 20 Kgs. and above is considered to be a commercial quantity. When small quantity of Ganja is involved in commission of the offence, the imprisonment prescribed is for a term which may extend to one year or with fine, which may extend to ten thousand rupees, or with both. In the instant case, the Ganja involved in commission of the offence is only 600 grams, which is below the 1000 grams. Therefore, as per the aforesaid notification, it is to be held that the Ganja involved in this case is only a small quantity and an offence under Section 20(b)(ii)(A) of the NDPS Act is only made out. So, the very registration of F.I.R. for the offence punishable under Section 20(b)(ii)(C) of the NDPS Act, which is relating to commercial quantity, is obviously erroneous - when it is found from the facts of the case that only an offence under Section 20(b)(ii)(A) of the NDPS Act is made out and as the said offence is punishable with less than seven years period of imprisonment, the case is clearly amenable to Section 41A Cr.P.C. Whether the procedure contemplated under Section 41-A of Cr.P.C. is applicable to the offences punishable under special enactment i.e. NDPS Act or not? - HELD THAT:- The Apex Court in the case of STATE OF PUNJAB VERSUS BALBIR SINGH [ 1994 (3) TMI 173 - SUPREME COURT ] held that search, seizure or arrest carried out by them in an offence under the NDPS Act were obviously under the provisions of Cr.P.C. So, the provisions of arrest, warrant, search and seizure incorporated in Sections 41 to 60, 70 to 81, 93 to 105 and 165 Cr.P.C are applicable to the said arrest, search and seizure, warrant etc., made under the NDPS Act. The aforesaid group of provisions includes Section 41-A of Cr.P.C. - the Apex Court also held that the provisions of Section 165 Cr.P.C, which are not inconsistent with provisions of NDPS Act, are applicable for effecting search, seizure, arrest under the NDPS Act. Further, it is significant to note that the Apex Court held that Section 4(2) Cr.P.C provides that all the offences under any other laws shall be investigated and inquired as mentioned therein. The application of provisions of Cr.P.C insofar as they are not inconsistent with provisions of the NDPS Act are not expressly or impliedly excluded to the offence under the NDPS Act. Therefore, there is absolutely no legal bar to apply the procedure contemplated under Section 41A Cr.P.C. to the offences under the NDPS Act. So, there is no substance in the contention of the learned Additional Public Prosecutor that the benefit of the procedure contemplated under Section 41A Cr.P.C cannot be extended to the offences under the NDPS Act, which are punishable with less than seven years period of imprisonment. Petition closed.
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