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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter February 25, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Articles Relaxation from compulsory dematerialisation and extension of last date is desirable The Court may relax latches incase a professional misleads Lack of clarity w.r.t. reasons/ contraventions in SCN violates the principles of natural justice Time limit for issuance of SCN for F.Y. 2017-18 is extended till September 30, 2023 News High Level Symposium on Digital Public Infrastructure for Innovative, Resilient, Inclusive Growth and Efficient Governance ahead of 1st Finance Ministers and Central Bank Governors Meeting in Bengaluru Notifications Customs 13/2023 - dated 23-2-2023 - Cus Effective rates of customs duty and IGST for goods imported into India - Seeks to exempt BCD on ships/ vessels for breaking up. Seeks to amend notification No. 50/2017-Customs, dated the 30th June, 2017 Circulars / Instructions / Orders DGFT 58/2015-2020 - dated 24-2-2023 One time relaxation for furnishing additional fee to cover excess imports affected under the Export Promotion Capital Goods Scheme to promote Ease of Doing Business Highlights / Catch Notes GST Refund of Tax / VAT - GST on contracts entered prior to 1.7.2017- Section 142(10) of GST Act - formula with rate of VAT has been introduced, by the order dated 8.11.2017 - Nothing has been pleaded or argued by the counsel for the petitioner to show that formula introduced by the Government Order violates the Section 142(10) of the Act 2017 in any manner. As a matter of fact, it does not deal with calculation or formula for determining the liability is arbitrary and unreasonable. - HC Visit to Get Source Writ Petitions filed invoking Article 226 of the Constitution of India - Non-constitution of Appellate Tribunal - As and when the contingency in the clause 4.3 of the Circular dated 26 May 2020 occurs, the petitioners can file an appeal or writ petition as the case may be. In light of this position, it is not deemed necessary to keep these Petitions pending on the file of this court. - HC Visit to Get Source Seeking grant of bail - creation of fake firms - availing and passing of fake/ ineligible Input Tax Credit (ITC) - without expressing any opinion on the merits of the case, it is deemed just and proper to grant bail to the accused petitioner under Section 439 Cr.P.C with a condition to deposit Rs. 3 crores by the petitioner before the respondent Department under protest. - HC Visit to Get Source Income Tax Delay in filing the appeal before the CIT(A) for 561 days - Delay attributable to the advice of the consultant being a chartered accountant - the assessee should not be facing any hardship on account of the advice of the 3rd party, who was the expert of the subject. - AT Visit to Get Source Reopening of assessment u/s 147 - Since an order under section 143(3) had been passed after eliciting various information from the petitioner, which was responded to by the petitioner, it must be presumed that the Assessing Officer, while passing the order under section 143(3) of the Act, had considered all issues pertaining to the queries raised as also issues in regard to which the information was sought and therefore, if the matter is deemed to have been considered, any subsequent reassessment on the same issue would be nothing but a ‘change of opinion’. - HC Visit to Get Source Penalty proceedings u/s 271D - contravention of the provisions of Section 269SS - Once the AO has treated the personal expenses incurred by the Company as income of the assessee (Director), then the same amount cannot be treated as loan in violation of the provisions of Section 269SS of the Act 1961 - HC Visit to Get Source Additions beyond the scope of show cause notice - assessment u/s 143(3) r.w.s. 144 - addition 50 times more to the income proposed - Assessment order is also contrary to the scheme of I.T Act because the additions are made beyond the scope and issues in the show cause notice resulting in actual income assessed at 50 times then proposed to be assessed in the show cause notice - HC Visit to Get Source Valuation of closing stock - gold and jewellery - AO cannot change the method which was not recognized method as per the prescribed standards for valuation of closing stock, when the assessee has explained the valuation of closing stock by adopting weighted average cost price method - AT Visit to Get Source Long Term Capital Gains - claim of conversion of agriculture land into stock-in-trade - The assessee was required to disclose such lands as stock in trade in books of account and in ITR filed by it on year to year basis. Had assessee been actually converted land into stock in trade, he would have obtained audit report u/s 44AB of the Act, filed audit report, disclosed sale of land as turnover and remaining land if any as stock in trade and failure to obtain such audited books of account clearly prove that entire theory of conversion of agricultural land as stock in trade is baseless and after thought - AT Visit to Get Source Penalty u/s 271(1)(c) - failure to file the income tax return - Merely for non-specifying in the notice as to under which limb the penalty is levied i.e., for concealment of income or furnishing inaccurate particular of income thereof, the penalty cannot be cancelled especially when the assessee who is a non-filer was put to notice - AT Visit to Get Source Exemption u/s 11 - claiming benefit of accumulation u/s 11(2) over deemed income u/s 11(3) - non application of income - the assessee should not be eligible to claim double deduction in respect of the same income i.e. recycle the same income, which remained unapplied after the end of the fifth year. Therefore, if exemption under section 11(1)(a)is allowable in respect of the deemed income u/s 11(3), then exemption u/s 11(2) is also allowable in respect of such deemed income as sub-section (2) of section 11 refers to the income referred to in section 11(1)(a). - AT Visit to Get Source Revision u/s 263 - A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the Assessing Officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. - AT Visit to Get Source Reopening of assessment u/s 147 - period of limitation extended to 16 years vide Finance Act, 2012- validity of notice for the period which has been expired already income escaped pertained to assets located outside India - the notice under Section 148 in the present case was issued on 27.03.2015; therefore, as per the facts of the present case also when the amendment extending limitation for issuing notice under Section 148 of the Act was brought on the Statute, the limitation for issuing notice in the present case already stood expired. - AT Visit to Get Source Addition u/s 68 - cash credit - assessee being a share broker - All the equity shares so purchased first came in the Demat account of the assessee broker and then has been transferred to the client’s Demat account. No discrepancy in these transactions and the alleged cash credits are nothing but an advance sum received for purchase of equity shares and the said transaction has been duly completed and brokerage for carrying out such transaction has been charged by the assessee and therefore, no addition is called for u/s 68 of the Act. - AT Visit to Get Source Customs Validity of SCN - recovery of excess of the duty drawback - Period of limitation - SCN issued by the respondent Authority after a period of about more than six/ten years, which are not permissible as per the settled legal position - the authority cannot be issue show-cause notice after a period of three years for assessment / export. - SCN quashed - HC Visit to Get Source Corporate Law Rejection of application for reservation of name of the proposed L.L.P. - the words “AND ASSOCIATES” would be reflective of the profession of Advocacy or not - There are no reasons assigned by the respondents in the impugned communication for declining registration of the LLP of the petitioner by the name as proposed by him on the aforesaid ground of the use of word “AND ASSOCIATES” as being a word indicative of a profession and mandating him to seek prior approval of the Bar Council of India is misplaced and is not sustainable and is liable to be set aside. - HC Visit to Get Source Service Tax SVLDRS - Non-adjustment of amount already deposited by the petitioner (as interest under protest) during the stage of investigation against the amount payable under the Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 - The petitioner cannot be punished for depositing the amount under different heads once the provision mandates to discount the amount paid during the investigation dehors the head it has been deposited under. - HC Visit to Get Source Extended period of limitation - The Adjudicating Authority has in the impugned order given clear reasons as to why the allegations of suppression of facts and intention to evade tax has been arrived by him for invoking the extended time limit. It has been held by Constitutional Courts that appellate bodies cannot be unmindful of the great weight to be attached to the findings of facts of the Original Authority who has first hand knowledge and is in a position to assess the facts and the credibility of circumstances from his own observation. - AT Visit to Get Source Central Excise Levy of duty based on production capacity u/s 3A - specified textile products - Though Section 3A of the Central Excise Act, 1944 was reintroduced by Section 79 of the Finance Act, 2008 with effect from 10.05.2008, no corresponding Notification was issued for bring the textile products within the purview of tax under Section 3A of the Act. - Revenue appeals dismissed - HC Visit to Get Source Refund of excess tax / duty paid - downward price revision based on the negative supplementary invoices - The assessee has furnished the supplementary invoices for the downward price variation with regard to both refund claims. It is not disputed that there has been excess payment of duty due to the downward price revision. - the refund is not hit by unjust enrichment - AT Visit to Get Source VAT Classification of mosquito repellant ‘Good Knight’ - Transfluthrin 0.88% w/w Liquid “is an effective insecticide recommended for the control of adult mosquitoes in the household” - It is evident therefore, that the product has been correctly categorized as an ‘insecticide’ under Entry 30 of Part II of Schedule B of the OVAT Act. - HC Visit to Get Source Case Laws: GST 2023 (2) TMI 984 Refund claim - refund order challenged on the ground that the Exporter had not mentioned the name and GST Identification Number of the present petitioner and was not mentioned in the shipping bill which was an essential condition of the N/N. 40/2017-CGST (Rate) and Notification No.41/2017-IGST (Rate) dated 23.10.2017 - HELD THAT:- It is true that initially, the Exporter to whom the petitioner has sold the goods had not mentioned the name and GST Identification Number of the petitioner. However, the authority granted refund considering the factual aspect of the matter i.e. details about the goods sold by the petitioner to the Exporter and further transferred by the Exporter to the third party. It is also true that subsequently, at the request of the petitioner, correct form was submitted by the Exporter to the authority and, therefore, this aspect was required to be considered by the Appellate Authority which is essentially not done in the present case - the impugned order is required to be quashed and set aside. Petition allowed. 2023 (2) TMI 983 Cancellation of registration of petitioner - non-providing of sufficient opportunity to meet the allegations - show cause notice neither disclosed any reason, nor does it enclosed any material which would indicate the reasons for the proposed action - violation of principles of natural justice. HELD THAT:- It is trite law that the show cause notice must indicate the reasons for an adverse order or action proposed to be taken. The object of the show cause notice is to enable the noticee to effectively respond to the allegations / reasons for which such adverse order / action is proposed. The show cause notice dated 25.04.2022 is vague and does not fulfil the fundamental requisites of a show cause notice. It is not considered apposite to examine whether the petitioner s GSTN registration could be cancelled for the reason stated in the communication dated 29.03.2022 and for that matter, whether the petitioner s claim for refund could be suspended solely on the basis of the said communication. Suffice it to note, that the petitioner was not provided a sufficient opportunity to counter the aforesaid reasons and present its case before the concerned officer. The matter is remanded back to the Adjudicating Authority to consider afresh. 2023 (2) TMI 982 Refund of Tax / VAT - GST on contracts entered prior to 1.7.2017- Section 142(10) of GST Act - Validity of Government Order dated 08.11.2017 - scope of the terms of contract between the parties - formula with rate of VAT has been introduced, by the said order - HELD THAT:- The position which emerges out in the present case is that if there is any dispute regarding refund of amount as claimed by the petitioner, the petitioner could raise its grievance before the Arbitrator as per Clause 34 of the agreement. As far as the challenge to sub paragraph 2 of paragraph 2 of the Government Order dated 08.11.2017 is concerned, the petitioner has pleaded neither in the writ petition nor in the prayer clause that the said paragraph under challenge is in contravention of which provision of the Act 2017. But during the course of argument, learned counsel for the petitioner has relied upon sub-Section (10) of Section 142 of the Act 2017 with an argument that sub paragraph 2 of paragraph 2 of the Government Order is in contravention of the above mentioned provision, whereas sub-Section (10) of Section 142 does not provide any mode of calculation or formula for determining the liability. Nothing has been pleaded or argued by the counsel for the petitioner to show that formula introduced by the Government Order violates the Section 142(10) of the Act 2017 in any manner. As a matter of fact, it does not deal with calculation or formula for determining the liability is arbitrary and unreasonable. Petition dismissed. 2023 (2) TMI 981 Cancellation of registration of petitioner - petitioner s registration was cancelled on the ground that the petitioner had neither appeared for a personal hearing nor submitted any reply - HELD THAT:- There is no statutory provision that requires a taxpayer to seek an NOC from any authority for moving an application for revocation of cancellation of its registration. It is found that the procedure adopted by the respondents for cancellation of the registration is flawed. As noted above, the impugned show cause notice cannot be considered as a show cause notice at all and therefore, the impugned order dated 11.10.2022, cancelling the petitioner s registration, has been passed in violation of principles of natural justice and is liable to be set aside. The impugned show cause notice dated 22.09.2022 as well as the impugned order dated 11.10.2022, cancelling the petitioner s GSTIN Registration, are set aside - petition allowed. 2023 (2) TMI 980 Cancellation of registration of petitioner - Taxpayer found non-functioning / not existing at the principal place of business - non-speaking order - violation of principles of natural justice - HELD THAT:- On bare perusal of the contents of the show cause notice as well as the impugned order, we find that the said show cause notice is absolutely vague, bereft of any material particulars and the impugned order is also vague and a nonspeaking order. It cannot be disputed that with cancellation of registration, the dealer is liable to both civil and penal consequences. To say the least, The Authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. The authority ought to have followed the principles of natural justice, which has not been done in the present case. Not only the order is nonspeaking but cryptic in nature and the reason of cancellation not decipherable therefrom. In such circumstances, the principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. The order of cancellation of GST registration dated 04.06.2022, the respective GST registration stands revived, forthwith - Petition allowed. 2023 (2) TMI 979 Writ Petitions filed invoking Article 226 of the Constitution of India - Non-constitution of Appellate Tribunal - though the statute provides an appeal to a Appellate Tribunal under Section 112 of the State Good and Services Tax Act, the Appellate Tribunal is not constituted - HELD THAT:- As clarified in the Circular dated 26 May 2020, the time to file appeals/application to the Appellate Tribunal would be counted from the date the President or the State President enters the office. A large number of petitions are being filed in this Court on the ground that the GST Tribunal is not functional. Almost in all cases, protective orders are being passed. It is stated in Clause 5 of the Circular as above that a declaration in Annexure-I has to be filed before the jurisdictional tax officer stating that an appeal is proposed to be filed. If such declaration is not filed, then it would be presumed that taxpayer is not willing to file an appeal and recovery proceedings would be initiated. Therefore, the sequitur is that if such a declaration is filed, recovery proceedings will not be initiated until the prescribed time limit as specified in Clause 4.3 of the Circular. Reverting to the present Petitions, the Petitioners have already filed such a declaration under Clause 4.3 of the Circular. If the Petitioners have not filed declarations, the Petitioners are permitted to submit the same within 15 days from today. Since the Petitioners have raised various other challenges, such a declaration would be considered as without prejudice. As and when the contingency in the clause 4.3 of the Circular dated 26 May 2020 occurs, the petitioners can file an appeal or writ petition as the case may be. In light of this position, it is not deemed necessary to keep these Petitions pending on the file of this court. Clarifying that the prescribed time limit has been extended as per Clause 4.3 and protective orders are a incorporated in Clause 5 of the Circular, the writ petitions are disposed off. 2023 (2) TMI 978 Seeking grant of bail - creation of fake firms for availing and passing of fake/ ineligible Input Tax Credit (ITC) to facilitate existing beneficiary firms - HELD THAT:- It is an admitted fact that petitioner was arrested on 04.11.2022 and since then, he is in judicial custody. The challan of the case has already been presented and no investigation is pending. Section 132(1)(i) of the Act provides for punishment that in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine . Taking into consideration the investigation and evidence so collected, the trial will take considerable time and it may happen, if denied bail, the judicial custody be prolonged beyond the statutory period of punishment which is for five years. In the case of Vinay Kant Ameta [ 2022 (7) TMI 1106 - SC ORDER ], the Hon ble Apex Court directed the accused to deposit Rs. 200 crores as a condition for grant of bail, therefore, having regard to the totality of the facts and circumstances of the present case, without expressing any opinion on the merits of the case, it is deemed just and proper to grant bail to the accused petitioner under Section 439 Cr.P.C with a condition to deposit Rs. 3 crores by the petitioner before the respondent Department under protest. Bail application allowed. 2023 (2) TMI 977 Blocking of sanctioned refund of Input Tax Credit of the Petitioner - petitioner has filed the present petition being aggrieved by the blocking of the petitioner s bank account, which this Court has been informed, is the refund of the input tax credited to the bank account of the petitioner - HELD THAT:- It appears that the said action has been taken on essentially three grounds. First, that there has been a mismatch in the payment made by the petitioner to the supplier in respect of the goods that are stated to have been exported. Second, it is stated that there are serious doubts as to whether any goods were procured from the supplier in question. The respondent s claim that the investigation has revealed that the vehicles in which the goods were transported, had not entered Delhi and the petitioner did not have the necessary space to store the goods in question. Third, the petitioner had also procured goods from another supplier whose registration has been suo motu cancelled. The order issued under Section 83 of the CGST Act, 2017 would be confined to freezing the petitioner s bank account to the extent of ₹50 lacs. In another words, the petitioner would not be entitled to withdraw any amount from the bank account till a credit balance of ₹50 lacs is achieved. The petitioner would be entitled to operate the bank account and withdraw any amount in excess of a credit balance of ₹50 lacs. The petitioner had approached this court as its bank account was blocked by issuing a letter to the concerned bank and without passing any order under the CGST. The respondents have now passed an order under Section 83 of the CGST Act - petition disposed off. 2023 (2) TMI 976 Cancellation of registration of petitioner - taxpayer found non-functioning/not existing at the principal place of business - HELD THAT:- This Court is unable to accept that the impugned show-cause notice can be sustained, considering that it is clear that it is premised on an alleged inspection that was carried contrary to the 2017 Rules. This court had also enquired whether any photographs were taken at the time of the inspection as required; Mr Satyakam has, after obtaining instructions, responded in the negative. The petition is allowed and the impugned show-cause notice as well as the impugned order is set aside. 2023 (2) TMI 975 Availment of transitional credit through TRAN 1 and TRAN 2 - HELD THAT:- In the light of the directions issued by the Hon ble Supreme Court in UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] , it would be well open to the appellant to revise its TRAN-1 and TRAN-2 returns and the verification can be done by the respondents/department. The learned advocate for the appellant submitted that there are certain observations made by the learned Single Bench, which may be an obstacle for the appellant to avail the appropriate benefit. The appellant need not have any apprehension since the Hon ble Surpeme Court has passed the order, which supersedes all directions issued earlier by various High Courts. Therefore, the observations made by the learned Single Bench in the impugned order will have to stand vacated in its entirety. Appeal disposed off. Income Tax 2023 (2) TMI 985 Delay in filing the appeal before the CIT(A) for 561 days - Delay attributable to the advice of the consultant being a chartered accountant - whether the assessee acting on behalf of the professional advice can be held guilty for defiance of any provision of law? - assessee was advised by the chartered accountant to wait and watch like the other assessee who were also facing the same problems - HELD THAT:- The assessee has acted and reacted on the advice of the chartered accountant who is a professional person for tax matters. This fact has nowhere been doubted by the learned CIT(A) in his order. Whether the assessee acting on behalf of the professional advice can be held guilty for defiance of any provision of law. The answer certainly goes in favour of the assessee. It is for the reason that the assessee, who was under the bona fide belief upon the advice of the professional, did not prefer any appeal before the learned CIT(A). However, at the same time the assessee upon the initiation of the recovery by the Department immediately approached to another consultant who advised to file the appeal before the learned CIT(A). CIT(A) in his order has made the remark that the consultant being the chartered accountant is expected to know the procedure in such matters as reproduced above. The above finding of the learned CIT(A) justifies the stand of the assessee that it was the mistake of the consultant and not the assessee. Assessee just followed the advice of the expert. Thus, the assessee should not be facing any hardship on account of the advice of the 3rd party, who was the expert of the subject. In such facts and circumstances, we also note that the Hon ble Madras High Court in the case of Hosanna Ministries [ 2017 (3) TMI 1387 - MADRAS HIGH COURT] has condoned the delay which was attributable to the advice of the consultant being a chartered accountant. Exemption u/s 11 - We note that the assessee was not registered under section 12A of the Act for the year under consideration but it got registered in the later year as on 30 July 2018. Admittedly, the assessment proceedings are pending before the ITAT and therefore it appears to us that the assessee is eligible for the benefit granted under section 11 of the Act for the year under consideration. We are making such observation for the reason to highlight the fact that it appears to us that the assessee has got meritorious case and therefore, the case of the assessee should not be rejected on account of technical lapses. Income of the assessee should not be over assessed even there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. To our understanding, the learned CIT(A) should have condoned the delay in filing the appeal by the assessee by deciding the issue on merit. As such, the case of the assessee deserves to be condoned and to be decided on merit. 2023 (2) TMI 974 Reopening of assessment u/s 147 - Reasons to believe - Change of opinion - reasons can neither be added nor substituted by pleadings - assessment reopened beyond the period of four years - HELD THAT:- Since this is a case where an order u/s143(3) of the Act had been passed for the relevant assessment year, AO in addition to satisfying the jurisdictional conditions of reason to believe that income chargeable to tax had escaped assessment, had to show that there was failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment during the original assessment proceedings. A reference to the reasons recorded would clearly show that not a whisper has been made by the AO that there was any such failure on the part of the assessee. The consequence is clear that the AO had not satisfied himself on this important jurisdictional aspect and therefore must be deemed to have arbitrarily proceeded to initiate the reassessment proceedings by issuing the notice impugned, which makes it unsustainable. Material which was referred to in the reasons recorded in the shape of transactions, securities, etc. do not reflect that the said material was not available with the AO during the scrutiny assessment proceedings. AO appears to have relied solely upon the said information obtained from the Investigation Wing of the department without, in the least, verifying as to whether the said issue had been gone into or disclosed by the assessee during the scrutiny assessment proceedings. The petitioner, on the other hand, has placed on record details of notices and the replies submitted thereto, as referred to in the preceding paragraphs which would show that the information with regard to all transactions had been sought for and supplied by the petitioner. Since an order under section 143(3) had been passed after eliciting various information from the petitioner, which was responded to by the petitioner, it must be presumed that the Assessing Officer, while passing the order under section 143(3) of the Act, had considered all issues pertaining to the queries raised as also issues in regard to which the information was sought and therefore, if the matter is deemed to have been considered, any subsequent reassessment on the same issue would be nothing but a change of opinion . Decided in favour of assessee. 2023 (2) TMI 973 Condonation of delay in filing the return of income - due date for filing return on income u/s 139(1) was 31.10.2019 and same was filed on 30.11.2020 u/s 139(4) - disallowing the brought forward losses as the same was not filed within the time stipulated u/s 139(1) - corporate insolvency resolution process was initiated against the company - grievance of the petitioner is that due to inaction on the part of the erstwhile management or resolution professional, the genuine business loss is not allowed to be carried forward for all times to come and if the delay is not condoned, the petitioner company would suffer - HELD THAT:- The petitioner has written on 02.01.2023, however the Board has not responded to this application for condonation of delay in filing the return of income for AY 2018-19 and 2019-20 u/s 119(2)(b) of the Act. There was a proposal on the part of the learned senior advocate Mr.Bhatt for the petitioners, seeking the directions against the respondent Board, for it to consider on expeditious basis the request for condonation of delay in filing the return of income for AY 2018-19 and 2019-20. Responding to the same, learned senior standing counsel Mr.Raval has taken instructions and has no objection to the matter being sent to the Board for its consideration and to be adjudicated at the earliest within a period of six (06) weeks. This Court has not entered into the merits at all and at the time of admission of this matter, with a specific request seeking the direction for the Board to decide the application dated 02.01.2023 at the earliest and since the parties are at ad idem on this issue, it has decided to relegate them and the matter is accordingly being finalized. Let the respondent No.2 take up the matter and decide within six (06) weeks from the date of receipt of the copy of this order. 2023 (2) TMI 972 Reopening of assessment u/s 147 - Reason to believe - redemption of preference shares - HELD THAT:- The assessing officer has not recorded that there was any failure on the part of the assessee to disclose fully and truly the material facts, which were otherwise necessary for assessment. Therefore, the jurisdictional conditions for exercise of power of reassessment under Section 147 of the Act beyond the period of four year had not been satisfied by the assessing officer. The proceedings impugned are, therefore, liable to be set aside on this ground alone. As during the course of the earlier proceedings u/s 143(3), the Petitioner in its Note 10 annexed with the Auditor's report dated 24 August 2012, had shown Rs.75,00,000/- on account of redemption of preference shares of G.R. Infratech Pvt. Ltd. AO in his notice issued under Section 142(1) required the Petitioner to submit various details, which included profit on sale of investments/shares/capital assets, details and working of capital gain or such income along with the evidences. In response to the said notice, the Petitioner submitted its reply giving details of the investments and stated therein that during the year, there was no purchase and sale of the shares, except redemption of preference shares of M/s G.R. Infratech Pvt. Ltd. It, thus, appears to be clear that the issue pertaining to redemption of preference shares must be deemed to have been considered while passing the Order of assessment under Section 143(3) by the assessing officer. Since an Order under Section 143(3) had been passed, pursuant to a query raised, which was responded to, it must be presumed that the Order under Section 143(3) had considered all issues notwithstanding the fact that no specific mention is made in that regard in the Order of assessment. Decided in favour of assessee. 2023 (2) TMI 971 Assessment u/s 153A - whether in absence of any incriminating documents seized during the course of search, AO is justified in making the addition in non-abated assessment orders u/s 153-A r/w Sec 143(3)? - HELD THAT:- The appeal before the CIT(Appeals) was directed against the addition of income by the AO taking production on presumptive basis and working out estimated income. The factum of addition not being based on any incriminating material found during the search is not disputed. Exactly identical substantial question of law came up for consideration before this Court at Gwalior Bench in [ 2019 (7) TMI 1050 - MADHYA PRADESH HIGH COURT ] these appeals were disposed of holding that in the given facts of the present case, as no incriminating documents during the course of search were found, the order in appeal cannot be said to have suffered any illegality as would give rise to proposed substantial question of law. Consequently, the appeals were dismissed. 2023 (2) TMI 970 Penalty proceedings u/s 271D - contravention of the provisions of Section 269SS - Assessee was one of the directors of Company Spaze Towers Pvt. Ltd as inflating its purchase and cash so generated was spent on the personal needs of the directors/promoters in the form of ceremonial functions, farm house construction etc and in the process nowhere actual cash changed hands, but was spent on personal expenses of promoters/directors - Spaze Towers Pvt. Ltd had approached the learned Settlement Commission and made disclosure of income - HELD THAT:- Once the Assessing Officer has treated the personal expenses incurred by M/s Spaze Towers Pvt. Ltd as income of the assessee, then the same amount cannot be treated as loan in violation of the provisions of Section 269SS of the Act 1961. The same income cannot be taxed in two hands in the same assessment year and CIT (A) has rightly deleted the additions made by the Assessing Officer. Decided in favour of assessee. 2023 (2) TMI 969 Reopening of assessment u/s 147 - validity of Notice u/s 148A(d) - difference in amount mentioned in notice u/s 148A and case related details - HELD THAT:- In the Section 148A(b) notice, the amount mentioned is Rs. 60,41,400/- whereas in the case related information details, the amount mentioned is Rs. 42,18,000/-. This is despite the petitioner informing the Assessing Officer (AO) via communication dated 06.06.2022, that there is a discrepancy between what is stated in the Section 148A(b) notice and the input received from the insight portal. According to us, there has been no application of mind, and therefore, the impugned order and notices are set aside. AO will have liberty to take the next steps in the matter, albeit, as per law. Needless to state, if any such steps are taken, due opportunity of hearing will be accorded to the petitioner and/or his authorized representative. Clearly, in this situation, if the escaped amount is Rs 42,18,000/-, then the respondents/revenue would have to cross the hurdle of Section 149(1)(b). However, if the escaped income, according to the respondents/revenue, is Rs 60,41,400/-, the AO will have to furnish the material, on the basis of which he pegged the said amount as the escaped income chargeable to tax. We set aside the impugned order passed under Section 148A(d), and the consequent notice under Section 148, with liberty to the AO to commence proceedings afresh. 2023 (2) TMI 968 Assessment u/s 143(3) r.w.s. 144 - Faceless assessment scheme u/s 144B - request for the video conference is rejected - Demand notice issued under Section 144 - addition 50 times more to the income proposed - HELD THAT:- As noticed time of issuance of notice that it is a serious grievance on the part of the petitioner that he made the request for not less than 4 times to hear through video conference and there were various reasons for such insistence. The subsequent action on the part of the respondent of completing the assessment on rejecting the books of accounts and making the addition 50 times more to the income proposed to be assessed would surely need to be regarded. Assessment order is also contrary to the scheme of I.T Act because the additions are made beyond the scope and issues in the show cause notice resulting in actual income assessed at 50 times then proposed to be assessed in the show cause notice. Thus, on both the counts non-grant of virtual hearing, though asked for repeatedly by the petitioner, and because the additions are made beyond the scope and issue of the show cause notice, the final assessment order passed deserves to be interfered with. Resultantly assessement order and the demand notice issued under Section 144 of the self same date are hereby quashed. 2023 (2) TMI 967 Undisclosed investment in stock of brass vessels and utensils u/s.69 - As per CIT-A AO is erred in making further additions towards valuation of closing stock when the assessee has already offered additional income by increasing the value of closing stock as on the date of search - HELD THAT:- If you go by figures of closing stock computed by the search parties as on the date of search at Rs. 15 crore and closing stock declared by the assessee in its books of accounts as per the return of income, which was at Rs. 18,68,25,000/-, then there is no doubt with regard to the admission of the assessee that it had declared additional income at Rs. 3.5 crores. The financial statement drawn by the assessee by splitting its trading account into up to the search and from the date of search to the end of the financial year clearly indicates that there is an increase in gross profit for the assessment year in consideration when compared to the previous year after inclusion of additional income of Rs. 3.5 crores to value of closing stock. CIT(A), after considering relevant facts has rightly observed that there is no documentary evidences to disprove the closing stock declared by the assessee as on 31.03.2013 on gross profit percentage, which is almost more than the gross profit declared in the previous financial year, while deleting additions towards value of closing stock. Therefore, no error in the reasons given by the CIT(A) to delete additions made towards undisclosed investment in stock of home appliances and electronics division and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the revenue. Difference in value of closing stock of gold and jewellery division - Assessee is following weighted average method for valuation of closing stock right from the beginning - HELD THAT:- We ourselves do not subscribe to the reasons given by the AO for the simple reason that the Accounting Standard has prescribed two methods for valuation of closing stock, as per which assessee can follow cost or market price whichever is less or weighted average cost method. The only prescribed condition in terms of provisions of section 145 of the Act is that, the assessee had to follow one method consistently without there being any change in method of valuation of closing stock. In this case, the assessee had followed weighted average cost method right from the beginning and has followed very same method for the impugned assessment year, except to the extent of valuation of closing stock as on the date of search for the purpose of declaration of income, where the assessee had followed six months average price and said method is as per the agreement between the assessee and the department. AO cannot change the method which was not recognized method as per the prescribed standards for valuation of closing stock, when the assessee has explained the valuation of closing stock by adopting weighted average cost price method - assessee had also explained the price adopted by the AO on the basis of its purchases as per which substantial part of purchases related to worn out jewellery from customers, which is having a different purchase price - AO is completely erred in substituting its own method of six months average price in place of weighted average cost method followed by the assessee to arrive at a closing stock valuation as on 31.03.2013. Decided against revenue. 2023 (2) TMI 966 Addition u/s 56(2)(viib) - correctness of DCF method followed by the assessee - amount received on account of share premium on shares and compulsory convertible debentures - AO made additions towards excess premium over and above face value u/s. 56(2)(viib) on the ground that the assessee could not justify valuation of shares under DCF method with necessary financials - As argued appellant would squarely fall under the definition of Venture Capital Undertaking as provided u/s 56(2)(viib) read with explanation (c) of Section 10(23FB) and hence the addition made u/s 56(2)(viib) was completely erroneous and not justifiable - HELD THAT:- AO is completely erred in arriving at a conclusion that DCF method followed by the assessee is incorrect only on the basis of one element, difference in projected financials and actual performance of the company for two financial years, because DCF method is mainly on the basis of projected financials of future years and depends upon various estimations and assumptions. AO is free to examine correctness of DCF method and method followed by the assessee to arrive at a free cash flow and relevant ratios considered for arriving at projected revenue and expenditure. In this case, the AO has failed to carry out necessary enquiries to ascertain correctness of DCF method followed by the assessee, but simply went on to reject the method only on one ground that there was a difference in two financial years when compared to projected free cash flow and actual cash flow. Therefore, we are of the considered view that the issue needs to go back to the file of the AO to re-examine method followed by the assessee to arrive at fair market value of equity shares and this view is supported by the decision of ITAT, Chennai Benches in the case of S.A. Metro Plots (P) Ltd [ 2022 (12) TMI 430 - ITAT CHENNAI] We set aside the issue to the file of the AO and direct the AO to re-consider the issue of addition towards share premium u/s. 56(2)(viib) of the Act, in light of various arguments made by the assessee, including valuation report submitted under DCF method. The AO is free to examine method followed by the assessee, however, he does not have power to change method followed by the assessee from DCF method to NAV method, and to decide the issue in accordance with law. Appeal filed by the assessee is treated as allowed for statistical purposes. 2023 (2) TMI 965 Long Term Capital Gains - claim and proof of conversion of agriculture land into stock-in-trade - capital asset u/s 2(14) - contention of the assessee that the point when agriculture land is converted into stock-in-trade, no capital gains takes place since neither agriculture land beyond 8 kms nor stock-in-trade comes to fall within the meaning of section 2(14) - HELD THAT:- As noted that even circumstantial evidence does not suggest that land has been converted into stock in trade as claimed by assessee. AO was correct in holding that assessee has not provided any accounting entries passed in the books of account for year 2011-12 wherein above land are classified as stock in trade in 02/07/2011 and even such lands are not shown as stock in trade for years 2012, 2013 and so on. The assessee was required to disclose such lands as stock in trade in books of account and in ITR filed by it on year to year basis. Had assessee been actually converted land into stock in trade, he would have obtained audit report u/s 44AB of the Act, filed audit report, disclosed sale of land as turnover and remaining land if any as stock in trade and failure to obtain such audited books of account clearly prove that entire theory of conversion of agricultural land as stock in trade is baseless and after thought - dismiss the appeal of the assessee. Computation of LTCG - Transfer value determination - AO ought to have accepted the measurement at Rs.1,800/- per sq. mt. against Rs.1950/- per sq. mt as transfer value when the valuation difference is less than 10% - HELD THAT:- We note that amendment in third proviso to section 50C of the Act was held to be retrospectively applicable in the case of Maria Fernandes Chery ( 2021 (1) TMI 620 - ITAT MUMBAI] - We note that as per assessee the measurement is at Rs.1,800 per sq. mt. However, as per Revenue, the measurement is at Rs.1950 per sq. mt, as transfer value. We note that difference between both the measurement is 8.33%, which is less than 10%. Such tolerance limit is allowable as per provisions of third proviso to section 50C of the Act. Therefore, we direct the assessing officer to consider measurement at the rate of Rs.1,800 per sq. mt. to compute the long term capital gain. Hence, we allow the additional ground raised by the assessee. 2023 (2) TMI 964 Penalty u/s 271(1)(c) - non filler of income tax return - Assessee has not filed the return u/s. 139 but filed the return in consequence to the notice issued u/s. 148 - HELD THAT:- Had the AO not issued notice u/s. 148, the assessee would not have filed the return of income, especially considering the past conduct of the assessee and therefore, it is a clear case of concealment of income as per Explanation 3 to section 271(1)(c) of the I.T. Act. Therefore, penalty in our opinion was rightly levied by the AO and sustained by the ld.CIT(A). AO has levied penalty for both concealment of income and furnishing of inaccurate particulars of income which he could not have done and therefore, the notice being defective such penalty should be cancelled - Merely for non-specifying in the notice as to under which limb the penalty is levied i.e., for concealment of income or furnishing inaccurate particular of income thereof, the penalty cannot be cancelled especially when the assessee who is a non-filer was put to notice which he has understood and has replied to such notice issued by the AO. In the light of the above discussion, we uphold the order of the ld.CIT(A) in sustaining the penalty levied by the AO. - Decided against assessee. 2023 (2) TMI 963 Exemption u/s 11 - claiming benefit of accumulation u/s 11(2) over deemed income u/s 11(3) - non application of income - AO was that the assessee has already claimed deduction of the said deemed income in the assessment year in which such amount was computed u/s 11(2) - HELD THAT:- Intention of the Act is quite clear that when the unapplied amount is deemed to be the income of the assessee u/s 11(3) of the Act, then the benefit of section 11(1)(a) would be lost. We observe that the above rulings on which reliance has been placed by the counsel for the assessee did not consider the above Circular i.e. the above Circular was not brought to the notice of the Court/ITAT for their consideration. Accordingly, we are unable to place reliance on the judicial precedents relied upon the counsel for the assessee on this issue. If the Natwarlal Chowdhury [ 1989 (8) TMI 19 - CALCUTTA HIGH COURT] judgment is to be followed, it will result in undue benefit to the trusts and will defeat the legislative intent of section 11. Secondly, in our considered view, there is a specific reason why this Circular was introduced and the purpose of introduction of the same is that the assessee should not be eligible to claim double deduction in respect of the same income i.e. recycle the same income, which remained unapplied after the end of the fifth year. Therefore, if exemption under section 11(1)(a)is allowable in respect of the deemed income u/s 11(3), then exemption u/s 11(2) is also allowable in respect of such deemed income as sub-section (2) of section 11 refers to the income referred to in section 11(1)(a). Thirdly, the Mumbai ITAT in the case of The Trustees, The B.N. Gamadia Parsi Hunnarshala [ 2001 (4) TMI 928 - ITAT MUMBAI] held that exemption under section 11 is available only on income within meaning of section and not on deemed income and, therefore, an assessee cannot claim benefit or accumulation with respect to deemed income . Fourthly, our view is also supported by Form No. 3A of the Income-tax Rules, 1962. Clause No. 10 of Part I of Form No. 3A prescribes the deemed income under section 11(3) to be added to the income arrived at after claiming exemption under section 11(1)(a) and 11(2). The form does not allow the assessee to claim exemption under sections 11(1)(a)and 11(2) in respect of deemed income under section 11(3). Thus we are of the considered view that the assessee Trust is not eligible to claim exemption under Section 11(1)(a) and Section 11(2) of the Act in respect of deemed income under section 11(3) of the Act. Appeal of the assessee is dismissed. 2023 (2) TMI 962 Revision u/s 263 - As per CIT did not make proper and adequate inquiries which he ought to have made - Deduction u/s 54F - CIT directing the ld. A.O to consider while framing the fresh assessment order the issue of exemption granted u/s 54F - HELD THAT:- AO has issued notice u/s 142(1) wherein AO has asked the details and documents in respect of the issue raised by ld PCIT in his 263 order, the assessee explained the nature of each properties before the AO. Those properties, which are using for commercial purposes, the assessee submitted rent agreement, Municipal tax receipt, electricity bill, and proper evidence to demonstrate that such properties have been using only for commercial purposes for a very long period. All these facts and evidences were before the AO. AO, as an adjudicator and investigator, has applied his mind and framed the assessment order, thus such order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. Since in the present case the PCIT has exercised jurisdiction u/s.263 of the Act on the ground that the Assessing Officer while completing the assessment proceeding did not make enquiries which he ought to have made. It is necessary to look into what enquiries the Assessing Officer made on the issues raised in the order u/s.263 of the Act. It is clear from the submissions and material available on record with regard to claim of assessee u/s 54F of the Act, that Assessing Officer got the details of the properties and examined the nature of properties and then framed the assessment order. In appropriate cases he made further inquiry also. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the Assessing Officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. Appeal of the assessee is allowed. 2023 (2) TMI 961 Reopening of assessment u/s 147 - period of limitation extended to 16 years - validity of notice for the period which has been expired already income escaped pertained to assets located outside India - Revenue reopened the case as per the limitation prescribed for issuing notice u/s 148 as per the provision of Section 149(1)(c)of the Act, which prescribed limit for reopening cases up to 16 years till the impugned assessment year - whether the learned CIT(A) was right in holding that the notice issued in the present case under Section 148 of the Act for reopening the case of the assessee was well beyond the prescribed period of limitation as prescribed under Section 149 ? - HELD THAT:- In the impugned assessment year pertaining to AY 2004- 05, the limitation prescribed under the unamended Section 149 of the Act expired on 31.03.2011. The amended provision under sub-clause (c) to Section 149(1) of the Act extending the limitation to 16 years was brought on the Statute on the 1st of July, 2012 by the Finance Act, 2012 and the notice under Section 148 in the present case was issued on 27.03.2015; therefore, as per the facts of the present case also when the amendment extending limitation for issuing notice under Section 148 of the Act was brought on the Statute, the limitation for issuing notice in the present case already stood expired. Therefore, the proposition laid down by the Hon ble Delhi High Court in the case of Braham Dutta [ 2018 (12) TMI 832 - DELHI HIGH COURT ] that in such cases the retrospectivity of the amended provision would not apply to empower the Assessing Officer to extend limitation, which limitation already stood exhausted in his hands, would apply. Decided against revenue. 2023 (2) TMI 960 Rectification u/s 154 - Addition u/s 68/69 - unexplained cash deposit - apply section 115BBE of the Act for tax calculation of at specific rate of tax instead of slab rate of tax as per normal provision of the Act - HELD THAT:- On going through the order passed u/s. 143(3) r.w.s. 147 we are of the considered view that the ld. AO has not invoked any under which provision he has added a sum of Rs. 2 lac. In the absence of any specific finding the ld. AO cannot charge the said income within the provision of section 115BBE as specific rate of tax for this addition therefore, action of charging the specific tax u/s.115BBE in the proceeding u/s. 154 of the Act is not correct considering the peculiar fact of the case on hand. See case of ACIT vs. Shri Sudesh Kumar Gupta [ 2020 (6) TMI 463 - ITAT JAIPUR ] Thus there is no finding in the assessment order that the income added is under which provision of the act and therefore, charging the specific tax rate u/s. 115BBE is not in accordance with the provision of law and the same is quashed. In terms of these observation the appeal of the assessee is allowed. 2023 (2) TMI 959 Reopening of assessment u/s 147 - Addition u/s 68 - HELD THAT:- We fail to find any merit since ld. AO has reopened the proceedings after validly recording the reasons based on the information received from the investigation wing and had reason to believe for reopening of the case regarding the transactions of the sum received by the assessee from the alleged accommodation entry provider. We, thus, dismiss the legal ground raised by the assessee in ground nos. 1 2. Addition u/s 68 - The assessee broker after opening the client s account has been approached by the above referred three clients for purchase of shares. For making the said purchase amounts have been transferred to the client s bank account which is specifically used for purchasing the shares and the disbursement from such account has to go either to the stock exchange or is returned back to the client. There is no authority with the broker to utilize such amount for its own purpose. The assessee broker duly received the amount and initiated the transactions for purchase of the share on the stock exchange and the quantities desired by the client was received in parts as and when the seller was available. All the equity shares so purchased first came in the Demat account of the assessee broker and then has been transferred to the client s Demat account. No discrepancy in these transactions and the alleged cash credits are nothing but an advance sum received for purchase of equity shares and the said transaction has been duly completed and brokerage for carrying out such transaction has been charged by the assessee and therefore, no addition is called for u/s 68 of the Act. As decided in SMT. HARSHILA CHORDIA VERSUS INCOME-TAX OFFICER [ 2006 (11) TMI 117 - RAJASTHAN HIGH COURT] both the lower authorities failed to appreciate the case of the assessee that these were the trade advances and not cash credits and against such advance, the assessee has supplied the material in due time as per details available on record - Based on this finding addition u/s 68 of the Act was deleted. We, thus, reverse the finding of ld. CIT(A), delete the addition made u/s 68 of the Act and allow the effective ground raised by the assessee on merits. 2023 (2) TMI 958 Unexplained expenditure u/s 69 - Credit cards expenses alleged as unverifiable - HELD THAT:- The credit cards referred by the Assessing Officer refers to two columns, one for expenses and another for payments. So, the disallowance could have been made to the extent of payments made to credit card and not expenses incurred or credit amount from credit cards. CIT(A) has carried out due verification of payments and after that he has sustained addition of Rs. 131495/- out of Rs. 667200/- made by the Assessing Officer. However, if aggregate payments are to be considered for the year, then Rs. 654204/- needs to be considered. Since, the payments of Rs. 5,35,705/- are duly verified and stands reconciled, the differential amount of Rs. 1,18,499/- (Rs. 654204 (-) Rs. 535705), is only amount has not been explained by way sources of cheque. The Ld. Counsel of the assessee has shown year wise cash withdrawal by the assessee, which are placed on record. In our opinion, the amount of said withdrawal is sufficient to explain the source of balance amount of Rs.1,18,499/-. Accordingly, the addition on account of credit card payment is deleted. Addition u/s 68 - unexplained liabilities - Assessee failed discharge his onus to prove - HELD THAT:- We find that the assessee has collected documents for discharging onus of the assessee and in most of the cases, documents have been filed. In respect of Rakesh Surve, although the assessee had filed loan confirmation, however, notice issued u/s. 133(6) of the Act had been returned unserved. In such circumstances, the Ld. AO should have made effort for verification of the same by way sending inspector from his office for verification of the party. As regards M/s. Mukund Associates from whom loan the Ld Counsel of the assessee has requested to provide one more opportunity for providing the documents in support. Thus we restore this issue of addition of Rs.43,80,000/- back to file of the AO for deciding afresh after examining documents filed by the assessee and conducting due enquires as required. Disallowance as personal expenses of the assessee - assessee has claimed certain expenses on account of motor car expenses, car loan interest, depreciation and telephone expenses - as the assessee failed to justify these expenses, the Assessing Officer disallowed 25% of these expenses - HELD THAT:- We are of the opinion that the depreciation (Rs. 195,654/-) does not require any vouchers as such. Similarly, the interest on bank loan (Rs. 56,866/-) cannot be disallowed on ad-hoc basis. The Only expenses, which could be disallowed are for Motor car ( Rs. 12,500/-) and telephone expenses (Rs. 23,497/-) , but the quantum of those expenses claimed is not too high as compared to the business activity of the assessee , so same does not deserve any disallowance . Accordingly, the disallowance confirmed by the ld CIT(A) is deleted. Disallowance of interest u/s. 36(1)(iii) - bank loans are personal in nature - assessee has not furnished any evidence of advancing loan for business as contended before the AO - HELD THAT:- Since the appellant earns reasonable amount of commission in the real estate deals made through him, he has to block the plots as and when he comes across some good plots and that blocking is possible only when some amount is paid as advance to the plot owners - assessee asks the intending buyers of the plots to make advance payments to the plot owners through the appellant; however, sometimes, due to urgency, when the buyers are not readily available or cannot be contacted, the assessee himself makes these advances from out of his own funds or borrowed funds. Hence, for this purpose, the assessee at times borrows money from bank and others which is utilised for purchasing plots. Considering, the nature of business of real estate agent of the assessee, the explanation given by the ld. Counsel is not unreasonable. Accordingly, we delete the addition made by the assessing officer. Unexplained expenditure u/s 69C - HELD THAT:- In the facts qua the issue in dispute it is evident that assessee has merely acted as broker for Mr Madan Kolmbkar for purchase of plots from four persons and this fact has been corroborated from the seized documents and cheque payments made by the assessee. Accordingly, the addition sustained by the Ld. CIT(A) is not justified, therefore same is deleted. The ground of the appeal of the assessee is accordingly allowed. Cash/unaccounted transactions of the assessee - HELD THAT:- We find that no enquiry has been made by the Assessing Officer from either the farmers are from rural land developers regarding the cash component of the transactions nor any adverse finding of investigation wing has been brought on record by the Assessing Officer- Thus addition sustained by the Ld. CIT(A) in respect of cash transactions is hereby deleted. Unexplained investment - evidence collected by the widow of the demised assessee i.e. legal heir - addition made in the assessment on account of the alleged purchase of the said flat, ONLY on the basis of a proposal which never materialized - HELD THAT:- As assessee has filed additional evidence to support that said flat was never allotted to the assessee and it was merely a proposal, which never materialized. In view of the evidence collected by the widow of the demised assessee i.e. legal heir, we feel it appropriate to admit the additional evidence and restore the matter to the file of the ld. Assessing Officer for necessary verification from the relevant authorities regarding allotment of concerned flat and then decide the issue in dispute in accordance with law after providing adequate opportunity of being heard to the assessee/legal heir of assessee. Cash found during the course of the search - HELD THAT:- Assessee has given undertaking that the legal heir of the assessee has agreed for collecting evidence from the banks and from the landowners to support of the availability of cash in the hands of the assessee. We are of the opinion that the interest of substantial justice one more opportunity should be allowed to the legal hair of the assessee to substantiate the source of cash found from the assessee. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore the matter back to the file of the ld. Assessing Officer for verification of the claim of the assessee. Unexplained investment in jewellery - HELD THAT:- We find that in the case Cit Vs Ratanlal Vyarilal Jain [ 2010 (7) TMI 769 - GUJARAT HIGH COURT ]; CIT(Central), Kanpur Vs M/s Ghanshyam Das Johri [ 2013 (10) TMI 1187 - ALLAHABAD HIGH COURT ] and CIT Vs Kailash Chnad Sharma [ 2004 (7) TMI 647 - RAJASTHAN HIGH COURT ] have consistently held that the position of the jewelry of the quantities specified in the instruction issued by the CBDT is reasonable and therefore should be held to be explained in the hands of the assessee and should not be subject matter of the addition by the AO on the ground that assessee was unable to explain the possession thereof to his satisfaction. In view of the above precedents, we feel it appropriate to restore the matter to the file of the Assessing Officer for allowing benefit of jewelery as per the CBDT instruction (supra) in accordance with law and also examine the claim of the assessee in respect of the balance amount of the jewelry if any out of the disclosure of Rs. 70 lakhs claimed to have been made by the assessee for assessment year 2008-09 and 200910. Accordingly, the ground of the appeal of the assessee is allowed for statistical purposes. Addition u/s 68 - HELD THAT:- We are of the opinion that as far as provisions of section 68 are concerned, the assessee has dischargedhis onus by way of filing MOU between the assessee and said party. Once the assessee filed the confirmation, onus sifted to the AO and if he did not discharge his onus, the assessee cannot be faulted. Accordingly, the addition in respect of M/s Narayan Niryat India Private Limited is deleted. Regarding the amount from M/s Basant Reality, assessee has requested for one more opportunity. In the interest of the substantial justice particularly in view of the fact that assessee has already demised and being represented by his widow, we feel it appropriate to restore this issue to the file of the AO for deciding a fresh. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. The ground of the appeal of the assessee is accordingly allowed for statistical purposes. 2023 (2) TMI 957 Disallowance of interest expenditure - assessee failed to justify the commercial expediency of the loan given to the various parties on interest free basis - HELD THAT:- When an appeal is filed before the Tribunal by the assessee himself against the order of lower authorities it is expected that assessee may put forth some documentary evidences in support of his contention to decide the appeal as it is the duty of the assessee to lead evidence in support of its claim and for adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. Before us there has been no appearance from the side of the assessee on the various dates though the notices were issued through RPAD. Before us no material has been placed by the assessee to controvert the findings of the lower authorities nor has assessee pointed to any fallacy in the findings of lower authorities. Decided against assessee. 2023 (2) TMI 956 Disallowance u/s 14A read with Rule 8D - contention of the assessee that assessee had earned tax free dividend of only Rs. 8.81 lacs whereas the disallowance made by AO u/s. 14A r.w.r. 8D and upheld by the Ld. CIT(A) is to the extent of Rs. 1.78 crores (rounded of) which is much in excess of the exempt income earned - HELD THAT:- As in the case Caraf Builders Construction Pvt. Ltd. [ 2018 (12) TMI 410 - DELHI HIGH COURT] has held that disallowance u/s.14A cannot exceed exempt income of the relevant year. In view of the settled position of law that the disallowance u/s. 14A cannot exceed exempt income and in view of the fact that the disallowance made u/s. 14A r.w.r 8D is much in excess of the exempt income, we direct the AO to restrict the disallowance u/s. 14 r.w.r 8D to the extent of exempt income earned by the assessee. Before us, though the assessee has stated that it has earned exempt tax free dividend income of Rs. 8.81 lacs but we find that there is no finding by the lower authorities of the exempt income earned by the assessee. AO is therefore directed to work out the disallowance u/s. 14A r.w.r 8D after considering the submissions of the assessee with respect to the exempt income earned and in accordance with law. Decided in favour of assessee for statistical purposes. Customs 2023 (2) TMI 955 Seeking grant of bail - Smuggling - Non Resident Indian - allegation is that on crossing green channel at the airport on 05.10.2022, the officers of the Investigating Agency apprehended him with dutiable goods including watches of admitted foreign origin - HELD THAT:- It is pertinent to note that the watches are amongst other goods as specified under Section 123(2) of the Customs Act, 1962. The Petitioner was arrested and was subsequently enlarged on bail. Learned counsel for the petitioner contends that despite the petitioner presenting himself as and when required to do so and full cooperation till date, no show cause notice has been issued. It is further submitted that since the petitioner is desirous of taking statutory route prescribed in the statute for settlement of cases under Section 127(B) of the Customs Act, 1962 but for want of a final show cause notice, he is unable to make an application seeking settlement of the case. Application disposed off with the direction to Respondent No. 2 to issue a final show cause notice to the petitioner within a period of one week from the date of receipt of this order. 2023 (2) TMI 954 Validity of SCN - recovery of excess of the duty drawback - time limitation - SCN issued by the respondent Authority after a period of about more than six/ten years, which are not permissible as per the settled legal position - HELD THAT:- This Court had an occasion to deal with the identical issue in the case of M/S SJS INTERNATIONAL VERSUS UNION OF INDIA [ 2021 (12) TMI 1339 - GUJARAT HIGH COURT] and held that the authority cannot be issue show-cause notice after a period of three years for assessment / export. When the issue is covered as per the decision of this Court in the case of M/s. S J S International, these petitions are allowed accordingly, quashing and setting aside the impugned showcause notices issued by the respondent authorities, which are admittedly beyond the period of three years. Since the impugned show-cause notices are quashed by this Court, the consequent action of the respondent authorities qua those show-cause notices are also quashed. Petition allowed. 2023 (2) TMI 953 Smuggling - export of foreign currency and import of anabolic drugs - Two adjudication orders-in-original in respect of the same goods - orders are pursuant to the show cause notice proposing to impose penalties on the petitioners (and one other noticee) on the same set of facts - HELD THAT:- It is seen that although there is a single show cause notice, it specifically called upon the petitioners to submit their respective replies in regard to allegations pertaining to seized currency to respondent no.1. and regarding issue of illegal import of anabolic steroids to respondent no.2. There are no fault in the impugned order passed by respondent no. 2 only on account of that it has been adjudicated on the basis of a single show cause notice dated 22.05.2019. The impugned order dated 14.02.2022 is set aside. The matter is remanded to respondent no. 1 to decide afresh. Corporate Laws 2023 (2) TMI 952 Rejection of application for reservation of name of the proposed L.L.P. - the words AND ASSOCIATES would be reflective of the profession of Advocacy or not - HELD THAT:- The word AND ASSOCIATES is not a word indicative of any specific profession and is a generic word which can be used with any vocation or profession or activity undertaken by a person. Other such or similar words as contemplated in the said Rule would safely be words such as Doctors, Architects, Engineers, Accountants, Cost Accountants, Hotel Managers etc. The object of the Rule is to ensure that the distinct word for a profession is not registered as a Limited Liability Partnership under the act and rules framed thereunder unless approval thereof is accorded by the Governing Council or the Authority as nominated by the Central Government. The interpretation proposed by the respondent cannot be extended to apply to the use of any other generic word which may be used such as Associates Sons , Brothers . There are no reasons assigned by the respondents in the impugned communication for declining registration of the LLP of the petitioner by the name as proposed by him on the aforesaid ground of the use of word AND ASSOCIATES as being a word indicative of a profession and mandating him to seek prior approval of the Bar Council of India is misplaced and is not sustainable and is liable to be set aside. Petition allowed. Insolvency & Bankruptcy 2023 (2) TMI 951 Initiation of CIRP - Operational Creditors - non-service of demand notice - Transfer of Winding up Petition - HELD THAT:- It is crystalline clear that the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench), ought to have treated the proceedings transferred under Section 434 of the Companies Act, i.e. CP No. 311 of 2016, as an Insolvency Petition, under Section 9 of the I B Code, 2016, and should have assigned an appropriate number. The Petition under Sections 433 and 434 of the Companies Act, 1956, as instituted before the Hon ble High Court, cannot be treated to be an application under Section 9 of the Code, 2016 in terms of Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, and the said observation is an incorrect one, especially in the teeth of the Order of the Hon ble High Court for the State of Telangana in IA No. 1 of 2019 in CP No. 311 of 2016 dated 29.11.2019, which the Adjudicating Authority (Tribunal), is to adhere to in true letter and spirit, without any deviation whatsoever, as opined by this Tribunal. Likewise, the observations of the Adjudicating Authority (Tribunal), in the impugned order dated 30.06.2022, at Paragraph 10, Hence the earlier proceedings, before the Hon ble High Court, may not be of much significance in the matter before this Tribunal. In any case, even if the matter were considered as transferred from the Hon ble High Court, it would stand abated, etc., are an incorrect, invalid, and legally untenable one. It is to be remembered that the proceedings to be transferred in Law, are required to be dealt with an Application / Petition, for the Corporate Insolvency Resolution Process, under the I B Code, 2016, with a mandate that the Adjudicating Authority (NCLT), will provide from the stage, at which, the Proceedings are transferred, as it is from the Hon ble High Court. Viewed in that perspective, this Tribunal, is of the cocksure opinion that the Adjudicating Authority (Tribunal), has misdirected itself by making observations at Paragraph 9, while passing the impugned order dated 30.06.2022, which are clearly unsustainable, in the eye of Law. Appeal disposed off. 2023 (2) TMI 950 Sufficient stamp duty or not - whether the claim is being barred by time or not - Financial Creditors can take benefit of limitation as per the provisions of Section 4(1)(b) read with 4(2) of the 1961 Act or not - seeking substitution of RP - HELD THAT:- The proceedings under the Rajasthan Stamp Act are separate and independent proceedings to the proceedings under the IBC initiated by the Financial Creditors under Section 7 of the IBC. The admission of claim by the RP, took place much before the proceedings initiated under the Stamp Act and which were based on other relevant materials as noted above cannot be faulted on the ground that Stamp Authorities have declared deficiencies in several documents relied by Financial Creditors - the submission of learned Counsel for the Appellant cannot be agreed upon, that on the ground of orders passed by Stamp Duty Authorities, the admission of claims by RP of the Financial Creditors need to be rejected. The second ground of attack made by learned Counsel for the Appellant that claim of the Financial Creditors is barred by time - HELD THAT:- Corporate Debtor was declared NPA on 30.09.1997 and the Application under Section 7 was filed on 11.01.2018. The limitation for filing an Application under Section 7 is three years under Article 137 of the Limitation Act. The learned Counsel for the parties have raised submission in regard to Rajasthan Relief Undertakings (Special Provisions) Act, 1961. Whether the Financial Creditors can take benefit of limitation as per the provisions of Section 4(1)(b) read with 4(2) of the 1961 Act, or the said benefit is not available to the Financial Creditor? - HELD THAT:- The Corporate Debtor was notified as relief undertaking from 03.10.1998 to 07.12.2016. The IBC came into force from 01.12.2016. The present Application has been filed on 11.01.2018. The period of limitation of three years for filing an Application under Section 7 commenced from the date Corporate Debtor was declared as Non-Performing Asset, i.e. 30.09.1997 - the period of limitation for filing an Application commenced on 30.09.1997, which is much before the enforcement of IBC. It is well settled that IBC does not give any fresh period of limitation for filing any Application and no fresh lease of life can be given to the State or dead claim by the enforcement of IBC. But when the Applicant has still balance period of limitation for filing an Application under Section 7 on the principle of computation of limitation as per provisions of 1961 Act, the said benefit cannot be denied. The period of limitation commenced on 30.09.1997 and Corporate Debtor was declared a relief undertaking on 03.10.1998 and continued till 07.12.2016. The period, which could be counted for filing Section 7 Application from 30.09.1997 was one year and 2 days. The period of limitation, which cannot be computed and was arrested by virtue of Section 4, sub-section (2), which again recommenced with effect from 08.12.2016, when the Corporate Debtor was de-notified from relief undertaking from 07.12.2016, so from 07.12.2016 to 11.01.2018 the period of one year and 34 days have elapsed. Thus, the Application under Section 7 was filed within a period of two years and 36 days from the date of commencement of the limitation, which is well within three years - thus, the admission of the claim of Alchemist cannot be said to be barred by time and Adjudicating Authority has rightly rejected. Seeking substitution of RP - HELD THAT:- The Committee of Creditors, till date has not passed any Resolution for change of RP. There being no Resolution of the Committee of Creditors for replacing the RP, the Adjudicating Authority did not commit any error in rejecting the application. There are no error in the order of the Adjudicating Authority in rejecting the application - appeal dismissed. 2023 (2) TMI 949 Related parties to Corporate Debtor or not - continuation with the Committee of Creditors or not - requirement to reconstitute the Committee of Creditors or not - it is the stand of the Appellant, that it ceased to be Related Parties , before the relevant date, as contemplated under the I B Code, 2016 - service of notice. Service of notice - HELD THAT:- In fact, the Onus, to prove Service of Summons, is on a Plaintiff. Where a question of Service of Notice, arises, the Court, is duty bound to Record a Finding - The Service of Summons, by a Courier, at the instance of Plaintiff, is permissible, as per decision of the Hon ble Supreme Court of India in (2005) 6 SCC 344 [ 2005 (8) TMI 714 - SUPREME COURT ]. Other Mode of Service are such as (a) Courier (b) Facts and (c) Electronic Mail Service or Service by Litigant, directly. Where the Registered Office of a Company is intact and working, it was held that the Service of Statutory Notice, for payment of Debt, a condition necessary for preserving a Winding up Petition, should have been served at the Registered Office. In Palmer s Company Law (21st Edition at Page 543), it is stated that, a Director, can at any time, Resign, from his Office, and usually the Articles, make express provision accordingly. If he communicates his Resignation, to the Company, for instance, by a Notice, upon the Company, served in the manner, provided by Section 437, his Resignation, is effective. A Resignation, once made, cannot be Withdrawn, except with a Consent of a Company. One cannot ignore the vital fact that the Nominee Directors filed the e-form DIR-11 only on 03.03.2022. But, the Corporate Insolvency Resolution Process of the Corporate Debtor, had commenced on 18.02.2022, which indicates that only as an afterthought, the said e-form DIR-11, was filed by the Nominee Directors. Also that, no Form DIR-12, which is required to be filed by the Company, Viz. the Corporate Debtor, was ever filed. In effect, this Tribunal, is of the considered view that, when the Notice of Resignation, had not reached the Company, Bafna remains as a Director, in the Corporate Debtor, and his position as Related Party, may not get erased, in the eye of Law - In the instant case, it cannot be brushed aside that the Corporate Debtor was admitted into CIRP on 18.02.2022 and the Resignation Letter, was sent on 11.02.2022, one week before the Corporate Debtor, being taken into the Corporate Insolvency Resolution Process. Also that, till the filing of Section 7 Petition, under the Code, by Mr. Bafna, he continued as Nominee Director, till 11.02.202, which is a stark reality. It is to be remembered that the ingredients of Section 3 (24) of the Code, do not exclude those Directors, who are not under the Control of the Promoter of the Corporate Debtor, from the ambit of the Related Parties. Even otherwise, in a given case where a Related Party / Financial Creditor, ceases to be a Related Party, with the prime aim of taking part in the Committee of Creditors, then he / it, ought to be considered as a Related Party, for the purpose of Section 21(2) of the I B Code, 2016, and not entitled to take part in the Committee of Creditors Meeting, as opined by this Tribunal. In the instant case, the Cover, given on 11.02.2022, had not reached the Company, as per the Track Record of the Courier (Filed on behalf of the Bafna), as rightly observed by the Adjudicating Authority (Tribunal), in the impugned order. Suffice it, for this Tribunal, to unerringly point out that the non-service of Resignation Letter, on the Company, leads to an inescapable conclusion that the ingredients of Section 168 of the Companies Act, 2013, were not complied with, and therefore, Mr. Praful Bafna and Mr. Yogesh Bafna, remain to be the Nominee Directors, and hence, they are not entitled to be a part and parcel of the Committee of Creditors, as held by this Tribunal. In view of the foregoing detailed qualitative and quantitative discussions and reasons, this Tribunal, taking note of the divergent contentions advanced on either side, keeping in mind the surrounding facts and circumstances in an integral manner, and also on going through the impugned order dated 22.08.2022 in IA (IBC) Nos. 53 and 54 of 2022 in CP (IB) No. 204/7/AMR/2019, passed by the Adjudicating Authority (NCLT, Amaravati Bench), comes to a consequent conclusion that there is no Irregularity or Illegality, in regard to the conclusion, arrived at in partly allowing the two Applications / Petitions. Petition dismissed. PMLA 2023 (2) TMI 948 Provisional attachment order - Money Laundering - scheduled offences or not - Petitioner was not arrayed as an accused and was merely a lender to M/s Omkar Realtors and Developers Pvt. Ltd. HELD THAT:- A perusal of the impugned PAO in the present case shows that the origin of the said PAO is an FIR No. 109/2020 which was registered in the PS: City Chowk, Aurangabad, Maharashtra under Sections 420, 406 and 34 of the Indian Penal Code, 1860 - A perusal of the order dated 18th October, 2022 passed by the Special Court under PMLA, Greater Bombay shows that M/s Omkar Realtors and Developers Private Limited which was arrayed as A-2, to whom the Petitioner had extended credit facility for the construction of the Worli Project , has also been discharged. Owing to this connection, the assets of the Petitioner were attached. The Supreme Court in Vijay Madanlal Choudhary Ors. v. UOI Ors., [[ 2022 (7) TMI 1316 - SUPREME COURT] ], has categorically held that when the accused person has been discharged/acquitted in the scheduled offence or the criminal case against the accused person has been quashed, there can be no offence of money laundering against the accused person. Further, in the said judgement it has also been stated that no offence of money laundering can be made out against any person having property linked to the person accused in the scheduled offence. Therefore, in the event that the accused person is discharged in the PMLA case itself, the impugned PAO and the attachment of such property linked to the accused person, from the said PAO, deserves to be quashed. The Supreme Court in Indrani Patnaik Anr. v. Enforcement Directorate and Ors. [[ 2022 (11) TMI 1311 - SUPREME COURT] ] has recently held that there cannot be any prosecution in relation to an offence for which the accused person has already been discharged. This position of law in terms of proceedings under the PMLA has been recently considered by this Court in EMTA Coal Limited and Ors. v. The Deputy Director of Directorate of Enforcement, [[ 2023 (1) TMI 694 - DELHI HIGH COURT] ]. In the said judgement it was held that once the closure report in the offences under respective FIRs has been filed, no criminality is ascertainable and the respective PAOs as well as the ECIRs are liable to be quashed. After hearing all the ld. Counsels for the parties and considering the judgements of the Supreme Court as also this Court, the Court is clearly of the opinion that the impugned PAOs against the properties of Piramal cannot continue as the Petitioner was not arrayed as an accused and was merely a lender to M/s Omkar Realtors and Developers Pvt. Ltd. (ORDPL). Accordingly, the flats which were attached by the ED, as extracted in Table No. 9 extracted above are thus, released. Petition disposed off. Service Tax 2023 (2) TMI 947 SVLDRS - Non-adjustment of amount already deposited by the petitioner (as interest under protest) during the stage of investigation against the amount payable under the Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- The amount included interest and penalty as well. In the meantime, Finance (No. 2) Act 2019 was introduced by the Central Government. The object of the scheme was to provide the settlement of pending disputes related to indirect taxes. The petitioner being eligible under the said scheme availed the same by making declaration in Form SVLDRS-1. The question before this Court was that as to whether the petitioner is entitled for credit of amount deposited under the head of interest and penalty while quantifying the amount payable under the scheme. Section 124 (2) lays down that the relief calculated under sub-section (1) shall be subject to the condition that any amount paid as predeposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant. Hence the provisions of Section 124 (2) is mandatory in nature that any amount deposited during enquiry, investigation is to be deducted when issuing the statement. Further the department has not filed any appeal against SCHLUMBERGER SOLUTIONS PRIVATE LIMITED VERSUS COMMISSIONER CENTRAL GST AND OTHERS [ 2021 (12) TMI 184 - PUNJAB AND HARYANA HIGH COURT] and thus this judgment attained finality, where it was held that Amount deposited by the petitioner falls in the second category. The provision only talks of amount irrespective of whether it has been paid as tax or interest or penalty. Thus, the view taken by the Designated Committee cannot be sustained. There is another side to the story. Had the petitioner remitted the entire amount paid by him towards tax, the respondents would have given credit of entire amount and his interest liability would have been waived off as well. The petitioner cannot be punished for depositing the amount under different heads once the provision mandates to discount the amount paid during the investigation dehors the head it has been deposited under. The impugned statement issued by the Designated Committee in the Form of SLVDRS- 3 dated 08.01.2020 (Annexure P-1) is quashed - petition allowed. 2023 (2) TMI 946 Levy of service tax - construction service provided to Gujarat State Police Housing Corporation Limited for construction of residential complex for the police staff - HELD THAT:- The Gujarat State Police Housing Corporation Limited is 100% owned by Government of Gujarat under the Ministry of Home Affairs therefore the same was held to be a government organization in various judgments. This very issue pertains to Gujarat State Police Housing Corporation Limited has been considered by this Tribunal in SHRI S. KADIRVEL VERSUS CCE ST, TRICHY [ 2018 (6) TMI 926 - CESTAT CHENNAI] where it was held that The definition of residential complex specifically excludes construction undertaken for personal use and such personal use includes permitting the complex for use as residence by another person. The exclusion clause covers the construction activity undertaken by the assessee. In view of the above decision, which are directly related to the same service recipient, the issue is no longer res-integra - appeal allowed. 2023 (2) TMI 945 Rejection of refund claim - rejection on the ground that the assessee s claim was not within sixty days as per Para 2(e) of Notification No. 41/2007 ibid., - non-production of certificate from the service providers to the effect that they have paid the Service Tax to the Government account - the conditions prescribed under the above Notification were not fulfilled by the assessee - HELD THAT:- The issue to be decided is no more res integra. The Hon ble Supreme Court in the case of SANSERA ENGINEERING LIMITED VERSUS DEPUTY COMMISSIONER, LARGE TAX PAYER UNIT, BENGALURU [ 2022 (12) TMI 49 - SUPREME COURT ] has held, in very clear terms that It is observed and held that while making claim for rebate of duty under Rule 18 of the Central Excise Rules, 2002, the period of limitation prescribed under Section 11B of the Central Excise Act, 1944 shall have to be applied and applicable. In the present case, as the respective claims were beyond the period of limitation of one year from the relevant date, the same are rightly rejected by the appropriate authority and the same are rightly confirmed by the High Court. In view of the above guiding binding principle laid down by the Hon ble Apex Court, it is clear that the period of limitation prescribed under Section 11B shall have to be applied since Section 11B ibid. is a substantive provision in the parent statute and the subordinate legislation in the form of Notification cannot override the parent statute. Thus, the appeals filed by the parties stand covered by the decision of the Hon ble Apex Court, wherein the Hon ble Apex Court has categorically held that the time limit prescribed under the substantive legislation, namely, Section 11B, is applicable. It is also noted that even the subsequent subordinate legislation in the form of Notification No. 17/2009 dated 07.07.2009 has prescribed time-limit of one year. The assessee s claim for refund was very much in order and the denial of refund is held to be bad and contrary to the law and therefore, the impugned order is set aside - Appeal allowed. 2023 (2) TMI 944 Taxability - Extended period of limitation - Activity of providing application software technology i.e. Core Insurance Solution for use in the business of UIIC - supply of the said service even prior to its Introduction in the taxing statute - extended time limit could be invoked or not for the issue of SCN when the entire issue involved the interpretation of law relating to taxability - levy of penalty. Whether the point of taxation for the right of use of a IT software would be the date on which it is downloaded or after the commissioning of the software? HELD THAT:- It is not disputed that the software was downloaded in December 2007 while the said service was brought under the tax net only on 16/05/2008 - From a reading of Section 65 (105) (zzzze) of the Finance Act, 1994, it is clear that the receipt of supply of software, through a download of it by UIIC for their use, from SSPSL would be covered under Section 65(105)(zzzze), if the service is found taxable during the relevant time. Since the Point of Taxation Rules 2011 came into effect only from 1/03/2011, it will not be of help in determining the relevant issue. Any person who purchases goods or services does it with the intention of using it. It is the common parlance understanding that a service can be said to have been delivered when it is done/ completed in a manner that would render its purpose satisfied to the person who sought it. In the context of the Information Technology Software Service, merely downloading the software onto his computer would not be of help to the said person, unless he can use it - The right to use information technology software supplied electronically would hence only commence at this point and is the critical event on which the liability to pay tax would get fastened as per the facts and circumstances of this Agreement. This being so the service has been supplied only after Information Technology Software Service was brought under the tax net and is hence subject to the levy. The Appellants reference to the Apex Court decision in Association of Leasing and Financial Services Companies [ 2010 (10) TMI 4 - SUPREME COURT ] or the Circular / Letter DOF No. 334/1/2008-TRU dated 29.2.2008 does not come to their help as it does not deal with the determination of the point of taxation and only refers to the taxability of the service per se. It is the Appellants view that the assessments in the case were provisional at the time of audit. The Appellant was also eligible to take credit of tax paid under reverse charge. This being so and considering that the matter involved an interpretation of law relating to taxability, extended time for issue of Show Cause Notice could not be evoked nor a penalty imposed. Just because assessments are provisional would not be an impediment in the finalisation of matters that are not covered by the provisional assessment. Matters that are complete in themselves and are not affected by the terms of the provisional assessment need not be kept pending - the Apex Court in its judgment in the case of The Chairman SEBI Vs. Shriram Mutual Funds and Anr. as reported in [ 2006 (5) TMI 191 - SUPREME COURT ] has held that, penalty is attracted as soon as the contravention of the statutory obligations as contemplated by the Act and Regulations is established and hence the intention of the parties committing such violations becomes wholly irrelevant. The Adjudicating Authority has in the impugned order given clear reasons as to why the allegations of suppression of facts and intention to evade tax has been arrived by him for invoking the extended time limit. It has been held by Constitutional Courts that appellate bodies cannot be unmindful of the great weight to be attached to the findings of facts of the Original Authority who has first hand knowledge and is in a position to assess the facts and the credibility of circumstances from his own observation. Appeal dismissed. 2023 (2) TMI 938 Nature of activity - Intermediary Service or Export of Service - place of provision of services - seeking recovery alongwith interest and penalty - Business Auxiliary Service - Information Technology Software Service - wilful suppression of facts or not - provisions of Rule 6A of Service Tax Rules 1994, Rule 9 of Place of Provision of Service Rules 2012 read with Section 68 of the Finance Act, 1994, Rule 6 of the Service Tax Rules,1994 and section 174(2) of CGST Act, 2017 - extended period of limitation. HELD THAT:- The Noticee nowhere has been mentioned as an agent or broker of M/s Ensim Corporation in the said Agreement. As per the said Agreement the noticee is to provide customized software services, quality testing, other technical and support services and consulting services to Ensim Corporation, USA. Hence, the main service provided by the Noticee is that of software development and other technical and consultancy services, on their own account to the foreign entity pursuant to the Agreement - the main service of Ensim Corporation, USA is to provide platform services including cloud and hosting services to their customers to which the Noticee does not have any access or relation. The Noticee is providing services to Ensim Corporation only, strictly in accordance with the Agreement and not on behalf of them. Even when specific consulting services are requested by Ensim Corporation in relation to its specific third-party customers, the recipient of such services remains the parent company who reimburses the Noticee, in terms of the said Agreement and no consideration is extended to the noticeee by any third party customers. There are no record or evidences suggesting that, the Noticee receives any work order or request for support from third party customers directly. Such third parties raise their technological issues with Ensim Corporation, which then, in terms of the said Agreement, requests the Noticee to provide technological support in relation to the software developed and supplied by the Noticee to Ensim Corporation, USA. In the instant case, the obligation of the Noticee is to provide customized software services to Ensim Corporation, USA along with other support as required including technical and consulting services on their own account to Ensim Corporation and not to third parties on their behalf. All third-party transactions of Ensim Corporation, USA are independent of the transaction with the Noticee - in the absence of the specific obligation towards facilitation of supply of services to the customers of the foreign entity, it is found that the Noticee cannot be treated as an 'intermediary'. The place of provision of the Noticee's services should be determined in terms of the default Rule 3 of the Place of Provision of Services Rules, 2012 (POPS Rules) instead of Rule 9 as the services rendered by the Noticee do not qualify as 'intermediary services' and consequently do not fall under Rule 9(c) or any other specific rule of the POPS Rules. There is no specific provision under Rules 4 to 12 of the POPS Rules, which cover the present transaction between the Noticee and Ensim Corporation, USA. Therefore, the place of provision of such services has to be determined in terms of the general rule under Rule 3 - in the instant case the service recipient is Ensim Corporation, USA, which is located outside the taxable territory of India, accordingly, the place of provision of the services is also outside the territory of India. The services provided by the Noticee are, therefore, not chargeable to Service Tax since they are not provided in taxable territory. As the services rendered by the noticee in the instant case satisfy all the conditions as laid down in Rule 6A of the Service Tax Rules, 1994, the services provided by the noticee qualify as 'export of services'. In the case between M/S. EVALUESERVE. COM PVT. LTD. VERSUS CST, GURGAON [ 2018 (3) TMI 1430 - CESTAT CHANDIGARH] wherein it has been held that the appellant has themselves provided the services to their client as the main service provider on principal to principal basis, therefore, the activity undertaken by the appellant do not qualify as 'intermediary' as defined in Rule 2(f) of Place of Provision of Services Rules, 2012. In the case between AMD INDIA PVT. LTD. VERSUS CST, BANGALORE [ 2017 (12) TMI 772 - CESTAT BANGALORE] , it was held that the Information Technology Software Services (ITSS), Information Technology Enabled Services (ITES) provided by appellant does not fall under 'intermediary services' and thus the concerned services falls within the definition of export. In the case between ANALOG DEVICES INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU EAST [ 2018 (4) TMI 301 - CESTAT BANGALORE] wherein it has been held that the appellant are not rendering the intermediary service and they are rendering consulting engineer services and BAS and hence fall under definition of export. Thus, the services rendered by the notice to M/s Ensim Corporation, USA in the instant case qualify as 'export of services' as the services satisfies all the conditions of Rule 6A of the Service Tax Rules, 1994 - there is no contravention on the part of the noticee and the demanded amount in respect of the instant 2 (two) show cause notices are liable to be dropped. As there is no demand, there is no question of charging interest and imposition of penalty - the entire proceedings initiated by issuance of Show Cause cum Demand Notices is dropped. Application disposed off. Central Excise 2023 (2) TMI 943 Validity of order decided by the revisional authority who has not heard the petitioner - Change of revisional authority - Denial of Rebate claim - allegation is limited to the accumulated CENVAT credit lying in balance prior to 01.03.2010 having lapsed during the time of opting Central Excise Exemption Notification No.30/2004-CE dated 09.07.2004 HELD THAT:- Without entering into as to whether the interpretation made is in accordance with law or not, this Court notices that the revisional authority itself has made a note of the fact that there was a change of the revisional authority - Relying on the written submissions of the petitioner of 09.09.2019, where it had requested to pass the order considering the documents available in record and they did not want any personal hearing since one such hearing had already taken place on 18.09.2019 has been relied upon to decide the matter on the strength of the record. Even if it is a matter of interpretation of the Rules, the Court is of the firm opinion that the authority which hears the matter should be deciding and not the other authority. Assuming that the petitioner would have nothing else to further add, it is a serious violation of principles of natural justice, if the authority which heard the matter is different than the one which actually adjudicates. - Matter restored back. Petition allowed. 2023 (2) TMI 942 Levy of duty based on production capacity u/s 3A - specified textile products - Legality of Notification No.36,1998-C.E. (N.T.), dated 10.12.1998, Notification No.42/1998-C.E. (N.T.), dated 10.12.1998 and Notification No.43/1998-C.E. (N.T.), dated 10.12.1998 - rate of duty on textile fabrics - HELD THAT:- Section 3A of the Central Excise Act, 1944 was omitted by Section 121 of the Finance Act, 2001 with effect from 11.05.2001 as has been observed by the Division Bench in its order dated 18.07.2008 in W.A.Nos.2366 to 2369 of 2002 etc., batch. Though Section 3A of the Central Excise Act, 1944 was reintroduced by Section 79 of the Finance Act, 2008 with effect from 10.05.2008, no corresponding Notification was issued for bring the textile products within the purview of tax under Section 3A of the Act. Following Notifications were issued by the Central Government to specify the rate of duty:- i. Notification.42/2008-C.E., dated 01.07.2008 as amended by Notifications No.43/2008-C.E., dated 15.07.2008, No.13/2012-C.E., dated 17.03.2012, No.6/2015-C.E., dated 01.03.2015 and No.17/2016- C.E., dated 01.03.2016. ii. Notification No.16/2010-C.E., dated 27.02.2010 as amended by Notifications No.19/2010-C.E., dated 13.04.2010, No.14/2012-C.E., dated 17.03.2012, No.5/2015-C.E., dated 01.03.2015 and No.16/2016- C.E., dated 01.03.2016. As no corresponding Notification was issued to bring the textile products under Section 3A of the Act once again and since issue has already attained finality, these Writ Appeals are liable to be dismissed. Appeal dismissed. 2023 (2) TMI 941 Refund of excess duty paid - downward price revision based on the negative supplementary invoices - rejection on the ground of unjust enrichment - HELD THAT:- It requires to be mentioned that the show cause notices in regard to both the refund claims have proposed to deny the refund raising the issue of unjust enrichment only. However, the Commissioner (Appeals) vide O-in-A dated 14/2014 dated 08.04.2014 has set aside the sanction of refund both on merits as well as on the issue of unjust enrichment. For the purpose of calculation of variation, the said clause has devised a formula based on which each and every supply made by the assessee was worked out and final payment was made to PGCL. The assessee then pays the differential duty by raising supplementary invoices wherever there was price increase. In case there is a downward price revision, they raise negative supplementary invoices and 100% negative bill value in order to adjust the excess amount billed - The assessee has furnished the supplementary invoices for the downward price variation with regard to both refund claims. It is not disputed that there has been excess payment of duty due to the downward price revision. In the case of COMMISSIONER OF C. EX., COIMBATORE VERSUS FLOW TECH POWER [ 2006 (1) TMI 37 - HIGH COURT OF JUDICATURE (MADRAS) ], the Hon ble High Court of Madras had held that when the assessee has submitted the Chartered Accountant certificate to prove that the duty has not been passed on to their customers, the refund is not hit by unjust enrichment. Thus, the refund is not hit by unjust enrichment. The assessee is eligible for refund on merits as well having satisfied the test of unjust enrichment. Appeal dismissed. 2023 (2) TMI 940 Rejection of CENVAT Credit - input services - construction work - maintenance of garden - consulting service - transport charges - clearing and forwarding charges - godown charges - professional charges - audit and training fee - legal charges - analytical charges - staff welfare charges - period August, 2007 to July, 2008 - HELD THAT:- Input services has been defined under Rule 2(l) of the Cenvat Credit Rules, 2004. The definition of input service is broadly in two parts i.e. main part and inclusive part. First part of the definition is restrictive in scope as it covers input services directly or indirectly used in relation to manufacture or clearance of final product. Whereas the latter part which is inclusive part of the definition expands the scope to such an extent that input services which are only remotely connected with the manufacture of goods will also get covered so long as these are related to the activities of business. Meaning thereby that inputs either directly or indirectly used in any activity concerned with or pertaining to the manufacture of finished goods, is eligible to be claimed as an input service. Professional Charges - Legal Charges - Audit Training Charges - HELD THAT:- Since these services are interconnected therefore I am taking them together. This service pertains to the professional, legal and other charges paid for insurance of import and export material, DGFT license work, certificate of transfer pricing under Income Tax Act, handling of appellants legal matters, drafting, liasoning work, etc. Cenvat credit on these services have been denied on the ground of no-nexus . There is no dispute that professional service and legal service are one of the important services without which the operation of any establishment cannot be undertaken - Similarly, the Audit and training also are essential services as it has been brought to my notice that it pertains to fees paid for replying show cause notice and if that is so then its also eligible input service. Civil Construction Work - Analytical Charges for ETP Samples - Transport charges for transport of biomass used for treatment of water - HELD THAT:- The Water (Prevention and control of Pollution) Act, 1974 casted an obligation on the appellant to maintain certain standards of effluent from their factory and when for certain activity the appellant is under statutory obligation, it cannot be said that the same is not in relation to manufacture - The Hon ble Supreme Court in the matter of INDIAN FARMERS FERTILISER COOP. LTD. VERSUS CCE., AHMEDABAD [ 1996 (7) TMI 141 - SUPREME COURT ] has laid down that the effluent treatment is essential and integral part of the process of manufacture in the plant and is part and parcel of the manufacturing process of that end product. Similarly the Analytical charges have been paid towards analysis of the effluent treatment plant sample and biomass is used for treatment of water before disposing it as waste which is also a statutory requirement as per Section 12 of the Factories Act, 1948. Therefore the services herein cannot denied to be input services and can very well said to be service used in or in relation to the manufacture and clearance of the final product. Maintenance of Garden - HELD THAT:- Pollution Control laws require atleast one-third of the open space under green coverage which is also essential in order to control the pollution and the appellants are under statutory obligation to maintain the garden in compliance with pollution control laws. Therefore, this service also falls under the category of input services under Rule 2(l). Consulting Services - HELD THAT:- This service has been denied on the ground that it is a type of welfare measure and could not be treated as an input services used in relation to the manufacture and clearance of final product - No doubt this service has been carried out in order to achieve the best utilisation of the employees, which in turn is going to enhance the production and therefore this service can be said to be used in relation to the business process and qualifying as input service. Cleaning and Forwarding Charges and Godown Charges - HELD THAT:- This services have been utilised for outward transport of the goods from the factory premises to the place of removal which is the godown and situated at Zirakpur and Guwahati respectively. This service has been denied on the ground that the information provided by way of only two invoices is not enough proof to determine that all the clearance are undertaken from Guwahati and Zirakpur and that the godowns are outside the purview of the factory premises which is a place of removal and hence not admissible as input service. - In order to substantiate the claim the appellant has placed on record the copies of tax invoices / commercial invoices which establishes that the goods are transferred to the godown situated at Zirakpur and Guwahati and are sold from their and therefore, these are also admissible input service. Staff Welfare - HELD THAT:- Under this head the expenses have been incurred for giving training to the staff / workers of the factory. There is no doubt that such periodical trainings are essential for any establishment and therefore eligible input service . Appeal allowed - decided in favour of appellant. 2023 (2) TMI 939 Maintainability of appeal - appellant sought for the benefit of SVLDR Scheme and the matter has been settled as per the scheme - HELD THAT:- The appeals filed by the Department against the impugned orders challenging the decision of the lower authority directing to give cum duty benefit becomes infructuous. Hence appeals filed by the Department are also dismissed. CST, VAT & Sales Tax 2023 (2) TMI 937 Classification of mosquito repellant Good Knight - to be classified as insecticide under Entry 30 of Part II of Schedule B to the OVAT Act attracting 4% tax or would fall in the residual entry of all other goods under Part III of Schedule B to the OVAT Act in which case it would be amenable to tax @ 12.5%? - HELD THAT:- The ACST and the Tribunal have concurrently held that the product in question is in fact an insecticide within the meaning of that expression in Entry 30 of Part II of Schedule B and, therefore, amendable to tax @ 4% thereby rejecting the plea of the Department that it should be classified as all other goods in terms of Part III of Schedule B of the OVAT Act, amenable to tax at 12.5%. The literature accompanying the product, which has been enclosed with the present revision petition, reveals that one of the principal ingredients of the product is Transfluthrin 0.88% w/w Liquid Vaporiser . It is explained in the said literature that Transfluthrin 0.88% w/w Liquid is an effective insecticide recommended for the control of adult mosquitoes in the household - It is evident therefore, that the product sold by the Opposite Party Page Dealer has been correctly categorized as an insecticide under Entry 30 of Part II of Schedule B of the OVAT Act. The Court is, therefore, satisfied that no error has been committed either by the ACST or the Tribunal in accepting the plea of the dealer and negativing the contrary plea of the Department. Revision petition dismissed. 2023 (2) TMI 936 Refund claim - respondent recovered excess amount of advance tax by asking the petitioner to do so and did not frame assessment and refunded the said amount - demand of interest - intent to evade, present or not - HELD THAT:- In the instant case, it is not in dispute that in the previous years on the asking of the department, the petitioner had paid tax in advance. The department also adjusted it while framing assessment for the year 1998-99. It is not a case where the petitioner made payment of excess amount of tax under some mistake. When the excess amount of tax so deposited by him, was refunded by issuing adjustment orders, the petitioner had not received the same and had made prayer for adjustment of the same for the amount of tax for the year 1998-99 which was so adjusted by the respondent. The respondent on one hand recovered excess amount of advance tax by asking the petitioner to do so and did not frame assessment and refunded the said amount only at the time of complying with directions given by this Court in Writ Petition No.2162 of 2000 to frame assessment for the previous years. On the other hand, it started demanding interest qua liability of subsequent years. There was no allegation against the petitioner that it had acted deliberately in defiance of any law or was guilty of any dishonest conduct or had made any attempt to evade payment of rightful tax levied under the provisions of the Act, 1973 - The well settled proposition of law is that penalty either by way of claiming interest or otherwise should not ordinarily be imposed unless the assessee either acted deliberately in defiance or disregard of its obligation. Unquestionably, an authority is competent to impose penalty in case, of a technical or intentional breach of provisions of an Act but where such breach flows from a bona fide belief, then the offender is not liable to act in the manner prescribed by the Statute. The impugned notice as served upon the petitioner thereby raising demand of interest on the amount of Rs.72,89,684/- is not sustainable and is liable to be quashed - Petition allowed.
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