TMI Tax Updates - e-Newsletter
February 27, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax

TMI Short Notes

1. Analysis of Salary Taxation: Section 15 of Income Tax Act 1961 vs Clause 15 of Income Tax Bill 2025

  Bill:

2. Provisions Relating to Expenditure Disallowance for Non-Taxable Income: comparing Clause 14 of Income Tax Bill, 2025, with Section 14A of Income-tax Act, 1961

  Bill:

3. A Comprehensive Analysis of Tax Provisions for Political Parties and Electoral Trusts: From Income Tax Act, 1961 to Income Tax Bill, 2025

  Bill:

Articles

1. Can a Strike-Off LLP Be Revived? Process and Legal Aspects

   By: Ishita Ramani

2. Key GST Provisions: Section 128A and Section 16(5) of the CGST Act

   By: Tushar Malik

3. Exception-Based MIS Reporting: A Smarter Approach to Decision-Making

   By: Sundaran Damodaran

4. Exporting goods through merchant exporters or engaging in third-party exports can provide significant benefits for businesses.

   By: YAGAY andSUN

5. Difference between Marine Insurance and ECGC (Export Credit Guarantee Corporation) Insurance.

   By: YAGAY andSUN

6. Let us put a full stop on erroneous invocation of Section 129 of CGST Act, 2017.

   By: K Balasubramanian

7. ASSESSMENT BASED ON ESTIMATED RATE OF NET PROFIT – PENALTY UNDER SECTION 271(1) (c) WILL NOT SURVIVE

   By: DR.MARIAPPAN GOVINDARAJAN

8. International Plant Protection Convention (IPPC)

   By: YAGAY andSUN

9. GSP (Generalized System of Preferences) of the European Union for India

   By: YAGAY andSUN

10. GSP (Generalized System of Preferences) Scheme of New Zealand for India

   By: YAGAY andSUN

News

1. House GOP pushes 'big' budget resolution to passage, crucial step toward delivering Trump's agenda

2. Keir Starmer hikes UK’s defence budget ahead of crunch meeting with Trump

3. J&K CM Abdullah holds pre-budget meetings with key departments in Jammu

4. Sri Lanka government budget gets parliamentary nod

5. UK trade secretary, investment minister firm up 17 new export, investment deals during India visit

6. Australia unveils roadmap to seize trade opportunities arising out of India's economic rise

7. Hyderabad: ED attaches assets worth crores in PMLA probe against 'illegal' Internet pharmacy

8. US, Ukraine near economic deal with mineral rights but no security promise: Officials

9. India needs 1.2-1.5 tax buoyancy to achieve 6.5-7pc growth: EY

10. Karnataka govt demonstrating how economic growth, ecological sustainability can go together: Ramesh

11. Union Minister of Commerce & Industry Shri Piyush Goyal highlights ports, shipping, and logistics as key to India's economic growth

12. Ministry of Corporate Affairs Organises Prime Minister Internship Scheme (PMIS) Mela At Kolkata in collaboration with CII

13. Operative Kisan Credit Card (KCC) amount crosses ₹10 Lakh Crore benefiting 7.72 Crore Farmers

14. Ukraine and US have agreed on framework economic deal, Ukrainian officials say

15. Review of trade agreement with ASEAN should not be delayed: Jaishankar

16. Developing SEZ priority for Assam to reap benefits of Gelephu Mindfulness City: Himanta

Notifications

Customs

1. 01/2025 - dated 25-2-2025 - CVD

Seeks to impose countervailing duty on imports of 'Saccharin in all its forms' originating in or exported from People’s Republic of China in pursuance of countervailing duty/anti-subsidy investigation issued by DGTR.

Circulars / Instructions / Orders

FEMA

1. II/21022/58(93)/2024-FCRA(MU) - dated 21-1-2025

Regarding maintaining of FCRA accounts and utilization accounts of associations whose FCRA Registration Certificate is not valid

Highlights / Catch Notes

GST

• Natural Justice Challenge Dismissed: Court Grants 30-Day Window for Statutory Appeal Despite Hearing Opportunity Dispute

  Case-Laws - HC : HC examined a challenge to an adjudication order allegedly issued without providing hearing opportunity. Despite claims of natural justice violation, the court found extensive documentation requiring detailed factual analysis. Determining this was not an exceptional case warranting bypass of statutory appeal mechanisms, HC dismissed the appeal. However, court granted appellant 30 days from judgment receipt to file statutory appeal, directing appellate authority to accept it without limitation period restrictions. Court emphasized need for thorough factual adjudication through proper appellate channels rather than direct judicial intervention.
  Visit to Get Source

  ---

• GST Show Cause Notice Invalid: Lack of Detailed Reasons and Hearing Denial Under Section 73 and 75(4)

  Case-Laws - HC : HC set aside GST order due to procedural defects in show cause notice (SCN) issuance. Court held that merely attaching tax determination details to SCN summary in Form GST DRC-01 does not constitute valid proceedings under Section 73. A proper SCN must specifically detail reasons for action and allow adequate opportunity for representation. Additionally, violation of Section 75(4) occurred as petitioner was denied requested hearing opportunity. Court found authentication requirements under Rule 26(3) were not met. While quashing impugned order dated 28.04.2024, HC granted liberty to authorities to initiate fresh proceedings under Section 73 for relevant financial year if warranted.
  Visit to Get Source

  ---

Income Tax

• Income Reporting Guidelines for Securitisation Trusts: Section 115TCA Mandates Detailed Distribution Statements and Investor Documentation

  Notifications : Filing requirements and income reporting structure for business and securitisation trusts under section 115TCA of the Income-tax Act, 1961. The key outcomes are: Securitisation trusts must report income distributed to investors across different categories including house property, business/profession, capital gains (long-term and short-term with specific tax codes), and other sources (dividends and others). The forms introduced (Form 64E and 64F) require detailed breakup of income paid/credited with specific codes for capital gains taxation rates ranging from 10-30%. Trusts must provide verified statements with investor details, PAN/Aadhaar numbers, and proportionate income distribution. Mandatory attachments include registration certificates and audited accounts. The framework ensures transparent tracking of income flows from securitisation trusts to investors for tax compliance purposes.
  Visit to Get Source

  ---

• ITAT's Rectification Power Under Section 254(2) Cannot Be Used To Review Income Classification Decision

  Case-Laws - HC : HC set aside ITAT's rectification order under Section 254(2) of Income Tax Act, finding ITAT exceeded its jurisdiction in reviewing income classification. The dispute centered on whether income received from PGHH constituted "income from house property" or "income from other sources." Court held ITAT's powers under Section 254(2) are limited and do not extend to substantial review of earlier findings. While invalidating ITAT's rectification order, HC explicitly preserved the pending revenue appeal under Section 260-A regarding income classification, noting this ruling would not prejudice the ultimate determination of income characterization in the main appeal.
  Visit to Get Source

  ---

• Denial of Video Conference Hearing Request Violates Natural Justice Principles in Tax Penalty Case Under Section 250

  Case-Laws - HC : HC held that denial of personal hearing request by Appellate Authority violated principles of natural justice in penalty proceedings under s.250. Petitioner's request for video conference hearing regarding exemption claim under s.10(23C)(iiiab) was improperly ignored. The Court determined that violation of natural justice principles at initial stage cannot be cured at appellate level, despite availability of statutory appeal remedy. The procedural defect fundamentally undermined fairness of proceedings. Writ petition allowed, setting aside impugned order due to failure to provide reasonable opportunity of being heard, which constituted prejudicial treatment contrary to established administrative law principles.
  Visit to Get Source

  ---

• Penalty Under Section 271(1) Waived After Taxpayer Voluntarily Disclosed Additional Income During Survey, Paid Advance Tax

  Case-Laws - AT : Penalty under s.271(1) was set aside by ITAT where assessee disclosed additional income during survey under s.133A. ITAT held that since assessee had already paid sufficient advance tax before survey, return filing due date had not expired, and declared income was accepted without variation in assessment under s.143(3), revenue's contention that income would not have been disclosed absent survey was untenable. The fact that assessee had proactively paid advance tax and ultimately reported same income that was accepted in assessment demonstrated no intention to conceal. Penalty imposed by AO and upheld by CIT(A) was found unjustified. Assessee's appeal allowed.
  Visit to Get Source

  ---

• Foreign Tax Credit Cannot Be Denied Solely Due To Delayed Form 67 Filing Under India-Denmark Tax Treaty

  Case-Laws - AT : ITAT allowed taxpayer's appeal regarding Foreign Tax Credit denial under India-Denmark DTAA. While Form 67 was filed after ROI submission deadline under s.139(1), ITAT held that AO's rejection solely on delayed filing was improper. Matter remanded to AO for fresh examination of whether taxes were paid in Denmark on same income taxed in India, and if no relief was claimed in Denmark. AO directed to verify facts and decide FTC eligibility per CBDT circular and applicable precedents, rather than reject purely on procedural grounds. Technical breach in Form 67 filing timeline should not defeat substantive DTAA benefit if double taxation occurred.
  Visit to Get Source

  ---

• Title: Transfer Pricing Adjustment: TPO Must Apply APA Parameters for Non-UK Entity Royalty Payments, Same as UK Entities

  Case-Laws - AT : ITAT addressed transfer pricing adjustment concerning royalty payments for licensed manufacturing between appellant and non-UK entities. The tribunal determined that TPO's approach lacked objectivity in differentiating between UK and non-UK AEs, particularly given prior MAP proceedings accepting 4-5% compensation for AY 2013-14 and APA for AY 2018-19 to 2022-23. While MAP/APA decisions lack precedential value for different assessees, they carry significant persuasive weight for the same assessee. Applying consistency principles in tax matters, ITAT directed TPO to accept APA parameters for determining ALP of disputed transactions with non-UK AEs, effectively aligning treatment of royalty payments across jurisdictions.
  Visit to Get Source

  ---

• Section 153D Approval Invalid: Tax Officials Failed to Review Complex Documentation Within Unrealistic Timeline for 35 Cases

  Case-Laws - AT : ITAT invalidated approval granted under s153D due to lack of proper application of mind by Addl. CIT. The approval, though conditional with directions, was deemed mechanically processed given the impractical timeframe for reviewing extensive documentation across 35 cases. The geographical distance between Dehradun (AO's location) and Meerut (Addl. CIT's office) necessitated physical transfer of voluminous records including assessment orders, appraisal reports, and seized materials. ITAT found it humanly impossible for Addl. CIT to meaningfully examine multiple complex cases, each containing substantial documentation, within days. The tribunal concluded the approval process was procedurally defective, ruling in favor of the assessee.
  Visit to Get Source

  ---

• Tax Appeal: Bogus Purchases Get 5% Profit Rate, Director's Personal Money Claims Accepted, Flat Deal Additions Modified

  Case-Laws - AT : ITAT modified multiple additions in a tax appeal concerning bogus purchases and unexplained money. For contested purchases of Rs. 13,80,63,994, ITAT directed application of 5% profit rate, restricting addition to Rs. 69,03,200, consistent with preceding assessment years. Regarding unexplained money evidenced in seized documents from Director's premises, addition was deleted as Director claimed personal ownership in statement u/s 132(4). For unaccounted flat transactions of Rs. 17,42,000, ITAT applied 5% profit rate, resulting in addition of Rs. 87,100. On disputed entries marked as "6kg" and "7kg", ITAT modified addition to Rs. 1,30,000 total, considering subsequent retraction and lack of corroborative evidence. Revenue's appeals were partly allowed across all issues.
  Visit to Get Source

  ---

• Tax Officials Cannot Double Tax Legitimate Cash Deposits From Sales During Demonetization Under Section 69A and 115BBE

  Case-Laws - AT : ITAT upheld CIT(A)'s deletion of additions made under s.69A r.w.s. 115BBE regarding unexplained cash deposits during demonetization. The assessee successfully demonstrated that cash deposits originated from legitimate sales recorded in books of accounts and already subjected to taxation. The tribunal noted that only 17.50% of pre-demonetization stock was sold on 08.11.2016, rejecting AO's allegations of abnormal sales as unsupported by evidence. ITAT emphasized that additions cannot be sustained merely on suspicion or conjecture, particularly when cash from sales was properly recorded in books. Double taxation being impermissible, s.69A provisions were deemed inapplicable as the source of deposits was adequately explained and documented.
  Visit to Get Source

  ---

• Interest Payments to NBFCs Disallowed Under Section 40(a)(ia) for TDS Non-deduction; Penalty Under 271AAB(1)(c) Upheld

  Case-Laws - AT : ITAT upheld disallowance of interest payments under s.40(a)(ia) due to non-deduction of TDS on payments made to NBFCs. Appellant's contention that NBFCs were considered banks was rejected, as ignorance of law is not a valid defense. The tribunal noted appellant's failure to submit Form 27BA certification regarding payments and statutory deductions. Additionally, lump sum expense disallowances were sustained due to assessee's inability to maintain proper records or provide evidence of business purpose for vehicle and telephone expenses. The tribunal also confirmed penalty under s.271AAB(1)(c), finding no grounds for interference with the penalty order following dismissal of quantum assessment appeal.
  Visit to Get Source

  ---

Customs

• SFP Devices Classified as Machinery Parts Under CTH 8517 7990, Qualifying for Basic Custom Duty Exemption

  Case-Laws - HC : HC determined that Small Form Factor Pluggable (SFP) devices are correctly classified under CTH 8517 7990 as parts of machinery, not under CTH 8517 6290 as apparatus/machines. Following precedents from IBM India and Reliance Jio Infocomm cases regarding Ethernet Switch Transceivers, the court held that SFPs qualify as optical transceivers entitled to Basic Custom Duty exemption. The earlier ruling classifying SFPs under 85176290 with 20% Basic Customs Duty was overturned. The court conclusively established that SFPs fall under Entry 85177990 and are eligible for applicable duty exemptions. The appeal was allowed, setting aside previous conflicting rulings.
  Visit to Get Source

  ---

• Importer Must Re-Export 67 Containers of Hazardous Waste After False Documentation Found in Pre-Shipment Certificates

  Case-Laws - HC : HC admitted revenue's appeal concerning imported hazardous waste materials. Initial examination revealed 67 containers contained municipal and hazardous waste prohibited for import, contradicting pre-shipment certificates. Court found prima facie evidence that goods description did not match documentation. Importer given option to re-export prohibited goods at own cost and risk, subject to written consent and departmental formalities, notwithstanding pending appeal. Following Emami Paper precedent, where similar goods were ordered destroyed, Court determined substantial questions of law existed. Appeal scheduled for hearing after six weeks, with revenue directed to file informal paper books within four weeks.
  Visit to Get Source

  ---

Bill

• Capital Asset Transfers During Entity Dissolution Now Taxable at Fair Market Value Under Sec 9B & Cl 8

  Notes : The provisions govern taxation of capital assets or stock-in-trade transfers during entity dissolution or reconstitution. Under both Sec 9B of IT Act 1961 and Cl 8 of IT Bill 2025, such transfers are deemed taxable events with fair market value as consideration. Cl 8 introduces refinements including a two-year limitation for guidelines issuance, 30-day parliamentary review, and modified terminology from "previous year" to "tax year." The framework requires specified entities to recognize deemed transfers in distribution year, compute gains on FMV basis, and subjects proceeds to business income or capital gains tax. Specified persons must document received assets and consider FMV implications. While core principles remain unchanged, Cl 8 enhances administrative procedures and oversight mechanisms for implementation effectiveness.
  Visit to Get Source

  ---

• New Income Tax Bill Expands Source-Based Taxation Rules for Digital Economy Through Significant Economic Presence Framework

  Notes : The Income Tax Bill 2025 establishes comprehensive criteria for income deemed to accrue or arise in India, focusing on four primary categories: income from Indian assets/sources, property, business connections, and capital asset transfers. The legislation introduces significant provisions for digital economy taxation through the Significant Economic Presence (SEP) concept, while maintaining traditional nexus rules. Key elements include expanded definitions of royalties encompassing digital rights, technical service fees excluding construction projects, and refined business connection tests. The framework incorporates substantial value derivation tests for indirect transfers, with specific exemptions for portfolio investors and small shareholders. This modernized approach aligns with OECD BEPS recommendations while preserving India's sovereign taxation rights, particularly in digital commerce and cross-border transactions.
  Visit to Get Source

  ---

• Proposed Tax Bill Expands Business Connection Rules and Digital Economy Taxation Under Sections 9 and 9A

  Notes : The proposed amendments to income deemed to accrue or arise in India under the Income Tax Bill, 2025, introduce comprehensive modifications to existing provisions under ss 9 and 9A of ITA 1961. Key changes include expanded definition of business connection incorporating significant economic presence, detailed framework for digital economy taxation, and modified investment fund management provisions. The amendments align with OECD BEPS guidelines while introducing specific provisions for online advertising, data monetization, and digital services targeting Indian market. The revised framework modernizes India's international taxation approach, particularly addressing digital economy challenges. Notable implications include reassessment requirements for businesses' digital presence, enhanced scope of taxable income for non-residents, and modified compliance obligations for fund managers under the new regulatory structure.
  Visit to Get Source

  ---

• New Income Tax Bill Unifies Employee Benefits and Dividend Income Under Restructured Clause 7, Replacing ITA Sections 7-8

  Notes : The Income Tax Bill 2025 consolidates and modernizes deemed income provisions previously contained in Sections 7 and 8 of ITA 1961. The new Clause 7 creates a unified framework dividing deemed income into two sub-clauses: employee benefits and dividend income. Key modifications include updated references to Schedule XI for provident funds, expanded scope of employer contributions, and refined dividend income treatment. The consolidation maintains essential provisions while improving organizational clarity through precise terminology and streamlined cross-references. The restructuring aims to reduce interpretational disputes and align with contemporary business practices, though initial implementation may require updated judicial precedents. The reform represents a systematic enhancement of deemed income provisions while preserving their fundamental characteristics.
  Visit to Get Source

  ---

• New Income Tax Bill Revamps Residency Rules with 182-Day Test and Rs. 15 Lakh Income Threshold

  Notes : The Income Tax Bill 2025 introduces substantial modifications to residential status provisions compared to the Income-tax Act 1961. Key changes include restructuring into 14 sub-sections, enhanced clarity in determining individual residency through refined 182-day and 60-day rules, and specific provisions for high-income individuals with Rs. 15 lakh threshold. The bill maintains dual criteria for company residency (Indian incorporation or POEM) while expanding POEM definition. NOR status criteria are broadened with additional categories for high-income individuals and deemed residents. The revised framework aligns with international standards, emphasizing substance over form and addressing global mobility concerns. These amendments aim to reduce interpretational disputes while providing clearer guidance for status determination across taxpayer categories.
  Visit to Get Source

  ---

• Income Tax Bill 2025 Clarifies Spousal Income Division Rules Under Portuguese Civil Code As Per Clause 10

  Notes : The proposed Income Tax Bill 2025 maintains established principles for income taxation of spouses governed by Portuguese Civil Code in Goa, Dadra and Nagar Haveli, and Daman and Diu. Under Clause 10, spousal income is not assessed as community property despite the "communiao dos bens" concept. Non-salary income is equally apportioned between spouses and included separately in their respective total incomes. Salary income remains exclusively attributed to the earning spouse. The provision retains core principles from Section 5A of Income Tax Act 1961 while introducing structural improvements through simplified language and clearer sub-clauses. This ensures continued tax equity while potentially enhancing implementation efficiency for couples under Portuguese Civil Code jurisdiction.
  Visit to Get Source

  ---

IBC

• Personal Insolvency: Early Court Intervention Before Resolution Professional's Report Under IBC Sections 97-100 Deemed Premature

  Case-Laws - SC : SC held that High Court's exercise of writ jurisdiction under Article 226 to halt personal insolvency proceedings was premature and unjustified. Following Jiwrajka precedent, appointment of resolution professional under IBC Section 97 is preliminary, with debt verification occurring first through professional's report under Section 99, then judicial examination by Adjudicating Authority under Section 100. High Court intervened before resolution professional's report, improperly preempting statutory process. While judicial review power exists, constitutional courts must exercise restraint when specialized tribunals are designated for specific determinations. Statutory process through resolution professional and Adjudicating Authority should have been allowed to proceed. Appeal allowed, High Court order set aside.
  Visit to Get Source

  ---

• Personal Guarantor's Appeal Against Insolvency Process Under IBC Section 95 Fails as Creditor Rights Upheld Through Assignment

  Case-Laws - AT : NCLAT dismissed appeal challenging initiation of Personal Insolvency Resolution Process under Section 95 of IBC. Court affirmed creditor's right to file application despite alleged lack of privity, holding assignment agreement and transfer of rights were binding. Personal guarantee terms established independent rights of creditors alongside Trust. Appellant's liability as guarantor was confirmed as co-extensive with principal debtor per Section 128 of Contract Act. NCLAT validated Resolution Professional's appointment, Board Resolution's authority, and Adjudicating Authority's adherence to natural justice principles. Court emphasized creditor need not first proceed against principal borrower before pursuing guarantor, citing established precedent on surety's concurrent liability.
  Visit to Get Source

  ---

PMLA

• Money Laundering Accused Gets Bail After 40 Months; PMLA Section 50 Statements Insufficient to Extend Pre-Trial Detention

  Case-Laws - HC : HC granted bail in a money laundering case after 3 years and 4 months of pre-trial detention. The prosecution relied on co-accused confessional statements under PMLA Section 50 to allege the accused provided entries facilitating money laundering. Following V. Senthil Balaji precedent, the court emphasized that PMLA trial requires completion of scheduled offense trial, which hadn't commenced. The court determined that prolonged incarceration without trial progress violated Article 21 rights to liberty and speedy trial, overriding PMLA Section 45 restrictions. Bail granted on Rs. 1,00,000 personal bond with surety, as evidence was documentary and prosecution showed no concrete flight risk.
  Visit to Get Source

  ---

SEBI

• Listed Companies Must Follow Industry Standards for Material Event Disclosures Under Regulation 30 LODR and SEBI Act

  Circulars : SEBI issued regulatory guidance mandating listed entities to follow industry standards developed by ISF for material event disclosures under Regulation 30 of LODR Regulations. The standards, formulated through collaboration between ASSOCHAM, CII, and FICCI under stock exchange oversight, aim to streamline business compliance requirements. The circular, exercising powers under Section 11(1) and 11A of SEBI Act 1992, directs stock exchanges to ensure listed entities' adherence to these standards. Industry associations and exchanges are required to publish these standards on their websites, establishing a unified framework for material event reporting compliance.
  Visit to Get Source

  ---

• Association of Persons Can Now Open Demat Accounts for Mutual Funds, Bonds and G-Secs Under New SEBI Framework

  Circulars : SEBI has authorized the opening of demat accounts for Association of Persons (AoP) to hold specified securities in dematerialized form, effective June 02, 2025. AoPs can maintain demat accounts for mutual fund units, corporate bonds, and Government Securities, subject to statutory compliance. The framework requires PAN verification of both AoP and Principal Officer, with members bearing joint and several liability. AoPs must confirm adherence to permitted securities holding and explicitly prohibits equity share subscription. Principal Officers serve as legal representatives in disputes. The directive amends the Master Circular for Depositories dated December 03, 2024, adding paragraph 1.2.6.A, exercising powers under SEBI Act 1992 and Depositories Act 1996.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2025 (2) TMI 1048
  Rejection of appeal filed by the petitioners on the ground of delay of 8 days in filing - HELD THAT:- Having considered that there is a marginal delay in filing the appeal and also noting that although the petitioners have a further right to prefer an appeal before the Appellate Tribunal, by reasons of the Appellate Tribunal not being constituted, the petitioners have been compelled to approach this Court. The appeal has not been adjudicated on merits. Having regard to the peculiar facts made out and noting that some explanation is available for the delay, it is opined that the matter ought to be remanded back to the appellate authority for a decision on merits and accordingly the order dated 27th June, 2024 passed by the appellate authority is set aside. Petition disposed off by way of remand.

  ---

• 2025 (2) TMI 1047
  Challenge to adjudication order - adjudication order was passed without giving an opportunity of hearing - violation of principles of natural justice - HELD THAT:- On going through the voluminous document placed, it is found that the matter provides adjudication into facts. It is not simple adjudication but deep and thorough adjudication into facts are required to be done and therefore, it is not one of the exceptional cases, where the appellant/assessee should be permitted to bypass the statutory appellate remedy. The appellant is directed to file a statutory appeal within a period of 30 days from the date of receipt of server copy of this judgment and order and if the appellant does so, the appellate authority shall entertain the appeal without rejecting the same on the ground of limitation. Appeal dismissed.

  ---

• 2025 (2) TMI 1046
  Valid service of SCN - attachment to the Summary of the Show Cause Notice (SCN) in Form GST DRC-01 - absence of a proper SCN - violation of principles of natural justice - HELD THAT:- From the perusal of the records, it would show that in the Summary of the Show Cause Notices issued in GST DRC-01 to the petitioner in the writ petition, there is a mention therein that there is a Show Cause Notice attached. It is the case of the respondents that the said attachment wherein determination of tax is mentioned is the Show Cause Notice. The question therefore arises as to whether the said attachment can be said to be a Show Cause Notice as per the mandate of both the Central Act as well as the State Act and the Rules made therein under. It would be apposite to take note of that in all these cases, the Summary of the Show Cause Notices have been issued in terms with Section 73. The Proper Officer is required to issue a Show Cause Notice, therefore, the Show Cause Notice is required to specifically mention the reason(s) and the circumstances why the provision of Section 73 had been set into motion. The person against whom the said Show Cause Notice is issued would only have an adequate opportunity to submit a representation justifying that the prerequisites for issuance of Show Cause Notice is not there if and only if the reason(s) for issuance of the Show Cause is specifically mentioned in the Show Cause Notice - Section 73 further stipulates that upon consideration of the representations, if any, the Proper Officer shall pass the order under Section 73(9) determining the amount of tax, interest and penalty. This Court is of the view that the Summary of the Show Cause Notice along with the attachment containing the determination of tax cannot be said to be a valid initiation of proceedings under Section 73 without issuance of a proper Show Cause Notice. The Summary of the Show Cause Notice is in addition to the issuance of a proper Show Cause Notice. Under such circumstances, this Court is of the opinion that the impugned order challenged in the instant writ petition is contrary to the provisions of Section 73 as well as Rule 142 (1) (a) of the Rules as the said impugned Orders were passed with issuance of a proper Show Cause Notice. Whether Rule 26 (3) can be applicable to Chapter-XVIII when the said Sub-Rule on refers to Chapter-III? - HELD THAT:- In the case of M/s Silver Oak Villas LLP [ 2024 (4) TMI 367 - TELANGANA HIGH COURT] , the learned Division Bench of the Telangana High Court had applied Rule 26 (3) of the Rules of 2017 even to Chapter-XVIII of the Rules of 2017. In the case of A.V. Bhanoji Row (supra), the learned Division Bench of the Andhra Pradesh High Court held that the signatures cannot be dispensed with and Sections 160 and 169 cannot save an order, notice, communication which did not contain a signature. This Court has duly perused the Summary of the Show Cause Notices wherein the petitioner was only asked to file his reply on a date specified. There was no mention as to the date of hearing and the Column was kept blank. However, the petitioner had sought for an opportunity of hearing which was however not given - The mandate of Section 75(4) of both the Central and State Act are safeguards provided to the assessees so that they can have a say in the hearing process. Conclusion - The issuance of the Summary of the Show Cause Notice, Summary of the Statement and Summary of the Order do not dispense with the requirement of issuance of a proper Show Cause Notice and Statement as well as passing of the Order as per the mandate of Section 73 by the Proper Officer. As initiation of a proceedings under Section 73 and passing of an order under the same provision have consequences. The Show Cause Notice, Statement as well as the Order are all required to be authenticated in the manner stipulated in Rule 26 (3) of the Rules of 2017. Accordingly, this Court is of the opinion that the Impugned Order challenged in the writ petition are in violation of Section 75(4) as no opportunity of hearing was given. This Court while setting aside the impugned Order-in-Original dated 28.04.2024, grants liberty to the respondent authorities to initiate de novo proceedings under Section 73, if deemed fit for the relevant financial year in question - Petition disposed off.

  ---

• Income Tax

• 2025 (2) TMI 1045
  Rectification u/s 254 - Characterization of income - nature of income derived by the petitioner from PGHH/sister concern of the petitioner - income from other sources or income from house property - HELD THAT:- ITAT s jurisdiction under Section 254 [2] of the IT Act is limited. It is not akin to a substantial review. This Court clarified this position in an earlier round when the ITAT had similarly exceeded its jurisdiction. The issue of whether the income receivable by the petitioner from PGHH was income from house property or income from other sources was writ large before this Court in the Revenue s pending appeal. ITAT, exercising powers u/s 254[2] of the IT Act, could not have reviewed its earlier finding on this issue. ITAT s impugned order deserves to be set aside accordingly. However, we clarify that this judgment and order would in no way interfere with this Court deciding on whether the income receivable from PGHH should be classified as income from house property or income from other sources in revenue s appeal under Section 260-A of the Act. ITAT exceeded its jurisdiction under Section 254 (2) in deciding such an issue.

  ---

• 2025 (2) TMI 1044
  Deduction u/s 10A and depreciation on computer peripherals - petitioner states that with respect to the two corporate tax issues, the respondent has failed to pass any appeal effect order till date, and therefore, the proceedings have become time barred with respect to these two issues - As submitted that once the ITAT set aside the assessment order, the demand arising from the said order stood extinguished and it was the duty of the AO to delete the outstanding demand from the portal of the petitioner. However, despite a lapse of more than 6 years from the date of the ITAT order setting aside the assessment order, the AO has failed to delete the demand from the portal - HELD THAT:- In view of the submissions of the learned counsel for the parties as also the statement of learned counsel for Revenue, we direct that the order dated 26.06.2015 passed by the ITAT be given appeal effect to and the consequential benefits with statutory interest, if applicable, be released forthwith, in accordance with law.

  ---

• 2025 (2) TMI 1043
  Validity of order passed u/s 250 - penalty proceedings initiated against the petitioner were decided in a manner prejudicial to the natural justice - denial of personal hearing - Rejection of exemption claimed u/s 10 (23C) (iiiab) - HELD THAT:- In the instant case, the petitioner has moved a rejoinder before the Appellate Authority requesting for a personal hearing but the said request was not considered by the Appellate Authority. If the application/request was made for personal hearing by the petitioner before the Appellate Authority, the Income Tax authority ought to have allowed the said application by arranging for video conferencing argument. At least in the instant case, it stands established the request from the petitioner was made before the Appellate Authority but the Appellate Authority did not give opportunity of hearing to the petitioner. Therefore, this Court is of the considered view that there is a violation of principle of natural justice and if the defect of principle of violation of natural justice has occurred in the initial stage of proceedings, it cannot be cured at the stage of appeal. No doubt, the petitioner has a right to avail the statutory appellate remedy but when the impugned order was passed by the respondent No. 2 in violation of principle of natural justice, it cannot be alleviated. WP allowed.

  ---

• 2025 (2) TMI 1042
  Application moved seeking a refund of an amount erroneously directed to be refunded to the petitioner along with interest - applicant/respondent/contemnor said that the amount which was attached by the respondent has been erroneously directed to be refunded to the petitioner along with payment of interest @ 6% p.a. from the date of seizure till its realization within six weeks thereof. HELD THAT:- The interest would be payable after the expiry of the initial 120 days from the date on which the authorization u/s 132 of the Income Tax Act or the requisition u/s 132A of the Income Tax Act was executed. Thus, pursuant to the notice issued to the non-applicant/petitioner, today a cheque mcontaining the income tax refund order has been handed over to learned counsel for the petitioner, towards the interest which has been calculated in terms of the aforesaid discussion. The same is accepted unconditionally. The copy of the said cheque is taken on record. Petitioner shall be at liberty to approach the worthy Registrar General, Delhi High Court for refund of the principal amount which already stands deposited with this Court.

  ---

• 2025 (2) TMI 1041
  Penalty u/sec 271(1) - income disclosed during a survey - as per revenue had there been no survey action u/s 133A assessee would not have disclosed the business income and long term capital gains - HELD THAT:- When the assessee has paid sufficient advance tax apart from the TDS / TCS and the due date for filing of return has not expired on the date of return, it cannot be said that the assessee would not have disclosed the income during the financial year 2016-17 had there been no survey. In our opinion, both the AO and CIT(A) have completely ignored the fact of sufficient advance tax paid by the assessee and the due date for filing of return has not expired. It is also an admitted fact that the income returned by the assessee has been accepted without any variation. Since in the instant case the income declared during the course of survey has been offered in the return which has been accepted by the AO in the order passed u/s 143(3) of the Act and the assessee has paid sufficient advance tax before the survey was conducted and the date for filing of return of income has not expired on the date of survey, therefore, penalty levied by the AO and sustained by the Ld. CIT(A) is not justified - Appeal filed by the assessee is allowed.

  ---

• 2025 (2) TMI 1040
  Non grant of Foreign Tax Credit ( FTC ) - Form 67 was filed beyond the date of furnishing the Return of Income u/s 139(1) - Scope of DTAA between India and Denmark - HELD THAT:- Undisputedly, the Double Taxation Avoidance Agreement between India and Denmark provides for relief in respect of payment of taxes in one jurisdiction and paid in other jurisdiction as well. Assessing Officer ought to have verified the correct position whether the assessee had claimed such benefit at source country i.e. Denmark but no exercise has been carried out by the lower authorities. The claim of the assessee is declined purely on the ground that Form No. 67 was filed belatedly. We, therefore, set aside the orders of the lower authorities and restore the issue to the file of the AO with the direction that he would verify whether the assessee has paid taxes in Denmark and also offered same income for taxation in India but no credit was claimed at Denmark. If, he finds that no such relief has been claimed at Denmark, he would decide the issue in the light of the aforesaid decisions and the Circular of CBDT (supra). All the grounds raised in this appeal are allowed for statistical purposes.

  ---

• 2025 (2) TMI 1039
  Addition on account of provision released - HELD THAT:- We note that the assessee has created a provision in the AY.2016-17 and the same has been added back to the total income in the computation of total income without claiming the provision as an expenditure. Further, during the AY.2017-18 the assessee has released the provision by crediting the same to the P L account by reducing from the provision created in the earlier AY.2016-17. Therefore, AO and that of CIT(A) have erred in making an addition. Disallowance of expenditure - As assessee has submitted the entire 17 ledger extracts of all the heads like car expenses, auto expenses, security expenses, data entry, repairs, water, newspaper etc. along with the sample vouchers. Books of accounts of the assessee is audited and the same have been submitted to various statutory authorities. AO and that of CIT(A) have disallowed the expenditure on adhoc basis at 5% without any cogent reason or identifying any defects. In the present facts and circumstances of the case we do not agree with the lower authorities in disallowing the expenditure on adhoc basis and hence we set aside the order of Ld. CIT(A) by directing the AO to delete the same by allowing the grounds of appeal filed by the assessee. Appeal of the assessee is allowed.

  ---

• 2025 (2) TMI 1038
  Reopening of assessment u/s 147 - addition of long-term capital gain by AO based on a joint development agreement - contention of the assessee that the joint development agreement was not executed and the vendor did not receive the consideration and therefore, the capital gain u/s 50C did not arise - HELD THAT:- We find that though the joint development agreement was entered into by the assessee with M/s Monark Dealcom Pvt. Ltd. in respect of landed property located at premises no.125A, Motilal Nehru Road, Kolkata of which he was 50% owner and remaining 50% belonged to Guramrit Singh Gill. We note that no money was ever received under this agreement and this was never performed or executed. We also note that the said land was sold by both the co-owners. i.e assessee as well as his brother Shri Guramrit Singh Gill on 28.08.2017 for the agreed consideration and the capital gain arose in the assessment year 2018-19 and would be paid accordingly. We observed that in the case of another co-owners Shi Guramrit Singh Gill, the same plea has been accepted by the ld. AO in the reassessment proceedings for the same assessment year 2013-14 and no addition was made. Accordingly, we set aside the order of ld. CIT (A) and direct the AO to delete the addition. Decided in favour of assessee.

  ---

• 2025 (2) TMI 1037
  Condonation of delay - delay in filing appeals before the learned CIT(A) - assessee had filed his appeals before the learned CIT(A) with a delay of 10 years 10 months and 19 days and 11 years 03 months and 05 days for the impugned assessment years 2010-2011 and 2011-2012 - HELD THAT:- There were no proper day-to-day explanation offered by the assessee. We note that the delays are of two kinds i.e., normal delay and inordinate delay. In case of former one, the Court s/Tribunal s always take a lenient view to condone such normal delays and proceed to decide the matter in issue before it on merits in the interest of substantial justice. However, in the present cases, there was an inordinate delay of more than 10 years and 11 years for the impugned assessment years 2010-2011 and 2011-2012, respectively, and admittedly, the assessee could not explain the day-to-day delay before the learned CIT(A). Even before the Tribunal also, the assessee had filed the appeals with a delay of 35 days and 50 days for the impugned assessment years 2010-2011 and 2011-2012, respectively. Taking the spirit from the recent Judgment of Pathapati Subba Reddy (died) [ 2024 (5) TMI 1319 - SUPREME COURT] dismiss the appeals of the assessee as there were no sufficient cause shown by the assessee which could convince the Bench to condone the impugned delays of 10 years 10 months and 19 days and 11 years 03 months and 05 days for the impugned assessment years 2010-2011 and 2011-2012 in filing the appeals before the learned CIT(A). We, therefore find no infirmity in the orders of the learned CIT(A) and accordingly, we confirm his orders. The grounds raised by the assessee are dismissed in both these appeals.

  ---

• 2025 (2) TMI 1036
  Reopening of assessment u/s 147 - reasons to believe - AO noted that the assessee has failed to offer satisfactory explanation about the nature and source of credits into the Axis Bank account - assessee did not comply with the notice by filing the return of income HELD THAT:- As perused the reasons recorded for reopening of assessment u/s 148(2) AO after extracting the report of the investigation, simply recorded in three lines that I have reason to believe that assessee s income chargeable to tax has escaped assessment, meaning thereby the AO has not recorded his satisfaction and reasons are vague, unambiguous and scanty. No details/information have been recorded as from whom the money was received and when it was received. In our opinion the re-assessment can be not be made on vague, scanty and ambiguous reasons recorded. As there is no satisfaction or independent application of mind by the ld. AO to the information received. Moreover, the reasons are vague, scanty and ambiguous. Therefore, we are inclined to quash the reopening of assessment. Consequently, the appeal of the assessee is allowed.

  ---

• 2025 (2) TMI 1035
  Addition on account of share capital/ share premium - unexplained money - there was no compliance to the summons u/s 131 of the Act by the directors of the subscriber companies as well as by the directors of the assessee company - HELD THAT:- Assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity, creditworthiness of investors and genuineness of the transactions. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as discussed above, we are inclined to set aside the order of Ld. CIT(A) by directing the AO to delete the addition. Appeal of the assessee is allowed.

  ---

• 2025 (2) TMI 1034
  Unexplained investment u/s 69 - assessee made cash-deposits in a bank a/c during demonetisation - HELD THAT:- Admittedly, the assessee made deposit on 15.11.2016 immediately after declaration of demonetisation on 08.11.2016. The assessee is claiming that the impugned deposit was made from cash balance available in books of his business at the time of declaration of demonetisation. To show this factual aspect, the assessee filed Cash-Book and other documents to AO during assessment-proceeding and the same are also placed in Paper-Book and referred by Ld. AR during hearing. On perusal of assessment-order, one thing is clear-cut that the AO has not rejected assessee s books of account, even the AO has not pointed out a single flaw or deficiency in assessee s books. Assessee paid VAT on sale of such gold. The impugned purchase transaction of gold from father and subsequent sale thereof were duly informed to VAT authorities in VAT return and the same were accepted. The gift was made due to love and affection and a gift-deed executed by father was also filed to AO and the same is a part of Paper-Book as well. Therefore, the assessee is very correct in claiming that the gift transaction is nothing to do with purchase transaction and the two transactions are altogether independent of each other. The AO has made a wrong notion that there is a circular transaction by way of gift. It is also noteworthy that the AO has neither disallowed the purchase made from father nor made any addition qua the gift received from father. Thus, the transactions of purchase and receipt of gift are not disturbed by AO. AO has, however, made addition treating the deposit in bank a/c as unexplained whereas the source of deposit in bank a/c is very much available in Cash-Book of assessee and the same Cash-Book is not even rejected by AO. It is also noteworthy that the AO has made addition u/s 69 even while accepting the books of account of assessee, the books of account in which the impugned cash deposit in bank a/c is recorded. Nobody can dispute that the section 69 applies only when a sum is not recorded in books of account whereas the position of present case is just opposite in as much as the impugned deposit is already recorded in cash-book accepted by AO. Decided in favour of assessee.

  ---

• 2025 (2) TMI 1033
  Disallowance of finance charges made u/s 36(1)(iii) - as per AO interest bearing funds have been diverted to non-business purpose - HELD THAT:- Basic business of the assessee is real estate development, and in that process, the assessee collected advances from customers for sale of flats. As per the agreement with the customers, the assessee has paid interest in case of delay in delivery of flats. The assessee had also proved that the funds received from the customers in the form of advances have been utilized for the purpose of business of the assessee. In fact, it is not a case of the AO that the assessee had diverted funds for non-business purposes. Assuming for a moment that loans and advances given to group concerns are diversion of interest-bearing funds, the fact remains that, as the AO himself noted, the group companies of the assessee are also engaged in the business of real estate development and there is a business nexus between the appellant and the group concerns and thus, in our considered opinion, loans and advances given to other group companies can be said to be in the normal course of the business of the assessee and thus, there is a commercial expediency. AO erred in disallowing finance charges being interest paid on customers advances without any valid reasons. CIT(A), without appreciating the relevant facts, simply sustained the addition made by the AO. Assessee appeal allowed.

  ---

• 2025 (2) TMI 1032
  Addition u/s 69A - unexplained cash credit - as during demonetization period the assessee had deposited a sum in bank account - assessee could not establish source for the balance cash deposit with no source of income - HELD THAT:- Assessee has filed additional evidences such as income tax returns filed by Mother of assessee and Wife of the assessee for the A.Y. 2017-2018 which are already with the Department and also an affidavits where they were admitted to have paid cash to the assessee and to establish the source of cash deposit and source of income. From the careful perusal of the above documentary evidences placed before the Tribunal, we find that the assessee has deposited the cash in the Bank out of the income of family members for the purpose of marriage expenditure appears to be bonafide and reasonable. Therefore, we direct the Assessing Officer to delete the addition sustained by the CIT(A) - Decided in favour of assessee.

  ---

• 2025 (2) TMI 1031
  TP Adjustment - transaction of payment of royalty in relation to licensed manufacturing segment of the Appellant on various models - ALP benchmarking of Royalty Payment to non-UK entities - HELD THAT:- Facts and circumstances of the case required the learned TPO to be more objective in his approach to counter the compensation of 4 to 5% accepted in the case of assessee in the MAP proceedings for A.Y. 2013-14 or APA for A.Y. 2018-19 to 2022-23 and the treatment in A.Y. 201-11, 2011-12 and 2012-13 when no addition was made in respect of Germany entities for royalty payment of 4-5%. MAP proceedings or APA may not have a precedent effect on different assessee s but in case of same assessee they at least have far reaching persuasive value and without countering anything on the basis of facts coupled with evidence, the ends of justice require giving assessee benefit of principles of consistency, which are recognized principles for determination of income and adjudication in tax matters. Reliance in this regard can be placed on the judgment of Radha Swami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] However, the ld. Tax authorities seems to have artificially distinguished the transaction of assessee with Non-UK and UK AEs, to apply a different rate in case of non-UK AE. We are inclined to allow ground nos. 4 to 6 and the additional ground, as raised. TPO is directed to accept the parameters of determination of compensation as accepted in APA and accordingly benefit the assessee in determination of ALP of disputed transaction with non-UK AE, too.

  ---

• 2025 (2) TMI 1030
  Assessment u/s 153A - Assessment in case of search or requisition - as argued no material belonging to or pertaining to assessee was seized from the premises of the director where search was conducted - HELD THAT:- Notice u/s 153A of the Act can be issued only in the case of a person where a search is initiated u/s 132 or books of account, other documents or any assets are requisitioned u/s 132A of the Act. Admittedly in the case of the assessee neither of any such action was carried out thus the notice issued u/s 153A dt. 23.01.2019 is without jurisdiction and is bad in law. As no search warrant was issued in the name of the assessee thus no proceedings u/s 153A could be initiate in the case of the assessee accordingly the notice issued us 153A is hereby quashed. Appeal of the assessee is allowed.

  ---

• 2025 (2) TMI 1029
  Unexplained stock - Difference between the stock submitted to bank and the stock found during the course of the survey - Addition on account of difference between the physical stock and the stock position submitted to the bank, which were held as unexplained stock - HELD THAT:- Hon ble Gujarat High Court in the case of Avi Polymers Limited [ 2016 (7) TMI 965 - GUJARAT HIGH COURT] also held that no addition could be made on account of difference between the stocks as per the books and the stocks statements submitted to the bank. Therefore, we are of the view that, for computing the stocks position as per the books of accounts as on the date of survey, the AO should have taken into consideration the stocks as per the books of accounts as on 31.01.2015, as against the stocks as per the statement submitted before the bank. Value of the stock - Physical valuation is reduced, and difference which is less than 10% of the stock physically found and valued by survey authorities. This difference could be for the reason that the valuation at the time of survey was based on an estimate value stated / informed by the assessee without referring to the bills and vouchers, in this regard. Therefore, such difference is nothing but due to such estimation.We find that the stock of the assessee as on the date of survey was in parity with the stock physically found and, therefore, no addition is required to be made, and accordingly, the assessee will get the relief. Disallowance made on account of various expenses @ 10% for possible personal purposes - CIT(A) concurred with the findings of the AO without going into the merits. After going through the orders of the lower authorities, we find that no single instant of personal use were pointed out by the AO and only on whims and fancies, the disallowance were made. No disallowance can be made in the present case of the assessee, more particularly, when there was a survey carried out in the case of the assessee, and revenue has failed to bring any evidence of personal use gathered as a result of survey. As the result, ground of assessee s appeal is allowed.

  ---

• 2025 (2) TMI 1028
  Validity of Approval granted u/s 153D - As argued approval was granted in a mechanical manner without the necessary application of mind - HELD THAT:- In the instant case from the perusal of the approval it is seen that the approval was granted conditionally with certain directions. The approval so given has been reproduced herein above. Another aspect which needs to be considered is that the AO in the instant case is at Dehradun and the Addl. CIT who has granted approval is form Central Range, Meerut thus for obtaining the approval entire records needs to be carried to Meerut from Dehradun and the Addl. CIT has to examine all the material including the assessment folders, appraisal report and seized material before granting the approval which cannot be humanly possible in such a short period of time of few days. As mentioned earlier by the ld. AR that there are 35 cases in this group. It is surprising that Addl. CIT has been able to go through the assessment orders, appraisal reports and other related materials for a minimum of 35 cases within such a short period of time more particularly looking to the fact that the entire records must have been shifted from Dehradun to Meerut for the perusal of the Addl. CIT. We use the word minimum of 35 cases because this group alone contains 35 cases and the Addl. CIT could avail his other files also before him. The assessment orders, in the instant case is of 6 pages, appraisal reports was also to be quite a few pages and the submissions of the assessee would be innumerable. We are not aware about the nature and issues involved in the other cases and other assessment years. This is physically impossible task which has been admitted to by the ld. Addl. CIT. Consequently, the approval granted in this case is without application of mind. Thus approval u/s. 153D of the Act granted in the impugned appeal by the Addl. CIT, is held to be invalid - Decided in favour of assessee.

  ---

• 2025 (2) TMI 1027
  Bogus purchases - AO made addition after excluding the GST amount from the total purchases - HELD THAT:- Sales of the assessee have not been disputed and the books of account have also not been rejected. Assessing Officer in assessee s own case for the four preceding assessment years has adopted the profit rate of 5% on account of bogus / untested purchases, therefore, we are of the considered opinion that adoption of the same profit rate of 5% on account of untested / bogus purchases of Rs. 13,80,63,994/- will meet the ends of justice. We, therefore, set aside the order of the Ld. CIT(A) and direct the AO to adopt the profit rate of 5% on the total purchases of Rs. 13,80,63,994/- and restrict the addition to Rs. 69,03,200/-. The order of the Ld. CIT(A) is accordingly modified. We hold and direct accordingly. The grounds raised by the Revenue are accordingly partly allowed. Unexplained money - CIT(A) deleted addition - HELD THAT:- Admittedly, the documents were found from the premises of Director of the assessee company during the course of search action at his residential premises. In his statement recorded u/s 132(4) of the Act, he has owned up the transactions as belonging to him in his personal capacity and the cheque was wrongly issued by the party in the name of Metarolls Ispat Pvt. Ltd. Therefore, once the person from whose residence the documents were seized and in his statement recorded u/s 132(4) of the Act he has owned up the transactions, therefore, the AO in our opinion was not justified in making the addition in the hands of the assessee company. Amount received as distribution of amounts received in the form of flat against the unaccounted transaction - HELD THAT:- Since we have directed the AO to adopt the profit rate of 5% on account of such bogus / untested purchases, therefore, we are of the considered opinion that adoption of the same percentage of profit i.e. 5% on such unaccounted sale of Rs. 17,42,000/- should be added to the total income of the assessee which in the instant case comes to Rs. 87,100/-. When the documents found containing certain transactions, the Ld. CIT(A) was not justified in deleting the addition stating that due to lack of evidence and in absence of any corroborative evidence addition is not sustainable. We set aside the order of the Ld. CIT(A) and direct the AO to adopt the profit rate of 5% on the unaccounted turnover of Rs. 17,42,000/- which comes to Rs. 87,100/-. The order of the Ld. CIT(A) is accordingly modified and the ground raised on this issue by the Revenue is partly allowed. Unexplained money - CIT(A) deleted addition on the basis of subsequent retraction - HELD THAT:- A perusal of the seized documents shows that two entries were found where it is mentioned as 6kg and 7kg. Although the AO has taken such entries as Rs. 6 lakh and Rs. 7 lakh, the assessee in its clarification has mentioned the same to be of Rs. 6,000/- and Rs. 7,000/- respectively. It is also not understood as to why the same should not be read as Rs. 60,000/- and Rs. 70,000/- or Rs. 6 lakh and Rs. 7 lakh. Since the seized documents contain the entries of 6kg and 7kg and it is not sure as to whether it is Rs. 60,000/- and Rs. 70,000/- or Rs. 6 lakh and Rs. 7 lakh and since Shri Ashish Bhala subsequently retracted from his statement by filing an affidavit before the DDIT(Inv) and since no other corroborative material was found, therefore, considering the totality of the facts of the case, addition of Rs. 60,000/- and Rs. 70,000/- both totaling to Rs. 1,30,000/- under the facts and circumstances of the case will meet the ends of justice. The order of the Ld. CIT(A) on this issue is accordingly modified and the ground raised by the Revenue on this issue is partly allowed.

  ---

• 2025 (2) TMI 1026
  Disallowance of payment made towards employees contribution to Provident Fund (PF) and Employee s State Insurance Corporation ( ESIC ) u/s. 36(1)(va) - HELD THAT:- Section 36(1)(va) of the Act very clearly provides that if employees contribution to PF ESIC are not paid within the stipulated time period, such amount has to be treated as income of the assessee u/s. 2(24)(x) of the Act. In fact, the issue is no more res integra in view of the ratio laid down in the case of Checkmate Services Pvt Ltd [ 2022 (10) TMI 617 - SUPREME COURT] Even, the assessee accepts the aforesaid position. However, the assessee has made an alternative claim that the payment can still be allowed as business expense u/s. 37(1). This claim of the assessee has to be rejected at the threshold in view of the position of law declared in the case of Checkmate Services Pvt Ltd [ 2022 (10) TMI 617 - SUPREME COURT] has decided that delayed payment of employee s contribution to PF ESIC cannot be allowed as deduction, the assessee cannot expect the very same relief under another provision. When section 36(1)(va) of the Act mandates that such contribution has to be treated as income of the assessee . Insofar as, the judicial precedents relied upon by the learned counsel of the assessee, on a careful perusal, we are of the view that in none of the decisions the alternate claim of deduction u/s. 37(1) of the Act has been accepted. Decided in favour of assessee. Taxability of unrealized foreign exchange fluctuation gain - HELD THAT:- Assessee has consistently followed a Revenue recognition method, under which the gain/loss arising on account of foreign exchange fluctuation has been treated as revenue in nature . Therefore, wherever gain arose, the assessee offered it as income and wherever there was loss, the assessee has claimed the loss. Following such revenue recognition principle, the assessee has offered the gain as income in the impugned assessment year. Therefore, since the offer of gain as income is consistent with the accounting principle regularly followed by the assessee, claim of withdrawal of such income cannot be accepted. If assessee s claim of foreign exchange fluctuation loss has not been accepted by the Revenue in some other assessment years, the issue has to be thrashed out in those assessment years and not here. Rule of consistency applies not only to the assessee, but also to the Revenue. In case, the gain derived is treated to be in the character of revenue, the loss arising in similar account also has to be treated to be on revenue account. The department has to take a consistent stand on this issue. With the afore-said observations, this ground is dismissed. Disallowance of additional claim of deduction - additional claim made by the assessee has been rejected only on the ground that such claim was not made through a revised return of income - HELD THAT:- The restriction imposed on the A.O. in entertaining an additional claim not made through revised return of income, does not apply to the appellate authorities. Therefore, learned first appellate authority should have examine the additional claim made by the assessee. Since, we have held that the assessee can make additional claim, which was not made in the return of income, assessee s claim has to be verified factually by looking into the relevant facts and evidences. Such examination having not taken place before the Departmental Authorities, we are inclined to restore the issue to the A.O. for fresh adjudication.

  ---

• 2025 (2) TMI 1025
  Addition u/s. 69A r.w.s. 115BBE - unexplained cash deposits - CIT(A) deleted addition on assessee s submissions with regard to cash deposits during demonetization period is supported with documents and evidences - HELD THAT:- When the sale has been reflected in the books of accounts and offered to tax, adding the same again would amount to double taxation, which is impermissible in law. The cash sales made by the assessee have been credited in the books of accounts and the same form part of the assessee s cash book. On these facts, it could be very well said that the assessee claim was backed up by relevant evidences. Thus, the assessee has discharged the burden of proving the source of the cash/SBN deposited in the bank and the AO failed to rebut the same. We also note that the assessee has sold only 17.50% on 08.11.2016 out of the stock held before the demonetisation day. The allegations/statistics relied upon by AO to take an adverse view is not backed up by relevant evidence/material and therefore the action of AO, which has been rightly set aside by the ld.CIT(A) and hence cannot be interfered. Finding of the AO that such abnormal sales could not be achieved immediately upon announcement of demonetization by the Governmentare bereft of any concrete evidence to prove otherwise on record. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises.Moreover, since cash generated out of sales has been credited in the books of accounts, the provisions of section 69A could not be invoked in the present case. Thus additions are not sustainable in the eyes of law and hence, we are of the considered view that the action of the ld.CIT(A) in deleting the addition need not be interfered and hence we dismiss the grounds raised by the Revenue.

  ---

• 2025 (2) TMI 1024
  Disallowance of payment of interest u/s 40(a)(ia) - HELD THAT:- Revenue has reclined against the observations and findings recorded by CIT(A) in upholding the additions, and submitted that there is no merit in the contentions raised on behalf of the appellant, particularly, when there was no justification for non deduction of TDS on the said payments. In the course of arguments, appellant has not disputed that NBFCs are not banks. Ignorance of law is no excuse. It is not case of the appellant that he had no assistance of any Chartered Accountant. When enquired in the course of hearing, Learned counsel admits that the assessee did not furnish any information by way of Form No. 27BA i.e. certificate by the Accountant regarding said payments and deductions required by law. Having regard to the provisions of section 40(a)(ia) of the Act, and non compliance thereof by the assessee, we do not find any merit in the submission that the appellant was under the impression that NBFCs are not Banks or that the addition be deleted. As a result, the impugned orders upholding the additions for the two Assessment Years under consideration are upheld. Lump sum disallowances as regards certain expenses - AO called upon the assessee to produce record to explain as to whether the subject expenses were incurred for business purposes, but the assessee was found to have not been maintaining any details or log book of the running vehicle and about use of telephone. Assessing Officer specifically observed that the assessee did not produce any evidence in support of the reply to the query raised i.e. to establish that the expenditures were incurred for business purposes. In absence of any such evidence, it can safely be said that the assessee failed to prove the version put forth for the purposes of deletion of the disallowances. CIT(A) was justified in sustaining the orders passed by the AO whereby disallowances were made. Penalty order u/s 271AAB - The appeal filed qua the quantum assessment stands dismissed. In view of the above findings and having regard to the provisions of section 271AAB(1)(c) of the Act, no fault can be found with the penalty order.

  ---

• Customs

• 2025 (2) TMI 1023
  Classification of goods - Small Form Factor Pluggable (SFP) devices - whether the Small Form Factor Pluggable (hereinafter SFP ) is a part of a machinery and is liable to be classified under CTH 8517 7990 or whether it is to be classified as an apparatus/ machine under CTH 8517 6290? - HELD THAT:- In IBM India Private Limited vs. Commissioner of Customs (Import) CESTAT, Mumbai [ 2024 (4) TMI 972 - CESTAT MUMBAI ] had again considered the same products i.e., Transceiver for Ethernet Switch/ Transceiver modules of different models and had relied upon the Reliance Jio Infocomm [ 2022 (8) TMI 76 - CESTAT MUMBAI] and had observed that the SFP s Optical Transceivers 9.1 were entitled to exemption from Basic Custom Duty and would be classified as held in Reliance Jio Infocomm. In view of the fact that the classification of SFP s has already been decided in various decisions and has also been accepted by the Department, the impugned ruling dated 26th September, 2024 by which the Authority has observed that SFP s would be classifiable under 85176290 with Basic Customs Duty Act of 20% would not sustain and the same is liable to be set aside. The goods i.e., SFPs shall stand covered under Entry 85177990 and shall also be entitled to applicable exemptions. Conclusion - SFPs should be classified under Entry 85177990 and be entitled to applicable exemptions. The impugned rulings are set aside - Appeal allowed.

  ---

• 2025 (2) TMI 1022
  Confiscation of imported consignments - hazardous material in the imported consignments - waiver of penalties under the Customs Act, 1962 - disregarding evidence submitted by the importer regarding the contents of the consignments - HELD THAT:- The question of re-examination of a cargo would arise when there is material to discredit the initial examination. On a reading of the order-in-original, it is prima facie found that the description of the goods stuffed in the 67 (54+13) containers did not conform to the pre-shipment certificate. On a perusal of the order-in-original of the show-cause notice and the order-in-original, it is found that the examination had been conducted on several containers and it has been found that the containers contained waste material which have been referred to as municipal waste that they are hazardous waste and the same is not permissible to be imported. The Court was convinced in the case of Emami Paper [ 2024 (5) TMI 1261 - CESTAT KOLKATA ] that substantial questions of law arose for consideration and therefore the appeal was admitted. The necessity to grant an interim order did not arise in the said case since the importer agreed to comply with the order passed by the first Appellate authority who directed destruction of the goods. The option is given to the respondent-importer that if they are willing to re-export the imported cargo which have been held to be prohibited goods in terms of the direction issued by the adjudicating authority, they will give their consent in writing to the Department and if the same is given, subject to compliance of other formalities the Department shall permit the respondent/importer to re-export the goods at their risk and cost without reference to the pendency of this appeal. The learned Advocate for the appellant shall file requisite number of informal paper books prepared out of Court within four weeks including therein all papers and documents used before the trial Court upon serving copies thereto the learned Advocate for the respondent. Settlement of index and all other formalities are dispensed with. Conclusion - The Court admitted the appeals based on substantial questions of law raised by the revenue. List the appeal for hearing after six weeks - The stay application stands disposed of.

  ---

• Insolvency & Bankruptcy

• 2025 (2) TMI 1021
  Invocation of judicial review under Article 226 of the Constitution to interdict personal insolvency proceedings initiated against respondent no.1 under Section 95 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Court in Jiwrajka [ 2024 (1) TMI 33 - SUPREME COURT ], while deciding the constitutional validity of Sections 95 to 100, has delved into the same and has held as follows. Pursuant to an application for initiating personal insolvency proceedings under Section 94 or Section 95, the Adjudicating Authority appoints a resolution professional under Section 97. The resolution professional performs distinct functions under Part II (dealing with corporate insolvencies) and Part III (dealing with personal insolvencies) of the IBC. As has been held by this Court in Jiwrajka [ 2024 (1) TMI 33 - SUPREME COURT ], the Adjudicating Authority does not adjudicate any point at this stage and need not decide jurisdictional questions regarding existence of the debt before appointing the resolution professional. This is because Section 99 requires the resolution professional to, at the first instance, gather information and evidence regarding repayment of the debt, and ascertain whether the application satisfies the requirements of Section 94 or Section 95 of the IBC. The existence of the debt will first be examined by the resolution professional in his report, and will then be judicially examined by the Adjudicating Authority when it decides whether to admit or reject the application under Section 100. It is well-settled that when statutory tribunals are constituted to adjudicate and determine certain questions of law and fact, the High Courts do not substitute themselves as the decision-making authority while exercising judicial review - In the present case, the proceedings had not even reached the stage where the Adjudicatory Authority was required to make such determination. Rather, the High Court exercised jurisdiction even prior to the submission of the resolution professional s report, thereby precluding the Adjudicating Authority from performing its adjudicatory function under the IBC. While there is no exclusion of power of judicial review of High Courts, and the limits and restraint that the constitutional court exercises and must exercise are well articulated - the High Court was not justified in allowing respondent no. 1 s writ petition. The High Court should have permitted the statutory process through the resolution professional and the Adjudicating Authority to take its course. Conclusion - The High Court s exercise of writ jurisdiction was incorrect as it interfered with the statutory process and made determinations that fell within the Adjudicating Authority s domain. Appeal allowed.

  ---

• 2025 (2) TMI 1020
  Violation of principles of natural justice - non-speaking order - no privity of contract between the Appellant and Respondent No.1 - Impugned Order passed based on invocation of personal guarantee by 3rd party - guarantee was not invoked by proper party - valid appointment of Respondent No. 2 - valid Board Resolution to show that the Respondent No. 1 was authorised to file its Application u/s 95 of the Code or not - liability of Appellant as Guarantor for outstanding dues. Whether there was no privity of contract between the Appellant and Respondent No.1? - Whether the Adjudicating Authority could have passed the Impugned Order based on invocation of personal guarantee by 3rd party? - HELD THAT:- Section 95 of the Code provides right to the creditors to file application to initiate Personal Insolvency Resolution Process ( PIRP ). The security trustee is merely holding security in favour of the Financial Creditor or consortium of creditors and therefore either the trust or creditors may file application under Section 95 of the Code. The wording of Section 95(1) of the Code clearly stipulates that creditor may apply either by himself or generally with other creditors . Therefore, the creditor i.e., Respondent No. 1 is within his right to initiate Section 95 application and does not prevent him based on alleged lack of privity of contract with the Appellant. It is settled law that a party can enforce the contract made for its benefit. The Assignment Agreement and the transfer of rights and obligations under the Facility Agreement were binding on the Corporate Debtor and accordingly, the Appellant could not seek to escape his obligations thereunder. Whether the guarantee was not invoked by proper party as Demand Notice dated 21.04.2021 was issued by PHL Fininvest Private Limited whereas the Guarantee was executed into between the Appellant and Piramal Trusteeship Services Private Limited? - HELD THAT:- The clauses of the Personal Guarantee dated 20.07.2017 are loud and vocal and establish the independent rights of creditors in addition to Trust. By no way of imagination it can be argued by the Appellant (as guarantor) that creditor (including its assignee) can not pursue his rights against the Appellant. The pleading of the Appellant does not stand to any logic and need to be dismissed. There are no merit in the pleadings of the Appellant on their issue and stand rejected. Whether the Impugned Order is a non-speaking order and contravene the principal of natural justice? - HELD THAT:- The proceedings under the Code are summary and time-bound, and thus, the Adjudicating Authority is not required to conduct proceedings akin to civil proceedings. The Adjudicating Authority s role is limited in considering whether a debt is due and payable and whether a default has occurred. In the present case, the amount of default is not in dispute, nor has the Appellant disputed signing the personal guarantee with the Financial Creditor by admitting to being a signatory to the personal guarantee, the privity of contract is established. Hon ble Supreme Court of India in case of Dilip B. Jiwarjka vs. Union of India Ors. [ 2024 (1) TMI 33 - SUPREME COURT ] cautioned that the principles of natural justice cannot be mechanically applied in a straightjacket formula and stipulated that based on the facts and circumstances, principles of natural justice on some occasions may extend to the right to a full-fledged evidentiary hearing while in certain cases may be circumscribed to a bare minimum opportunity to furnish an explanation by the affected party. The Impugned Order is found to be valid and was passed while keeping in mind the principles of natural justice and equity. Whether the appointment of Respondent No. 2 was not in accordance with provision of the Code? - HELD THAT:- The Respondent No. 2 was appointed as the Resolution Professional by the Adjudicating Authority vide order dated 08.04.2022 which has not been challenged by the Appellant and thus attained finality - there are no merit in the contention of the Appellant on this issue. Whether there was no valid Board Resolution to show that the Respondent No. 1 is authorised to file its Application u/s 95 of the Code? - HELD THAT:- The Board Resolution was valid and wide enough to cover the proceedings, and any objections raised by the Appellant were addressed by a fresh Board Resolution ratifying previous actions. Whether when adequate securities are already available with the Respondent No. 1 by way of first and exclusive mortgage of various properties (both immoveable and moveable) charged in favour of the Piramal Finance Limited at the time of execution of the Facility Agreement dated 20.07.2017 by Corporate Debtor (HEIL) and therefore, the Appellant as Guarantor is not liable for outstanding dues? - HELD THAT:- In terms of Section 128 of the Indian Contract Act, 1872, the liability of the surety is co-extensive with that of the principal debtor. The Supreme Court in the case of Industrial Investment Bank of India Ltd. v. Biswanath Jhunjhunwala [ 2009 (8) TMI 1186 - SUPREME COURT ] while examining the issue of the term co extensive liability has held that the liability of a surety is not in alternative to the principal borrower or Corporate Debtor and further it is not necessary for a creditor to first proceed against the principal borrower or Corporate Debtor before initiating legal proceedings against the surety. Section 5(22) of the Code defines personal guarantor as an individual who is the surety in a contract of guarantee to a corporate debtor who provides guarantee in his personal capacity against the loans availed by the corporate debtor with co-extensive liabilities alongwith the corporate debtor. Conclusion - i) The Assignment Agreement and the transfer of rights and obligations under the Facility Agreement were binding, and the Appellant could not escape his obligations. ii) The creditors have the right to enforce the contract made for their benefit, and the Facility Agreement allowed for the assignment of rights without the consent of the Corporate Debtor. iii) The terms of the Personal Guarantee allowed both the Lender and the Trustee to initiate action against the Appellant. iv) The Adjudicating Authority had considered the Resolution Professional s report and provided reasonable opportunities for objections. The Impugned Order was deemed valid, adhering to the principles of natural justice. v) The appointment was within the discretion of the Adjudicating Authority and that the provisions of the Code are directory in nature. vi) The Board Resolution was valid and wide enough to cover the proceedings, and any objections raised by the Appellant were addressed by a fresh Board Resolution ratifying previous actions. vii) The liability of the surety is co-extensive with that of the principal debtor, and the creditor is not required to first proceed against the principal borrower. There are no merits in the appeal - appeal dismissed.

  ---

• PMLA

• 2025 (2) TMI 1019
  Seeking grant of regular bail - Money Laundering - proceeds of crime - scheduled offence - right to speedy trial - evidence against the present applicant is in the form of confessional statements by the other co-accused persons which cannot be relied upon with respect to the prosecution of the present applicant - HELD THAT:- The first complaint filed by the respondent/Enforcement Directorate in the present ECIR was on 04.12.2021, thereafter, it is pointed out that 4 supplementary complaints have been filed, last of which was filed on 06.04.2023. The Hon ble Supreme Court in V. Senthil Balaji [ 2024 (9) TMI 1497 - SUPREME COURT ] has clearly held that since the existence of a scheduled offence is the sine qua non for alleging existence of proceeds of crime then, the said existence of proceeds of crime at the time of the trial of offence under Section 3 of PMLA can be proved only if the scheduled offence is established in the prosecution of the said offence. In these circumstances, it was held, that trial in the case under PMLA cannot be finally decided unless a trial of scheduled offence concludes. In the present case, as pointed out by the learned counsel for the applicant, in the scheduled offence wherein the charge-sheet has also been filed, the trial has not yet commenced and the charges have not been framed so far. The role of the present applicant as per the case of the prosecution was for providing entries in order to assist the main accused in laundering the proceeds of crime. The said allegation is sought to be proved by the prosecution on basis of statements made by the other co-accused persons as well as the present applicant. The statements made under Section 50 of the PMLA, no doubt is admissible in evidence, however, the veracity and sanctity of the same has to be tested during the course of the trial - The trial has not even commenced. The present applicant who is accused in a case of money-laundering cannot be considered to be a threat to the society without any material to demonstrate the same. The continued incarceration of the applicant with no possibility of trial being completed in near future, cannot be ignored and in case of conflict with a restrictive statutory provision like Section 45 of PMLA, the latter would not come in way ensuring the right to liberty and speedy trial under Article 21 of the Constitution of India. In the present case, the applicant was arrested on 12.10.2021 and has been in custody for a period of 3 years and 4 months approximately. The trial in the present complaint, is yet to commence and would take time to conclude. Apart from expressing apprehension of the applicant being a flight risk, no material has been shown to demonstrate the same. The evidence in the present case is primarily documentary in nature which is already in possession of the prosecution. The applicant is directed to be released on bail upon his furnishing a personal bond in the sum of Rs. 1,00,000/- alongwith one surety of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the fulfilment of conditions imposed. Conclusion - The right to a speedy trial is paramount and cannot be compromised by statutory conditions for bail. It establishes that prolonged pre-trial detention without a foreseeable trial conclusion infringes on constitutional rights. The applicant should be granted bail due to the prolonged detention and lack of trial progress. Bail application allowed.

  ---

• Service Tax

• 2025 (2) TMI 1018
  Levy of service tax on the operation of air-conditioned buses - rejection of Sabkha Vishwas (Legacy Dispute Resolution) Scheme, 2019 - whether the petitioner was eligible for relief under the scheme based on the notices received and the rejection order? - HELD THAT:- The Karnataka High Court in M/S. JAGADISH ADVERTISING [ 2020 (8) TMI 788 - KARNATAKA HIGH COURT] had held that creation of a remarks column and assigning reasons for rejection by the Designated Committee, under the scheme, was not permissible as there was no such prescription in the statutory form. Consequently, the Learned Single Judge set aside the order of rejection as the committee did not have any authority to go into such reasons. In the present case, the Designated Committee had set out the reasons for rejection as filing of bogus certificates and notices. This Court is of the opinion that, where applications had been filed by producing documents which are not genuine, the same can be rejected by the Designated Committee. Any other view, would mean that a person claiming the benefit of the scheme can come forward with any kind of document and the Designated Committee is precluded from going into the question of whether the said document is genuine or not. Such a view, would result in extreme situations. Conclusion - The petitioner was not entitled to the benefits of the scheme due to insufficient evidence to support eligibility. There are no reason to interfere with the order of rejection of the application of the petitioner and accordingly, the Writ Petition is dismissed.

  ---

• 2025 (2) TMI 1017
  Levy of service tax on reimbursement - reimbursable expenses received by the appellant as consideration towards rendering of the taxable service of supply of manpower - time limitation - HELD THAT:- The personnel engaged are the employees of the appellant company and the appellant is paying all salaries etc. to such employees. Only cost of salary of such employees are reimbursed by the JV on actual basis. Thus, it is observed that the whole arrangement between the appellant and the JV does not fall under the taxable service of manpower supply service as defined under rule 2(g) of the Service Tax Rules. Accordingly, the reimbursements received by the appellant cannot be considered as consideration towards any taxable service. The instant case is squarely covered by the decision of the Hon ble Apex Court in COMMISSIONER OF CGST, DELHI SOUTH Versus BOEING INDIA DEFENSE PVT. LTD. [ 2023 (12) TMI 239 - SC ORDER] where it was held that The issues which arise in these appeals are covered by the judgment of this Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Time Limitation - HELD THAT:- In the instant case, the Show Cause Notice dated 16-09-2014 has been issued by invoking the larger period under proviso to the Section 73(1) of the Act, whereas the activity of the appellant is well within the knowledge the of the respondent when first Show Cause Notice, dated 09- 04-2013 was issued. Hence, the whole demand is barred by limitation. Conclusion - i) The reimbursements received by the appellant cannot be considered as consideration towards any taxable service. ii) The demand is barred by limitation. The impugned order is set aside - appeal allowed.

  ---

• 2025 (2) TMI 1016
  Extended period of limitation - suppression of facts - intent to evade or not - differences between the Form-26AS and the Balance Sheet furnished by the appellant - HELD THAT:- In the present case, on the basis of third party data received from the Income Tax Department, there was a mismatch in the gross amount declared in the ITR/TDS on the services during the period of FY 2016-17. Further, due to portal glitches, certain errors were there in the service tax returns for the second half year period from 01.10.2016 to 31.03.2017; but at the time of statutory audit, the exact liability was indentified and entire amount was deposited. The information sought by the Revenue was supplied along with the relevant documents, but despite that, show cause notice was issued after inordinate delay of more than three years and by resorting to best judgment assessment, the demand was confirmed without looking into the documents/information supplied by the appellant. Extended period of limitation - HELD THAT:- There is no allegation of suppression against the appellant either in the show cause notice or in the Order-in-Original Order-in-Appeal. The Revenue has failed to establish any of the ingredients as required for invoking the extended period of limitation. The impugned order is barred by limitation - Appeal of the appellant allowed only on limitation by setting aside the impugned order.

  ---

• Central Excise

• 2025 (2) TMI 1015
  Maintainability of petition - availability of alternative statutory remedy - petitioners did not put in the pre-deposit as is required for maintaining such appeals - HELD THAT:- Considering the fact that the petitioners had already applied before the statutory authority by filing appeals and at this stage since learned advocate representing the petitioners would submit that the petitioners are ready and willing to pursue the aforesaid appeal provided the communications dated 30th September, 2024 are permitted to be withdrawn, I am of the view that in the fitness of things and not to render the petitioners remediless, the petitioners should be permitted to pursue the appeal filed by them. Accordingly, the petitioners are permitted to withdraw the letters dated 30th September, 2024. The Commissioner of Appeals is directed to if necessary by passing appropriate orders to restore the appeal, hear out and dispose of the appeals in accordance with law, subject to compliance of statutory formalities. Application disposed off.

  ---

• CST, VAT & Sales Tax

• 2025 (2) TMI 1014
  Works contract - Exemption to subcontractors in terms of Entry 59-A of the 1st schedule to the AP VAT Act - HELD THAT:- Entry 59A exempts all goods sold within the SEZ area by an operator, developer, a co-developer or contractor or by any of the above. The term contractor has now been interpreted to include sub-contractors, by virtue of the Judgment of the erstwhile High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh in M/s. Larsen and Toubro and Others vs. State of Andhra Pradesh [ 2006 (10) TMI 377 - ANDHRA PRADESH HIGH COURT] . However, Section 7A, which was introduced subsequently, on 24.09.2008, states that exemption of tax on sale of goods within the Special Economic Zone will be available on sale of any goods to persons who have been authorized to establish unit in the SEZ or authorized to develop operate and maintain a SEZ. The further condition is that only such sales of goods made for the purposes, set out in Section 7A would be eligible for such exemption. In the present case, entry 59A states that all goods sold by the persons mentioned in entry 59A, would be eligible for exemption. Section 7A also provides for such exemption. However, the said exemption is subjection to certain conditions - When there is a possibility of conflict between two provisions of law, the rule of harmonious construction would have to be applied to see if both provisions of law can operate simultaneously. Applying this principle, there are no reason as to why both provisions cannot operate at the same time. At best, Section 7A is a more restrictive provision of law whereas item 59A is a more expansive exemption. It may also be noted Entry 59A was not deleted from the Act, when Section 7A was introduced, and came to be deleted much later. This is also a factor, which has to be taken into account while trying to harmonize both the provisions of law. Conclusion - There are no reason to hold that there is a conflict between Section 7A of AP VAT Act and Entry 59A of the 1st Schedule to the AP VAT Act. In the absence of a conflict, the non-obstante clause does not come into operation and consequently the petitioner was entitled to the benefit of Entry 59-A of the 1st schedule which exempts all the sales made by the petitioner, in the course of execution of the works contract, for M/s. Abhijeet Projects Limited. All the impugned orders are set aside and the Writ Petitions are allowed.

  ---