TMI Tax Updates - e-Newsletter
February 3, 2021

Case Laws in this Newsletter:

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

TMI Short Notes

1. Rates of income-tax in respect of income liable to tax for the assessment year 2021-22.

  Bill:

2. Rates for deduction of income-tax at source during the financial year (FY) 2021-22 from certain incomes other than“Salaries”.

  Bill:

3. Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the FY 2021-22

  Bill:

4. Tax Incentives Exemption for LTC Cash Scheme

  Bill:

5. Incentives for affordable rental housing

  Bill:

6. Tax incentives for units located in International Financial Services Centre (IFSC)

  Bill:

7. Issuance of zero coupon bond by infrastructure debt fund

  Bill:

8. Tax neutral conversion of Urban Cooperative Bank into Banking Company

  Bill:

9. Facilitating strategic disinvestment of public sector company

  Bill:

10. Extension of date of sanction of loan for affordable residential house property

  Bill:

11. Extension of date of incorporation for eligible start up for exemption and for investment in eligible start-up

  Bill:

12. Removing difficulties faced by taxpayers Increase in safe harbour limit of 10% for home buyers and real estate developers selling such residential units

  Bill:

13. Relaxation for certain category of senior citizen from filing return of income-tax

  Bill:

14. Rationalisation of provisions related to Sovereign Wealth Fund (SWF) and Pension Fund (PF)

  Bill:

15. Addressing mismatch in taxation of income from notified overseas retirement fund

  Bill:

16. Rationalisation of provisions of Minimum Alternate Tax (MAT)

  Bill:

17. Exemption of deduction of tax at source on payment of Dividend to business trust in whose hand dividend is exempt

  Bill:

18. Rationalisation of the provision concerning withholding on payment made to Foreign Institutional Investors (FIIs)

  Bill:

19. Rationalisation of provisions relating to tax audit in certain cases

  Bill:

20. Advance tax instalment for dividend income

  Bill:

21. Raising of prescribed limit for exemption under sub-clause (iiiad) and (iiiae) of clause (23C) of section 10 of the Act

  Bill:

22. Extending due date for filing return of income in some cases, reducing time to file belated return and to revise original return and also to remove difficulty in cases of defective returns

  Bill:

23. Rationalisation of various Provisions Payment by employer of employee contribution to a fund on or before due date

  Bill:

24. Constitution of Dispute Resolution Committee for small and medium taxpayers

  Bill:

25. Constitution of the Board for Advance Ruling

  Bill:

26. Income escaping assessment and search assessments

  Bill:

27. Allowing prescribed authority to issue notice under clause (i) of sub-section (1) of section 142

  Bill:

28. Provision for Faceless Proceedings before the Income-tax Appellate Tribunal (ITAT) in a jurisdiction less manner

  Bill:

29. Discontinuance of Income-tax Settlement Commission

  Bill:

30. Reduction of time limit for completing assessment

  Bill:

31. Rationalisation of the provision of Charitable Trust and Institutions to eliminate possibility of double deduction while calculating application or accumulation

  Bill:

32. Taxation of proceeds of high premium unit linked insurance policy (ULIP)

  Bill:

33. Rationalisation of the provision of slump sale

  Bill:

34. Rationalisation of provision of transfer of capital asset to partner on dissolution or reconstitution

  Bill:

35. Provisional attachment in Fake Invoice cases

  Bill:

36. Rationalisation of the provisions of Equalisation Levy

  Bill:

37. Depreciation on Goodwill

  Bill:

38. Rationalisation of the provision relating to processing of returned income and issuance of notice under sub-seciton (2) of section 143 of the Act

  Bill:

39. Adjudicating authority under the PBPT Act

  Bill:

40. Rationalisation of the provision of presumptive taxation for professionals under section 44ADA

  Bill:

41. Clarification regarding the scope of Vivad se Vishwas Act, 2020

  Bill:

42. Definition of the term “Liable to tax”

  Bill:

43. Income Declaration Scheme (IDS) amendment

  Bill:

44. Tax Deduction at Source (TDS) on purchase of goods

  Bill:

45. TDS/TCS on non filer at higher rates

  Bill:

46. Taxability of Interest on various funds where income is exempt

  Bill:

47. CUSTOMS

  Bill:

48. AMENDMENTS IN THE CUSTOMS ACT, 1962

  Bill:

49. AMENDMENTS IN THE CUSTOMS TARIFF ACT, 1975

  Bill:

50. AMENDMENTS IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975

  Bill:

51. CHANGES IN CUSTOMS RULES

  Bill:

52. OTHER PROPOSALS INVOLVING CHANGES IN BASIC CUSTOMS DUTY RATES IN RESPECTIVE NOTIFICATIONS [with effect from 2.2.2021, unless specified otherwise]

  Bill:

53. Other miscellaneous changes

  Bill:

54. Pruning and review of customs duty concessions/ exemptions

  Bill:

55. Prescribing the condition of observance of the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules, 2017) for certain conditional entries in notification No. 50/2017-Customs dated 30.06.2017, in lieu of certain exiting conditions. Besides certain other conditions for imports are being rationalized/simplified

  Bill:

56. IMPOSITION OF AGRICULTURE INFRASTRUCTURE AND DEVELOPMENT CESS ON IMPORT OF CERTAIN ITEMS [to be effective from 02.02.2021] [Clause [115] of the Finance Bill, 2021]

  Bill:

57. OTHER CHANGES (INCLUDING CERTAIN CLARIFICATIONS/ TECHNICAL CHANGES BY AMENDING NOTIFICATION NO. 50/2017-CUSTOMS DATED 30.06.2017

  Bill:

58. Review of levy of Social Welfare Surcharge on various items

  Bill:

59. Other Miscellaneous changes pertaining to Anti-Dumping Duty (ADD)/ Countervailing Duty (CVD)/ Safeguard Measures

  Bill:

60. EXCISE

  Bill:

61. AMENDMENT IN THE FOURTH SCHEDULE

  Bill:

62. Retrospective amendment in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944

  Bill:

63. Amendment in Chapter 27 of the Fourth Schedule to the Central Excise Act, 1944

  Bill:

64. IMPOSITION OF AGRICULTURE INFRASTRUCTURE AND DEVELOPMENT CESS (AIDC) ON PETROL AND DIESEL

  Bill:

65. CHANGE IN EFFECTIVE RATE OF BASIC EXCISE DUTY AND SPECIAL ADDITIONAL EXCISE DUTY ON PETROL AND DIESEL [to be effective from 02.02.2021]

  Bill:

66. EXEMPTIONS FOR M-15, E-20 AND OTHER BLENDED FUELS

  Bill:

67. Amendments in the Schedule VII of the Finance Act 2001 (NCCD Schedule)

  Bill:

Articles

1. AMENDMENTS TO GST ACTS BY FINANCE BILL, 2021

   By: DR.MARIAPPAN GOVINDARAJAN

2. Costlier V/S Cheaper - Budget Updates

   By: CSSwati Rawat

3. Budget 20-21- Important Takeaways

   By: CSSwati Rawat

News

1. Income Tax Department conducts searches in Kolkata

Notifications

Companies Law

1. G.S.R. 93 (E) - dated 1-2-2021 - Co. Law

Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021

2. G.S.R. 92(E) - dated 1-2-2021 - Co. Law

Companies (Specification of Definitions Details) Amendment Rules, 2021

3. G.S.R. 91(E) - dated 1-2-2021 - Co. Law

Companies (Incorporation) Second Amendment Rules, 2021

GST - States

4. 86/2020 – State Tax - dated 29-1-2021 - Delhi SGST

Recind Notification No. 76/2020 – State Tax, dated the 20th January, 2021

Money Laundering

5. G.S.R. 59(E) - dated 28-1-2021 - PMLA

Notify reporting entity undertake Aadhaar authentication service of the Unique Identification Authority of India “National Payments Corporation of India.”

6. S.O. 473 (E) - dated 19-1-2021 - PMLA

Amendment in Notification No. S.O.372(E), dated 5th February, 2016

7. S.O. 472(E) - dated 19-1-2021 - PMLA

Amendment in Notification No. S.O. 372(E), dated the 5th February, 2016

Circulars / Instructions / Orders

IBC

1. IBBI/II/39/2021 - dated 2-2-2021

Providing copy of application to the Board, as mandated under Rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019

Highlights / Catch Notes

Income Tax

• Directors require specific allegations for prosecution under Income Tax Act Section 277; automatic charges not permitted.

  Case-Laws - HC : Offence under Section 277 - Whether all the Directors of the Company can be prosecuted for any violation of the Income Tax Act in terms by relying on the inclusive definition under Section 2(35) of the Income Tax Act? - all the Directors of the Company cannot be automatically prosecuted for any violation of the Income Tax Act. There has to be specific allegations made against each of the Directors who is intended to be prosecuted and such allegation would have to amount to an offence and satisfy the requirement of that particular provision under which the prosecution is sought to be initiated - HC
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• Jurisdictional Issues u/s 277: Magistrate Must Record Reasons for Skipping Inquiry in Absence of Permanent Residence.

  Case-Laws - HC : Offence under Section 277 - Jurisdiction - in the event of accused being an individual, if the said accused has a temporary residence within the jurisdiction of the Magistrate, again merely because he does not have a permanent residence, there is no enquiry which is required to be conducted under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the event of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held - HC
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• Unexplained Cash Deposit u/s 69A: Inconsistencies in Explanations Fail to Justify Source During Demonetization Period.

  Case-Laws - AT : Unexplained cash deposit in bank account u/s 69A - story created by assessee for withdrawing the amount for settlement of the matrimonial dispute - There is a contradiction in the explanation of the assessee made before AO as well as before Ld. CIT(A). Thus assessee failed to explain the source of cash deposit in her bank account during demonetization period. - AT
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• Forfeited Earnest Money from Contractors Classified as Capital Receipt, Reducing Project Costs Before Operations Begin.

  Case-Laws - AT : Characterization of income - forfeiture of earnest money from the contractors, forfeited and appropriated by the assessee - The commercial operations of the power plant has not yet commenced during the impugned ay and the project was under implementation. Thus, the receipts are inextricably linked to the project - to be treated as capital receipt which will go on to reduce cost of project - AT
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• PCIT cannot deem AO's order erroneous due to disagreement if thorough enquiries were conducted, per Section 263 of Income Tax Act.

  Case-Laws - AT : Revision u/s 263 - merely because the ld. PCIT does not agree with the order of the AO cannot make the order erroneous as long as the same was passed after all possible enquiries and due verification of facts on record. It is not a case of lack of enquiry or lack of investigation so as to invoke the provisions of section 263 of the IT Act, 1961. - AT
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• Section 263 Revision Overruled: Assessee Proves Share Capital Genuineness u/s 68, Errors in Revenue's Claim Highlighted.

  Case-Laws - AT : Revision u/s 263 - addition made u/s. 68 - Assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. - AT
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• Interest on Late TDS Payment Considered Damages, Not Expense; Incorrect Use of Section 37(1) Overturned.

  Case-Laws - AT : Disallowance of interest paid on late payment of TDS - These are only damages thrust on the assessee for non-payment of dues to the Revenue within the stipulated period provided under the Act. Revenue Authorities has erred in invoking the provisions of section 37(1) in the case of the assessee - Claim of interest expense directed to be allowed - AT
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Indian Laws

• Finance Bill 2021: New TDS Rule on High-Value Goods Purchases to Boost Tax Compliance and Curb Evasion.

  Notes : Tax Deduction at Source (TDS) on purchase of goods - FINANCE Bill, 2021
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• Finance Bill 2021 enforces higher TDS/TCS rates for non-filers to boost tax compliance from July 1, 2021.

  Notes : TDS/TCS on non filer at higher rates - FINANCE Bill, 2021
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• Finance Bill 2021 amends Customs Tariff Act 1975, revises duty rates, exemptions, and aligns with global trade practices.

  Notes : AMENDMENTS IN THE CUSTOMS TARIFF ACT, 1975 - FINANCE Bill, 2021
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• Finance Bill 2021 amends Customs Act 1962 to boost compliance, enforce penalties, streamline disputes, and enhance tech in trade.

  Notes : AMENDMENTS IN THE CUSTOMS ACT, 1962 - FINANCE Bill, 2021
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• Finance Bill 2021 amends IGST Act 2017 to streamline tax processes, modify supply provisions, and clarify zero-rated refunds.

  Notes : AMENDMENTS IN THE IGST ACT, 2017 - FINANCE Bill, 2021
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• Finance Bill 2021 amends CGST Act 2017 to impact input tax credit, invoice rules, supply scope, and compliance.

  Notes : AMENDMENTS IN THE CGST ACT, 2017 - FINANCE Bill, 2021
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Wealth-tax

• Wealth Tax Reassessment: Vacant Urban Land Excluded Without AO Evidence of Structure, Contradicting Joint Development Agreement.

  Case-Laws - AT : Reassessment of wealth tax - vacant urban land not included - Unless, the AO brings on record any evidence to prove that there was a structure, we cannot concur with findings of the AO only on the basis of letter of Corporation of Chennai that the assessee has demolished the building before entering into joint development agreement, more particularly, when JDA dated 4-7-2009 is specifically mentioned about existing structure on the land. - AT
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Service Tax

• Court Denies Union of India's Appeal Due to Delay, Emphasizes Importance of Filing in Correct Forum.

  Case-Laws - SC : Condonation of delay in filing appeal - UOI, which has competent legal advice at its command, cannot, particularly in the facts of the present case, be heard to contend that they were under a mis-apprehension that the appeals would lie before the High Court. - The nature of the controversy involved in the appeals leaves no manner of doubt, that the appeals were maintainable before this Court and this Court alone. Hence, we are not inclined to condone such a gross delay on the part of the Revenue in accessing its remedies before the court. - SC
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• Supreme Court to Decide if Free Items Should Be Included in Service Tax Valuation Per Bhayana Builders Case.

  Case-Laws - AT : Valuation of taxable services - inclusion in assessable value, the items supplied on free of cost - the decision of the Supreme Court in Bhayana Builders are clearly applicable to the facts of the present case inasmuch as the charge in the show cause notice is that the cost of material supplied free of cost should be included in the gross value of the taxable service provided by the appellant. - AT
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VAT

• Interpreting Entry Tax Laws: Casual Traders and Transaction Classifications u/s 13(2) of General Clauses Act, 1897.

  Case-Laws - SC : Levy of Entry Tax - Casual Trader - The Legislature could not, possibly, have intended that a person making 2 or 3 transactions should be treated as a “Casual Trader”, but a person making only one transaction should be treated at par with regular traders. - It is well settled that in construing a statutory provision, words in the singular are to include the plural and vice versa, unless repugnant to the context in which the expression has been used, as provided in Section 13(2) of the General Clauses Act, 1897 and provisions identical thereto in State enactments pertaining to General Clauses. - SC
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Case Laws:

• GST

• 2021 (2) TMI 79
  Vires of Section 69 and 132 of the CGST Act, 2017 - HELD THAT:- Issue notice. Mr. Aditya Shekhar, Advocate accepts notice on behalf of Union of India. Mr. Abhishek Jain, Advocate accepts notice on behalf of Respondent No. 2 and 3.

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• 2021 (2) TMI 78
  Seeking activation of GSTIN - It appears that the problem for the writ-applicant cropped up as regards activating the GSTIN as the registration under the Value Added Tax came to be cancelled w.e.f. 30.06.2016 - HELD THAT:- Over a period of time, many representations were preferred by the writ-applicant as regards the subject matter, but of no avail. We dispose of this writ-application with a direction to the respondent no.2 Council to take up the matter of the writ-applicant at the earliest and see to it that the GSTIN is activated and made operational. This writ-application is disposed of with a direction to the respondent no.2 that an appropriate order shall be passed within a period of one week from today and needful shall be done in accordance with law without fail.

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• Income Tax

• 2021 (2) TMI 77
  Withholding of refund - Instruction No. 1 of 2015 dated 13th January 2015 issued by the Central Board of Direct Taxes challenged - refunds were declined for the reason that the case was pending scrutiny and that in the light of Section 143(ID) and the Instructions of the CBDT, refund could not be processed for the said AYs - HC held Instruction No.1 of 2015 dated 13th January 2015 issued by the CBDT is unsustainable in law and it is hereby quashed - HELD THAT:- Special leave petitions pertain to pre-assessment stage. We are informed that the assessment is now over. Hence the special leave petitions have become infructuous and are disposed of as such. Question of law is, however, left open.

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• 2021 (2) TMI 76
  Penalty u/s 271D and 271E - Deposit of the cash by the Director into the bank account of the assessee - running account maintained between the promoter/director and the Appellant company in the context of the transactions covered in section 269SS - no genuinity or bonafideness in the transaction done by the assessee and it will not amount to reasonable cause for the purpose of exercise or discretion by the Assessing Officer under Section 273B - HELD THAT:- SLP dismissed.

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• 2021 (2) TMI 75
  Offence under Section 277 - evasion on account of misstatement or a wrong statement - non- payment of any tax before uploading of the returns - petitioners did not have money to make payment of the income tax - prosecution against all the directors of the company - reverse burden of proof - proof of willful evasion of tax or not? - petitioners have categorically mentioned the BSR Code, challan number and the amount which are alleged to have been paid by the petitioners towards the income tax - whether misstatement is required to be willful to prosecute the assessee? - HELD THAT:- In the present case, the misstatement is stated to be as regards the income tax having been paid even though such payment had not been made since the uploaded returns reflected the BSR code, challan number as also the amount paid as income tax. It is alleged that if not for the reconciliation, the petitioner-Company would have got away with non-payment of the taxes. We are unable to accept such a submission. It is not that there was non- payment of any tax before uploading of the returns. The 26 AS returns indicated payment of substantial amount of money due to tax deduction at source. Apart there from, the first petitioner-Company has also made several payments on account of the income tax dues. But however on account of non availability of funds, the entire amount could not be paid before the returns were to be uploaded and/or filed The assessee in the present case has been forced to upload the returns by mentioning that the entire amount had been paid since without doing so the returns would not have been accepted by the software system set up by the Income Tax Department. Therefore, the said statement made has been forced upon the assessee by the Income Tax Department and cannot be said to be misstatement within the meaning and definition thereof under Section 277 of the Income Tax Act. For an offence to be said to be committed under Section 277 of the Income Tax Act, the misstatement is required to be willful made with a malafide or dishonest intention in order to prosecute the assessee. There is no willful misstatement by the petitioners in the present proceedings. The Income Tax Department is also directed to consider the provisioning of a facility in its software to upload Income Tax Returns with the actual amount paid and for the system to accept the said returns even though the complete amounts had not been paid. Hence, we answer Point Nos.1 and 2 by holding that there is no straight-jacket formula which could be laid down as to determine what is a misstatement and what is not. It would be required for the Court and/or the Assessing Officer or the Appellate Authority to determine the same on the facts of the case liberally in favour of the assessee. Whether the delayed payment of Income Tax would amount to evasion of tax or not? - This question is no longer res integra inasmuch as this Court in Vyalikaval s case [ 2019 (7) TMI 184 - KARNATAKA HIGH COURT] has held that delayed payment of income tax would not amount to evasion of tax. Applying the same principle to the present fact situation, the delay caused by the petitioner-Company in making payment of the income tax cannot be said to be evasion. We answer Point No.3 by holding that delayed payment of Income Tax would not amount to evasion of tax, so long as there is payment of tax, more so for the reason that in the returns filed there is an acknowledgement of tax due to be paid. Whether all the Directors of the Company can be prosecuted for any violation of the Income Tax Act in terms by relying on the inclusive definition under Section 2(35) of the Income Tax Act? - A perusal of the complaint as filed by respondent-Income Tax Department would indicate that there are only omnibus allegations which had been made against the Directors. The contention and/or the allegation is that the uploading of the income tax returns with false data amounts to misstatement for the purposes of evasion. For this purpose, it would have had to be ascertained as to who has made such a statement for the purpose of initiating action. Since we have answered point Nos.1 and 2 by holding that in the present case there is no misstatement, the question of the Directors being liable for prosecution would not arise. Thus answer Point No.4 by holding that all the Directors of the Company cannot be automatically prosecuted for any violation of the Income Tax Act. There has to be specific allegations made against each of the Directors who is intended to be prosecuted and such allegation would have to amount to an offence and satisfy the requirement of that particular provision under which the prosecution is sought to be initiated, more so when the prosecution is initiated by the Income Tax department who has all the requisite material in its possession, and a preliminary investigation has been concluded by the Income Tax department before filing of the criminal complaint. Whether the order of cognizance by the Economic Offences Court is proper and correct? - When there are multiple accused, the order is required to disclose the application of mind by the Court taking Cognisance as regards each accused. The Court taking Cognisance ought to have referred to and recorded the reasons why the said Court believes that an offence is made out so as to take Cognisance more so on account of the fact that it is on taking Cognisance that the criminal law is set in motion insofar as accused is concerned and there may be several cases and instances where if the Court taking Cognisance were to apply its mind, the Complaint may not even be considered by the said Court taking Cognisance let alone taking Cognisance and issuance of Summons. Order taking Cognisance is not in compliance with applicable law and therefore is set aside. Answer Point No.5 by holding that the order of Cognisance dated 29.03.2016 in both matters is not in compliance with the requirement of Section 191(1)(a) of the Cr.P.C and further does not indicate the procedure under Section 204 of Cr.P.C having been followed. At the time of taking Cognisance and issuance of process, the Court taking Cognisance is required to pass a sufficiently detailed order to support the conclusion to take Cognisance and issue process, in terms of the discussion above. The judicious application of mind to the law and facts of the matter, should be apparent on the ex-facie reading of the order of Cognisance. Whether the Magistrate is required to follow the procedure under Section 202 of the Cr P.C.even for the offences under the Income Tax Act? - In the present case, as could be seen from the extract of the order dated 29.03.2016 in answer to point No.5 above, there is no such postponement made by the Magistrate, but as soon as the Magistrate received a complaint, he has issued process to accused No.6, who is residing outside the jurisdiction of Magistrate. In view of the above, it was required for the Magistrate to conduct a mandatory enquiry as per Section 202 (2) of the Cr.P.C. There being a violation of the requirement under Section 202 of Cr.P.C., the Magistrate could not have issued summons to petitioner No.6 without following the requirement and without conducting an enquiry under Section 202 of Cr.P.C. as held by the Hon ble Apex Court in Vijay Dhanka vs. Najima Momtaj [ 2014 (3) TMI 1103 - SUPREME COURT] We answer Point No. 6 by holding that in the event of accused being an individual, if the said accused has a temporary residence within the jurisdiction of the Magistrate, again merely because he does not have a permanent residence, there is no enquiry which is required to be conducted under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the event of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held. When the accused has no presence within the jurisdiction of the Magistrate where the offence has been committed, then it would be mandatory for an enquiry under Section 202 of the Cr.P.C to be held. Order - The prosecution initiated by the respondent against the petitioners is misconceived and not sustainable and as such, the complaints are hereby quashed.

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• 2021 (2) TMI 74
  Rectification of mistake - Eligibility to claim weighted deduction @ 200% u/s 35(2AB) - assessee has claimed deduction u/s 35(2AB) of the expenditure incurred on research development - whether Form No.3CL is mandatory forclaiming deduction during the year under consideration? - HELD THAT:- We agree with the submissions of Ld. A.R. that the Hon ble jurisdictional Karnataka High Court, in the case of Tejas Network Ltd. [ 2015 (4) TMI 1064 - KARNATAKA HIGH COURT] has considered an altogether different issue and hence it was not relevant to the issue adjudicated by the Tribunal in the instant case. No merit in the submissions made by Ld. D.R. with regard to the above said case. We notice that the Tribunal has followed the decision rendered by the coordinate bench in the case of Mahindra Electric Mobility Ltd. [ 2019 (1) TMI 20 - ITAT BANGALORE] , wherein it has been clearly held that No.3CL had no legal sanctity prior to 1.7.2016. Accordingly, we are of the view that the Tribunal has taken a view on this issue based on the case laws relied on by the assessee before it. We are not able appreciate the contentions advanced by Ld D.R for distinguishing the decision rendered in the case of Mahindra Electric Mobility Ltd (supra) the law interpreted by theco-ordinate bench in the above said case has been followed in the instant case. It is a well settled proposition of law that the Tribunal is empowered to rectify the mistakes apparent from record under the powers granted to it u/s 254(2) of the Act. Tribunal cannot review its order under the garb of rectification. In the instant case, the petition filed by the revenue would make the Tribunal to review its order,which is not permitted under section 254(2) of the Act.Accordingly, we do not find any merit in the petition filed by the assessee. In paragraph 7 of the order passed by the Tribunal, the assessment year has been wrongly mentioned as 2014-15, whereas the Tribunal has disposed of the appeal for the assessment year 2013-14.Accordingly, we direct that the assessment year mentioned in paragraph 7 of the order of the Tribunal should be substituted by 2013-14 .

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• 2021 (2) TMI 73
  Levy of penalty u/s 271(1)(c) - Defective notice - assessment of income from house property - no ITR was filed by the assessee for any of the assessment years - assessee as argued for defective notice issued - assessee had received rental income as his share of income from house property and since, the income exceeded maximum amount which is chargeable to tax, assessee was liable to file return of income u/s 139 - HELD THAT:- Notices issued by the AO for levy of penalty u/s 271(1)(c) of the Act to be bad in law as it did not specify in which limb of section 271(1)(c) the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing inaccurate particulars of income. The show-cause notices are, therefore, bad in law and illegal and, as such, the entire penalty proceedings are vitiated and no penalty is leviable against the assessee in any of the years. On this scope itself, similar views is taken by the Hon ble Karnataka High Court in the case of CIT Vs. M/s SSAs Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] and this decision is confirmed by the Hon ble Supreme Court [ 2016 (8) TMI 1145 - SC ORDER] . Hon ble Delhi High Court in the case of Pr. CIT Vs. M/s Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] , following the above decisions of Karnataka High Court did not find any error in the order of the Tribunal in cancelling the penalty. - Decided in favour of assessee.

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• 2021 (2) TMI 72
  Unexplained cash deposit in bank account u/s 69A - story created by assessee for withdrawing the amount for settlement of the matrimonial dispute - assessee made cash deposit of Rs. 15 lakhs in her bank account during demonetization period - HELD THAT:- Amounts withdrawn earlier in year 2014 from the bank account of the assessee was in ten installments of Rs. 1 lakh to Rs. 3 lakh respectively. When the matrimonial dispute was not settled till August, 2019, there was no reason for the assessee to keep the cash at home. When assessee made cash deposits of Rs. 15 lakhs in three installments in her bank account in November, 2016, would lead to irresistible conclusion that assessee was keeping unaccounted cash money of Rs. 15 lakhs with her at the time of demonetization period and the assessee realizing that such currency cannot be used anywhere, she deposited same in her bank account and purposely the return of income was filed belatedly on 25.03.2018 after expiry of the period provided u/s 139(1) for filing of the return of income within the period of limitation. There is a contradiction in the explanation of the assessee made before AO as well as before Ld. CIT(A). Thus assessee failed to explain the source of cash deposit in her bank account during demonetization period. Thus, assessee failed to explain the sources, therefore, no interference is called for in the matter. - Decided against assessee.

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• 2021 (2) TMI 71
  Addition u/s 68 - Unexplained share capital - As alleged assessee failed to prove the genuineness of the share application money received - HELD THAT:- The assessee has received Rs. 3,50,000/- from Smt. Renu Rekhan and Rs. 6 lacs from Smt. Nisha Rekhan on account of share application money. The assessee has filed their confirmation and copy of the ITR, but, in the confirmation it is not mentioned whether share application money have been given in cash or through Bank account. No evidence of their creditworthiness have been filed. Thus, assessee failed to prove the genuineness of the share application money received from these two ladies. In the absence of adequate evidence, the authorities below were justified in making the addition. We, therefore, confirm the addition and dismiss this ground of appeal. Unsecured loans from 05 parties - parties have not appeared before A.O. in response to the summons under section 131 - In the case of Star Technosoft Pvt. Ltd., assessee has filed letter before A.O. in which assessee has explained that the assessee is making efforts to get the bank statements and in case of urgency the same may be summoned from the concerned Bank of the creditors. The assessee also requested that this creditor may be summoned under section 131 - Since the A.O. did not take any steps in the matter, therefore, no adverse inference could be drawn against the assessee in respect of the creditor Star Technosoft Pvt. Ltd. A.O. has found that income of the creditor is low as compared to the corresponding transaction, but, their bank statements clearly show they have sufficient means to give loan to the assessee and in case of two of the creditors even their income was higher as compared to the loan given to the assessee. Merely because low income is shown in the return of income by the creditor is no ground to make any addition against the assessee. In the case of creditor Kshitiz Infratech Pvt. Ltd., the A.O. from the balance sheet found that amount of Rs. 50 lakh have been shown as advance against the property, but, it is a fact that this creditor has given an amount of Rs. 50 lakhs to the assessee, therefore, no further adverse inference could be taken against the assessee. The authorities below have also rejected the explanation of assessee because the creditors did not appear in response to the summons issued by the A.O. Dated 17.05.2018 for the date fix for 24.05.2018. A.O. issued summons under section 131 to enforce the attendance of the creditors at the fag end of the assessment. The first date was fixed for 24.05.2018 only and assessment have been framed on 31.05.2018. Thus, the Learned Counsel for the Assessee rightly contended that no sufficient time was given to the creditors to appear before A.O. in response to the summons under section 131 - no time have been given to the assessee to enforce the attendance of these creditors before A.O. It is also well settled Law assessee need not to prove the source of the source. In A.Y. 2010-2011 the same Ld. CIT(A) passed the Order on 06.07.2020 and on production of the sale deed found that creditworthiness of the creditor is established. It is held in this year that mere non-compliance of the summon is not sufficient to make the addition under section 68 of the Income Tax Act, 1961, where identity, genuineness and creditworthiness stands established. Thus, there was no reason for the Ld. CIT(A) to take a different view in assessment year under appeal i.e., 2009-2010. Initial burden upon the assessee to prove identity of the creditors, their creditworthiness and genuineness of the transaction have been discharged. A.O. did not bring any evidence on record to disbelieve the explanation of the assessee or the documentary evidence filed on record. In view of the above, we set aside the Orders of the authorities below and delete the addition - on account of 05 creditors above. This ground of appeal is allowed.

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• 2021 (2) TMI 70
  Estimation of income - Addition on estimate basis - assessee did not file requisite details before A.O - CIT(A) found that since in the preceding assessment year he has estimated the G.P. at 25% after rejecting the books of account, therefore, the G.P. declared by the assessee at Rs. 24% is justified - HELD THAT:- Even though assessee has not filed certain details called for by the A.O. at assessment proceedings, but, no basis is shown as to how the income of the assessee have been estimated at Rs. 2.50 crores. A.O. even while estimating the income has not rejected the book results of the assessee.A.O. has also not brought any material on record to justify higher estimation of income and even no comparable case or history of the assessee have been mentioned. Thus, it was a mere estimation of income without any justification. A.O. has also referred to his order for preceding A.Y. 2010- 2011 while making estimation of income, but, the Ld. CIT(A) on consideration of the details on record found that in preceding assessment year he has rejected the book results of the assessee and estimated the gross profit at 25%. In assessment year under appeal there is a significant fall in the turnover of the assessee and assessee has disclosed G.P. at 24%. The A.O. has not rejected the book results of the assessee even in assessment year under appeal. CIT(A) considering the history of the assessee and nature of the business of the assessee, correctly deleted the addition particularly when books of account have not been rejected in assessment year under appeal. We, therefore, do not find any justification to interfere with the Order of the Ld. CIT(A). - Decided against revenue.

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• 2021 (2) TMI 69
  Chargeability to income-tax of interest income which was earned by assessee from deposits placed with the Banks - eligibility to relief to the assessee by following decision of tribunal in assessee s own case for earlier years - principles of resjudicata - assessee had claimed that it was setting up power project during the year under consideration and commercial production has not started till the end of ay, and hence the said interest income earned by assessee is to be set off against the interest paid by the assessee on term loan availed by it for setting up of power generation plant, which will go on to reduce cost of project - AO disallowed the said setting off of the interest income by referring to provisions of Section 5 - HELD THAT:- As observed that every assessment year is a separate assessment year and principles of resjudicata are not strictly applicable, but we are also fully aware that consistency has to be followed. The reference is made to the decision of Radhasoami Satsang v. CIT [ 1991 (11) TMI 2 - SUPREME COURT] . As observed in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. [ 1991 (11) TMI 2 - SUPREME COURT] has observed that even during the period when commercial production has not started but the funds were invested in the bank FDR etc. the interest income has to be brought to income-tax under provisions of Section 56 under the head Income from other sources , and setoff cannot be allowed against interest on term loans secured by tax-payer from Financial Institutions which would be capitalized after the commencement of commercial production. The facts for the earlier years viz. ay s: 2009-10 and 2010-11 were clearly peculiar as it was at the behest of bank the deposits were created, which were automatically reversed by the bank, when the assessee required the funds towards implementation of the project. Thus, finding was given by tribunal that there was no surplus funds held by assessee and interest income was inextricably linked with the construction and acquisition activities in the regular course of the assessee activities. In the impugned assessment year 2013-14 which is in consideration before us, it is observed that there was a further infusion of capital in equal proportion by both the promoters and the assessee has earned interest income on deposits made with the bank which was sought to be set off by assessee against interest paid to bank on term loans availed for setting up of the project. But here during the impugned assessment year s, there are no such further findings as were there in ays:2009-10 and 2010-11 as to whether the surplus funds were deployed by assessee with deposit with banks on which interest income was received or short term deposits were created at the behest of the bank which were automatically credited by bank when the assessee required the funds for the project execution, and the ld. CIT(A) has merely followed the appellate order passed by the tribunal for earlier ay s: 2009-10 and 2010-11 . The power of ld. CIT(A) are co-terminus with the power of the Assessing Officer, and the ld. CIT(A) is duty bound to make enquiries to give finding that facts as are prevalent in the current year are similar/para materia to the facts of the earlier year and hence the appellate order passed by tribunal for earlier year is to be followed. Since there is no clear finding given by the ld. CIT(A) in the fitness of thing it will be appropriate that this issue is restore to the file of ld. CIT(A) for deciding the above issue afresh after considering the facts for impugned assessment year vis- vis facts prevalent in ay: 2009-10 and 2010-11, and also after considering the decision of Tuticorin Alkali Chemicals Fertilizers Ltd. [ 1997 (7) TMI 4 - SUPREME COURT] and Sangam Power Generation Company Limited [ 2017 (9) TMI 737 - ALLAHABAD HIGH COURT] and Pryagraj Power Generation Company Ltd. [ 2017 (9) TMI 824 - ALLAHABAD HIGH COURT] . In the interest of justice and fairness to both the rival parties, we restore the matter back to the file of the ld. CIT(A) for fresh consideration and denovo determination of the issues on merits in accordance with law. The ld. CIT(A) is directed to provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law and evidences/explanations filed by assessee in support of its contentions shall be admitted by ld. CIT(A) and adjudicated on merits in accordance with law. We clarify that we have not commented on the merits of the issue in appeal. Characterization of income - forfeiture of earnest money from the contractors, forfeited and appropriated by the assessee - constituted business income or income from other sources or capital receipt and as such was not liable to be taxed - commercial production has not yet started of the project - HELD THAT:- The finding by ld. Assessing Officer/ld. CIT(A) that earnest money(EMD) given by contractors was forfeited by assessee on account of non completion of work and other miscellaneous recoveries were made from contractors. It is undisputed that power plant project of the assessee was under implementation during the impugned ay: 2013-14 and commercial production has not yet started during the impugned assessment year. In this case, it is undisputed contractors has given earnest money (EMD) to the assessee and since they could not complete the work in time the assessee has forfeited the amount, and also there were miscellaneous recoveries from contractors. The commercial operations of the power plant has not yet commenced during the impugned ay and the project was under implementation. Thus, the receipts are inextricably linked to the project and the ratio of case of Bokaro Steel Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] wherein held that if the receipt are inextricably linked to the project under implementation then the same are be treated as capital receipt which will go on to reduce cost of project, shall be applicable and hence we are of the view that these are capital receipt and they cannot be brought to tax and shall go on to reduce the cost of the project - Decided in favour of assessee.

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• 2021 (2) TMI 68
  Disallowance of subscription fees paid - Deloittee Touche Tohmatsu (DTT) charges subscription fees to Deloitte Hasking Sells, Mumbai - AO observed that, the same is not in the nature of revenue expenditure and is also not expenses wholly exclusively related to the business and therefore not allowable u/s section 37(1) - HELD THAT:- The issue of disallowance of subscription fees is concerned, we agree with the contentions of the Ld. Authorized Representative that this issue stands covered by the order of the Co-ordinate bench of this Tribunal in Assessment Year 2009-10 wherein held said amount was towards the reimbursement of the expenses, which was in fact incurred on behalf of the assessee and there was no profit element. Similar decision was taken for Assessment Years 2013-14 2014-15 [ 2019 (10) TMI 349 - ITAT AHMEDABAD] and assessment years 2011-12 and 2012-13 [ 2021 (1) TMI 738 - ITAT DELHI] - That being so, we decline to interfere with the order of Ld. CIT (A) deleting the aforesaid addition. we allow ground No.1 in both the years under consideration and direct the Assessing Officer to delete the disallowance. Allowability of legal and professional fees - whether the fees paid for defending the act of a partner can be considered to be an act committed during the ordinary course of business of the firm and whether the said expenditure can be said to have been incurred for the purpose of the business of the assessee? - HELD THAT:- Assessee firm is a firm of Chartered Accountants and Shri Deepak Roy, while working in the capacity of the partner of the firm, had signed an audit report. The Registrar of Companies, Uttar Pradesh and Uttaranchal lodged a complaint against Shri Deepak Roy in terms of Section-233 of the Companies Act, 1956 and it was under these circumstances that the assessee company decided to defend the case of Mr. Deepak Roy. Although, the assessee company was defending a case which was in the name of the partner Mr. Deepak Roy, it cannot be said that defending the said case was not a part of the business activity for the company in as much as the reputation and goodwill of the assessee company was at stake. It is also beyond the doubt that the criminal complaint was filed against Mr. Deepak Roy in a matter which was related to the business of the company. In such circumstances, it is our considered view that the impugned expenditure incurred by the assessee company towards defending the suit in the name of the partner is deductible business expenditure.

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• 2021 (2) TMI 67
  Revision u/s 263 - As per CIT no proper enquiry was conducted by the AO in the case of the assessee for A.Y. 2005-06 and the AO has not considered the application of provisions u/s 68 or 69C of the IT Act for making of undisclosed income arising out of unexplained expenditure due to foreign visits - HELD THAT:- Evidences, examined and analysed by the Assessing Officer during the course of assessment proceedings, further supported by thorough investigations/enquiries made by the Assessing Officer during the assessment proceedings, we are of the considered view that there remains nothing for the PCIT to assume jurisdiction u/s 263 to say that the assessment order is not only erroneous but prejudicial to the interest of the revenue. Since the facts of the instant case are identical to the facts of the case already decided by the Tribunal in the case of the spouse of the assessee, namely, Mrs. Shumana Sen, therefore, respectfully following the decision of the Tribunal in the case of the spouse of the assessee Mrs. Shumana Sen [ 2019 (11) TMI 1175 - ITAT DELHI] we hold that the PCIT has wrongly assumed jurisdiction u/s 263 of the Act on these issues. Allegation of not conducting any enquiry regarding ESOP - We find the year under consideration is A.Y. 2005-06 and there was no provision in the Act to treat the ESOPs as perquisites in the hands of the assessee. The amendment in Section 17(2)(vi) of the Act was w.e.f. 01.04.2010 and prior to such amendment ESOPs were treated as capital receipts in the hands of the recipient and were taxable only after the sale of the shares. We find merit in the argument of assessee that the observation of the PCIT that the AO did not conduct any enquiry regarding tax on receipt arising out of ESOPs received from employer is not in accordance with law. Therefore, the PCIT, in our opinion, is not justified in assuming jurisdiction u/s 263 on the issue of non-examination of taxability of receipts of ESOPs from the employer. In the instant case, the AO after examining the facts on record and after conducting all possible enquiries had passed the order by making certain additions. Therefore, merely because the ld. PCIT does not agree with the order of the AO cannot make the order erroneous as long as the same was passed after all possible enquiries and due verification of facts on record. It is not a case of lack of enquiry or lack of investigation so as to invoke the provisions of section 263 of the IT Act, 1961. PCIT himself has not conducted any enquiry so as to give a definite finding that the order passed by the AO is erroneous. Even otherwise also when two views are possible and the AO has adopted one possible view, the order of the AO cannot be said to be erroneous so as to assume the jurisdiction u/s 263 since the twin conditions cannot be fulfilled. PCIT was not justified in assuming jurisdiction u/s 263 - Decided in favour of assessee.

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• 2021 (2) TMI 66
  Addition u/s 68 - procurement of accommodation entries through share application money from non-descript companies - CIT- A deleted the addition - DR submitted that the CIT(A) was not correct in admitting additional evidence under Rule 46A without giving proper justification and has not given adequate opportunity and totally ignored the remand report given at the appellate proceedings by the Assessing Officer - HELD THAT:- Inspector Report has clearly stated the wrong address and therefore, the same will not prove the case of the Department that the share applicant parties were not properly examined. The CIT(A) has taken into account all the evidences and has confronted the same to the Assessing Officer for which remand report was filed by the Assessing Officer. We find that the Assessing Officer chose not to consider the evidences on merit and simply stated that these parties were not found. Thus, the assessee in our opinion has proved the genuineness, identity and creditworthiness of these parties. The case of the sister concern in Superb Developers [ 2018 (7) TMI 827 - ITAT DELHI] has also dealt with some of the parties involved in the present assessee s case. Thus, the parties mentioned in present assessee s case were held genuine, creditworthiness and its identity was also accepted in case of Superb Developers (supra). We further observe that each and every case law cited by the Ld. DR also highlights the point that the genuineness, identity and creditworthiness of the share applicant parties have to be established by the assessee. In the present case, the same has been done by the assessee. Therefore, the onus was discharged by the assessee company which was properly taken into account by the CIT (A). Thus, the order of the CIT(A) does not require any interference and appeal of the Revenue is dismissed.

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• 2021 (2) TMI 65
  Reopening of assessment u/s 147 - unverifiable purchases - information received by the A.O. regarding search operation conducted in the case of Jain Group of companies and information of which was available to the A.O - Assessee argued there was only statement of third person on the basis of which the A.O. had reopened the case of the assessee - HELD THAT:- We are not included to accept the contention of the assessee as the information in this case was received by the A.O. from the Investigation Wing and the A.O. after examining the same had recoded reasons for reopening the assessment, we are of the view that the proceedings U/s 147 of the Act could be initiated on the basis of investigation report, in this respect, we draw strength from the decision in the case of Ankit Agrochem (P) Ltd. [ 2017 (12) TMI 1625 - RAJASTHAN HIGH COURT ] wherein it was held that proceedings initiated U/s 147 of the Act on the basis of report received from DIT(Inv.) were valid. Sufficiency and adequacy of the reasons which have led to formation of a belief by the A.O. that the income has escaped assessment cannot be examined by the Court. Therefore, in view of above discussion, we are of the view that the A.O. had specific information based on which and after recording of reasons and approval, the assessment has been reopened. Therefore, up uphold the decision on ld. CIT(A) on this ground and dismissed the ground raised by the assessee. Bogus purchases - rejection of books of accounts of the appellant by the assessing officer u/s 145(3) of the Act on account of alleged unverifiable purchases - CIT-A directing application of G.P. rate of 12% on declared turnover - HELD THAT:- The purchases made has been exported as it is and there is bill to bill tally of purchase and export. Photo copies of purchase bills has also been placed on record by the assessee. Therefore, according to us, in view of difference in the circumstances, the results of this year i.e. A.Y. 2010-11 cannot be compared to the results of earlier year as the complete nature of business is changed from this year. In view of the above facts, the allegation of reducing profit by obtaining non-genuine bogus purchase bills is wrong and not sustainable. There is increase in total gross profit and thus results can be held as progressive and therefore, in such circumstances, no additions are called for. Even the Coordinate Bench of Jaipur ITAT in assessee s own case having similar facts, deleted the entire addition confirmed by the ld. CIT(A). Therefore, keeping in view the above facts and circumstances and discussion, we are also of the view that the additions confirmed by the ld. CIT(A) by applying G.P. rate of 12% as against the declared G.P. rate of 9.34% is uncalled for and bad in law and deserves to be deleted and hance the same is directed to be deleted. - Decided in favour of assessee.

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• 2021 (2) TMI 64
  Revision u/s 263 - addition made u/s. 68 - second revisional jurisdiction of Pr. CIT - Whether the AO (called second AO) has not conducted enquiry while framing re-assessment order - Angle of doctrine of merger - second Pr. CIT passing the second revisional order has substituted the First Pr. CIT s order passed u/s. 263 - HELD THAT:- Persons representing the share applicant companies have appeared before the Assessing Officer in the second round of assessment proceedings, in response to notice u/s. 131 of the Act, and their statements were recorded on oath. The share applicant companies have also responded to notice u/s. 133(6) of the Act by furnishing the information called for. The information filed by the creditor share applicant companies as Copy of I.T. Return/Acknowledgment, Copy of annual audited accounts, Balance sheet and profit loss a/c statement and Copy of Bank Statement These documents prove the genuineness of the transactions. A perusal of these documents show that the Assessing Officer has followed the directions of the ld. Pr. CIT, issued in his first order dt. 09/09/2016 passed u/s. 263 of the Act and has taken a plausible view. It is not a case of lack of enquiry, nor a case of inadequate enquiry. A decision was taken after examination of all evidences and documents. Such a view cannot be termed as erroneous insofar as it is prejudicial to the interest of the revenue. Assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. AO s action (reassessment) pursuant to the first revisional order of Ld. Pr. CIT dated 10.06.2016, to accept the share capital and premium as a possible view As specifically applying the decision of the Tribunal in the case of M/s. Amritrashi Infra Private Ltd. [ 2020 (8) TMI 407 - ITAT KOLKATA] and in the case of M/s. Omkar Infrastructure Pvt. Ltd. [ 2020 (5) TMI 209 - ITAT KOLKATA] to the facts of the case on hand, we have to necessarily hold that the exercise of revisionary power by the ld. Pr. CIT, u/s. 263 of the Act, vide order dt. 14/03/2019, is bad in law. Hence we quash the same and allow the appeal of the assessee.

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• 2021 (2) TMI 63
  Addition towards proportionate interest on interest free advances extended U/s. 36(1)(iii) - Assessee argued that assessee had extended interest free loan out of its non-interest-bearing fund - HELD THAT:- Claim of the Ld. AR that the assessee had extended interest free loan out of its non-interest-bearing fund is only partially correct - AO has not considered the interest free fund available with the assessee during the period of interest free loan extended to its sister concern. Needless to mention that addition cannot be made in the hands of the assessee U/s. 36(1)(iii) extending interest free loan from its non-interest-bearing fund - we hereby remit the matter back to the file of the ld. AO to compute the proportionate interest with respect to the interest-bearing fund extended to the assessee s sister concern and thereafter pass appropriate order in accordance with law and merit based on our observations mentioned herein above. Disallowance of interest paid on late payment of TDS - penalty levied invoking the provisions of section 37(1) of the Act - HELD THAT:- Any expenditure incurred by the assessee for any purpose which is an offence or which is prohibited by law shall not be allowed to be claimed as deduction. In the case of the assessee, the late payment of TDS and the penalty levied towards the late payment of TDS cannot be treated as an offence or an act prohibited by law. These are only damages thrust on the assessee for non-payment of dues to the Revenue within the stipulated period provided under the Act. Revenue Authorities has erred in invoking the provisions of section 37(1) in the case of the assessee - we hereby direct the Ld. AO to delete the addition made in the hands of the assessee towards interest and penalty paid for late payment of TDS. Appeal of the assessee is partly allowed for statistical purposes.

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• 2021 (2) TMI 62
  Income from house property - Annual Letting Value of the property situated at Anna Salai, Chennai - assessee company was having the vacant property at Anna Salai and ALV of the property was assessed @ 6% of capital value of the house property - HELD THAT:- Actually, the premises in question was on rent earlier with the HDFC Bank. Under the compelled circumstances, the tenant HDFC Bank vacated the premises because the Metro Rail Project came before the premises, therefore, the said premise was vacated by Bank. On similar circumstances, the Hon ble ITAT has already explained the reason in which the rental value of the premises was not liable to be assessed on the percentage basis of the value of the property. Accordingly, it is quite clear that the case of the assessee has duly been covered by the Hon ble ITAT in the assesse s own case [ 2019 (11) TMI 983 - ITAT MUMBAI ] therefore, we set aside the finding of the CIT(A) on these issues and allowed the claim of the assessee.

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• 2021 (2) TMI 61
  Cessation of liabilities u/s 41(1) - the trade liabilities payable by the assessee exist from the earlier years and are disclosed in the financial statements - CIT-A enhancing and confirming the addition - HELD THAT:- Trade liabilities are carried forwarded in the books of accounts from the earlier years and the assessee is liable for payment to the Creditors and substantiated with the details. We find the assessee has not written off the liabilities as no longer required in the books of account - on perusal of assessment order, we find that the A.O. has neither recorded satisfaction for making disallowance or made enquires on trade creditors nor supported with any evidence that the trade liabilities are no longer payable by the Assessee. Accordingly, we set aside the order of the CIT(A) on this disputed issue and direct the Assessing officer to delete the addition. Disallowance of Franking, processing and registration charges - whether they are wholly incurred for the purpose of business - AR has substantiated his arguments with the details along with registration charges and sanction letters of the banks substantiating that the said amount are revenue expenditure - HELD THAT:- We considering the facts and the material find that these details are to be verified and examined. Accordingly, we remit this disputed issue to the file of the Assessing officer for limited purpose for verification. The assessee should be provided with adequate opportunity of hearing and shall cooperate in submitting the information and allow the grounds of appeal for statistical purpose

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• 2021 (2) TMI 60
  Rectification of mistake - Reopening of assessment - unexplained cash deposited in the saving bank account maintained with the ICICI Bank - before the ld. CIT(A) the assessee has completely changed the facts of her own claim made before the Assessing Officer stating that the said bank account in the ICICI bank was not opened by her and it was opened by a travel agent and all the transactions with the bank were also made by him - HELD THAT:- ITAT highest fact finding authority after verification of the paper book filed by the assessee had noticed that assessee has declared and owned up the said saving bank account in the return of income filed by her. The assessee has failed to produce any material to substantiate her contradictory claim made before the ld. CIT(A). Further the altogether different claim made before the ld. CIT(A) that the bank account was not belonged to her found to be false claim. Considering these specific facts which are distinguishable from the cases referred by the assessee, the ITAT has not found any infirmity in the decision of ld. CIT(A). ITAT confirmed that assessee has herself reported under her signature in her income tax return filed after replying the notices from the assessing officer that the impugned bank account with the ICICI Bank was pertained to her. In the light of the above facts and circumstances, we consider that the assessee has failed to substantiate the source of cash deposit detected in the saving bank account, It was a very long adjudicated order passed after taking into consideration actual facts distinguishable from the facts in the case laws referred by the assessee. Keeping in view the above facts and circumstances, we consider that the power of rectification u/s. 254(2) of the Act can be exercised only when the mistake which is subject to be rectified is an obvious patent mistake, which is apparent from record and not a mistake which is required to be established by argument and long drawn process of reasoning on points on which there may conceivably be two opinion. In the light of facts and circumstances, we do not find any merit in the Miscellaneous Application of the assessee and the same is dismissed.

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• Customs

• 2021 (2) TMI 43
  Seeking early hearing of the appeal - early appeal sought on the ground that the goods namely, readymade garments have been detained since March, 2019, which would deteriorate over a period of time - HELD THAT:- Consequently, the miscellaneous application for early hearing of the appeal is allowed and appeal is fixed for hearing on 06.01.2021.

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• Corporate Laws

• 2021 (2) TMI 59
  De-activation of the Director Identification Number - Section 164(2) of the Companies Act, 2013 - HELD THAT:- Similar controversy was raised in other High Courts and after considering the issue at length, the Gujarat High Court decided batch of petitions in [ 2019 (1) TMI 27 - GUJARAT HIGH COURT ] where it was held that the Court is of the opinion that the action of the respondents in deactivating the DINs of the petitioners- Directors along with the publication of the impugned list of Directors of struck off companies under Section 248, also was not legally tenable. Of course, as per Rule 12 of the said Rules, the individual who has been allotted the DIN, in the event of any change in his particulars stated in Form DIR-3 has to intimate such change to the Central Government within the prescribed time in Form DIR-6, however, if that is not done, the DIN could not be cancelled or deactivated. The cancellation or deactivation of the DIN could be resorted to by the concerned respondents only as per the provisions contained in the said Rules. The writ petition for challenge to the de-activation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number for use for other company.

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• 2021 (2) TMI 58
  Disqualification of the petitioners as Directors - Section 164(2)(a) of the Companies Act, 2013 - Allegation that the Directors has not submitted financial statements for three consecutive financial years - opportunity of hearing not given to petitioner - HELD THAT:- The issue raised in this writ petition was considered by the Hon ble Division Bench of this Court in the case of Meetgelaveetil Kaitheri Muralidharan Versus Union of India Another [ 2020 (10) TMI 595 - MADRAS HIGH COURT ] where it was held that The case on hand stands on the same footing. In the instant case also, no notice was given to the petitioner before disqualifying him as Director of M/s. Aventa Technologies Limited. The impugned order passed by the second respondent disqualifying the petitioner as Director of M/s. Aventa Technologies Limited under Section 164(2)(a) of the Companies Act, 2013 is hereby set aside - Petition allowed.

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• 2021 (2) TMI 57
  Approval of scheme of amalgamation - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, CP(CAA)/927/MB-III/2020 is made absolute. The Scheme is sanctioned hereby, and the Appointed Date of the Scheme is fixed as 1stApril2019. The Transferor Companies are ordered to be dissolved without winding up - Petitioner Companies are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically in Form INC-28 within thirty days from the date of receipt of the Order duly certified by the Deputy Registrar/ Assistant Registrar of this Tribunal.

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• 2021 (2) TMI 56
  Approval of scheme of Arrangement involving Demerger - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and does not violate any provisions of law and is not contrary to public policy or public interest. Since all the requisite statutory compliances have been fulfilled, CP(CAA)/4039/MB.II/2019 has been made absolute - The Scheme of Arrangement is sanctioned hereby, and the Appointed Date of the Scheme of Arrangement is 1st day of April, 2019 as defined in Clause 1.3 of the Scheme.

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• 2021 (2) TMI 55
  Approval of Composite Scheme of Arrangement and Amalgamation - sections 230 to 232 read with section 66 of the Companies Act 2013 - HELD THAT:- From the material on record, the Composite Scheme of Arrangement and Amalgamation pursuant to section 230 to 232 read with section 66of the Companies Act, 2013 appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, the Company Petition filed by the Petitioner Companies is made absolute. The Scheme is hereby sanctioned and the appointed date of the Scheme is fixed as 1st April, 2018. The Transferor Company be dissolved without winding-up after this Scheme becomes effective. Application allowed.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 54
  Resolution for approval of Settlement Proposal - Section 12A of the I B Code - HELD THAT:- The facts on record indicate that a notice invoking arbitration was issued on 29.07.2016 by respondent no.1 in relation to Contract No.2 whereafter an application under Section 11(6) of the Arbitration Conciliation Act, 1996 was filed in the High Court of Bombay on 15.12.2016. A notice was also issued on 23.03.2017 invoking arbitration in relation to Contract No.1. Thereafter, Consent Terms dated 29.03.2017 were entered into, in terms whereof, the Notice dated 23.03.2017 stood withdrawn. It appears that Consent Terms did not fructify and completely failed. On 16.06.2017 a Notice under Section 8 of the Code was issued. In its response dated 29.06.2017, respondent No.2 submitted inter alia that the Terms of Consent were void and unenforceable - thereafter, the application under Section 11(6) as aforesaid was withdrawn on 14.09.2017. The Adjudicating Authority admitted the petition under Section 9 of the I.B. Code vide Order dated 25.03.2018 against which an appeal was preferred. The appeal was dismissed by the NCLAT - appeal dismissed.

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• 2021 (2) TMI 53
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - operational debt, due and payable or not - Frustration of contract by efflux of time - time limitation - HELD THAT:- It is seen from the correspondences between the parties and from the perusal of the clauses/articles as enumerated under the EPC contract that the contract has not been terminated by either parties and the contract still subsists. Therefore, the Adjudicating Authority rightly held that there is no termination of contract and the issue raised with regard to barred by limitation cannot be accepted. Therefore, we hold that the Application filed by the Respondent under Section 9 of IBC before the Adjudicating Authority is not barred by limitation. Whether the claim of the Respondent is an Operational Debt? - HELD THAT:- Admittedly, the claim of the Respondent is an operational debt. Therefore, the arguments of the Appellant that the claims of the Respondent is not an operational debt does not hold any field. Frustration of contract by efflux of time - HELD THAT:- The EPC contract between the Appellant and Respondent still subsists and there is no such clause in the contract regarding frustration or termination by efflux of time, it is held that there is no merit in this point and accordingly, we negate this point issue also. From the perusal of the facts it is evident that the default has arisen out of EPC Contract, which itself is a continuing contract. Even from the Demand Notice dated 02.07.2018 in particulars of operational debt at column-1, the Respondent had clearly stated that the debt fell due on 24.12.2010 and the last payment made to the Respondent was on 25.02.2011 through RTGS. It is also mentioned that the debt continues to fall even today as the EPC contract between the Appellant and Respondent never terminated by either parties - the Adjudicating Authority had rightly admitted the Application of the Respondent which in our considered opinion does not require any interference in the instant Appeal. Appeal dismissed.

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• 2021 (2) TMI 52
  Maintainability of application - initiation of CIRP - misuse of Section 420 of the Companies Act, 2013 - mistake apparent on the fact of record for which RP is seeking amendment - HELD THAT:- It is admitted fact that the RP worked for only 39 days and the settled amount is Rs. 1250000/- and the expenses for 39 days is Rs. 17,75,638/- which seems unreasonable and excessive on the face of it. Further the order was passed after consent of both the sides. Further when the order was dictated the counsel appearing on behalf of the RP did not object and also did not brought the fact before the Appellate Tribunal that he is proxy counsel. The argument of the RP that the counsel was proxy counsel and he was not authorised, is an after thought. Further the RP has not made any complaint against the counsel Mr. Rituraj Biswas to the Bar Council of India. Petition dismissed.

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• 2021 (2) TMI 51
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- The respondent itself has admitted having taken a term loan of Rs. 4.00 crores and having repaid the entire loan as per the schedule agreed upon between the parties. The respondent has also admitted having taken additional loan of Rs. 2.50 crores subsequently. Thus, the respondent has admitted the debt. The only objection raised by the respondent is that in absence of repayment schedule, penal interest/charges or interest calculation are without any basis and/or justification are disputed between the parties. On perusal of records it is found that no document is produced by the respondent fortifying such claim. On the other hand, the petitioner has put on record (pages 25-30 of rebuttal documents) the repayment schedule duly sealed/signed and acknowledged/accepted by the respondent. That, the application is filed on 9th July, 2019. On perusal of the records it is found that from time to time the corporate debtor has made payments towards the outstanding loan and thus acknowledged the debt. That, the application filed by the financial creditor is well within limitation. That, the documents filed along with the application is sufficient to prove that there exists financial debt. The Adjudicating Authority is of the considered view that there is a debt due to financial creditor and there is default on the part of the corporate debtor - the application is found to be complete in all respect. Hence it does not warrant any rejection or dismissal. That, the records available shows that the applicant had sanctioned term loans to the respondent company, to be repaid within the stipulated period as per the terms and conditions agreed between the parties. Records available shows that the respondent has not cared to reply the notice issued by the applicant - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt - In the instant case, the documents produced by the Financial Creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the financial debt . The application under section 7 (2) of the IB Code is complete in all respects and there is debt due to the financial Creditor and there is default on the part of the corporate debtor . Hence, there is no alternative but to admit the application in absence of any infirmity - Petition admitted - moratorium declared.

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• Service Tax

• 2021 (2) TMI 50
  Condonation of delay in filing appeal - it is contended that the delay occurred on account of the fact that the appeals were mistakenly filed before the Calcutta High Court - HELD THAT:- Even if the period of time which was spent in pursuing the appeals before the High Court is excluded, there is still a substantial and unexplained delay. Even otherwise, we are of the view that the Union of India, which has competent legal advice at its command, cannot, particularly in the facts of the present case, be heard to contend that they were under a mis-apprehension that the appeals would lie before the High Court. The nature of the controversy involved in the appeals leaves no manner of doubt, that the appeals were maintainable before this Court and this Court alone. Hence, we are not inclined to condone such a gross delay on the part of the Revenue in accessing its remedies before the court. In a matter such as the present, certainty in fiscal matters is of importance to the assessee just as the interests of the Revenue have to be duly protected. The concerns of the Revenue have to be duly met by showing alacrity in pursuing remedies which are available in law. The appeals are dismissed on the ground of delay.

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• 2021 (2) TMI 49
  Valuation of taxable services - inclusion in assessable value, the items supplied on free of cost - whether comes within the ambit of the term consideration or not - HELD THAT:- This precise issue came up for consideration before the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] as the issue before the Supreme Court was also whether the value of goods/material supplied or provided free of cost by a service recipient and used for providing the taxable service of construction or industrial complex is to be included in the computation of gross amount for valuation of the taxable service under section 67 of the Finance Act. The Supreme Court observed that a plain reading of the expression the gross amount charged by the service provider for such service provided or to be provided by him would lead to the conclusion that the value of goods/material that is provided by the service recipient free of charge is not to be included while arriving at the gross amount for the reason that no price is charged by the assessee/ service provider from the service recipient in respect of such goods/materials. The decision of the larger bench of the Tribunal in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] and the decision of the Supreme Court in Bhayana Builders are clearly applicable to the facts of the present case inasmuch as the charge in the show cause notice is that the cost of material supplied free of cost should be included in the gross value of the taxable service provided by the appellant. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 48
  Levy of Entry Tax - Respondent was a Casual Trader - time limitation for passing an Assessment Order - HELD THAT:- Under Section 2(ccc) of the Rajasthan Sales Tax Act, 1994 Casual Trader means a person who has, whether as principal, agent or in any capacity, occasional transaction of business nature involving the buying, selling, supply or distribution of such goods as may be specified by the State Government by notification in the official gazette whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration - Sections 10A and 10B of the Rajasthan Sales Tax Act pertain to assessment and the time limit for assessment in the case of a Casual Trader. Section 10A(1) read with Section 10A(2) of the Rajasthan Sales Tax Act, 1954 provides that every Casual Trader , on completion of a transaction of sale or purchase, for which he is liable to pay tax, shall make a report to the Assessing Officer or to the Officer-in-charge of a Check Post, of the sale or purchase price, tax payable thereon, etc. and deposit the tax with such officer. Subsection (3) of Section 10 enables the Assessing Officer to assess the tax payable by a Casual Trader on his failure to make a report. In the case of a Casual Trader , the time limit for assessment is one year from the date of making the report, and if no report is made, within two years from the date of the transaction. The date of transaction in this case is 26.12.2009. The question is whether assessment was barred upon expiry of two years from the date of transaction, and/or in other words after 25/26.12.2011 - The Appellate Authority, the Rajasthan Tax Board and the High Court have concurred in arriving at the finding that the assessment of the Respondent was barred by limitation as the Respondent was a Casual Trader . A perusal of the definition of Casual Trader makes it amply clear that a person with occasional transactions of buying/selling are to be treated as casual traders, for whom a shorter time limit for assessment has been imposed under Section 10B(iii) read with Section 10A of the Rajasthan Sales Tax Act 1954. The Legislature could not, possibly, have intended that a person making 2 or 3 transactions should be treated as a Casual Trader , but a person making only one transaction should be treated at par with regular traders. It is well settled that in construing a statutory provision, words in the singular are to include the plural and vice versa, unless repugnant to the context in which the expression has been used, as provided in Section 13(2) of the General Clauses Act, 1897 and provisions identical thereto in State enactments pertaining to General Clauses. SLP dismissed.

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• Wealth tax

• 2021 (2) TMI 47
  Net wealth assessment - additions towards two assets within the definition of asset u/s. 2(ea)(1)(v) of the Act, which includes property at Saidapet and property at Haddows Road, Nungambakkam - claim of assessee before lower authorities that property at Saidapet is in the name of partnership firm, where the assessee is having 50% share and hence the same cannot be included in the net wealth of the assessee - HELD THAT:- It is an admitted fact that once an asset is not in the name of the assessee, the same cannot be included in the definition of asset for the purpose of wealth tax. Valuation of interest of a person in a firm of which the assessee is a member shall be determined in the manner provided in Rule 16 and such value shall be added to the value of net asset as on the date of valuation. In this case, the AO has directly taken 50% value of property in the hands of the assesse without considering the prescribed method provided under Rule 16 for value of interest in partnership firm. Similarly, as regards property at Saidapet, although the assessee claims that the said property was used for her own business, but conceded the fact that property was never used for the purpose of business during the impugned assessment years. The only argument advanced by the learned AR for the assessee is value adopted by the Assessing Officer and according to him, value adopted by the Assessing Officer is on higher side. Schedule III (2) of Wealth Tax Act, 1957 provides for valuation of asset and how such value to be determined. Assessing Officer shall determine value of property in accordance with Schedule III. In this case, the Assessing Officer has adopted value declared by the assessee, without following the procedure provided under Schedule III. Considering the facts and circumstances of this case, are of the opinion that the appeals need to be set aside to the file of the Assessing Officer to redo the assessments in respect of above two properties and determine the value of interest in partnership firm in accordance with Rule 16 and value of Saidapet property in accordance with Part B of Schedule III to Wealth Tax Act, 1957.

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• 2021 (2) TMI 46
  Reassessment of wealth tax - vacant urban land not included within the definition of asset as defined u/s. 2(ea) of the Wealth tax Act - JDA Entered for construction of building after demolition of existing building - definition of asset for the purpose of Wealth Tax Act - whether the impugned land was a vacant urban land or there existed any building - Whether AO as well as CWT(A) has brought out various reasons to come to the conclusion that the land in question was a vacant urban land and there was no structure in the impugned land as on the date of valuation of asset? - HELD THAT:- On perusal of details filed by the assessee including Joint Development Agreement, we find that Joint Development Agreement dated 4-7-2009 has clearly spelt out the main purpose of agreement and as per which, the sole object of agreement is for construction of building after demolition of existing building. At the time of signing joint development agreement there was a building on the impugned land. Unless, there is building, then the question of specifying a condition for demolition of existing building does not arise. JDA agreement was entered into on 4-7-2009 and said date falls within the financial year 2008-09 relevant to assessment year 2009-10. From the above, it is undoubtedly clear that there was a building up to the end of financial year 31-03-2008 and thus, for the impugned Asst. years 2007-08 and 2008-09 the land was a vacant urban land and the existing building was demolished is not supported by any evidence. Sole basis and evidence for the lower authorities to draw an adverse inference against the assessee is copy of letter from the Corporation of Chennai dated 06.08.2007 where permission has been given for demolition of old structure. AO as well as the ld. CWT(A), on the basis of above letter assumed that the assessee must have demolished existing building immediately after receipt of permission and at the time of entering joint development agreement, the land was vacant - said finding is not supported by any evidence, but purely on suspicion and conjectures. Unless, the AO brings on record any evidence to prove that there was a structure, we cannot concur with findings of the AO only on the basis of letter of Corporation of Chennai that the assessee has demolished the building before entering into joint development agreement, more particularly, when JDA dated 4-7-2009 is specifically mentioned about existing structure on the land. Since, the JDA dated 4-7-2009 is clearly mentioned about existing building and demolition of said building before commencement of construction, we cannot agree with the findings of the ld. AO and ld. CWT(A). We, therefore are of the considered view that the findings recorded by the lower authorities to conclude that said land is urban vacant land and which comes under the definition of asset as defined u/s 2(ea) of the wealth tax Act, 1957 is incorrect. Alternative argument taken by the assessee that there existed incomplete or semi-finished building on the impugned land on the date of valuation and thus the said land fall outside the definition of asset for the purpose of Wealth Tax Act - In absence of any evidence to prove that the assessee has necessary permission from the authorities to commence construction of building and further any evidence to prove that there existed a semi-finished building on the impugned land as on the date of valuation, the arguments of the assessee that there existed a semi-finished building as on the date of valuation cannot be accepted. This fact is further strengthened by the Gift Deed dated 25.04.2009 executed by the assessee and other co-owners in favour of CMDA where it was clearly indicated the fact that there was no approval from the authorities for construction of building. Therefore on this count also the arguments of the assessee that there existed a semi-finished or under construction building on the impugned land is incorrect - there is no merit in the alternative arguments of the ld. AR for the assessee that there exists a semi-finished building on the impugned land. In this case, the whole argument of the assessee stands on the pretext of the land in question was not a vacant land because there was a building or structure in the land as on the date of valuation. Even, the AO has not gone in to the aspect of whether the building is used for own residential purpose or business purpose or the same has been let out during the relevant previous year. Unless these facts are examined, simply on the ground that there was a building in the impugned land, the same cannot be excluded from the ambit of wealth tax. We, therefore are of the considered view that the AO needs to verify above facts before coming to the conclusion that whether particular asset comes under the definition of asset as defined u/s.2(ea) of the Act or not. Appeals filed by the assessee go back to the file of the AO.Hence, we set aside appeals to the file of AO and direct him to re-examine the issue in light of our findings given hereinabove, in accordance with law. Appeal filed by the assessee for both assessment years are treated as allowed for statistical purpose.

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• Indian Laws

• 2021 (2) TMI 45
  Condonation of delay in filing appeal - service of demand notice - Jurisdiction - power of Metropolitan Magistrate to take cognizance of the complaint u/s 138 Negotiable Instruments Act (NI Act) filed by respondent No.2, without that being accompanied by application under Section 142 (b) NI Act for condoning the delay in filing the complaint - HELD THAT:- The crux of the present case is that legal demand notice dated 31.05.2019 was sent on 01.06.2019, which was duly served upon the petitioner on 03.06.2019. The 15 days notice period in this case commenced on 04.06.2019 and lapsed on 18.06.2019. It is not in dispute that in terms of Hon ble Supreme Court s decision in M/S. SAKETH INDIA LIMITED AND OTHERS VERSUS M/S. INDIA SECURITIES LIMITED [ 1999 (3) TMI 591 - SUPREME COURT] , one day has to be excluded for counting the one month limitation period and, therefore, excluding the day of 19.06.2019, the limitation period started from 20.06.2019 and the limitation period expired with the day in the succeeding month immediately preceding the day corresponding to the date upon which the period started. Consequently, the limitation period in this case, which commenced on 20.06.2019, expired in the succeeding month on a day preceding the date of commencement i.e. 19.07.2019. Admittedly, the complaint in this case was instituted on 20.07.2019 i.e. 01 day after the limitation period had expired. Hence, both the courts below have fallen in error while computing the period of limitation. Moreover, at the time of filing, the complaint was not even accompanied by an application under Section 142 (b) NI Act for condoning the delay. It is pertinent to mention here that on one hand, Revisional Court in Para-16 of the impugned order (as extracted in Para-10 of this order) has held that as per tracking report and as admitted, petitioner had received the demand notice on 03.06.2019 and on the other hand, in Para-17 the Revisional Court has observed that as per tracking report, the demand notice was received by petitioner on 05.06.2019 and so, the complaint is filed within the limitation period. Revisional Court has erroneously taken into consideration two different dates for service of demand notice while computing the limitation period. It is an admitted fact that the demand notice was served upon petitioner on 03.06.2019 and so, Revisional Court was not required to take into consideration the tracking report showing service of demand notice on 05.06.2019 to justify that the complaint was filed within the limitation period. Petition allowed.

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• 2021 (2) TMI 44
  Principles of Natural Justice - order of Cognisance - compliance with the requirement of Section 191(1)(a) of the Cr.P.C or not - validity of issuance of summons without following the procedure under Section 204 of Cr.P.C - issuance of notice to accused Nos. 2 who is stated to be not registered within the Jurisdiction of the Magistrate without holding an enquiry under Section 202(1) of Cr.P.C. - petitioner residing outside the jurisdiction of the Magistrate without holding an enquiry under Section 202(1) of Cr.P.C. - Jurisdiction as regards an offence relating to an e- commerce transaction - intermediary as defined under Section 2(w) of the Information Technology Act - action or inaction on party of a vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place - non-compliance with the requirements under the Drugs and Cosmetics Act, 1949 on its platform accused No.2 being an intermediary - Effect of delay in filing a Criminal Complaint. Whether the order of Cognisance dated 8.6.2020 complies with the requirement of Section 191(1)(a) of the Cr.P.C? - Whether Summons could have been ordered without following the procedure under Section 204 of Cr.P.C? - HELD THAT:- In the present case, a mere perusal of the Impugned Order, makes it apparent that the same does not disclose any application of mind for the purpose of coming to the conclusion as to why each of the accused including the Petitioner herein, are required to be proceeded against - When there are multiple accused, the order is required to disclose the application of mind by the Court taking Cognisanse as regards each accused. The Court taking Cognisance ought to have referred to and recorded the reasons why the said Court believes that an offence is made out so as to take Cognisance more so on account of the fact that it is on taking Cognisance that the criminal law is set in motion insofar as accused is concerned and there may be several cases and instances where if the Court taking Cognisance were to apply its mind, the Complaint may not even be considered by the said Court taking Cognisance let alone taking Cognisance and issuance of Summons - the order dated 08.06.2020 taking Cognisance is not in compliance with applicable law and therefore is set aside - the order of Cognisance dated 8.6.2020 is not in compliance with the requirement of Section 191(1)(a) of the Cr.P.C and further does not indicate the procedure under Section 204 of Cr.P.C having been followed. At the time of taking Cognisance and issuance of process, the Court taking Cognisance is required to pass a sufficiently detailed order to support the conclusion to take cognisance and issue process, in terms of the discussion above. The judicious application of mind to the law and facts of the matter, should be apparent on the ex-facie reading of the order of Cognisance. Whether the Magistrate could have issued Summons to accused Nos. 2 who is stated to be not registered within the Jurisdiction of the Magisterate without holding an enquiry under Section 202(1) of Cr.P.C.? - Whether the Magistrate could have and 4 i.e. petitioners in Crl.P.No.4676/2020 since they are residing outside the jurisdiction of the Magistrate without holding an enquiry under Section 202(1) of Cr.P.C.? - HELD THAT:- Section 202 of Cr.P.C. provides for the safeguard in relation to persons not residing within the jurisdiction of the said Magistrate, not to be called or summoned by the said Court unless the Magistrate were to come to a conclusion that their presence is necessary and only thereafter issue process against the accused - In the present case, as could be seen from the extract of the order dated 8.06.2020, the answer to point No.1 above, there is no such postponement made by the Magistrate, but as soon as the Magistrate received a complaint, he has issued process to accused No.2, who is registered outside the jurisdiction of the Magistrate and also does not have any office within the territorial Jurisdiction of the Magisterate. Accused Nos.3 and 4 are residing outside the jurisdiction of Magistrate and none of the accused Nos.2, 3 and 4 have any connection with any place within the jurisdiction of the Magistrate. When the accused is having an office, branch office, corporate office, sales office or the like within the Jurisdiction of the Magistrate where the offence has been committed and or continues to be committed, there would be no requirement for any enquiry under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the order of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held - In the event of accused being an individual, if the said accused has a temporary residence within the Jurisdiction of the Magistrate, again merely because he does not have a permanent residence, there is no enquiry which is required to be conducted under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the order of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held - In the event of accused being aggrieved by the issuance of Summons, the said accused immediately on receipt of the Summons and/or on appearance before the Magistrate is required to make out his grievance before the Magistrate and/or by petition under Section 482 Cr.P.C. If there is any delay, in such challenge and/or if challenge has not made within reasonable time, the accused would not be entitled to raise the grievance that the procedure under Section 202 of Cr.P.C. has not been followed on account of delay and latches. Which Court could exercise Jurisdiction as regards an offence relating to an e- commerce transaction? - HELD THAT:- In the present case as in all e-commerce transactions, the sale took place on the internet, in that once the product was put up for sale on the marketplace, anyone could have bought the same from any place so long as the product could be delivered at the place where the buyer was located. A buyer could also place an order from one place and get the product delivered at another. It is for this reason that the concept of Jurisdiction of courts in e-commerce transactions gets complicated - In a prosecution for criminal offences, white collared or otherwise the accused is required to be present physically on each date of hearing, so long as such appearance is not exempted. As such the court would have to protect the accused from possible forum shopping and or from complaints being filed in multiple jurisdictions, which could cause undue harassment to such an e-commerce entity - only a Court in which the accused has a presence, like registered office, branch office, corporate office or the like could exercise Jurisdiction as regards an offence relating to an e- commerce transaction. Whether an intermediary as defined under Section 2(w) of the Information Technology Act would be liable for any action or inaction on party of a vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place? - HELD THAT:- Snapdeal has exercised due diligence under Section 79(2)(c) of the Information Technology Act, 2000, read in conjunction with the Information Technology (Intermediaries Guidelines) Rules, 2011 - When Snapdeal/Accused to. 2 Company is exempted from any liability under Section 79 of the Information Technology Act, 2000, no violation can ever be attributed or made out against the directors or officers of the intermediary, as the same would be only vicarious, and such proceedings as initiated against them would be unjust and bad in law - The only liability of an intermediary under Section 79(3)(b) of the IT Act is to take down third-party content upon receipt of either a court order or a notice by an appropriate government authority and not otherwise, which as per the Complaint filed indicates has been complied with by Snapdeal, by removing the information regarding the sale of the offending item. Thus, an intermediary as defined under Section 2(w) of the Information Technology Act or its directors/officers would not be liable for any action or inaction on part of a vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place. Whether Snapdeal/accused No.2 would be responsible and/or liable for sale of any item not complying with the requirements under the Drugs and Cosmetics Act, 1949 on its platform accused No.2 being an intermediary? - HELD THAT:- Though the platform is owned and operated by Snapdeal it is Accused No. 1, who has exhibited and offered its products for sale on the Snapdeal s platform. Snapdeal being an intermediary is exempt from criminal prosecution as aforestated - In this background neither Snapdeal nor its Directors can be or made liable for alleged offences punishable under Section 27(b)(ii) of the Drug and Cosmetics Act - Snapdeal/accused No.2 would not be responsible and/or liable for sale of any item not complying with the requirements under the Drugs and Cosmetics Act, 1949 on its platform by accused No.1 since the essential ingredients of Section 18 (1)(c) of the Act not having been fulfilled neither Snapdeal nor its Directors can be prosecuted for the offence under Section 27(b)(ii) of the Act. Effect of delay in filing a Criminal Complaint? - HELD THAT:- In the present case the Complaint was filed with an inordinate delay of nearly six years, though the transaction is stated to have occurred in the year 2014 - In the Complaint filed there is no explanation or justification w h i c h has been given for the unreasonable delay caused by the Respondent, more so when the Respondent/Complainant is a government official - Such a delay would result in arriving at a rebuttable presumption that there was no offence committed. Even if there may be no embellishments, criminal proceedings cannot be initiated after a period of 6 years, irrespective of the applicability of limitation period in terms of Section 468 of the Cr. P.C or not. The only excuse for the delay provided is that the complainant being a government employee the process of obtaining permission to file the complaint took some time. In my considered opinion a period of 6 years cannot be said to be some time. It is required for the state to act with alacrity, the fact that there was a delay of 6 years in filing would itself indicate and/or establish that even the authorities might have probably considered that there is no offence as such made out - thus, there being no acceptable explanation for the highly belated lodging of the Complaint, the delay is fatal to these proceedings.

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