TMI Tax Updates - e-Newsletter
February 8, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws

Articles

1. LLP vs Pvt Ltd: Registration Process and Compliance Comparison

   By: Ishita Ramani

2. Abolition of Angel Tax: A kaleidoscopic study of its triumphs and failures

   By: Nisha Singh

3. Unfortunate retrospective amendment in GST laws when there was no scope of doubt or ambiguity in provisions. More so when it is to nullify law as interpreted and finally declared by honorable Supreme Court – whether amendment to substitute word “or” with “and” in between word ‘plant’ and ,machinery’ will serve purpose of such amendment?

   By: DEVKUMAR KOTHARI and CA UMA KOTHARI

4. Self-Assessment of Customs Duty

   By: YAGAY andSUN

5. Union Budget 2025-26 : Direct & Indirect Tax Highlights

   By: SATYAJIT NAIK

6. Pre-Consultation before issuance of SCN in Customs Laws

   By: YAGAY andSUN

7. Investigations, Checks, Alerts, & Audits by Customs Department

   By: YAGAY andSUN

8. Adherence with Regulatory & Statutory Compliances while filing of Shipping Bills with Customs Department

   By: YAGAY andSUN

News

1. ADVISORY ON E-WAY BILL GENERATION FOR GOODS UNDER CHAPTER 71

2. Take steps to expand eco activity; put more money in people's hand: Congress leader Bordoloi

3. NDA govt is 'Robin Hood' in reverse, alleges TMC MP Abhishek Banerjee in Lok Sabha

4. Kerala Budget: Infrastructure push takes priority as taxes rise to tackle Rs 27,000 crore deficit

5. LoP demands 21 days for budget session of MP assembly

6. NDA govt is Robin Hood in reverse, alleges TMC MP Abhishek Banerjee during Budget session

7. Budget Session of U'khand Assembly to begin on Feb 18

8. Budget fails to address farmers' grievances: Congress MP

9. Kerala CM calls budget ''creative,'' Opposition slams it as ''hollow''

10. In Tirunelveli, CM Stalin targets Centre with ‘halwa’ jibe for letting down TN in Union Budget

11. Senate confirms Project 2025 architect Russell Vought to lead powerful White House budget office

12. Budget to be passed in J&K Assembly should not be framed in isolation: CM Abdullah

13. Home, other loans to become cheaper as RBI under new Guv cuts rate after 5 years

14. Union Minister of Commerce & Industry Shri Piyush Goyal inaugurates National IP Moot Court Competition

15. Less restrictive policy approach only for this meeting, global uncertainties bigger worry than rupee: Guv

16. ED searches Eros International in Rs 2,000-cr FEMA case

17. RBI repo rate cut to provide long-awaited relief on interest rates: Experts

18. Markets settle lower after RBI policy; continuous foreign fund outflows dent investors' sentiment

19. New I-T law explainer: No new taxes, simple read for common man

20. India can certainly achieve 7 pc plus growth rate: RBI Governor

21. Repo rate cut to provide long-awaited relief on interest rates: Experts

22. Monetary Policy Statement, 2024-25 Resolution of the Monetary Policy Committee February 5 to 7, 2025

23. Exchange rate policy consistent; not targeting specific rupee level: RBI Governor

24. RBI under new Governor cuts interest rate for first time in 5 years

25. Markets trade higher as RBI cuts policy rate by 25 bps

26. Highlights of RBI's monetary policy

27. Banks to have 'bank.in' internet domain name, non-banks 'fin.in': RBI

28. RBI projects 6.7 pc growth for FY'26 on better Rabi harvest, tax relief by govt

29. RBI projects FY26 inflation at 4.2 pc, down from 4.8 pc estimate in 2024-25

30. RBI cuts policy rate by 25 bps to 6.25 pc , first reduction in five years

31. Stock markets trade lower in volatile trade ahead of RBI policy decision

32. Public Sector Banks (PSBs) show strong performance in the first three quarters (April-December) of current FY 2024-25

33. Income tax dept raids Cong MLA Rana Gurjeet Singh's residence

34. CBI books IRS officer, 6 CAs for sharing pending case details under faceless assessments

Notifications

Customs

1. 09/2025 - dated 7-2-2025 - Cus (NT)

Seeks to amend Notification No. 61/94-Customs (N.T.) dated the 21st November, 1994

2. 08/2025 - dated 4-2-2025 - Cus (NT)

Central Board of Indirect Taxes and Customs, appoints the Commissioner of Customs (Adjudication), Mumbai

GST - States

3. 25/2024-State Tax - dated 16-12-2024 - Himachal Pradesh SGST

Amendment in Notification No. 50/2018- State Tax dated 18-09-2018

4. 24/2024-State Tax - dated 16-12-2024 - Himachal Pradesh SGST

Amendment in Notification No. 5/2017- State Tax dated 24.06.2017

5. 06/2024-State Tax (Rate) - dated 16-12-2024 - Himachal Pradesh SGST

Amendment in Notification No. 4/2017-State Tax (Rate), dated the 30th June, 2017

6. 05/2024-State Tax (Rate) - dated 16-12-2024 - Himachal Pradesh SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017

7. 143-F.T. - dated 27-1-2025 - West Bengal SGST

Seeks to notify different dates on which the different provisions of the WBGST (Amendment) Act, 2024 shall come into force.

Income Tax

8. 13/2025 - dated 7-2-2025 - IT

Income-tax (Third Amendment) Rules, 2025

Circulars / Instructions / Orders

DGFT

1. 47/2024-25 - dated 7-2-2025

Amendments in conditions of the Standard Input Output Norms (SION) at E-136 for export of Wheat Flour

Customs

2. PUBLIC NOTICE No. 13/2025 - dated 31-1-2025

Changes in the system to request for Provisional assessment of bills of entry by Importers – reg.

3. PUBLIC NOTICE No. 11/2025 - dated 24-1-2025

Implementation of the Sea Cargo Manifest and Transshipment Regulations (SCMTR) -reg.

4. PUBLIC NOTICE NO. 08/2025 - dated 21-1-2025

Fee for application to grant extension of time for submission of Applications for Fixation of Brand Rate of Duty Drawback under Rule 6(1) and Rule 7(1) of the Customs and Central Excise Duties Drawback Rules, 2017-reg.

Highlights / Catch Notes

GST

• Precious Metals and Jewelry Under Chapter 71 Remain Exempt from E-Way Bill Requirements Under Rule 138(14)

  News : Generation of Electronic Way Bills (E-Way Bills) for goods under Chapter 71 of GST classification, covering precious metals, stones, and jewelry (except HSN 7117 - imitation jewelry), remains exempt from mandatory requirements under CGST Rules, 2017 Rule 138(14). While the NIC portal previously offered an "EWB for Gold" option, this facility has been withdrawn nationwide. The exemption continues except for intrastate movements within Kerala, where state-specific notification mandates E-Way Bill generation. The clarification resolves confusion arising from voluntary E-Way Bill generation by stakeholders who utilized the previously available system option. Transporters and taxpayers dealing with Chapter 71 goods must note this exemption while ensuring compliance with Kerala's state-specific requirements where applicable.
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• Foreign Currency Refund Claims Cannot Be Rejected Solely On Receipt Timing Without Examining Complete Documentation Trail

  Case-Laws - HC : HC found procedural deficiencies in handling refund claims where foreign currency receipts lacked proper documentation through e-BRC filings. Despite timing discrepancies between payment receipts and refund period, court emphasized adherence to natural justice principles. Original order was set aside with directions to relevant authority to pass fresh orders within 2 months, mandating proper consideration of evidence and following judicial discipline. Authority must provide opportunity for representation and maintain procedural fairness in reassessment. Timing of foreign currency receipt alone cannot be sole basis for rejection without examining complete documentation trail.
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• Constitutional Validity of GST Circulars Upheld Against Procedural Challenges by Third-Party Petitioner Under CGST Act 2017

  Case-Laws - HC : HC upheld the constitutional validity of GST Circulars No. 3/3/2017 and 31/05/2018, dismissing challenges to their procedural legitimacy. The petitioner, lacking direct connection to the investigated firms, failed to establish standing. The court emphasized that challenges to administrative actions, particularly Show Cause Notices (SCNs), require concrete evidence of legal violations. Given the gravity of allegations involved, the court found no justifiable grounds to interfere with ongoing SCN proceedings under CGST Act, 2017. The determination of proper officers for GST functions was deemed valid within statutory framework. Petition dismissed, affirming administrative authority's procedural compliance.
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• GST Refund Claim Must Be Processed Promptly After Verification, Following Previous Precedents and Government Orders

  Case-Laws - HC : HC directed state authorities to process petitioner's GST refund claim promptly following verification of facts and entitlement. Decision must consider state government's order dated 10.10.2018 and subsequent relevant orders. Court acknowledged petitioner's argument that similar GST refunds were previously granted in comparable cases. State must evaluate claim in light of established precedent regarding GST refunds during contract execution. Authorities instructed to conduct thorough assessment while maintaining consistency with prior administrative decisions on GST reimbursements. Matter disposed with specific directive for immediate processing of refund application.
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• Foreign Affiliate Seconded Employee Services: Rule 28 Sets Invoice Value as Market Value for GST Assessment

  Case-Laws - HC : HC determined that under Rule 28's second Proviso, the value declared in invoices for services from seconded employees represents their open market value. When foreign affiliates provide services without raising invoices, per Circular No. 210/4/2024-GST, such services are deemed to have 'nil' value, which becomes the market value under CGST Rules. This interpretation applies specifically to GST levy on expenses for seconded employees from foreign entities. The court emphasized that the declared invoice value, or absence thereof resulting in nil value, establishes the definitive market value for GST purposes. Petition was allowed, confirming this interpretation of Rule 28 and its application to seconded employee arrangements.
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Income Tax

• Taxpayer's Challenge to Section 147 Reassessment Fails Due to Delayed TOLA Objections and Factual Examination Requirements

  Case-Laws - HC : HC dismissed writ petition challenging reassessment proceedings under Section 147. Court declined jurisdiction noting petitioner's failure to raise TOLA provisions applicability in initial objections, making it inappropriate to address first time in writ. Questions about Section 54F deductions and rental income taxation involved factual determinations unsuitable for writ jurisdiction. While audit-based reopening was contested, Court held distinction between fact-based and law-based audit objections requires factual examination. Petitioner's participation in proceedings without timely objections weakened procedural challenges. Court granted 4-week extension of interim relief for appeal filing and stay application, directing appellate authority to consider all grounds including procedural objections.
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• Income Tax Reassessment Notices U/s 148 Valid Despite Faceless Assessment Scheme, Joint Commissioner Approvals Post-April 2021 Invalid

  Case-Laws - HC : HC held that notices under s.148 issued by jurisdictional Assessing Officer remain valid despite faceless assessment requirements, as traditional and faceless mechanisms are meant to work complementarily. The Court rejected challenges to AO's jurisdiction, clarifying that distribution of functions between jurisdictional AO and National Faceless Assessment Centre is concurrent. However, approvals granted by Joint Commissioner post April 1, 2021, were deemed invalid. AOs were directed to evaluate individual show cause notices considering precedents from T.K.S. Builders, Abhinav Jindal, and Naveen Kumar Gupta cases regarding sanction under s.151 and reassessment procedures. Assessment of limitation periods must follow Rajeev Bansal and Ram Balram judgments. AOs must issue reasoned orders determining validity of reassessment notices, with petitioners retaining right to challenge adverse decisions.
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• Tax Penalty Waived Under Section 271C As Legal Opinions And Advance Ruling Request Show Reasonable Cause

  Case-Laws - HC : HC upheld ITAT's ruling against penalty under s.271C, accepting assessee's reasonable cause defense for TDS non-deduction. Assessee's reliance on legal opinions from Singhania & Co. and Lovelock & Lewis demonstrated bona fide belief. Court considered significant that assessee had sought advance ruling, which remained unprocessed due to Authority Chairman's personal reasons. HC found no mala fide intent, noting assessee derived no benefit from non-deduction. Multiple factors constituted reasonable cause under law, validating non-imposition of penalty. Assessee's explanation sufficiently established absence of willful default, justifying relief from punitive measures.
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• Depreciation on Goodwill from Amalgamation Allowed Due to Revenue Authorities' Failure to Object Within Notice Period

  Case-Laws - HC : HC upheld ITAT's ruling allowing depreciation on goodwill acquired through amalgamation. Revenue authorities were estopped from challenging the scheme's validity since they failed to object when given notice during the amalgamation approval process. The Income Tax Department received scheme copy on July 8, 2015, with 15 days to respond but filed no objections by August 26, 2015. The share exchange ratio was explicitly included in paragraph 11.1 of the amalgamation scheme. ITAT considered that depreciation on goodwill was previously allowed for AY 2013-14 and initially for AY 2014-15 (though later reopened). HC found no grounds to interfere with ITAT's decision that CIT's order affirming AO's disallowance was erroneous.
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• Penalty Notice Under Sections 271D and 271E Invalid Without Specific Satisfaction Recording by Assessing Officer

  Case-Laws - HC : HC ruled penalty proceedings under sections 271D and 271E require explicit satisfaction to be recorded by Assessing Officer during reassessment. Mere recording of satisfaction for section 271(1)(c) proceedings is insufficient. Following Jai Laxmi Rice Mills precedent, where penalty was quashed due to lack of specific satisfaction, the court held that DCIT's recording of satisfaction only for 271(1)(c) without addressing 271D/E requirements was legally deficient. Consequently, the notice issued under section 271E and subsequent proceedings were quashed, with judgment favoring the assessee due to procedural non-compliance in recording mandatory satisfaction.
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• Willful Delay in Filing Tax Returns Leads to Criminal Case Despite Penalty Payment Under Section 276CC

  Case-Laws - HC : HC upheld criminal proceedings against assessee under s.276CC of Income Tax Act for willful delay in filing returns. Payment of penalty under Chapter 21 does not preclude prosecution under Chapter 22. Court distinguished from C.P Yogeshwara case where proceedings were quashed due to returns filed before sanction order. Applying s.278E presumption and following Sasi Enterprises precedent, HC ruled assessee must present defense evidence before Magistrate to rebut presumption of culpable mental state. Petition dismissed while preserving right to raise defenses during trial. Court emphasized separate nature of penalty and prosecution provisions under IT Act.
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• Principal CIT's Section 263 revision rejected as verification duties cannot be delegated to Assessing Officer without independent examination

  Case-Laws - AT : ITAT ruled against Principal CIT's revision under Section 263, finding the order procedurally flawed. The tribunal held that PCIT cannot delegate verification responsibilities to AO without independently establishing that the original assessment order was erroneous and prejudicial to revenue interests. PCIT failed to consider submitted documents and make necessary observations before concluding the order's erroneousness. The tribunal emphasized that outsourcing Section 263 jurisdiction to AO is legally impermissible, as it would implicitly vest revision powers with AO. Consequently, ITAT set aside PCIT's Section 263 order and restored AO's original assessment under Section 143(3), allowing the taxpayer's appeal.
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• Transport Payments Under Section 194C Require TDS Even Without Direct Contract; Sub-threshold Payments Below Rs.50,000 Exempt

  Case-Laws - AT : ITAT held that TDS provisions under s.194C apply to transport payments made by assessee to transporters, despite no direct contract between parties. While payments below Rs.50,000 are exempt from TDS per s.194C(5), assessee's claim of Rs.1,00,524 for such payments was allowed. On the broader disallowance under s.40(a)(ia), matter remanded to AO to examine application of amended first proviso limiting disallowance to 30% of expenditure, effective retrospectively from April 1, 2015. Though assessee hadn't previously raised this amendment argument, ITAT permitted fresh consideration by AO for statistical purposes. Ground regarding sub-threshold payments allowed; alternative ground on limited disallowance remanded.
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• First-Time Taxpayer From Remote Area Gets Relief From Penalty As CA Failed To Upload Tax Audit Report Under s271B

  Case-Laws - AT : ITAT cancelled penalty under s271B for failure to furnish tax audit report under s44AB. Assessee, a first-time taxpayer from remote area, had engaged CA who audited books but failed to upload report. Though assessment was completed under s144, assessee later produced audit report dated 18.09.2017 during CIT(A) proceedings. Considering assessee's remote location, limited access to professional services, first-time tax filing status, and default being attributable to CA's failure rather than willful non-compliance, ITAT held penalty was not warranted. The technical breach occurred due to professional's oversight and lack of proper guidance to a small taxpayer, making it a fit case for penalty cancellation.
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• Seven-Month Appeal Delay Condoned Under Section 249(3) As Justice Prevails Over Technical Procedural Requirements

  Case-Laws - AT : ITAT condoned a 7-month delay in filing appeal before CIT(A), prioritizing substantial justice over technical considerations. Following precedent that meritorious matters should not be dismissed solely due to non-deliberate delays, the Tribunal determined that hearing the case on merits would better serve justice than rejecting it on procedural grounds. The matter was remitted back to CIT(A) for fresh adjudication on merits with directions to provide adequate hearing opportunity to the assessee. The delay was condoned considering that procedural lapses should not override substantive justice, particularly when the delay was not deliberate and the opposing party had no vested right in technical rejection.
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• Transfer Pricing: Business Support Services Need Clear Distinction Between Cost Allocation and Actual Services Under Section 92CA

  Case-Laws - AT : ITAT addressed transfer pricing adjustment regarding business support services between associated enterprises. TPO rejected assessee's TNMM method and entity-level benchmarking, favoring CUP method. Tribunal found insufficient evidence demonstrating actual service receipt, noting mere documentation (master agreement, work statements, invoices, emails) inadequate to establish genuine service provision. Tribunal determined services appeared to be shareholder cost allocations rather than distinct business services. Due to inadequate documentation distinguishing between cost allocation and actual services rendered, matter remanded to TPO for de-novo adjudication. Issue restored for fresh determination under transfer pricing provisions without prejudice from prior findings. Appeal allowed for statistical purposes.
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• Income Voluntarily Disclosed During Survey Taxable as Business Income, Not Under Section 115BBE After Proper Verification

  Case-Laws - AT : ITAT held that income declared during survey proceedings was properly assessed as business income at normal tax rates rather than under s.115BBE. The assessee's voluntary disclosure during survey itself, before assessment completion, distinguished this case. Following Dharti Estate precedent, since AO had conducted due diligence and consciously treated the undisclosed amounts as business income after verifying evidence and allowing related partner payments, Pr.CIT's revision under s.263 was invalid. ITAT emphasized that s.263 powers are limited to examining if order is erroneous/prejudicial to revenue, not re-adjudicating assessment merits. Revision proceedings quashed in assessee's favor as AO's treatment was neither erroneous nor prejudicial to revenue interests.
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• Agricultural Income Deletion Upheld While Cash Deposits During Demonetization Face Partial Scrutiny Under Section 68

  Case-Laws - AT : ITAT partially allowed the appeal concerning disputed agricultural income and cash deposits during demonetization. The addition of differential agricultural income was deleted as the original return was processed under s.143(1) and not scrutinized. Regarding unexplained cash credits under s.68, ITAT upheld the addition based on lack of evidence for agricultural activity but acknowledged legitimate business transactions from retail trading. The Tribunal rejected retrospective application of enhanced tax rates under s.115BBE, directing taxation at normal rates with applicable surcharges. The assessee's retail business "Shreeji Paints & Ply" provided partial justification for cash deposits, resulting in partial relief against the additions made by the AO.
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• Income Not Taxable When Enhanced Charges Remain Unrecoverable Due to Consumer Litigation Despite Book Entries

  Case-Laws - AT : ITAT ruled that under mercantile accounting, income accrues only when there exists a legal right to receive it, not merely based on book entries. In the disputed case, enhanced charges recorded in books were unrecoverable due to consumer litigation. Following the 'real income' doctrine established in precedent cases, ITAT held that hypothetical or unilateral book entries without acceptance from debtors do not constitute taxable income. The tribunal emphasized that even in mercantile accounting, income must actually become due and not remain a mere claim. Addition was deleted as no real income had accrued to the assessee, aligning with established judicial principles on income recognition and taxability.
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Customs

• SEZ Unit's Penalty Slashed After Weather Damage Led to NFE Shortfall; Later Achieved Compliance Under Rule 54(2)

  Case-Laws - HC : HC reduced penalty from Rs. 17.10 lakhs to Rs. 10,000 for a SEZ unit's failure to achieve positive Net Foreign Exchange Earnings (NFE) in 2008-09. The unit's inability was attributed to severe weather conditions causing damage to export goods. The court considered that the unit subsequently achieved positive NFE in 2011-12 and maintained compliance over the five-year block period (2005-06 to 2009-10). Under Rule 54(2) of SEZ Rules and FTDR Act, the court deemed the original penalty excessive, noting the temporary nature of the breach and valid explanations provided. The token penalty reflects a proportionate response to the technical violation while acknowledging the unit's overall compliance and mitigating circumstances.
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• Parts of Self-Loading Concrete Mixtures to be classified under same heading as main machine under CETH 8474

  Case-Laws - AT : CESTAT ruled on classification dispute regarding parts of Self-Loading Concrete Mixtures (SLCM). The appellant, both importer and manufacturer of SLCM, had Central Excise registration under tariff heading 8474. The Tribunal determined that since the main machine (SLCM) was already classified under CETH 8474 by Central Excise authorities, its parts must follow the same classification. Revenue's proposal to classify parts under CTH 8708 was rejected. The decision aligned with previous rulings by Telangana VAT Appellate Tribunal and GST regime classifications. Following established legal principle, when revenue's proposed classification fails, the department's case cannot succeed regardless of assessee's classification accuracy. Appeal disposed, maintaining classification as declared in Bills of Entry.
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DGFT

• DGFT Revises Import Quantity to 334mg Erythromycin Stearate Per 250mg Tablet Under SION A-222

  Circulars : DGFT amended SION A-222 under FTP-2023 regarding export norms for Erythromycin Stearate tablets. The revised norm establishes that for manufacturing one tablet of Erythromycin Stearate (250 mg), the permitted import quantity of Erythromycin Stearate is 334 mg. The amendment, effective immediately, allows pro-rata calculations for other product variants. This modification, executed under paragraphs 1.03 and 2.04 of FTP-2023, standardizes the input-output ratio for pharmaceutical manufacturers engaged in export of Erythromycin formulations, ensuring regulatory compliance and manufacturing consistency.
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• DGFT Revises Wastage Norms for Jewelry Exports: New Rules Set Different Rates for Handcrafted vs Mechanized Manufacturing

  Circulars : DGFT amended para 4.59 of HBP 2023 and modified SION M-1 to M-8 for jewelry exports, revising wastage norms and input-output ratios for precious metals. Key changes include differentiated wastage allowances between handcrafted (higher) and mechanized (lower) manufacturing - with handcrafted plain jewelry allowing 2.25% for gold/platinum and 3% for silver, while mechanized processes permit 0.9% across metals. For studded jewelry, handcrafted items get 4% wastage versus 2.8% for mechanized production. Religious idols receive special consideration with 4% wastage for handcrafted/studded and 2% for plain versions. These revisions supersede Public Notice No. 30 dated 01.11.2024.
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• DGFT Extends Broken Rice Export Timeline to Senegal Through NCEL Under Section 3 and 5 Until February 2025

  Notifications : DGFT extends timeline for broken rice exports to Senegal through NCEL under Section 3 and Section 5 of FT(D&R) Act, 1992. The amendment modifies previous notifications (No. 46/2023, 15/2024-25, and 42/2024-25) by granting a one-month extension until February 28, 2025, for export of broken rice under ITC(HS) code 10064000. The extension maintains existing quantity allocations as previously notified while ensuring continued trade facilitation through the designated state trading enterprise NCEL. The modification aligns with Para 1.02 and 2.01 of FTP 2023 provisions governing strategic agricultural exports.
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IBC

• Resolution Professionals Must Transfer Real Estate Assets With 66% Committee Approval Under New IBBI Corporate Insolvency Rules

  Notifications : IBBI amended regulations for corporate insolvency resolution process introducing key changes effective February 2025. New provisions mandate resolution professionals to transfer possession of real estate assets with 66% committee approval. For creditor classes exceeding 1000, up to five facilitators can be appointed at 20% of authorized representative fees. Resolution professionals must submit reports on real estate project development rights within 60 days. Monitoring committees established to oversee resolution plan implementation must provide quarterly updates to adjudicating authority. Relaxations introduced for MSME registration disclosure and performance security requirements for real estate projects where 10% or 100 creditors request modifications.
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• Swiss Challenge Method and Right of First Refusal in Liquidation Sale Upheld as Valid Under IBC Framework

  Case-Laws - AT : NCLAT upheld the Adjudicating Authority's decision approving private sale through Swiss Challenge Mechanism for Corporate Debtor's liquidation. The Tribunal confirmed that Swiss Challenge is a valid, transparent method for asset sales under IBC framework. Liquidator's decision to grant Right of First Refusal (RoFR) to OASPL as base bidder was within statutory authority, supported by Stakeholder's Consultation Committee. While anchor bidders have no indefeasible rights per Supreme Court's R.K. Industries precedent, the mechanism remains consistent with natural justice principles and IBC regulations. NCLAT dismissed the appeal, finding no jurisdictional overreach in Liquidator's actions and affirming that Discussion Papers from IBBI serve advisory purposes without affecting statutory framework.
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Indian Laws

• New Income Tax Bill Proposes Simplified Framework to Replace 1961 Act While Maintaining Current Tax Structure

  News : The proposed new Income Tax Bill aims to replace the Income Tax Act 1961 with a modernized, simplified framework that maintains revenue neutrality. The legislation will streamline the current 298-section statute by eliminating obsolete provisions, removing redundant amendments, and simplifying legal language for enhanced comprehension. Key objectives include reducing litigation through clearer statutory interpretation, implementing technology-driven compliance mechanisms like pre-filled returns, and consolidating direct tax provisions in a more accessible format. The Bill, scheduled for Parliamentary introduction during the Budget session, will undergo Standing Committee review. While maintaining existing tax rates and structures, the reform focuses on procedural simplification rather than substantive tax policy changes, preserving the established direct tax framework while improving its administrative efficiency.
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• Chartered Accountant Gets Fresh Hearing to Contest 'Other Misconduct' Finding Under Section 22 for Dishonored Cheques

  Case-Laws - HC : HC remanded a disciplinary matter back to the Appellate Authority concerning a chartered accountant accused of 'other misconduct' under the Chartered Accountants Act, 1949 for dishonored cheques. While the appellant initially failed to contest the Board of Discipline's findings during the original hearing, the Court determined that given the significant professional implications, procedural fairness required granting him an opportunity to challenge the misconduct findings on merits. The Court noted that whether dishonored cheques constitute 'other misconduct' requires case-specific analysis of context and circumstances. The matter was remanded for reconsideration of both original and supplementary appeals within four weeks, as the BoD's guilty verdict appeared to inadequately consider the appellant's explanation regarding loan repayment.
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PMLA

• Joint Director's PMLA Search Order Invalid: Mere Suspicion Without Evidence Fails "Reason to Believe" Test Under Section 17(1)

  Case-Laws - HC : HC invalidated search and seizure operations conducted at petitioner's residence under PMLA, 2002. Court held that mere suspicion of money laundering without substantive evidence violates statutory procedural safeguards. Despite proper authorization from Joint Director, the search lacked "reason to believe" standard required under Section 17(1). No prima facie evidence established petitioner's involvement in predicate offense of illegal site allotments during MUDA commissioner tenure. Subsequent summons under Section 50 and recorded statements were quashed as they stemmed from illegal search. Court emphasized protection of liberty and privacy rights under Article 21, granting petitioner liberty to pursue action under Section 62 PMLA for vexatious search.
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SEBI

• New SEBI Framework Requires Exchange Registration and Two-Factor Authentication for Retail Algorithmic Trading Through APIs

  Circulars : SEBI has established a regulatory framework for retail investor participation in algorithmic trading, effective August 1, 2025. The framework mandates brokers to act as principals while algo providers serve as agents. All algo orders via APIs must carry unique Exchange-provided identifiers. Retail investors' self-developed algos require Exchange registration if exceeding specified order thresholds. The directive categorizes algos into White Box (disclosed logic) and Black Box (undisclosed logic) types, with additional Research Analyst registration requirements for Black Box providers. Brokers must implement two-factor authentication, OAuth-based security, and handle all algo-related grievances. Exchanges will supervise algo trading through comprehensive SOPs, surveillance mechanisms, and kill switch capabilities. Implementation standards will be formulated by April 1, 2025, through the Broker's Industry Standards Forum.
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Service Tax

• Service Tax Notice Invalid: Improper Delivery Under Section 37C Voids Show-Cause Notice and Original Order

  Case-Laws - HC : HC determined the show-cause notice and Order-in-Original under Finance Act, 1994 were invalid due to improper service procedures under Section 37C of Central Excise Act, 1944. Despite attempts at service via speed post, the notices were undelivered due to changed business address. The authority failed to properly execute alternative service methods through premises affixation or notice board posting as required by statute. Additionally, the petitioner was found not liable for service tax on export services. The court quashed both the show-cause notice and Order-in-Original, ruling the respondent authority lacked jurisdiction to issue orders based on improperly served notices and misapplied tax liability principles. Petition allowed with remand.
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• Equipment Rental for Terminal Operations Not Taxable as Cargo Handling Service When Charged at Fixed Rates

  Case-Laws - AT : CESTAT determined two distinct service classifications under separate agreements with CONCOR. Under the first agreement for terminal handling, the service was classified as "supply of tangible goods" based on hiring of reach stackers at fixed rates, not cargo handling. For the second agreement involving cargo operations, the tribunal remanded the matter regarding service tax liability on export cargo for fresh adjudication. The adjudicating authority must reconsider the case after allowing appellant to submit additional evidence within 6 weeks to substantiate claims about export cargo handling and challenge the extended limitation period. The appeal was partially allowed through remand, with clear distinction maintained between supply of equipment and actual cargo handling services.
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• Premium Payments for Property Possession Rights Qualify as Taxable Service Under Section 65(105)(zzzz) and 66B

  Case-Laws - AT : CESTAT determined that premium/salami payments for property possession constitute taxable consideration under 'renting of immovable property' service. The Tribunal held that premium represents payment for transfer of property enjoyment rights and falls within service tax scope under Finance Act provisions. For periods before 01.07.2012, such payments are taxable under Section 65(105)(zzzz), and post 01.07.2012 under Section 66B. The Tribunal rejected appellant's contention that premium payments qualify for exclusion under Section 65B(44), noting that declared services cannot simultaneously be excluded from taxation. Matter remanded to Division Benches for merit-based adjudication.
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Case Laws:

• GST

• 2025 (2) TMI 249
  Refund claim - principles of natural justice - no co-relation of the invoices and the amount of foreign currency received, i.e., no e-BRC had been filed - valid proof or not - date of payment received in foreign currency is not within the refund period - HELD THAT:- It is directed that the orders of the 5th Respondent referred to in paragraph 1 above, are hereby set aside and the 5th Respondent is directed to pass appropriate orders in accordance with law following the principle of judicial discipline, within a period of 2 months from the date of receipt of this order and after following the principles of natural justice. Petition disposed off.

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• 2025 (2) TMI 248
  Maintainability of petition - availability of alternative remedy - challenge to order passed by the Appellate Authority under Section 107 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In view of the alternative remedy available to the petitioner under provisions of Section 112 of the GST Act, the petition is not entertained. Issue of pre-deposite may be considered by the Tribunal as and when such issue arises before the Tribunal in accordance with law. The petition is accordingly disposed of.

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• 2025 (2) TMI 247
  Constitutionality of Circular No. 3/3/2017-GST dated 05.07.2017 and Circular No. 31/05/2018-GST dated 09.2.2018 - ultra vires the provisions of the Central Goods and Services Tax Act, 2017 or not - proper officers for the purposes of discharge of functions under the Central Goods and Services Tax Act, 2017 - HELD THAT:- It is unable to sustain that submission since the said writ petition itself had been instituted by an individual who was not named or had been found in the course of any investigation to be the operator of the various firms concerned. Conclusion - The procedural challenges to administrative actions, such as the issuance of SCNs, must be substantiated by clear evidence of procedural or substantive violations of the law. Bearing in mind the seriousness of the allegations which stand levelled, there are no ground to interdict the SCN proceedings. Petition dismissed.

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• 2025 (2) TMI 246
  Refund of GST - Inaction on the part of the respondents in not refunding the amount of GST collected from the petitioner in the course of the execution of the contract that was awarded to the petitioner - HELD THAT:- The writ petition as of now stands disposed of directing the State Authorities to immediately process the claim of the petitioner so far as refund of GST is concerned, after due verification of facts and also the entitlement part of the petitioner is concerned. Let an appropriate decision be taken keeping in view the earlier order of the State Government dated 10.10.2018 in this regard and all subsequent orders also passed in this regard by the State. The State Authorities shall also keep in mind the contention of the petitioner that in many of the similar cases, the govt. itself has refunded the GST. Petition disposed off.

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• 2025 (2) TMI 245
  Levy of GST - expenses incurred by the petitioner for seconded employees from foreign entities - HELD THAT:- As is manifest from a reading of the second Proviso to Rule 28, it becomes apparent that the value declared in invoices generated by an entity receiving the requisite goods or services, in the present context the services from the seconded employees, shall be deemed to be the open market value of the said goods and services. As is manifest from paragraph 3.7 of its Circular No. 210/4/2024-GST dated 26 June 2024, in circumstances where no invoice is raised in respect of services rendered by its foreign affiliate, the value of such services will be deemed to have been declared as nil and it is this nil value which shall be treated as the market value of the services in question, in terms of the second Proviso to Rule 28 of the CGST Rules. Petition allowed.

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• Income Tax

• 2025 (2) TMI 244
  Reopening of assessment - notice issued beyond a period of 4 years - Applicability of TOLA provisions - reasons record that deduction u/s 54F must be restricted to the cost of acquisition of petitioner s share in the property and also no rental income has been offered for tax u/s 23 - whether this Court should exercise its extraordinary jurisdiction to examine the validity of reassessment proceedings in the present case? - HELD THAT:- The issue of whether, on account of TOLA provisions, proviso to Section 147 of the Act would be applicable or not was not raised by the petitioner in its objections. This issue has been raised for the first time before this Court. In our view, if the objection has not been raised before the assessing officer, it would not be fair to raise such an objection in Writ Petition for the first time to challenge the validity of the reassessment proceedings. Petitioner has filed undated letters to show that the issue of Section 54F was examined during the assessment proceedings and, therefore, there is a change of opinion. In the annexure to the queries raised, there is no query concerning Section 54F or taxation of rental income. Whether these undated letters were filed or not during the assessment proceedings in the absence of any document acknowledging the same by the revenue, it would not be proper for us to enter the arena of investigating this issue as to whether these documents were filed or not. This would involve an investigation into the facts that this Court, under Article 226 of the Constitution of India, cannot examine. However, the petitioner is free to demonstrate the same in appeal. Issue of rental income under the house property is concerned, no query is raised, and even in the undated letters, there is no reply on this issue. Therefore, we cannot accept the petitioner s contention that this issue was examined during the assessment proceedings. Learned counsel for the petitioner was fair in stating that, certainly, this was not examined. Petitioner also submitted that the impugned proceedings were initiated at the behest of the audit party and, therefore, the proceedings are bad in law. In our view, it is a settled position that if the audit objection is on facts, then the revenue would have no jurisdiction to reopen the case on audit. However, if the issue raised is a question of law, then certainly, reopening can be done. The issue in the present case, whether it is a question of fact or a question of law, will have to be examined in the light of the submissions made during the course of the assessment proceedings, which would again involve the determination of questions of fact, which this Court cannot go into in writ proceedings. In any view, the reasons recorded do not mention the reopening being done based on audit objections. Therefore, we have our own doubts about whether the petitioner can raise this issue. Also, we cannot comprehend how internal audit objection documents were shared with the petitioner. On perusal of the letter filed on 17 August 2018, in response to the audit party s query, we find various documents annexed to this letter. Prima facie, we do not find a reference to these documents in undated letters, which the petitioner claims to have filed in assessment proceedings. Petitioner has participated in the reassessment proceedings despite the officer not disposing of the objection observed in the assessment order. The petitioner, vide letter dated 28 March 2022, has made his detailed submissions on the merits of the case without raising any objection on the insufficiency of time between the order rejecting objection and the time given for reply. On 17 January 2022, the petitioner has filed detailed submissions on the merits again without objecting the respondents not having passed any order disposing of the objections. Therefore, in our view, the petitioner cannot now raise this contention before the Writ Court. However, the petitioner is free to raise this issue before the Appellate Authority. We refrain from exercising our jurisdiction under Article 226 of the Constitution of India. However, if the petitioner files an appeal against the assessment order dated 29 March 2022 within four weeks from the date of uploading of the present order, then, the Appellate Authority will adjudicate the appeal Ad-interim relief extended for four weeks from the date of uploading the present order to enable the petitioner to make an appropriate application before the appropriate Authority for seeking a stay of the demand.

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• 2025 (2) TMI 243
  Stay the recovery of tax demands - Appellant is a lossmaking company - Whether unconditional stay should be granted? - disturbing the profit and loss account when capital expenditure is debited to the profit and loss account to avoid book profit tax in a manner not permitted by the Companies Act - HELD THAT:- Though some arguable issues have been raised, we do not think that this is a case where the decisions relied upon by Ms Sethna concerning a strong prima facie case would be attracted and entitle the Appellant to an unconditional stay on demand. Each case would turn on its facts. The arguments based on high-pitched assessment, CBDT circulars and the decisions relied upon in that regard were mainly in the context of the first appeal against the assessment order. Today, the Income Tax Appellate Tribunal has decided the matter, confirming the demands. The usual rule would be a deposit of the entire demanded amount. However, since the rectification application is pending and Ms Sethna has urged that if the same is allowed, the tax liability will be reduced to Rs. 68.91 Crores, some departure can be made from this usual rule. But no case is made out for an unconditional stay. The circumstance that the Appellant is a loss-making company is based upon the balance sheet for the year ended 31 March 2024. Even accounting for the same, the interest of justice would be met if interim relief is granted to the Appellant subject to the Appellant depositing with the tax authorities an amount of Rs. 60 Crores within four weeks from today. Such deposit shall abide by the final orders in this Appeal. Accordingly, the Interim Application is disposed of by staying the impugned tax demand subject to the Appellant depositing with the Respondent an amount of Rs. 60 Crores within four weeks from today.

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• 2025 (2) TMI 242
  Reopening of assessment u/s 147 - Validity of approvals granted Notice u/s 148 issued by the jurisdictional Assessing Officer being rendered invalid and contrary to the procedure of faceless assessment as contemplated u/s 151A and the e-Assessment of Income Escaping Assessment Scheme, 2022 which mandates that such notices be issued only by an authority selected through an automated process and by the National Faceless Assessment Centre u/s 144B - HELD THAT:- The distribution of functions between the jurisdictional Assessing Officer and National Faceless Assessment Centre is complimentary and concurrent as contemplated under the various schemes and the statutory provisions. This balanced distribution underscores the legislative intent to create a seamless integration of traditional and faceless assessment mechanisms within a unified statutory framework. This we so hold and observe since we have, principally, been unable to countenance a situation where the jurisdictional Assessing Officer stands completely deprived of the jurisdiction to evaluate data and material that may be placed in its hands. We, find ourselves unable to sustain the challenge as addressed. The contention that the impugned notices are liable be quashed merely on the ground of the same having been issued by the jurisdictional Assessing Officer is thus negated Issue of approval as contemplated under Section 151 - Any approvals if granted by a Joint Commissioner of Income Tax post 01 April 2021 would not sustain. Once reassessment is triggered by a search, it would be incumbent upon the respondents to proceed only in accordance with Sections 153A or 153C as the case may be and to the exclusion of Section 148 of the Act - This question too has come to be answered against the writ petitioners in light of the judgment rendered by a Division Bench of the Court in Pr. Commissioner of Income Tax-7 v. Naveen Kumar Gupta [ 2024 (11) TMI 1071 - DELHI HIGH COURT ] as held that scheme of Sections 153C of the Act indicates that the said provision was enacted to simplify the procedure, while maintaining the necessary safeguards, for assessment/reassessment in cases where assets belonging to the assessee or books of account or documents, which contain information pertaining to the assessee are found pursuant to a search conducted under Section 132 of the Act or requisition made under Section 132A of the Act, in respect of a person other than the assessee. This is subject to the same having a bearing on the determination of income of the assessee. The AO is neither require to record reasons for his belief that the income of the assessee for the concerned assessment year has escaped assessment nor does he require to seek further approvals as required under Section 148 of the Act. However, he must be satisfied that the assets seized or requisitioned or the documents, books of account or other material transmitted by the AO of the searched person belongs to or contains information, which has a bearing on the determination of the income of the assessee. The reassessment must be predicated on material held to be incriminating and the income assessed/reassessed must be relatable to the material found as held by this Court in Commissioner of Income Tax v. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] and affirmed by the Supreme Court in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] Whether the reassessment notices could be said to be barred by the timelines as prescribed by Section 149 of the Act? - As period of limitation for issuance of a notice for reassessment would have expired on 12 July 2022 and consequently the reassessment notice dated 30 July 2022 being liable to be quashed and set aside. We dispose of this batch of writ petitions by directing the concerned AOs to evaluate the individual SCNs under Section 148 of the Act bearing in mind our judgments in T.K.S. Builders [ 2024 (10) TMI 1586 - DELHI HIGH COURT ], Abhinav Jindal [ 2024 (9) TMI 1282 - DELHI HIGH COURT ] and Naveen Kumar Gupta [ 2024 (11) TMI 1071 - DELHI HIGH COURT ] These decisions have conclusively settled issues pertaining to the accordal of sanction under Section 151 as well as the authority of the jurisdictional AO to commence and undertake reassessment. Those decisions also lay at rest the challenge which the writ petitioners had raised that an AO is bound to adhere to the procedure prescribed by Section 153C in cases emanating from a search. A similar exercise would have to be undertaken to examine the issue of surviving period in respect of each individual noticee under Section 148 and which would necessarily be guided by the judgments of Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB) ] and Ram Balram [ 2025 (2) TMI 55 - DELHI HIGH COURT ] The concerned AOs shall consequently pass a reasoned and speaking order dealing with the impact of the judgments referred to above upon the impugned reassessment notices. That decision shall thus render a finding on whether the impugned reassessment notices would survive or be liable to be recalled. It shall be open to the writ petitioners to assail any adverse orders that may come to be passed pursuant to the above in accordance with law.

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• 2025 (2) TMI 241
  Levy of penalty u/s.271C - Assessee failed to deduct and pay taxes on time in respect of payments made to REOL on account of the contract in question. Interest u/s.201(A) was also levied for the said default - Whether there is a reasonable cause for not deducting TDS? - CIT(A) and ITAT agreed with the explanation offered by the respondent and granted relief to it observing that the non-deduction of TDS was not tainted with mala fide, there is reasonable cause shown for not deducting. HELD THAT:- The respondent in its reply to the notice in question specifically stated that the non-deduction of tax for the subject period was due to the bona fide belief formed on the basis of the legal opinion obtained at the hands of M/s.Singhania Co., a Law Firm of repute; and the opinion of a Chartered Accountant s Firm namely Lovelock Lewis. This apart, the regular Assessee had applied on 11.09.1997 seeking advance ruling and that the Chairman of the Advance Ruling Authority did not process the same for personal reasons. Added, what benefit the respondent could derive by not deducting the tax at source, is also a factor. All these certainly constitute a reasonable cause for not effecting TDS and therefore the impugned orders being consistent with the same are not vulnerable for challenge, as rightly contended by learned Sr. Advocate appearing for the respondent. Decided in favour of assessee.

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• 2025 (2) TMI 240
  Disallowance of depreciation on goodwill accounted from the amalgamating company - HELD THAT:- Tribunal took note of the various decisions and held that once the scheme of amalgamation is approved by the High Court after giving notice to the stakeholders including the Income tax Department to state its objections, if any, to the proposed amalgamation scheme and if the revenue has not raised any objection, they would be estopped from challenging the validity of the scheme subsequently. As on perusal of the affidavit filed by the Regional Director where it has been specifically stated that as per the instruction of the Ministry of Corporate Affairs, New Delhi, a copy of the scheme was forwarded to the Income tax Department on 8th July, 2015 with a request to forward their comments/observations/objections, if any, on the proposed scheme of amalgamation within fifteen days but till the date of filing of the affidavit before the High Court, that is, on 26th August, 2015, no comments/observations/objections were received from the Income tax Department. That apart, we note that the share exchange ratio was very much part of the scheme as could be seen from paragraph 11.1 of the scheme of amalgamation which was presented for approval. Tribunal partly took note of the submissions made on behalf of the assessee for the assessment year 2013-14 which was the first year the claim for depreciation of goodwill was allowed by the Department and the matter attained finality. Though for the assessment year 2014-15 the same was allowed initially but subsequently the assessment has been reopened and the matter is stated to be pending. Thus this is already a very relevant factor which weighed in the mind of the Tribunal. Thus, we find that the issue was considered when the scheme was approved and the learned Tribunal was right in holding that the order passed by the CIT affirming the order of the AO is erroneous. Thus, we find no grounds to interfere with the order passed by the learned Tribunal. Decided against the revenue.

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• 2025 (2) TMI 239
  Validity of Reopening of assessment - taking consideration any other income which has escaped assessment and which has not specifically been pointed out in the reopening order - Addition u/s 68 - bogus accommodation entry of unexplained credit - HELD THAT:- As decided in Mehak Finvest Pvt. Ltd. [ 2014 (11) TMI 56 - PUNJAB HARYANA HIGH COURT ] AO can assess the income chargeable to tax which has escaped assessment and which has not specifically been pointed out in the reopening order and comes to his notice subsequently in course of proceedings under Section 147 of the Income Tax Act. Also in Karnataka in N. Govindaraju [ 2015 (8) TMI 271 - KARNATAKA HIGH COURT ] while relying on earlier decision of Majinder Singh Kang [ 2012 (6) TMI 616 - PUNJAB AND HARYANA HIGH COURT ] and Mehak Finvest Pvt. Ltd. [ 2014 (11) TMI 56 - PUNJAB HARYANA HIGH COURT ] has come to the conclusion that the Assessing Officer can take into consideration any other income which may have escaped assessment but discovered during the re-opening process, however, was not specifically mentioned in the reopening order. Decided in favour of revenue.

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• 2025 (2) TMI 238
  Penalty u/s 271D and 271E - mandation of recording satisfaction to be recorded in the reassessment proceedings by the concerned AO - HELD THAT:- In Jai Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT ] the Supreme Court was dealing with the issue as to whether the penalty proceedings under section 271D are independent of the assessment proceedings. In that case, in the assessment order passed in pursuance to the remand no satisfaction was recorded for initiating the proceedings u/s 271E. Though the AO stated for initiation of proceedings u/s 271(1)(c). The penalty proceeding was quashed on the ground that in absence of satisfaction recorded by the AO the penalty can not be imposed. In the case in hand the DCIT had only recorded satisfaction for proceedings u/s 271(1)(c) and no satisfaction was recorded to initiate penalty proceedings u/s 271D. The notice issued u/s 271E and the proceedings in pursuance thereto are quashed. Decided in favour of assessee.

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• 2025 (2) TMI 237
  Offence punishable u/s 276CC - there was a delay on the part of the petitioner assessee in submitting his income tax returns - whether there was a willful and deliberate delay on the part of the petitioner-assessee in submitting the Income Tax Returns? HELD THAT:- The power to levy penalty for delayed filing of the income tax returns can be traced under Chapter 21 of the Income Tax Act, while Chapter 22 of the Income Tax act provides for offences and prosecutions. A reading of the aforesaid two chapters would make it very clear that delay in filing of the income tax returns would not only result in payment of penalty, but it also results in prosecution as provided under Chapter 22 of the Act. Therefore, merely for the reason that petitioner has paid the penalty levied by the Competent Authority for the delay in filing of the returns, the same does not exonerate the petitioner from being prosecuted as provided under Chapter 22 of the Act of 1961. The explanation sought to be offered on behalf of the petitioner before this Court cannot be accepted and it is for the petitioner to lead evidence and produce necessary material before the learned Magistrate in support of his defence and rebutt the presumption available against him under Section 278E of the Act. In the case of C.P Yogeshwara [ 2017 (1) TMI 1792 - KARNATAKA HIGH COURT] this Court had quashed the proceedings initiated against the assessee for offence punishable under Section 276CC of Act of 1961, for the reason that the assessee had filed his returns as on the date of order of sanction by the Competent Authority which had gone unnoticed. Therefore the Department had erred in initiating proceedings. In the said case, this Court has not taken notice of the presumption that was available under section 278E of the Act and therefore the order passed cannot be of any assistance to the petitioners, more so in view of the judgment of the Hon ble Supreme Court in the case of Sasi Enterprises. [ 2014 (2) TMI 19 - SUPREME COURT] Thus the petitions lack merit and they are liable to be dismissed with liberty to the petitioner to raise all such grounds before the learned Magistrate in support of his defence. Criminal petitions dismissed.

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• 2025 (2) TMI 236
  Revision u/s 263 - as per CIT AO while the framing assessment had failed to consider the disallowance u/s. 40(a)(ia) therefore, the same had rendered his order as erroneous in so far it was prejudicial to the interest of the revenue - HELD THAT:- Pr. CIT cannot without recording an observation after considering the documents/material/submissions filed by the assessee in the course of the proceedings before him and arbitrarily dispensing with the very process of arriving at an opinion that the order passed by the A.O was erroneous in so far it was prejudicial to the interest of the revenue, summarily set-aside the same to the A.O for carrying out the necessary verification. If that is so permitted, then we are afraid that it will lead to a situation where the Pr. CIT without himself arriving at a finding will summarily set aside the matter to the file of the A.O, i.e. without recording a finding that the assessment order passed by the A.O is found to be erroneous in so far it is prejudicial to the interest of the revenue u/s 263 which, we are afraid is not permissible as per the mandate of law. Outsourcing of the jurisdiction under Section 263 by the Pr. CIT to the A.O. is not permissible as per the settled position of law. Rather, we will mince no words in observing, that the setting aside of the matter to the file of the A.O for carrying out necessary verification and arriving at a conclusion as to whether or not the order so passed by him is erroneous, thus, would lead to a situation wherein the jurisdiction to revise the order u/s. 263 of the Act would impliedly get vested with the A.O. CIT had failed to bring the proceedings initiated by him under Section 263 of the Act to a logical end, i.e. the assessment order passed by the A.O u/s. 143(3) as per him was found to be erroneous in so far it was prejudicial to the interest of the revenue, and rather, had aborted in the mid-way the very process for arriving at the aforesaid view, thus, the same had resulted to setting-aside of the assessment order to the file of the A.O for verifying as to whether or not the assessment order is found to be erroneous in so far it was prejudicial to the interest of the revenue, which is not found as per the mandate of Section 263 of the Act. Thus in the absence of any observation of the Pr. CIT that the order passed by the A.O. is found to be erroneous, therefore, are constrained to set-aside the order passed by him u/s 263 and restore the order passed by the A.O. u/s. 143(3). Assessee appeal allowed.

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• 2025 (2) TMI 235
  Undisclosed cash deposit in the bank account - onus to prove - assessee explained that she had received the said amount by way of gift from her late father and submitted a copy of Halfia Bian/gift deed executed by her Late Father as well as copy of the sale deed executed by her Late Father whereby he has sold his agriculture land HELD THAT:- A registered gift deed will no doubt have an edge over an unregistered gift deed, at the same time, mere nonregistration of the said gift deed is not sufficient to dislodge the existence and contents of such gift deed, more so where the original gift deed has been presented for verification before the AO and the AO has failed to carry out any further verification/examination and without bringing any adverse material on record. As far as non-production of the bank account statement of the assessee s late father is concerned, the assessee has tried to obtain the bank statement of her late father, but the same couldn t be obtained inspite of her best efforts, however where the mode of gift is clearly in cash, the bank statement even if produced would only corroborate the gift deed and cannot dislodge the gift deed and the contents and source of such gift which is otherwise clearly established. Assessee has thus discharged the necessary onus in terms of explaining the nature and source of receipt in her bank account by way of gift of money from her late father and even the creditworthiness and source of funds in the hands of the her late father has been duly demonstrated, being the sale proceeds of agriculture land, a factum which has been separately verified and accepted in the assessment proceedings undertaken u/s 147 r/w 143(3) of the Act. AO was not justified in treating the gift received by the assessee from her late father as her income from undisclosed sources. Decided in favour of assessee.

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• 2025 (2) TMI 234
  CIT(A) setting aside the assessment orders u/s 251(1)(a) when the assessee was responsive during assessment proceedings - AO directed to verify the cash/credit entries made in bank account of the appellant and directed to verify the credits made into the bank account by cash or otherwise and also verify the withdrawals made by the appellant and the destination of the same HELD THAT:- The direction of the learned CIT(A) are flawed and superfluous, because the Assessing Officer has made the addition as the assessee failed to discharge its onus. The assessee cannot be permitted to improve his cases by permitting a second innings. Moreover, the assessment orders having not been revised under section 263 of the Act cannot be held to be lacking on the aspect of enquiry. The impugned orders passed by the learned CIT(A) for both the years under consideration are set aside and the assessment orders passed by the Assessing Officer for A.Y. 2015 16 and 2018 19 are hereby restored. Accordingly, all the grounds raised by the Revenue in the years under consideration are allowed.

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• 2025 (2) TMI 233
  TDS u/s 194C - non-deduction of TDS on transport charges - HELD THAT:- As gone through the section 194C(5) of the Act, where it has been stated that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income tax under this section. As the assessee made payments below fifty thousand rupees, assessee is entitled for an amount of Rs.1,00,524/-. Hence, this ground raised by the assessee is allowed. Whether there is no direct contract between the assessee and the transport companies and the seller has made the arrangements? - It is an admitted fact that the entire amount of transport charges was paid by the assessee. Even as per the contention of the assessee that the seller has arranged the lorries on behalf of the assessee, but the assessee has not produced any evidence to establish that the lorries were engaged by the seller. Moreover, there is no mention u/s 194C that there should be a direct contract between the assessee and the transporters to deduct TDS u/s 194C of the Act. It is an admitted fact that the entire transportation amount was paid by the assessee to the transporters. Therefore, there is a contract between the assessee and the transporters. Hence, whatever the amount paid by the assessee is liable to deduct TDS. No hesitation to come to a conclusion that the TDS provision under section 194C is applicable to the present case on hand. Alternatively, the plea of the assessee is that AO is not justified in disallowing the entire amount for non-deduction of tax at source. According to the amendment of the 1st proviso to section 40(a)(ia) of the Act, wherein it has provided to restrict the disallowance to the tune of 30% of the amount of expenditure claimed as retrospectively applicable from 1st April, 2015. However, the assessee has not pleaded before the ld. Assessing Officer as well as ld. CIT(Appeals) about the amendment. Therefore, remit the matter back to the file of ld. Assessing Officer to examine this issue afresh and pass a speaking order regarding the amendment vide Finance Act, 2014 to the first proviso to section 40(a)(ia) - Alternative ground raised by the assessee is allowed for statistical purposes.

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• 2025 (2) TMI 232
  Penalty u/s 271B - assessee failed to furnish any tax audit report and get its account audited u/s 44AB - HELD THAT:- The assessee belongs to a remote area where the facilities of a consultant may not be readily available. As stated that the assessment was made for the first-time u/s 144 of the Act and prior to that the assessee was not aware about the applicability of Income-tax Act. Non-filing of the audit report, it was stated before the Ld. CIT(A) that although he got his books of account audited by a CA, however, the audit report could not be uploaded due to failure on the part of the CA. Being in a remote area there was a default. CIT(A), it was claimed in the grounds of appeal that the books of account were already audited on 18.09.2017 but a mistake happened on the part of the CA that the return and the audit report had not been filed and uploaded respectively for the said year. A copy of the audit report was filed during the course of the appeal proceeding before the Ld. CIT(A). Thus, the assessment being made for the first-time and the assessee remaining in a remote area where the facility for such consultant may not be available, we are of the view that the assessee should not be penalised on account of the default committed by the CA as he is a small and first-time taxpayer and the default occurred due to lack of adequate guidance from the professional he had engaged. Hence, the penalty levied u/s 271B of the Act is cancelled and the appeal is allowed.

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• 2025 (2) TMI 231
  Validity of reassessment proceedings - Unexplained cash u/s 69A - HELD THAT:- On one hand the assessee has not furnished the return of income and secondly she did not respond to the communication of the AO who had reason to believe that the cash deposits can be from unexplained sources of income. In our considered opinion, under given facts and circumstances, a valid notice u/s 148 was issued after getting prior approval from the competent authority because there was a valid information from the bank account about cash deposit, no return was filed by the assessee and no further information was given by the assessee in response to the letter dated 18.01.2018. therefore dismiss the legal ground raised in ground no.4. Unexplained cash deposit - Alleged sum is part of the sale consideration received by the assessee during the year from the business of trading in Cashew Seeds. Estimation of net profit apart from placing the purchase and sale register, no other documents supporting the expenditure has been furnished and also the cash received has mostly being utilized either for purchase or for making payment to husband and purchase of immovable property. Therefore, certainly the margin of profit of the assessee is on much higher side as has been declared in the income tax return. In the absence of any details about opening and closing stock (if any) difference of purchase and sales as given by the assessee. Though there are certain withdrawals during the year and the same includes household drawings utilized by the assessee, estimate net profit of Rs. 3,00,000/- as against Rs. 1,96,800/- declared by the assessee. Accordingly, addition of Rs. 1,03,200 is sustained in the hands of the assessee and remaining addition is hereby deleted - Decided partly in favour of assessee.

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• 2025 (2) TMI 230
  Condonation of the delay of about 07 months in filing the appeal before CIT(A) - HELD THAT:- Hon ble Supreme Court in the case of Collector, Land Acquisition vs., MST Katiji [ 1987 (2) TMI 61 - SUPREME COURT] has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown-out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Thus, we deem it fit and appropriate to condone the delay of about 07 months in filing the appeal before the CIT(A) and remit the matter in issue back to the file of learned CIT(A) for his afresh adjudication on merits, by affording adequate opportunity of being heard to the assessee. Grounds raised by the assessee are allowed for statistical purposes.

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• 2025 (2) TMI 229
  Validity of reopening proceedings - unexplained cash credit u/s. 68 - eligibility of reasons to believe - as alleged borrowed satisfaction without establishing any tangible nexus between the information received and belief formed - HELD THAT:- AO has not mentioned the name of the company through which the assessee has received the alleged sum but merely based on the information received from Investigation Wing about some individuals, proprietary firms and Private Limited Companies where huge cash was deposited and immediately thereafter transferred to other bank accounts which in generally large with abnormal pattern and having no business rationale. AO had not made efforts to give that detail of the companies through which the assessee has received the alleged sum, the nature of transaction whether such transaction has already been declared in the audited balance sheet filed by the assessee. There is also no proper reason to believe which could show that the income has escaped assessment. It is a clear case of borrowed satisfaction and the reopening is carried out without any tangible material in the possession of the AO. The case of the assessee has been opened after four years and there is no observation of the AO that the assessee had failed to disclose the relevant material information in its regular return of income. Assessee has filed the detail of the company through which it received the alleged Share Application money and the same has been returned on the same day for entering into another transaction. Detail of these transactions were filed by the assessee but no enquiry whatsoever has been carried out. As relying on South Yarra Holdings [ 2019 (3) TMI 582 - BOMBAY HIGH COURT] re-assessment proceedings carried out in the instant case by the AO are without any tangible material and without independent application of mind even when all the details of the alleged transaction were duly explained by the assessee. Decided in favour of assessee.

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• 2025 (2) TMI 228
  Estimation of income - bogus purchases - CIT(A) restricted addition of the gross profit @4% as against 12.5% determined by AO - HELD THAT:- As in V. Jiwani [ 2022 (10) TMI 173 - BOMBAY HIGH COURT] held that in cases involving bogus purchases, only the profit element embedded in such purchases should be treated as the income of the assessee. CIT(A) accordingly adopted a gross profit rate of 4%, respectfully following the rulings of Mohammad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] . These decisions of the Hon ble Jurisdictional High Court are binding upon us. We respectfully follow the direction supra, no infirmity in the impugned appellate order.

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• 2025 (2) TMI 227
  Penalty levied u/s 271(1)(c) - addition made in the quantum appeal are deleted by the Coordinate Bench of this Tribunal - HELD THAT:- When the very addition on which penalty has been levied u/s 271(1)(c) has been deleted/set-aside for fresh adjudication, the penalty levied u/s. 271(1)(c) also does not survive. With due respect to the Tax Appeal pending before the Jurisdictional High Court, further Section 275(1A) of the Act provides that the Assessing Officer to impose or enhance or reduce or cancel penalty pursuant to the quantum appeal before Commissioner (Appeals) passed u/s. 246A or appeal before Appellate Tribunal passed u/s. 253 or appeal before High Court passed u/s. 260A or appeal before Supreme Court passed u/s. 261 or Revision order passed u/s. 263 of the Act by giving effect to the quantum order. No infirmity in the order passed by Commissioner (Appeals) deleting Penalty levied u/s. 271[1][c] of the Act. Thus the AO has in-built power to give effect to every appellate order and consequently revise the penalty under section 271[1A] of the Act, therefore the ground raised by the Revenue is devoid of merits and the same is liable to be dismissed.

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• 2025 (2) TMI 226
  TP Adjustment - determining the ALP at NIL value of the international transaction representing business support services - assessee has benchmarked the transaction at entity level by applying TNMM Method and accordingly claimed the same at ALP - HELD THAT:- While determining the Arm s Length Price (ALP) of international transactions under transfer pricing regulations, aggregation of transactions is often necessary provided transactions are closely linked functionally or economically. Likewise, transactions of similar type (e.g., sale of goods, services, intangibles) can be aggregated. Unconnected transactions refer to international transactions between associated enterprises (AEs) that lack economic, functional, or contractual interdependence. These transactions do not influence each other and, therefore, cannot be aggregated for determining the Arm s Length Price (ALP). In the case on hand, the transaction being management support services is separate and independent to the other international transactions of the assessee, therefore the same cannot be aggregated with other transaction for working out the ALP. Most Appropriate Method (MAM) - Whether the TPO was justified in rejecting the TNMM as the Most Appropriate Method (MAM) and adopting the CUP method? - We note that the assessee was to demonstrate the actual services received before making claim in the profit and loss account. Simply filing the Master agreement, statement of work, invoice of the AE and few emails by the assessee do not ipso facto establish the fact of receiving of services from the AE. It has been held by the lower authorities that the impugned business support charges represent the allocation of the cost which is nothing but the shareholders services. There is lack of supporting documents to draw the conclusion whether the impugned cost is an allocation of cost or represents the services availed by the assessee. In this backdrop, we are inclined to restore the issue to the file of the TPO for fresh/ de-novo adjudication as per the provisions law without getting from influenced from the above discussion. Hence, the ground of appeal of the assessee is allowed for statistical purposes.

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• 2025 (2) TMI 225
  Revision u/s 263 - income declared by the assessee during the survey should have been taxed u/s 115BBE, rather than at the normal rates - HELD THAT:- Question of applicability of tax rate will come into picture if the assessee would have not declared prior to the conclusion of the assessment proceedings but in the present case on the survey proceedings itself, the assessee has declared the income and the same is not denied by the Pr. CIT being the income from business out rightly only has given his opinion it should have been treated as income from other sources. As decided in DHARTI ESTATE [ 2024 (1) TMI 1197 - GUJARAT HIGH COURT] during the course of assessment proceedings, as the AO had made due inquiries and was aware of the fact that the assessee had disclosed the income as business income in his return of income in respect of which it had claimed expenditure in relation to interest and remuneration paid to partners and after making inquiries, AO allowed the claim of the assessee by treating undisclosed income found during the survey as assessee s business income. The purview and scope of section 263 do not envisaged the Pr. CIT to go into the adjudication on merit of the assessment which is made by the Assessing Officer after proper verification of the evidences. CIT has to only look into the issue whether the assessment order is erroneous or prejudicial to the interest of revenue or not. Therefore, the Pr. CIT was not right in invoking Section 263 of the Act in the present assessee s case. Decided in favour of assessee.

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• 2025 (2) TMI 224
  Denial of deduction u/s. 80P - no valid return of income was filed by the assessee - HELD THAT:- Admittedly, in the present case the assessee has not filed valid return of income either under the provisions of section 139 or in response to the notice u/s. 142(1) issued by the AO. The provisions of sub-section 80A(5) mandates that in order to claim a deduction under the section specified under Chapter VI-A, a claim is required to be made in the return of income. The issue in the present case is settled against the assessee by the decision of Nileshwar Range Kallu Chethu Vyavasaya Thozihilali Sahararana Sangham [ 2023 (3) TMI 1055 - KERALA HIGH COURT ] as held that the assessee is not entitled for deduction u/s. 80P as no valid return of income was filed by the assessee society - Decided against assessee. Penalty levied u/s. 271B - audited financial statements were not furnished by the assessee within the due date as specified u/s 44AB - HELD THAT:- As decided in Chavakkad Service Co-op. Bank Ltd. [ 2024 (11) TMI 1272 - KERALA HIGH COURT ] where assessee co-operative societies did not file audit report as mandated u/s 44AB within time limit specified thereunder, however, audit reports were made available before Assessing Authority at time of finalization of assessments, since delay in obtaining audit reports from statutory auditors under Kerala Co-operative Societies Act and Rules could be seen as a reasonable cause for delayed submission of audit reports, no penalty under section 271B was to be imposed on assessee. Deduction u/s 80P(2)(d) on account of interest received from District Co-operative Bank and Treasury allowed.

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• 2025 (2) TMI 223
  Addition of differential agricultural income - HELD THAT:-Assessee had filed the return of income for AY.2016-17 wherein agricultural income Rs. 7,17,797/- was declared. The same was processed u/s 143(1) of the Act and the case was not picked up for scrutiny. Therefore, the AO could have added the impugned sum by re-opening the assessment for AY.2016-17. However, he has allowed agricultural income partly. Income offered in the earlier year cannot be disturbed without scrutinizing the return by way of regular assessment or re-assessment u/s 143(3) or 147 of the Act respectively. Therefore, the addition is deleted. Unexplained cash credits u/s. 68 r.w.s. 115BBE - AO has added it u/s 68 by holding that higher exempted agricultural income was declared only to explain the cash deposit during demonetization period - HELD THAT:- AO concluded that (i) no tenant details are available on government record, (ii) details of crop cultivated shows Padtar , which means no agricultural activity has been undertaken on the land and (iii) that there was no irrigation facility in the land. These findings have not been disproved by the appellant before CIT(A) or the Tribunal. Therefore, the plea of extra agricultural income cannot be accepted. We find that the assessee was also engaged in the retail trading business in the name of Shreeji Paints Ply . Therefore, benefit of cash sales and debtors realization cannot be denied to assessee till the date of cash deposit. Disallowance would be sufficient to avoid possibility of revenue leakage. Accordingly, addition is upheld and the remaining amount is deleted. The ground is partly allowed. Addition at the enhanced rate of tax u/s 115BBE - Applicability of amended provision of Section 115BBE is not retrospective. There is no reason not to follow above decisions. Thus, the AO is directed to tax the addition at normal rate of tax and applicable surcharges and cess, if any. The assessee is, accordingly, allowed relief against taxing the addition at higher rate u/s 115BE of the Act.

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• 2025 (2) TMI 222
  Validity of notice u/s. 153C - Validity of rectification of orders under Section 154 - HELD THAT:- Perusal of the findings of the Hon ble jurisdictional High Court would show that the Hon ble High Court [ 2024 (2) TMI 116 - KARNATAKA HIGH COURT ] was please to hold that notices u/s. 153C is bad in law. However, in [ 2022 (8) TMI 1233 - KARNATAKA HIGH COURT ] which is related to the impugned assessment year, the Hon ble High Court after quashing the earlier order has remanded the matter to the revenue for deciding it afresh in view of the judgment rendered by the Hon ble High Court. Perusal of the above findings would prove beyond doubt that the impugned order of the AO dated 31.12.2019 is no more in existence, as the Hon ble High Court has already quashed the assessment order. Therefore, the 154 orders passed by the revenue are also non-est as the same are passed in consequence to an order which is already set aside by the Hon ble jurisdictional High Court. Treatment of cash seized from the premises of the assessee - It is the categorical finding of the Hon ble jurisdictional High Court that the cash found was belonging to the assessee only and the revenue has also accepted the said cash as payment of advance tax. It is further worthy to note that the assessee vide letter dated 18.11.2019 has categorically stated that cash seized from the premises of the assessee may be adjusted against the outstanding tax liability. Therefore, we are of the view that the cash found from the premises of the assessee was actually belonging to the assessee and hence in terms of the request of the assessee, the same cash shall be treated as payment of advance tax by the assessee. Assessee appeal allowed. Deduction of employees contribution of PF ESI amount paid beyond the due date specified under the relevant regulations , is no more res integra in view of the judgment of the Hon ble Supreme Court in the case of Checkmate [ 2022 (10) TMI 617 - SUPREME COURT ]. Therefore, there is no merit in restoring the matter back to the file of the ld. CIT(Appeals) and opportunity of being heard to the assessee.

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• 2025 (2) TMI 221
  Accrual of income - mercantile system of accounting - Income relating to the unaccepted data - HELD THAT:- it is well settled that income can be said to accrue only when the assessee acquires a right to receive that income [C.IT V. Ashok Bhai [ 1964 (10) TMI 11 - SUPREME COURT] ] and such accrual may depend on the agreements which may give rise to such rights. AR cited the decision in Godhra Electricity Co. Ltd. [ 1997 (4) TMI 4 - SUPREME COURT] wherein the Hon ble Supreme Court reiterated the concept of real income , emphasizing that even under the mercantile system, a mere claim by the assessee is not sufficient to make income accrue on the basis of hypothetical income - the income must actually become due. Although the assessee company was following the mercantile system of accounting and had made entries in the books regarding enhanced charges for the supply of electricity made to its consumers, no real income had accrued to the assessee-company in respect of those enhanced charges in view of the representative suits filed by the consumers which were decreed by the court and ultimately, after various proceedings which took place, the assessee- company had not been able to realize the enhanced charges. Since no real income having accrued, it was held that the amount due on enhancement was not assessable to Income Tax. In a subsequent decision rendered in CIT v. Bokaro Steel Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] following its earlier decision in Godhra Electricity Co. Ltd. s case [ 1997 (4) TMI 4 - SUPREME COURT] affirmed the decision of the Patna High Court wherein it was held that the entry in the books of account shown as income from Hindustan Steel Ltd. for the 8 locomotives supplied by the assessee-company to them could not be brought to tax as income since this entry reflected hypothetical income and only the real income could be brought to tax. In CIT v. Modi Rubber Ltd [ 1997 (9) TMI 92 - DELHI HIGH COURT] held that a mere unilateral act of the assessee debiting the books of account, the liability for payment whereof was not accepted or agreed to by the debtor, did not amount to income accrued to the assessee. No infirmity in the impugned order of the Ld.CIT(A) deleting the addition - Decided in favour of assessee.

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• Customs

• 2025 (2) TMI 220
  Seeking deletion of bail condition - condition requiring Applicant to surrender his passport every time he returns from abroad and obtain permission to travel abroad on the next occasion - infringement of fundamental rights under Articles 19(1)(g) and 21 of the Constitution of India - maxim generalia specialibus non derogant (general things do not derogate from specific things) - HELD THAT:- At the outset it is seen that passport is not an incriminating document in the prosecution case and hence seizure of passport permanently prima facie would stand contrary to the provisions of the Passports Act, 1967 and more specifically Sections 10(3)(e) and 10-A thereof. The condition of permanent seizure of passport by the Court would indirectly amount to impounding of the passport. The Passports Act is a special Act and it would override the provisions of Cr.P.C. for the purpose of impounding / retention of passport. The present case is such that considering the business profile and antecedents of the Applicant he would be required to travel abroad at short notice and therefore if he has to seek release of his passport on every occasion, the time spent in doing so is clearly detrimental to his prospects given the existential conditions in Court. This is not a case where the Applicant has misused the liberty given to him. Submission on behalf of the DRI that he is a flight risk therefore cannot be countenanced as perviously Court has released his passport thrice and Applicant has travelled aboard and diligently complied with the condition of return. Employing such an onerous condition in a bail order clearly amounts to indirectly impounding of the passport in substance. The Passports Act is a special law while Cr.P.C. is a general law and it is well settled that the special law prevails over the general law. This principle is expressed in the maxim generalia specialibus non derogant. Conclusion - It will be unjust to deny the Applicant the opportunity to travel abroad for his future business prospects, if such an opportunity would stand defeated due to the delay in the present system for seeking permission of the Court for release of the passport on every such occasion which is practically not possible due to the existential delay that occurs. It is seen that Applicant has deep roots in the Society and no criminal antecedents whatsoever. Condition No.3 in the bail order dated 21.05.2021 therefore stands deleted - the impugned order dated 13.12.2022 is quashed and set aside. Application allowed.

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• 2025 (2) TMI 219
  Levy of penalty imposed on the petitioner company for not achieving positive Net Foreign Exchange Earnings (NFE) within the stipulated time - grant of extension of three months to achieve positive NFE (Net Foreign Exchange) - whether the penalty imposed by the respondent authority to Rs. 17.10 lakhs is justified in the facts of the case or not? - HELD THAT:- It appears that the petitioner company could not achieve the positive NFE in the year 2008-09 on account of heavy rains and cyclone in the area, the goods lying in the unit of the petitioner company were severely damaged and were not worthy of exports and amounted to wastage, as a result, the petitioners had to clear such goods as wastage by way of the Domestic Tariff Area Sale. In such case, when the petitioner company has achieved positive NFE subsequently in the year 2011-12 and on undertaking given by the petitioner company to achieve positive NFE for the block period, the petitioner has been permitted to carry out export and import transactions and ultimately, the petitioner company achieved positive NFE which was submitted along with the letter dated 02.03.2012 before the respondent. It would, therefore, germane to refer the condition of achieving NFE by the SEZ unit as per Rule 53 as it existed prior to 2019. As per sub-rule (2) of Rule 54 of the SEZ Rules, SEZ unit is liable for penal action under the provisions of the FTDR Act in case the Approval Committee come to the conclusion that the a unit has not achieved positive Net Foreign Exchange Earning or stipulated Value Addition as specified in Rule 53 or such unit has failed to abide by any of the terms and conditions of the Letter of Approval or Bond-cum-Legal Undertaking. In the facts of the case on hand, there is no dispute that the petitioner unit has achieved positive NFE for the block of 5 years, i.e. from 2005-06 to 2009-10. Therefore, no penalty could have been imposed upon the petitioner unit, more particularly when Rule 54 (2) of the SEZ Rules only stipulates for achieving the positive NFE. It is also pertinent to note that the petitioner unit has also provided valid reasons for not achieving positive NFE due to heavy rains during the year 2008-09. This fact is also taken note of by the Development Commissioner at the relevant point of time which is reflected in the order passed by him in the first round of litigation, wherein the statement of the Development Commissioner is recorded to the effect that the petitioner unit achieved positive NFE. Conclusion - Considering the facts of the case and the explanation tendered by the petitioner for not achieving positive NFE and in view of Rule 54 (2) of the SEZ Rules read with sections 11 and 13 of the FTDR Act, it is opined that a token penalty of Rs. 10,000/- is required to be imposed upon the petitioner for temporary breach of condition of not achieving positive NFE. The impugned order imposing penalty as well as the Appellate Authority confirming the amount of Rs.17.11 lakhs is modified and the penalty amount is reduced to Rs. 10,000/- only, which shall be paid by the petitioner within a period of four weeks from the date of receipt of this order - petition allowed in part.

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• 2025 (2) TMI 218
  Classification of imported goods - Self-Loading Concrete Mixtures (SLCM) - classifiable CTH 8474 3110 or under CTH 8708? - HELD THAT:- In the present case the importer is also the manufacturer of SLCM for which the imports of parts have been made. They possess a Central Excise Registration Certificate for Self Loading Concrete Mixers falling under Tariff Heading 8474. Once the decision on the main machine has been taken by the Proper Officer in charge of the factory it is not deemed proper to sit in judgment over the said classification when that matter is not here. The Telangana VAT Appellate Tribunal in Appellant s own case T.A. No. 137/2016 dated 09.09.2016 has classified SLCM under CETH 8474. Even under the GST regime, the appellant has stated that the SLCM s manufactured by them are sold and cleared under Heading 8474. Since the classification of the parts of the SLCM is dependent on the classification of the SLCM which falls under CETH 8474, as decided by the Central Excise Authorities and not under 8708 as stated by the customs department, the classification of the parts of the SLCM proposed by revenue in the present appeals / cross objections, fails. A Coordinate Bench of this Tribunal in Sun Rise Traders v. Commissioner of Customs, Mundra [ 2022 (1) TMI 468 - CESTAT AHMEDABAD ], held that it is a settled legal position that if the goods are not classifiable under the chapter heading proposed by the revenue thereafter even if the goods is classified under the chapter heading claimed by the assessee are correct or not, the case of the department will fail. Conclusion - Classification of the parts of the SLCM is dependent on the classification of the SLCM which falls under CETH 8474, as decided by the Central Excise Authorities and not under 8708 as stated by the customs department. The classification of the goods as declared in the BoE s does not merit a change. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 217
  Seeking permission of the Adjudicating Authority, to sell the Corporate Debtor (CD) as a going concern through private sale method - appropriateness of the Swiss Challenge Mechanism - HELD THAT:- The Hon ble Supreme Court in R.K. Industries [ 2022 (8) TMI 1162 - SUPREME COURT ] held that anchor bidder had no vested right to insist that the process must be taken to its logical conclusion. R.K. Industries was treated to be anchor bidder, but due to intervening facts, including the offer received from Welspun for purchase of materials as well as the land, SCC had decided to go for private sale of consolidated assets. Due to the above reasons, the Liquidator left the process of Swiss Challenge and discontinued the Swiss Challenge Process opting for private sale. The above observation of the Hon ble Supreme Court was in reference to the facts of that case. There can be no dispute to the proposition that an anchor bidder has no indefeasible right. Anchor bidder has to place first bid, after which other bidders are required to participate and give a higher bid. The present is a case where the OASPL, offer was treated to be a base bid giving right of RoFR and the Swiss Challenge Process was to proceed thereafter, which was fixed for 29.01.2025. The judgment of the Hon ble Supreme Court in R.K. Industries case as noted above, in no manner support the submission of the Appellant in the present case that the OASPL could not have been given Right of First Refusal. On looking into the Discussion paper, it clearly mentions that Swiss Challenge is a time-tested mechanism and has proven to be highly effective. The Swiss Challenge Mechanism has also been incorporated in hybrid method pertaining to pre-packaged insolvency resolution process. Section 54K of the IBC contemplate the base resolution plan by the Applicant and thereafter other competitive resolution plans are invited in event the base resolution plan is not approved. The Discussion Papers issued by IBBI are Discussion Papers to elicit response from stakeholders and to inform the stakeholders about the issues, which arose regarding working of IBC and Regulations. Discussion Papers are only to inform the issues and elicit response to strengthen the regulatory framework. The Discussion Paper in no manner can affect the statutory and regulatory scheme governing the liquidation process as noticed in foregoing paragraph of this judgment. Thus Discussion Paper dated 27.08.2021 relied and as extracted by the Appellant, in no manner help the Appellant to support his submission in the present case. The power and duties given to the Liquidator under the IBC and the 2016 Regulations, has to be exercised within the four corners of the statutory provisions. The decision taken by the Liquidator to proceed with private sale by adopting Swiss Challenge Mechanism, cannot be said to be a decision beyond the jurisdiction or authority of the Liquidator. Furthermore, SCC has already endorsed the said decision after detailed discussion as noted above. Conclusion - i) The Swiss Challenge Mechanism is a valid and transparent method for asset sale, consistent with the principles of natural justice. ii) Granting the Right of First Refusal to OASPL was justified given the context and lack of other offers. iii) The Liquidator acted within the scope of the IBC and 2016 Regulations, with SCC s approval supporting the actions taken. There are no error in the order passed by Adjudicating Authority, which warrant any interference by this Tribunal in exercise of its appellate jurisdiction. There is no merit in the Appeal - appeal dismissed.

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• PMLA

• 2025 (2) TMI 216
  Money Laundering - legality of search and seizure conducted at his residence from 28.10.2024 to 29.10.2024, as well as the subsequent statement recorded under Section 17 of the Prevention of Money-Laundering Act, 2002 - proceedings based solely on the assumption or suspicion that the petitioner, as the former Commissioner of MUDA, might be in possession of records related to the offence of money laundering, is violative of statutory procedural safeguards - reason to believe under section 17 (1) of PMLA, 2002. Whether the authorisation issued to conduct the impugned search and seizure at the residence of the petitioner on 28.10.2024 and 29.10.2024, and the consequent statement recorded under Section 17 of PMLA, 2002 suffers from lack of jurisdiction? - HELD THAT:- A careful perusal of Section 17 of the Act, 2002, the relevant portion of which is extracted hereunder, reveals that the competent authority under the Act to authorize a search and seizure of any premises is the Director or any other officer authorized by the Director, for the purposes of Section 17, provided such officer is not below the rank of Deputy Director. Therefore, the statute clearly limits the vesting of authority to record reasons to believe on the basis of material in possession with highest responsible authority to prevent the misuse of such provisions. Furthermore, the words the Director in sub-section (1) of Section 17 were substituted for the words the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section vide the Amendment Act 21 of 2009 (w.e.f. 1.06.2009). Where the Director has clearly authorised the Joint Director (an officer above the rank of Deputy Director) for purposes of Section 17 of PMLA, 2002 vide Circular No. Circular Order (Tech) No. 03/2011, dated 27.09.2011, the conduct of impugned search and seizure under Section 17 of PMLA, 2002 cannot be faulted for lack of jurisdiction. Whether the said impugned search and seizure and the statement recorded, is bad in law for lack of the requisite reason to believe under section 17 (1) of PMLA, 2002, and is therefore, an abuse of process of law? - HELD THAT:- Concluding its observations in Arvind Kejriwal [ 2024 (7) TMI 760 - SUPREME COURT ], the Supreme Court held that reason to believe must be distinguished from mere grave suspicion . It refers to the reason for the formation of belief which must have rational connection with or an element bearing on formation of belief. The reason must not be extraneous to the provision s purpose. The Court further held that reason to believe should be furnished to the arrestee at the time of arrest to enable them to challenge the arrest. It opined that any State action prejudicing personal liberty is subject to judicial review. The Court concluded that doubts arise only when the reasons recorded by the authority are unclear or ambiguous, thereby necessitating deeper scrutiny to determine the validity of the reason to believe. In the present case, the alleged predicate offence pertains to the illegal allotment of sites during the petitioner s tenure as the Commissioner of MUDA. However, there is no evidence to demonstrate that any consideration passed in relation to the conveyance or relinquishment of such sites was received by the petitioner. Consequently, the petitioner cannot be attributed any role in possessing, concealing, or using the proceeds of crime to constitute an offence under Section 3 of the PMLA, 2002 - the existence of reason to believe, as required under the Prevention of Money Laundering Act, 2002 (PMLA), mandates the presence of sufficient cause to indicate the commission of the offence of money laundering. Additionally, it necessitates a corresponding justification for the seizure of any records or proceeds of crime discovered during the search. Such a requirement ensures that the said property is not dissipated, layered, or integrated in a manner that renders it seemingly legitimate. It is now well settled that reason to believe must exist on the basis of evidence regarding the existence of certain facts. In the instant case, no such material as was in possession at the time of search, has been furnished to this Court to probablize the purported involvement of the petitioner. In absence of the same, any conclusion arrived at necessitating the search does not satisfy the threshold of reason to believe , as envisaged under the PMLA, and is therefore, no more than a mere suspicion of involvement in the offence under the Act. Thus, this Court is of the opinion that the impugned search and seizure conducted at the residence of the petitioner was unwarranted and based on unfounded suspicion, and is therefore, an abuse of process of law. Whether the impugned summons/notices issued under Section 50 of PMLA, 2002 and the various statements recorded thereunder, be sustained under the law? - HELD THAT:- In the present case, summons under Section 50 were issued following the illegal search and seizure conducted under Section 17 of the PMLA. However, as established in the preceding paragraphs, the reasons recorded for the search do not satisfy the essential elements required to establish the commission of an offence under Section 3 of the PMLA. As a result, the search and seizure lacked proper authority for there being no proper reason to warrant such a search. The respondent-Agency can summon any person to record a statement or produce a document or record only in cases where there is credible evidence that an offence under Section 3 of PMLA has been committed, and in such circumstances, the person who has been summoned cannot raise any grievance against the issuance of summons. In light of the circumstances of this case, where no prima facie case has been established showing that an offence has been committed under the PMLA, and no incriminating material has been elicited at the time of search and seizure, the issuance of summons to the petitioner lacks legal authority. The petitioners cannot be compelled to appear and record their statements or produce documents, as such actions would unjustly infringe upon their personal right to liberty. Whether, in the course of its administration and execution of the PMLA, 2002, the attachment of property under Section 5 of the Act must mandatorily precede the conduct of search and seizure under Section 17 of the said Act? - HELD THAT:- As against the submission of the learned ASG that the instant petition suppresses material facts of the petitioner and the scope of responsibilities incumbent upon him, in relation to holding of the office of Commissioner of MUDA in the past, it is to be observed that the petitioner is not an accused in the predicate offence and that unless the petitioner were to be informed that the investigation conducted is in relation to the particular predicate offence, and that the impugned search and seizure and the subsequent issuance of summons were in relation to purported role of the petitioner in the illegal allotment of 14 sites to an accused in the predicate offence, it cannot be expected of the petitioner to disclose past fact of having discharged any duties of such nature. The right to liberty and privacy under Article 21 of the Constitution vests a right against the conduct of arbitrary searches, and therefore, the search conducted on the premises of the petitioner under the garb of investigation, when there is no prima facie evidence to establish the offence under Section 3 is but an abuse of process of law. The Enforcement Directorate cannot give the elements of procedural fairness contained in the PMLA a go-by in the course of its administration. It is pertinent that the right to liberty and privacy of individuals cannot be trampled upon and that any curtailment of civil liberties is subject to the due process of law. Conclusion - i) The search and seizure conducted at the petitioner s residence and the statement recorded under Section 17 (1) (f) of the PMLA are declared invalid and illegal. ii) The statement recorded under Section 17 (1) (f) is ordered to be retracted. iii) The summons issued under Section 50 of the PMLA and the various statements recorded thereunder are quashed. iv) The petitioner is granted the liberty to initiate action under Section 62 of the PMLA against the concerned officer, as the matter of whether the search and seizure were vexatious is subject to trial. Petition allowed.

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• Service Tax

• 2025 (2) TMI 215
  Valid service of SCN and the Order-in-Original issued u/s 73 of the Finance Act, 1994 - jurisdiction to issue the Order-in-Original based on the information available in Form 26AS under the Income Tax Act, 1961 - liability to pay service tax on export services under the provisions of the Finance Act, 1994 - HELD THAT:- The decision or order passed or any summons or notice issued under the Act is to be served by various modes as prescribed in clause (a) by tendering or by registered post or by speed post with proof of delivery or by courier, failing which, by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case maybe, is intended and on failure of the modes prescribed in clauses (a) and (b), by affixing a copy thereof on the notice board of the Officer who passed such decision or order or issued summons or notice. Admittedly the show-cause notice was never served upon the petitioner. Similarly, the letter dated 07.04.2022 fixing the personal hearing as well as the Order-in-Original were also sent by speed post as contended in the reply dated 30th May, 2023 given under the RTI Act, however, the same also met with the same fate of not delivering upon the petitioner. Therefore, the respondent-Authority was required to take recourse to clauses (b) and (c) of Sub-section (1) of Section 37C of the Act, 1944, however, it is admitted in the affidavit-in-reply that as the petitioner had changed the place of the business, it was not possible to follow the provisions of Section 37C (b) of the Act, 1944 as at the time of delivery, the address of the premises was not in existence but the provisions of Section 37C (c) was followed by affixing copy thereof on the notice board, no document or details are available even for compliance of clause (c) of Section 37C (1) of the Act, 1944. It is clear that neither the show-cause notice nor the Order-in-Original was ever been served upon the petitioner at any point to time and when there is non service of the show-cause notice and the Order-in-Original, both are liable to be quashed and set aside. Conclusion - i) The show-cause notice and the Order-in-Original were invalid due to improper service, as per Section 37C of the Central Excise Act, 1944. ii) The petitioner was not liable to pay service tax on export services under Section 66B of the Finance Act, 1994. iii) The respondent authority lacked jurisdiction to issue the Order-in-Original based on improperly served notices and incorrect application of tax liability principles. The matter is required to be considered in favour of the petitioner as petitioner was never liable to pay the service tax on the export services under the provisions of the Act, 1994 and hence, no further orders are required to be passed - petition allowed by way of remand.

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• 2025 (2) TMI 214
  CENVAT Credit - inputs/input services used in relation to output service - angles, channels, beams, etc., which are used for erecting transmission towers - HELD THAT:- While considering the issue as to whether the appellants were eligible for the cenvat credit availed on angles, channels, beams, etc., which are used in providing output, the Hon ble Supreme Court in the case of Bharti Airtel Ltd. [ 2024 (11) TMI 1042 - SUPREME COURT] observed that the tower and pre-fabricated buildings (PFBs) are goods and not immovable property and since these goods are used for providing mobile telecommunication services, the inescapable conclusion is that they would also qualify as inputs under Rule 2(k) for the purpose of credit benefits under the CENVAT Rules. Conclusion - The structures essential for service provision, even if not directly involved in the service, qualify as inputs. CENVAT Credit allowed. Appeal allowed.

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• 2025 (2) TMI 213
  Abatement of appeal - continuation of appeal proceedings, following the death of the appellant, who was a sole proprietor - Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - HELD THAT:- The Appellant who was a sole proprietor has died on 16.08.2021 during the pendency of the present appeals. It is also found that in terms of Rule 22 of Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, on the death of the appellant, the proceedings will be abated unless an application is made for continuance of such proceedings by the legal Heirs of the Appellant. In this case, no such application has been received. As the Death has occurred on 16.08.2021, nearly four years passed already. In view of the judgement of the Hon ble Supreme Court in the case of SHABINA ABRAHAM AND OTHERS VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS [ 2015 (7) TMI 1036 - SUPREME COURT] , wherein it has been held that no proceedings can be initiated or continued against a dead person as it amounts to violation of natural justice in as much as the dead person, who is proceeded against is not alive to defend himself. Conclusion - On the death of the appellant, the appeals stand abated and disposed of in terms of Rule 22 of the CESTAT procedure Rules, 1982. Appeal disposed off.

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• 2025 (2) TMI 212
  Classification of services - supply of tangible goods services or cargo handing services? - first agreement of performing the work of terminal handling of containers at Inland Container Depot, Tughlakabad, New Delhi - second agreement of cargo handling operation in relation to export and import cargo - extended period of limitation. First Agreement - Terminal Handling - whether the appellant had provided supply of tangible goods services or cargo handing services to CONCOR? - HELD THAT:- The agreement, it is seen, is for performing the work of handling of containers at ICD, Tughlakabad at the rates and conditions specified in the Schedule annexed to the agreement. The rate Schedule clearly shows that an amount of Rs. 8 lakhs is to be paid to the appellant towards hiring of each of the two loaded reach stackers for round the clock operation, and Rs. 4.50 lakhs for hiring of one empty reach stacker for round the clock operation. It is, therefore, clear that CONCOR hired two loaded reach stackers and one empty reach stacker, for which the appellant was to receive consideration in terms of money. The rate schedule does not refer to handling of cargo at all and indeed could not have, as the agreement is for providing reach stackers to CONCOR - The terms of the agreement clearly show that the appellant rendered supply of tangible goods service to CONCOR. Second Agreement - Cargo Handling - whether the appellant was justified in not paying service tax for handling operations in respect of export cargo? - HELD THAT:- The amount received by the appellant for handling of import cargo as also export cargo. This apart, as can be seen from the second agreement also the charges to be paid to the appellant for handling of import cargo and export cargo are different - The Court remanded the issue of service tax liability for export cargo handling under the second agreement to the adjudicating authority for fresh consideration, allowing the appellant to submit additional evidence. Extended period of limitation - HELD THAT:- It is, therefore, a fit case where the matter needs to be remanded to the adjudicating authority to examine the levy of service tax on handling of export cargo afresh after providing an opportunity to the appellant to substantiate what was contended by the appellant in reply to the show cause notice, namely that it had handled export cargo also. The appellant may provides such evidence to the adjudicating authority within a period of six weeks from today. The adjudicating authority shall examine the evidence, if submitted. The appellant may also substantiate its submission that the extended period of limitation could not have been invoked in so far as this service is concerned. Conclusion - i) The appellant provided supply of tangible goods services under the first agreement, not cargo handling services. ii) The Court remanded the issue of service tax liability for export cargo handling under the second agreement to the adjudicating authority for fresh consideration, allowing the appellant to submit additional evidence. iii) It is, therefore, a fit case where the matter needs to be remanded to the adjudicating authority to examine the levy of service tax on handling of export cargo afresh after providing an opportunity to the appellant to substantiate what was contended by the appellant in reply to the show cause notice, namely that it had handled export cargo also. Appeal allowed in part by way of remand.

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• 2025 (2) TMI 211
  Taxability of the value of premium or salami for the period prior to 01.07.2012 and w.e.f. 01.07.2012 under renting of immovable property - Whether premium or salami can be subjected to levy of service tax under renting of immovable property defined under section 65(90a) of the Finance Act? - HELD THAT:- Premium is a payment for being allowed to take possession of the immovable property. It is a price paid for a transfer of a right to enjoy the property. The lessor, who owns and possesses the property transfers the possession to another for a price. There can, therefore, be no doubts that premium is the amount received for renting of immovable property. Section 65B (44) of the Finance Act defines service to mean any activity carried out by a person for another for consideration, and includes a declared service . It is seen that consideration is received in the form of premium which would be included in the definition of renting . Renting of immovable property is a declared service under section 66E of the Finance Act. Once renting of immovable property is a declared service and so taxable under section 66B of the Finance Act, it cannot be contended by the appellant that it will also be included in those services which are excluded under section 65B (44) of the Finance Act, for it can never be the intention of the legislature to include a service as exigible to service tax and at the same time also exclude that service from taxability. The contention of the appellant that it is excluded from taxability under sub-clause (a)(i) of section 65B(44) of the Finance Act cannot also be accepted for this reason. Conclusion - The value of premium or salami is exigible to service tax under renting of immovable property for the period prior to 01.07.2012 under section 65(105)(zzzz) of the Finance Act and from 01.07.2012 under section 66B of the Finance Act. The two appeals may now be placed before the respective Division Benches of the Tribunal for deciding them on merits.

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• Central Excise

• 2025 (2) TMI 210
  Calculation of Central Excise Duty - inclusion of cost of specifications provided by the manufacturer in the assessable value of the final products manufactured by the appellant and cleared to the manufacturer - HELD THAT:- The issue raised in the case of Denso India Pvt. Ltd. [ 2024 (3) TMI 686 - CESTAT NEW DELHI ] was whether the notional cost of specifications in the form of drawings and designs supplied free of cost by Maruti to the potential vendors should be included in the assessable value of the parts or components manufactured by the vendors and cleared to Maruti for their motor vehicles. To appreciate the said issue, the Principal Bench considered the provisions of section 4 of the Central Excise Act, 1944 and Rule 6 of the Valuation Rules and observed that anything which is supplied by the buyers to the manufacture before even identifying the potential seller/ manufacturer cannot be treated as additional consideration for sale. It was, therefore, held that something can be treated as an additional consideration for sale of goods only when there exists a contract of sale or an agreement to sale between two parties and in terms thereof the buyer pays something over and above the price agreed. In other words anything which is supplied by the buyer to the manufacturer even before identifying the potential manufacturer can never be treated as an additional consideration for sale. The Tribunal, therefore, concluded that the drawing and designs supplied by MSIL at the time of identification and short listing of potential vendors for supply of parts and components, the provisions of section 4 1(b) of the Act read with Rule 6 of the Valuation Rules, could not have been invoked as no consideration was received by the vendors from MSIL. The specifications in the nature of design/drawings provided by MSIL were merely layout or dimensions of the desired parts and components as they have to be necessarily manufactured as per the requisite dimensions so that they can be fitted in the vehicle manufactured by the Maruti. Conclusion - The notional cost of specifications provided by MSIL is not includable in the assessable value of the final products. Appeal allowed.

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• 2025 (2) TMI 209
  Demand of differential duty of excise short paid on the goods sold - DSRM and DSRMPL are related parties under Section 4(3)(b)(i) of the Central Excise Act, 1944 or not - inter-connected undertakings - applicability of Rules 8, 9, and 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Extended period of limitation - HELD THAT:- On a plain reading of the said Rule 10, it would be clear that the provisions of Rule 10 would govern transactions between undertakings which were inter-connected undertaking and in terms of Rule 10(a) ibid, the inter-connected undertakings should be so connected that they are also related in terms of sub-clause (ii) or (iii) or (iv) of Section 4(3)(b) of CEA to attract determination of the value in the manner prescribed in rule 9. DSRM had contended that from the shareholding patterns it would be amply clear that they are not holding and subsidiary companies and given that they are not covered under the aforementioned sub-clauses, the provisions of Rule 10(a) ibid would not be applicable and that the only recourse left to be taken is the valuation of their goods cleared to DSRMPL under Rule 10(b) ibid which in other words means that the value shall be determined as if they are not related persons for the purpose of sub-section (1) of Section 4. While the contention of DSRM that from the shareholding patterns it would be evident that DSRM and DSRMPL are not holding and subsidiary companies, is not seen controverted in the OIO, it is seen that the adjudicating authority has brushed aside the contention of the appellant that the value has to be determined in accordance with Rule 10 of the valuation rules stating that it is unsustainable since DSRM had adopted the CAS-4 valuation for paying differential duty during 2009-10 - since it is an admitted fact that DSRM and DSRML are treated as related only on the ground of being inter-connected undertakings as stated in sub-clause (i) of Section 4(3)(b), the legal premise based on Rule 9 and Rule 8 that has been invoked in the SCN to foist the requirement of adherence to CAS-4 valuation by DSRM thus stands demolished. Extended period of limitation - HELD THAT:- Admittedly the appellant has adhered to the instructions of the Department as communicated to the appellant vide letter C. No. III/1-318/2010-IA dated 13.09.2010 in appointing a qualified Cost Accountant and adopting CAS-4 valuation. Even thereafter, consequent to the visits of the audit department as and when the appellant has been communicated the CAS-4 valuation which is to be adopted according to the Department, the appellant has implicitly complied with the same. That the appellant, despite having views to the contrary as was communicated by the appellant to the department, had chosen to buy peace by adhering to the CAS-4 valuation provided by the Department, shows that there were interpretational issues involved. Given these circumstances, the demand is also barred by limitation. Conclusion - i) The interconnected undertakings under Section 4(3)(b)(i) are not automatically subject to valuation under Rules 8 or 9 unless further related as specified in sub-clauses (ii), (iii), or (iv). ii) The demand is also barred by limitation. Appeal allowed.

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• 2025 (2) TMI 208
  CENVAT Credit - maintenance of separate records for inputs used in the manufacture of dutiable and exempted goods or not - HELD THAT:- Though it is settled law that the appellate authority should not reverse the identical finding of fact recorded by the two subordinate authorities viz adjudicating authority and first appellate authority, still to determine the correctness of the claim made by the appellant, the records produced by the appellant are verified on sample basis for the month of December 2013 in the presence of counsel of Appellant during the hearing on 12.09.2024. On next date of hearing i.e. on 03.10.2024, the counsel for appellant failed to provide any explanation and sought adjournment. Appellant didn t filed any submissions even after being allowed time to explain the discrepancies noted during the hearing on 12.09.2023. Thus I have reason to conclude that the appellant has no submission to make in this regards. From perusal of the said documents it is evident that appellant has taken CENVAT credit against the documents in respect of which he claims that no credit was taken. The submission of the appellant in this respect is not supported by the said documents and is totally perverse, and appellant has failed to provide any explanation for the same. Conclusion - The requirement for maintaining separate records under Rule 6(2) of the Cenvat Credit Rules, 2004 affirmed. The application of Rule 6(3)(i) for non-compliance upheld, resulting in a demand for payment based on the value of exempted goods. There are no reason to interfere with the impugned order - appeal dismissed.

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• Indian Laws

• 2025 (2) TMI 207
  Modification of penalty imposed by the Board of Discipline (BoD) under Section 21A of the Chartered Accountants Act, 1949 - appellant guilty of other misconduct as envisaged under Clause (2) of Part IV of the First Schedule to the Act - dishonor of cheques issued by the appellant constitutes other misconduct under the Act or not - HELD THAT:- The appellant had raised substantial grounds before the Appellate Authority to assail the findings of the BoD, which grounds he appears to have not pursued at the time of hearing before the Appellate Authority, where he had appeared in person. No doubt, the order passed by the Appellate Authority on 17.07.2012, records that the appellant had not assailed the findings of the guilt on merits, but taking into account that the appellant had soon thereafter, preferred a review petition seeking rehearing of appeal on merits, which request was rejected by the Appellate Authority on the ground of maintainability, looking at the cascading effect which the findings of guilt against him are likely to have on his professional career, the appellant deserves to be granted an opportunity to be heard on merits on his challenge to the findings of the BoD holding him guilty of other misconduct under the Act. The question, whether dishonour of cheques issued by a Chartered Account would fall within the ambit of the term other misconduct as envisaged as under the Act would have to be examined on a case to case basis by taking into account the facts and circumstances of each case - Reference may be made to the following observations of the Apex Court in Institute of Chartered Accountants of India v. H.S. Ghia [ 2004 (8) TMI 782 - BOMBAY HIGH COURT ] where it was held that the word misconduct though not capable of precise definition, on reflection receives its connotation from the context, the delinquency in its performance and its effect on the discipline and the nature of the duty. It may involve moral turpitude, it must be improper or wrong behaviour; unlawful behaviour, wilful in character; forbidden act, a transgression of established and definite rule of action or code of conduct but not mere error of judgment, carelessness or negligence in performance of the duty; the act complained of bears forbidden quality or character. Thus, it is evident that the dishonor of the cheques issued by the appellant had to be considered in the light of his explanation that though he had taken a loan from respondent no.4, he had already returned the loan amount to him in cash. The findings of BoD regarding the appellant being guilty of other misconduct prima facie appears to have been arrived at without properly appreciating the context in which the cheques issued by the appellant were dishonoured. Having said so, it is opined that instead of this Court examining the appellant s challenge to the BoD s order dated 22.11.2011 on merits, it would be appropriate that the matter is remanded back to the Appellate Authority for reconsideration of his appeal on merits. Conclusion - i) Procedural fairness requires that appellants be given a fair opportunity to challenge findings of misconduct on merits, especially when such findings have significant professional implications. ii) Instead of this Court examining the appellant s challenge to the BoD s order dated 22.11.2011 on merits, it would be appropriate that the matter is remanded back to the Appellate Authority for reconsideration of his appeal on merits. Matter remanded back to the Appellate Authority for reconsideration of the appellant s original appeal alongwith the supplementary appeal, for which purpose the appellant is being granted four weeks time - appeal allowed by way of remand.

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