TMI Tax Updates - e-Newsletter
February 9, 2021

Case Laws in this Newsletter:

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

TMI SMS

• Tribunal cannot extend the stay beyond a period of 185 days in violation of Section 254(2A) - Suo motu Corrigendum issued by ITAT is invalid - HC

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Articles

1. GST Evasion: Sessions Judge, Karnal Grants Regular Bail to Person alleged of wrongfully claiming ITC to the tune of ₹ 24 Crore

   By: Sandeep Goyal

2. QRMP Scheme at a Glance

   By: pratish goel

News

1. FDI cap hike to raise insurance penetration, help attract overseas funds: Experts

2. Union Budget 2020-21 places the AYUSH Sector on a sustainable path of growth, say sectoral experts

3. Meeting between the Commerce and Industry Minister of India and the Secretary of State for International Trade of the U.K.

Notifications

Indian Laws

1. S.O. 571(E) - dated 8-2-2021 - Indian Law

Central Government hereby nominates Shri Amitabh Kumar, Joint Secretary, Department of Commerce, as Director on the Board of Directors of Export Import Bank of India.

Circulars / Instructions / Orders

SEZ

1. Instruction No. 105 - dated 5-2-2021

One time waiver of Customs Duty as well as inspection requirement in case of de-bnding of It/ITES units in SEZs and exemption on filling of BOE for goods sold by IT/ITES SEZ unit which were initially procured on payment of duty and not used for authorised operations.

Indian Laws

2. No. I-11011/3/2020-Estt.G - dated 19-1-2021

Engagement as Consultant for Export-Import Policy (Exim Policy)

Highlights / Catch Notes

GST

• Provisional Attachment u/s 83 Invalid Without Pending Proceedings Against Party, Court Rules in GST Case.

  Case-Laws - HC : Provisional attachment of goods - section 83 of CGST Act - The language of Section 83 of the Act is plain and simple. In the absence of any proceedings pending as on date against the writ-applicant under the provisions of the GST Act as referred to under Section83 of the Act, the order of provisional attachment could not have been passed. - HC
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• Court Lifts Provisional Attachment of Cash Credit Account u/s 83 of SGST Act 2017.

  Case-Laws - HC : Provisional attachment of the immovable properties as well as the cash credit account of the writ-applicant - Section 83 of the SGST Act, 2017 - The provisional attachment of the cash credit account cannot continue and the same is hereby lifted. - HC
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Income Tax

• Tribunal's Extension of Stay Beyond 185 Days u/s 254(2A) Challenged; Lacks Authority Without Hearing or Dated Order.

  Case-Laws - HC : Validity of order of Tribunal extending the stay beyond a period of 185 days - delay in disposing of the appeal is attributable to the assessee - Scope of Section 254(2A) - We are at a loss to understand as to how the Tribunal exercised its power in issuing a suo motu Corrigendum, that too by an undated order without hearing the Revenue or the Assessing Officer. - Tribunal, while issuing directions to the Departmental representative, not to exercise its jurisdiction against the assessee, should be traceable to the statutory provisions. We find that no such power has been conferred on the Tribunal under Section 254 of the Act. - HC
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• Jurisdiction Change Prompts Rehearing; 162 Days Excluded from Penalty Limitation u/ss 271E & 275 of Income Tax Act.

  Case-Laws - AT : Penalty u/s 271E - Period of limitation - The assessee, on change of jurisdiction, requested for rehearing the case as provided in the proviso to section 129 of the Act vide letter dated 27-11-2003 which came to be concluded on 06-05-2004. Effectively, the time of 162 days was consumed in the rehearing of the case of the assessee. Accordingly, such time has to be excluded as per the explanation attached to section 275 of the Act which has been discussed here in above. - AT
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• Unsigned Notices u/s 148 Deemed Invalid for Assessment Reopening Due to Lack of Valid Signature.

  Case-Laws - AT : Validity of reopening of assessment - no valid notice issued - A notice or an order without having signature of the person who issued such notice loses its relevance and importance and is to be treated as invalid. An order or notice without signature is not an order for execution or implementation. In all these cases, there was no signature of the AO who issued notice u/s. 148. - AT
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• No Penalty for Cash Advance: Section 271D Not Applicable as Transaction Excluded from Section 269SS Constraints.

  Case-Laws - AT : Penalty u/s 271D - amount accepted by the assessee in cash - advance received against sale of land - Section 269SS refers to the loan or deposit received in cash and since it was an advance taken, the amount, therefore would not be within the rigours of Section 269SS of the Act and hence, there cannot be any penalty leviable u/s. 271D of the Act on the assessee. - AT
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• Income from Share Trading: Capital Gains vs. Business Income for Tax Purposes. Separate D-mat Accounts Not Mandatory.

  Case-Laws - AT : Characterization of income - Trading in shares - d 'capital gains' or 'business income' - While maintenance of capital and trading transactions as a separate category in books can be insisted upon in practice to ascertain the underlying intentions, the maintenance of separate D-mat account separately is not necessarily in conformity with usage of share trade and thus cannot be insisted upon. - AT
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• Can Medical Insurance for Employees' Families Be Deducted u/s 37(1) of the Income Tax Act?

  Case-Laws - AT : Expenditure Allowable u/s 37(1) - Disallowance of medical insurance premium paid for the family members of the employees of the company - it can hardly be said that the impugned expenditure were not incurred wholly and exclusively for the purpose of business, which is the real intent of Section 37(1) - AT
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• Interest on Delayed Land Compensation Exempt from Income Tax per Section 96 of 2013 Act.

  Case-Laws - AT : Addition u/s.56(2)(viii) - interest for delayed payment of compensation under the Land Acquisition Act - interest received by the assessee towards delayed payment of compensation for compulsory acquisition of land is akin to compensation for compulsory acquisition of land, which is exempt from Income Tax by virtue of Section 96 of RFCTLARR Act 2013. - AT
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• Taxpayer's 7.5% Expense Disallowance Reviewed Due to Missing Documents; Case Sent Back for Further Review.

  Case-Laws - AT : Ad-hoc disallowance @ 7.5% on trading expenses - failure to submit the documents - As it is highly unlikely that the assessee would intentionally or deliberately not produce the documents before the revenue authorities, as this would cause immense harm to his own interests. Ultimate aim of the assessment by the revenue authorities is to collect correct taxes due from the assessee - Matter remanded back - AT
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• Depreciation on Machinery Valid: Installed and Ready by March 30, 2013, Qualifies Per Income Tax Rules.

  Case-Laws - AT : Disallowance of Depreciation claimed on the machineries purchased at the end of the year - It is quite evident the machines were not only installed but ready to use as on 30.03.2013. Once this is an accepted position if the assets in the form of machinery equipment are kept ready for use, then same is eligible for depreciation as per the Income Tax Rules. - AT
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• Transfer Pricing Case: Negative Working Capital Adjustment Not Applicable, TPO to Compute ALP with Assessee's Input.

  Case-Laws - AT : TP Adjustment - Grant of negative working capital adjustment - Since the assessee does not have any working capital risk, the question of negative working capital does not arise - TPO is directed to compute the ALP in the light of the directions as given above, after affording Assessee opportunity of being heard. - AT
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• Income in India: Payments Not from Govt or Indian Entity Not Subject to Section 44DA, Not Classified as Income.

  Case-Laws - AT : Income accrued in India - Reimbursement of expenses as “not income” - royalty or fees for technical services - Since the payment in the case of the assessee was neither received from the Government nor from the Indian concern, it was hold that the provisions of section 44DA of the Act were not applicable. - AT
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Customs

• High Court Allows Retroactive Conversion of Drawback to DFIA Scheme; Board Circular Time Limit Not Statutory Under Customs Act 1962.

  Case-Laws - HC : Benefit of conversion from Drawback scheme to DFIA scheme - applicability of benefit at any time for the clearances which had taken place almost four years back - It is settled law that the time limit prescribed by the Board Circular is not binding as same is not statutory provision in terms of section 49 of the Customs Act 1962 - HC
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IBC

• Court to Decide if Leasehold Land of Corporate Debtor Can Be Included in Liquidation Estate for Effective Asset Management.

  Case-Laws - Tri : Whether the leasehold land of the Corporate Debtor can be scheduled into the Liquidation Estate of the Corporate Debtor? - Since, the Building/ hospital is situated in the very same land having 16.55 Ares, no purpose will be served without getting the hospital property also into the Liquidation Assets - Tri
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Service Tax

• Rejection of Application Under Sabka Vishwas Scheme 2019 Violates Natural Justice Due to Lack of Transparency and Specificity.

  Case-Laws - HC : Rejection of application (declaration) filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - The decisions of rejecting the application by the respondent No.1 were in violation of principles of natural justice. It appears from the record that, no specific amount of variance being brought into notice of the writ applicant. The only remarks appended to the statement in Form SVLDRS­-2 without any specification, is not sufficient to hold that, the principles of natural justice have been complied by the respondent No.1. - HC
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VAT

• Withholding of recovered amount lacks legal basis; should be refunded per assessment orders under VAT Act, Section 36.

  Case-Laws - HC : Refund of the amount recovered during the search - There is no legal justification for withholding the amount referred to above, which is otherwise refundable to the writ applicants in passing of any assessment orders for the relevant assessment years. It could be said that such withholding of the refund is contrary to the provisions of the Section 36 of the VAT Act, 2003. - HC
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• Bank Account Attachment Under GVAT Act Section 44 Deemed Illegal Due to Unmet Conditions for 2010-11 Assessment.

  Case-Laws - HC : Legality and validity of the order of attaching the bank account of the writ­-applicant in exercise of power u/s 44 of the GVAT Act - he plain reading of the afore­said communication would indicate that the matter was closed for the assessment year 2010­-11 - as the condition precedent for invoking Section ­34(8A) of the Act is not fulfilled in the present case, not only the impugned order dated 08.07.2019 of assessment is rendered illegal, but even the subsequent action in the form of attachment order under Section­ 44 of the Act would be rendered without jurisdiction. - HC
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Case Laws:

• GST

• 2021 (2) TMI 295
  Coercion and pressure induced for payment of tax by Revenue - HELD THAT:- The mode and manner in which the respondents Nos.2 and 3 are alleged to have coerced and pressurized the writ applicant to transfer an amount of almost Rs. 9 Crore to the account of the department is shocking. It is brought to our notice that the writ applicant was summoned and under the guise of interrogation was kept under detention for almost a period of 33 hours. No wonder, the State of Gujarat has topped the list of States with the highest collection of tax under the GST Act in the country for the year 2020-21. Let Notice be issued to the respondents, returnable on 16th February 2021.

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• 2021 (2) TMI 294
  Grant of Regular Bail - Section 132(1)(a) of Central Goods and Services Tax Act, 2017 - HELD THAT:- Considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released on regular bail, on executing a personal bond of Rs. 10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - application allowed.

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• 2021 (2) TMI 293
  Seizure of goods along with trucks - Section 129(1)(a) of the Gujarat Goods and Service Tax Act, 2017 - HELD THAT:- This writ application with a direction to the respondent no. 2 to complete the proceedings initiated against the writ applicant under Section 132 of the Act, 2017. The writ applicant shall appear before the respondent no.2 as and when he receives the notice and shall make good his case for the purpose of getting the notice discharged - However in the event, if any final order in MOV-11 is passed, then, it would be open for the writ applicant to prefer an appeal against such order under Section 107 of the Act. Writ application disposed off.

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• 2021 (2) TMI 292
  Restoration of cancelled registration of the petitioner - no show-cause notice in form GST REG-17 was issued - impugned order cancelling the registration is bereft of any details - HELD THAT:- The learned AGP very fairly submitted that the order impugned dated 04.06.2020 is not only bereft of any material particulars, but the same has been passed without issuing the show-cause notice in Form GST REG-17. This writ application succeeds and is hereby allowed. The impugned order dated 04.06.2020 is quashed and set aside. The matter is remitted to the Commercial Tax Officer, Ghatak-7, Ahmedabad, with a direction that, if he intends to pass a fresh order of cancellation of registration, then he shall first issue show-cause notice in Form GST REG-17 giving an opportunity of hearing to the writ applicant and thereafter, pass an appropriate order.

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• 2021 (2) TMI 291
  Provisional attachment of goods - section 83 of the Central Goods and Services Tax At, 2017 - HELD THAT:- Indisputably, in the case on hand, no proceedings under Section62 or Section 63 or Section 64 or Section 67 or Section 73 or Section 74 of the Act have been initiated or pending against the writ-applicant. In the absence of pendency of any such proceedings referred to above, the respondent no.2 could not have invoked Section 83 of the Act for the purpose of provisional attachment. Assuming for the moment that something has surfaced in the course of any inquiry or investigation against the writ-applicant as regards some business transaction with any other individuals, the same by itself will not confer jurisdiction to the respondent no.2 to invoke the Section 83 of the Act. The language of Section 83 of the Act is plain and simple. In the absence of any proceedings pending as on date against the writ-applicant under the provisions of the GST Act as referred to under Section 83 of the Act, the order of provisional attachment could not have been passed. The impugned communication at Page 24, Annexure-C to this writ-application is hereby quashed and set aside. The attachment is ordered to be lifted. The bank shall permit the writ-applicant to operate his bank account - application allowed.

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• 2021 (2) TMI 290
  Provisional attachment of the immovable properties as well as the cash credit account of the writ-applicant - Section 83 of the SGST Act, 2017 - HELD THAT:- The cash credit account of the writ-applicant should not have been ordered to be provisionally attached under Section 83 of the SGST Act, 2017. The position of law in this regard is now well-settled. Even otherwise, Mr. Poddar, the learned counsel would submit that for a liability of Rs. 3 lac and odd amount, the authority ought not to have proceeded to provisionally attached the immovable properties worth rupees more than 10 crores. He would further submit that as the cash credit account came to be freezed and rather provisionally attached, all other accounts including the term deposits have also been provisionally attached. The provisional attachment of the cash credit account cannot continue and the same is hereby lifted. Ultimately, if the entire liability as sought to be fasten is discharged by the writ-applicant, then the authority may continue passing appropriate orders lifting the provisional attachment of the immovable properties also - Application disposed off.

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• 2021 (2) TMI 289
  Release of seized goods alongwith conveyance - Section 130 of the GST Act - HELD THAT:- The matter is at the stage of MOV-10. We expect the writ-applicants now to participate in the proceedings initiated by the authority for the purpose of confiscation of the goods and the vehicles. The writ-applicants shall file his reply and shall make his case good for the purpose of getting notice discharged in MOV-10. Ultimately, if the final order of confiscation is passed under Section130 of the Act, then the writ-applicants will have the remedy to file an appeal under Section 107 of the Act. This writ-application stands disposed of.

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• 2021 (2) TMI 288
  Release of seized goods alongwith conveyance - Section 130 of the GST Act - HELD THAT:- The matter is at the stage of MOV-10. We expect the writ-applicants now to participate in the proceedings initiated by the authority for the purpose of confiscation of the goods and the vehicles. The writ-applicants shall file his reply and shall make his case good for the purpose of getting notice discharged in MOV-10. Ultimately, if the final order of confiscation is passed under Section130 of the Act, then the writ-applicants will have the remedy to file an appeal under Section 107 of the Act. This writ-application stands disposed of.

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• Income Tax

• 2021 (2) TMI 287
  Rectification of mistake - Validity of assessment order u/s 144C(2) - instead of being titled a draft order is titled as order or final order - whether the same is an irregularity or an illegality ? - HELD THAT:- Though we have heard the counsels for some time but the counsel for the petitioner is unable to satisfy, under which provision the income tax return can be deemed to be accepted, for the reason of the mistake in non labelling the assessment order as a draft. Though it is contended that the Assessing Officer becomes functus officio but we would prefer to hear further. In the present case, the Assessing Officer, immediately after issuing the impugned order and within the time prescribed, issued a corrigendum to the effect that the same is not a final order but a draft order. In this case it was open to the assessee to, immediately on receipt of the corrigendum, prefer the objections to the Dispute Resolution Panel (DRP). The petitioner states that the order was also followed by the demand notice and the penalty notice.

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• 2021 (2) TMI 286
  Depreciation on the flameless furnace and steel rolls - AO denied the depreciation as it is a financial transaction - whether the assessee-Company ascertained that the supplier himself is the manufacturer or who is the actual manufacturer of the machinery and whether the assessee received quotation for approval of purchase of the machinery? - AO denied the depreciation as it is a financial transaction - depreciation claim in respect of the rolls given on lease to Bellary Steels and Alloys Limited (BSAL) - HELD THAT:- Following the ratio laid down by the Hon ble Supreme Court in Vasisth Chay Vyapar Ltd. [ 2018 (3) TMI 56 - SUPREME COURT] and the ratio laid down in M/S. INDBANK MERCHANT BANKING SERVICES LTD. [ 2019 (7) TMI 1740 - MADRAS HIGH COURT] the order passed by the Income Tax Appellate Tribunal is liable to be set aside. Accordingly, the same is set aside. The substantial questions of law are decided in favour of assessee.

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• 2021 (2) TMI 285
  Non filling of appeal electronically within the period of limitation - prayer made by the assessee to reckoned the date of filing as on date on which the appeal was actually filed - Whether Tribunal was right in holding that there is no delay in filing of e-appeal since the date of filing of belated e-appeal relates back to the date of filing of manual appeal? - HELD THAT:- Issue held in favour of the assessee and against the Revenue in the decision in the case of CIT Vs. A.A.Antony others [ 2021 (1) TMI 170 - MADRAS HIGH COURT ] taking into consideration the Circular issued by CBDT, which in our opinion, appears to be a one time measure, the substantive right of appeal should not be denied to the assessee on hand on a technical ground. We make it clear that this observation cannot be taken advantage by the assessee as of now, when the procedure has been in vogue ever since the year 2016 and stood the test of time and in all probabilities, as of now, all teaching problems would have been solved. Bearing in mind the fact situation in the year 2016, we are of the view that the appeals need not have been rejected by the CIT-A on the ground that they were not e-filed within the period of limitation.

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• 2021 (2) TMI 284
  Revision u/s 263 - AO Allowed set off the brought forward losses against the income from capital gains derived by the respondent-assessee by selling its undertaking relating to GGBS business - ITAT set aside revision proceedings - Whether the Hon ble ITAT is right in ignoring the provisions of Section 263 wherein the Hon ble Pr. CIT, Panaji rightly invoked the proceedings under Section 263 in respect of the Assessment Order which was erroneous and prejudicial to the interest of revenue? - HELD THAT:- This Court has accepted the position that it is not the requirement of Section 72 of the said Act that such gain or profit must be taxable only under the head of profits and gains of business or profession . The carry forward business losses would therefore be set off against theshort-term capital gains on the sale of building, plant, and machinery. This is yet another reason not to accept the submissions of Ms. Linhares and to answer the substantial questions of law against the Revenue and in favour of the assessee. Although, we may not be entirely in agreement with the ITAT on the aspect of invocation of the revisional jurisdiction under Section 263 of the said Act by the PCIT, we feel that the impugned order made by the ITAT warrants no interference because there is nothing fundamentally wrong in the view taken by the ITAT having regard to the decisions of the Hon ble Supreme Court in the case of Chugandas Co.[ 1964 (7) TMI 8 - SUPREME COURT] , Cocanada Radhaswami Bank Ltd[ 1965 (4) TMI 11 - SUPREME COURT] and the decision of this Court in Hickson and Dadajee (P.) Ltd. [ 2020 (1) TMI 1399 - SUPREME COURT] . Therefore, there is no point in dilating on the first substantial question of law when the second substantial question of law which relates to the merits will have to be answered against the Revenue and in favour of the assessee. Assessee based on instructions from the assessee has fairly stated that the assessee will pay proportionate tax on the basis that the AO allowed excess set off to the extent of Rs. 22,34,366/-. In fact, even the ITAT, in paragraph 10 of its order had held that the AO, if at all, had allowed excess set-off of Rs. 22,34,366/- and therefore the appeal of the assessee is partly allowed . This would mean that the assessee was still to pay proportionate tax since the AO had allowed excess set-off of Rs. 22,34,366/-. This appeal is disposed of by making the following order: (a) The substantial questions of law as framed are decided against the Revenue and in favour of the assessee ; (b) However, the respondent-assessee, consistent with the statement made on its behalf is directed to pay proportionate tax based on the premise that the AO had allowed excess set off to the extent of Rs. 22,34,366/-. This payment to be made within three months from today.

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• 2021 (2) TMI 283
  Validity of order of Tribunal extending the stay beyond a period of 185 days - delay in disposing of the appeal is attributable to the assessee - Scope of Section 254(2A) - whether the Appellate Tribunal was right in law in extending stay of collection of demands beyond six months? - assessee has not made out the case before the first appellate authority and also not paid any tax dues beyond 20% of confirmed demand - HELD THAT:- We find from the order that there is no discussion as to how the Tribunal was satisfied in directing the Revenue not to initiate coercive action against the assessee for recovery of outstanding demand. The power to be exercised by the Tribunal should be in accordance with Section 254(2A) read with the proviso thereunder. We find the order to be devoid of reasons though the order is a four page order, substantial part of the order is only the submissions made by the assessee, which are touching upon the merits of the matter and while holding that the order is devoid of reasons, we find that the Tribunal was justified in observing that they are not commenting upon the merits of the matter involved in the main appeal We are at a loss to understand as to how the Tribunal exercised its power in issuing a suo motu Corrigendum, that too by an undated order without hearing the Revenue or the Assessing Officer. As mentioned above, the appeal was not taken up for hearing on 13.01.2020 and obviously, the protection granted by the Tribunal in its interim order dated 20.12.2019 enured in favour of the assessee and the Revenue is right in its argument that the order of stay was in force beyond the period provided in the proviso to Section 254(2A) of the Act Tribunal, while issuing directions to the Departmental representative, not to exercise its jurisdiction against the assessee, should be traceable to the statutory provisions. We find that no such power has been conferred on the Tribunal under Section 254 of the Act. Tribunal has no such power to issue directions, but has got power to grant an interim order under Section 254, subject to the conditions stipulated therein. Therefore, we are compelled to answer the substantial questions of law in favour of the Revenue and against the assessee.

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• 2021 (2) TMI 282
  Order u/s 201(1A) - TDS u/s 195 - Proceedings barred by limitation - assessee has not deducted the tax at source for the payment made to the NRI - assessee treated as assessee in default for non deduction of tax - HELD THAT:- In the instant case, the transaction took place on 24.04.2010 i.e. in the financial year 2010-11 and the AO passed the order on 22.03.2018 by issue of notice u/s 195 on 18.09.2017. Thus, the action taken by the AO was more than six years from the end of the financial year in which the transaction took place. Thus, the assessee s case is squarely covered by the decision of Bheemarasetty Sunitha [ 2017 (8) TMI 476 - ITAT VISAKHAPATNAM] . Hence, we hold that the proceedings initiated by the AO are barred by limitation. Accordingly we set aside the orders of the lower authorities and allow the appeal of the assessee.

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• 2021 (2) TMI 281
  Unexplained cash credit and the unexplained interest expenditure on it - case was selected for scrutiny through CASS under limited category - statement recorded u/s 133A - HELD THAT:- The so-called Inspector s Report which states that the lender companies could not be traced in their respective addresses was not furnished to the assessee. Secondly because, the evidence on record show that pursuant to the notice issued by AO u/s 133(6) of the Act to all these lenders at the very same addresses, it got served upon them by the postal authorities which fact can be safely inferred because it is not the case of the AO that notices issued u/s 133(6) has been returned back un-served . Thirdly all the lender companies have replied directly to the AO pursuant to the notices issued u/s 133(6) . Coming to the statement of Shri Ashish Kumar Agarwal it is noted that his statement was recorded u/s 133A but survey statement has been recorded by DDIT(Inv) in some third party case and not that of assessee. Secondly the deponent has been administered oath before his statement was recorded, which is not in accordance to Section 133A of the Act and the Hon ble Supreme Court in Khader Khan Sons [ 2013 (6) TMI 305 - SC ORDER] held that the statement recorded u/s 133A of the Act is not given evidentiary value for the reason that officer is not authorized to administer oath and to take any sworn statement in contra distinction to the power vested in authorities to record statement under oath during search u/s 132 - on the sole statement recorded u/s 133A of the Act of Shri Ashish Kumar Agarwal, no adverse view can be taken against the assessee since there is no evidentiary value to be given to it. After doing these exercises, still if the AO finds that from the statement which has undergone cross-examination, a wrong-doing on the part of assessee, then he could have drawn adverse inference against the assessee. However admittedly these actions were not taken by AO. So the statement of Shri Ashish Kumar cannot be relied upon against the assessee In the light of the fact that all the eleven (11) lender companies from which the assessee had taken loan of Rs. 4,50 crore had replied directly to AO pursuant to section 133(6) and the fact that all the lender companies are regular income tax assessee s having PAN as well as their ROC details were brought to the notice of AO their respective balance sheet shows that all of them have enough creditworthiness to lend the amounts in question to assessee and the assessee had squared up the loan transaction with all these lenders (except 15 Lakhs) and all the payments/TDS were made payments were made through banking channel, the addition made by AO was untenable and therefore the Ld. CIT(A) rightly deleted the addition which action is confirmed - Decided in favour of assessee.

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• 2021 (2) TMI 280
  Penalty u/s 271E - validity of the order passed u/s 271E on the reasoning that it is barred by limitation - Change in jurisdiction of the Income Tax Office - HELD THAT:- In the case on hand there was change in the jurisdiction of the Income Tax Office under the provisions of section 129 of the Act from central range to range 3 Baroda. The assessee, on change of jurisdiction, requested for rehearing the case as provided in the proviso to section 129 of the Act vide letter dated 27-11-2003 which came to be concluded on 06-05-2004. Effectively, the time of 162 days was consumed in the rehearing of the case of the assessee. Accordingly, such time has to be excluded as per the explanation attached to section 275 of the Act which has been discussed here in above. The time limit for passing the order was expiring on 30 September 2003 under the provisions of clause (c) to section 275 of the Act but the same needs to be extended for another 162 days as per the explanation provided in section 275 of the Act. Thus, after considering such time, the time limit expired for passing the order as on 11-05-2004 but the AO has passed the penalty order dated 18-05-2004 which is delayed by 7 days. Accordingly we are of the view that the order passed by the AO under section 271E imposing the penalty upon the assessee is not sustainable as it is barred by time. Consequently, we quash the same. Hence the ground of appeal of the assessee is allowed.

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• 2021 (2) TMI 279
  Validity of assessment - limited scrutiny was not intimated along with the notice u/s 143(2) - HELD THAT:- In the present case, though the reasons have not been incorporated/annexed to the notice u/s 143(2), we find that the assessee was made aware of the reasons for limited scrutiny on the very next date of hearing i.e. 10/10/2017 as is evident from the docket sheet entries and in compliance thereof, the assessee has also provided all the required details on the subsequent date. No prejudice has been caused to the assessee by such intimation of the reasons subsequent to the issuance of notice u/s 143(2) - though the return was selected for scrutiny on two issues, the AO has made addition only on account of one issue, i.e. cash deposits, the sources of which could not be explained by the assessee and, therefore, he has not exceeded his brief of the limited scrutiny. Only where the AO believes that there is income, which has to be brought to tax but is not the issue for the limited scrutiny, he needs to get the permission of the Commissioner to proceed with complete scrutiny assessment. AO has restricted himself to the limited issues of cash deposits under CASS and it was the assessee s contention that these are his business receipts, but, could not prove his business activity - issue was limited to the cash deposits and as there was no other income, there was no need for the AO to obtain permission from the higher authorities to proceed with complete scrutiny assessment. Therefore, we do not find any reason to hold that there is any non-compliance of CBDT Circular and that the assessment order is invalid. Income offered by the assessee u/s 44AD not been accepted - DR submitted that the assessee has failed to prove that he had carried on any business/construction activity - HELD THAT:- offering of income by an assessee u/s 44AD of the Act, itself does not preclude the AO from examining the nature of activity carried on by the assessee. If the assessee was carrying on the construction activity, the assessee should have produced some evidence to show that he was involved in such activity. The assessee has not filed any details before the AO or before the CIT(A) or even before us. The assessee submitted that if given an opportunity, he will submit all the details before the AO. Therefore, in the interest of justice, we deem it fit and proper to direct the AO to verify this contention of the assessee de-novo. Business receipts deposited into the bank account and that the sum also has been offered as income from other sources in his revised computation of income - We find that when the assessee has not been able to explain the source of deposits in the bank account, he himself worked out the peak cash credit and agreed for the addition of peak cash credit. However, on thorough perusal of the assessment record, we found that the assessee along with the covering letter filed on 20/11/2017 had enclosed the revised computation of income i.e. in response to AO s direction to file information for the issues of limited scrutiny. Therefore, the revised computation of income filed should have been examined. But, there is no reference to the same by the AO, may be because it is not filed by way of revised return of income. However, in view of our direction to examine the income of the assessee u/s 44AD of the Act in the above paragraphs, we deem it fit and proper to remit this issue also to the file of the AO with a direction to consider the same . Penalty levied u/s 271(1)(c) - HELD THAT:- We find that the addition has been made because the assessee could not substantiate his claim of construction activity. However, in the quantum appeal, we have set aside the issues to the AO for reconsideration. Therefore, the penalty order is set aside with liberty to the AO to reinitiate penalty proceedings, if need be, after conclusion of the assessment proceedings.

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• 2021 (2) TMI 278
  Validity of reopening of assessment - no valid notice issued - Rectification u/s. 154 and Re-assessment Proceedings u/s. 147 based on Audit Objection - AO in the Assessment Order has stated that on finding the mistakes of non-disallowance of expenditure of Labour Charges for failure to deduct the tax u/s. 194C - HELD THAT:- The said notice issued u/s. 148 of the Act was typed on a plain paper, it was not signed by the Assessing Officer who issued the same and remained unsigned which is not in dispute before us. The contention of the ld. DR is that the office copy of the said notice was duly signed by the AO. This notice issued u/s. 148 is a manual notice and not a digital document. The digital document only does not require signature. A manual notice u/s. 148 is required to be dated and duly signed by the Officer who is issuing the same. A notice or an order without having signature of the person who issued such notice loses its relevance and importance and is to be treated as invalid. An order or notice without signature is not an order for execution or implementation. In all these cases, there was no signature of the AO who issued notice u/s. 148. Therefore, it has to be construed that no notice was issued by the AO to the assessee and the assessee was continuously objecting for the same. It is also a fact that from the assessment order it is found that it is an ex parte order u/s. 144 r.w.s 147 of the Act without participation of the assessee and the provisions of section 292BB of the Act is of no help to the assessee, which suggests that if the assessee cooperated in the proceedings of assessment, the assessee cannot raise objections in further proceedings. In our opinion, service of valid notice is a pre-condition to assume jurisdiction by the AO. Non-signing of a notice is not a clerical mistake and there cannot be any waiver by the assessee of an irregularity of an unsigned notice. In our view, section 282 of the Act provides that a notice under the Act may be served on the person name therein as if it were a summons issued by a court under the Code of Civil Procedure, 1908. Sub-rule (3) of Rule 1 of Order 5, CPC, provides that every summons shall be signed by the judge or such officer, as he appoints. In view of this provision, the notice issued u/s. 148 should have been signed by the AO and omission to do so invalidated the notice. The provisions of section 292B of the Act intended to ensure that an inconsequential technicality does not defeat justice. But, the signing of a notice under section 148 of the Act is not merely an inconsequential technicality. Under the circumstances, the provisions of section 292B of the Act would not be attracted so as to make it as a valid notice in the eye of law. Therefore, the requirement of the signature of the AO is a legal requirement. The omission to sign the notice u/s. 148 cannot be cured by relying on the provisions of section 292B of the Act. The notice issued by the AO without affixing signature, in our view, cannot be said to be an omission, which was sought to be covered by the provisions of section 292B of the Act. If such a course is permitted to be followed, then that would amount to miscarriage of justice. An unsigned notice of reopening of assessment cannot be said to be in substance and effect in conformity with or according to the intent and purpose of the Act. The provisions of section 282A of the Act is of no assistance to the department and it would be applicable only to a CPU which was nominated as designated authority by CBDT as required u/s. 282A of the Act. Therefore, we are of the opinion that the assessment framed on the basis of unsigned notice u/s. 148 is bad in law and cannot be sustained in the eyes of law. Accordingly, we quash all the assessment orders in these cases and allow the primary legal ground raised by the assesses in all these appeals. - Decided in favour of assessee.

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• 2021 (2) TMI 277
  Disallowance u/s 36(1)(va) - delay in remitting employee s contribution to Provident Fund and ESI - As per assessee sum was remitted before the due date of filing of the return of income U/s. 139(1) and therefore, the same should not have been disallowed U/s. 36(1)(va) - Diversified decisions on the issue - HELD THAT:- The Hon ble Supreme Court in the case of CIT vs. M/s. Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] has held that if there are two views possible on the same issue, the one which is in favour of the assessee should be adopted. Thus decision of the Hon ble Supreme Court in the case of CIT vs. Alom Extrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] is applicable to both the employer as well as employee s contribution to Provident Fund and ESI and if the assessee has not remitted the amount collected from the employees before the due date of filing of return of income U/s. 139(1) of the Act, then the same has to be disallowed and brought to tax. With these directions, the appeal of the assessee is allowed and the A.O. is further directed to reconsider the issue, if the contrary view is upheld by the Apex Court in the appeals before the Hon ble Supreme Court on this issue. Assessee appeal is allowed for statistical purposes.

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• 2021 (2) TMI 276
  Trading Addition - non consideration of book results - GP estimation - Addition on account of Gross Profit as applied Gross Profit Ratio 8.5% against Assessee firm recorded 7.99% Gross Profit Ratio - HELD THAT:- As decided in own case [ 2019 (9) TMI 1489 - ITAT JAIPUR] where the assessee company had declared better trading results as compared to previous year and such result provides a reasonable basis to hold that there should not be any addition in the hands of the assessee company. It is also noted that the AO had not detected any defect in the books of the assessee and AO has not invoked the provisions of section 145(3) of the Act for rejecting the books of account of the assessee but made the lumsum/ adhoc addition on account of labour expenses on estimation basis without finding any defects in the books of account and vouchers of the assessee. Hence, relying upon the decision of ITAT Jaipur in the case of Goodwill Impex Ltd vs DCIT [ 2019 (3) TMI 1456 - ITAT JAIPUR] we are of the view that once the assessee company had declared better trading results as compared to previous year, such results provide a reasonable basis to hold that there should not be any addition in the hands of the assessee company. - Decided in favour of assessee.

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• 2021 (2) TMI 275
  Penalty u/s 271D - amount accepted by the assessee in cash - advance received against sale of land - violation of provision of Section 269SS - HELD THAT:- From the orders of the sub ordinate Authorities, it is crystal clear that though on one hand, they disbelieved the evidences placed on record specifically confirmation letter of C.B. Oswal, however, they themselves have not conducted any specific enquiry or examination with regard to the facts of the case. The entire addition has been made on the premises of guess work and suspicion It is the contention of the assessee that some land sale transactions were to be made with C.B. Oswal, for which, the advance amount was paid in cash to the assessee. That however, when this transaction did not materialize, the assessee refunded the said amount of Rs. 5,00,000/- in cheque back to C.B. Oswal. These facts were never enquired or examined or verified by the Department. Section 269SS refers to the loan or deposit received in cash and since it was an advance taken, the amount, therefore would not be within the rigours of Section 269SS of the Act and hence, there cannot be any penalty leviable u/s. 271D of the Act on the assessee. Assessee could not be penalized for the inaction of the Department in verifying the facts of the case wherein both the Assessing Officer and the CIT(Appeal) has made the addition based on mere surmises and guess work and therefore, penalty u/s. 271D of the Act cannot be sustained. Accordingly, we direct the Assessing Officer to delete the penalty from the hands of the assessee. - Decided in favour of assessee.

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• 2021 (2) TMI 274
  Characterization of income - whether gains arising on sale of certain quantity of shares of a company, namely, Pyramid Siamira Theatre Ltd. (PSTL) by the assessee in the relevant assessment order is required to be taxed under the head capital gains as offered by the assessee or is to be treated as business income of the assessee? - HELD THAT:- The cumulative effect of all factors need to be weighed and a mere involvement of borrowed funds in some instances would not per se denude the transactions of its character of capital assets. The issue is essentially factual and depends of peculiar facts of each case. In the absence of any straight jacket formula available despite plethora of judgments, the lack of regularity and isolated instances of capital transactions would vindicate the stand of assessee that income/loss from seven transactions have been rightly regarded as capital gains. Assessee has taken delivery of shares before sale. While maintenance of capital and trading transactions as a separate category in books can be insisted upon in practice to ascertain the underlying intentions, the maintenance of separate D-mat account separately is not necessarily in conformity with usage of share trade and thus cannot be insisted upon. We thus find merit in the plea of assessee. Consequent claim of assessee deserves to be allowed on merits.

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• 2021 (2) TMI 273
  Unexplained jewellery - excess gold and silver ornaments/excess stock - HELD THAT:- The fact remains that Assessee has not been able to explain each and every item in both gold as well as silver stock(s). We notice that it has placed on record a detailed reconciliation statement of both stocks of gold as well as silver items before us; the very discrepancy continues in the instant second appellate proceedings as well. We therefore deem it appropriate that a lump sum addition of Rs. 2 lakhs qua excess gold and Rs. 1 lakh pertaining to excess silver stock; respectively (over and above the survey disclosure of Rs. 10 lakhs), would meet the ends of justice. The same shall be deemed to have covered all the alleged shortfalls as well. Both parties get part relief in foregoing terms. It is also made clear that our instant estimation shall not be taken as a precedent in any other assessment year. Necessary computation to follow as per law.

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• 2021 (2) TMI 272
  Expenditure Allowable u/s 37(1) - Disallowance of medical insurance premium paid for the family members of the employees of the company - such expenditure though incurred in terms of contractual obligation with the employees, however, it cannot be stated to have been incurred wholly and exclusively for the purpose of the business of the assessee - HELD THAT:- As decided in assessee s own case [ 2018 (8) TMI 849 - ITAT DELHI] record reveals that the assessee had paid the insurance premiums of the employees family members in terms of employment Rules framed by the assessee-company there for. Therefore, it can hardly be said that the impugned expenditure were not incurred wholly and exclusively for the purpose of business, which is the real intent of Section 37(1) Authorities below appear to have rejected the claim of the assessee that these payments were in the nature of perquisites to the employees as contemplated under sub-clause (iv) of section 17(2) of the IT Act, according to which any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee, shall be included in perquisites. However, in view of proviso (iii) (iv) appended to this section clearly prohibit the applicability of section 17(2) in certain eventualities as contained in these provisions - Decided in favour of assessee.

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• 2021 (2) TMI 271
  Addition u/s.56(2)(viii) - interest for delayed payment of compensation under the Land Acquisition Act - assessee has claimed exempt from tax towards interest received on compensation for compulsory acquisition of land on the ground that as per new Land Acquisition RFCTLARR Act 2013, the provisions of Section 96 overrides all provisions of Income Tax relating to taxation of compensation or any award payable under the Act and consequently interest if any received towards delayed payment of compensation is exempt from tax - HELD THAT:- Taxability of compensation received on compulsory acquisition of land, especially this relating to acquisition of non-agricultural land, a clarification has been issued by way of Circular No.36 of 2016 and clarified that compensation received in respect of award or agreement which has been exempted from levy of Income Tax vide section 96 of RFCTLARR Act 2013, shall also not to be taxable under the provisions of IT Act, even there is no specific provision of exemption for such compensation in IT Act. Further, the benefit of exemption from Income Tax in respect of the amounts paid under new Land Acquisition Act, 2013 pursuant to Circular No.36 of 2016 was inserted by way of a clarification amendment by Finance Act, 2017 in Section 10(37) and Section 194LA of IT Act. Second proviso was inserted to Section 194LA of the IT Act, which states that no deduction shall be made under this section, where such payment is made in respect of any award or agreement which has been exempted from levy of income tax u/s.96 of RFCTLARR Act 2013. From the above, it is very that TDS is also not required to be deducted in respect of amount paid under new Land Acquisition Act. It may be noted that the Special Land Acquisition Officer has deducted tax u/s.194LA of IT Act, which makes it clear that the amounts paid are in the nature of compensation and hence it is exempt from the purview of Income Tax. Though tax was not required to be deducted at source, the Special Land Acquisition Officer had deducted TDS by way of abundant caution in the absence of corresponding enactment under income tax, which was not made under this juncture. But, in our view, i It does not make any difference with regard to non-taxability of compensation or award including interest if any payable under the new Land Acquisition Act, 2013. Therefore, we are of the considered view that the ld.AO has grossly erred in bringing to tax interest received by the assessee for delayed payment of compensation under New Land Acquisition Act for compulsory acquisition of land. we are of the considered view that interest received by the assessee towards delayed payment of compensation for compulsory acquisition of land is akin to compensation for compulsory acquisition of land, which is exempt from Income Tax by virtue of Section 96 of RFCTLARR Act 2013. The ld.CIT(A) after considering relevant facts has rightly deleted additions made by the AO towards interest u/s.56(2)(viii) of the IT Act. There is no error in the finding recorded by the ld.CIT(A) and hence, we are inclined to uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue.

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• 2021 (2) TMI 270
  Exemption u/s 11 - Denial of exemption as receipts are on account of franchisee fee and the same are in the nature of business income within the meaning of provisions of sub-section 4A of section 11 - HELD THAT:- At the time of hearing before us, both sides have agreed that the issues in dispute in this appeal are covered in favour of the assessee by the aforesaid order [ 2019 (8) TMI 1635 - ITAT NEW DELHI] in assessee s own case. Neither side has brought any facts and circumstances of this year on any of the issues in dispute to distinguish from the facts and circumstances of earlier Assessment Year - we decide all the issues in dispute in this appeal; in favour of the assessee and against Revenue. All the grounds of appeal are dismissed.

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• 2021 (2) TMI 269
  Ad-hoc disallowance @ 7.5% on trading expenses - failure to submit the documents - HELD THAT:- CIT(A)/AO decided the case of the assessee on the basis of the material available on record and have not considered the past or subsequent year history of the profit earned by the assessee. Before us the assessee had shown the reasonable cause for non submission of documents before the Commissioner as well as before the assessing officer. Taking into account the facts and circumstances of the matter and in the interest of substantial justice, we concur with this plea of assessee for sending back the matter to the file of CIT(A). As it is highly unlikely that the assessee would intentionally or deliberately not produce the documents before the revenue authorities, as this would cause immense harm to his own interests. Ultimate aim of the assessment by the revenue authorities is to collect correct taxes due from the assessee We set aside the order passed by the Commissioner and remand the matter to CIT (A) - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (2) TMI 268
  Disallowance of Depreciation claimed on the machineries purchased at the end of the year - assessee has submitted bills of machinery purchased on 26.02.2013 which were installed on 30.03.2012 by engineers of Voltas Ltd. a unit of Tata and the proof of visit for installation and commissioning of engineers were submitted, thus the machine was not only installed commissioned but also subjected to trial run by Engineers of TATA, that was ignored by the ld. CIT(A) - HELD THAT:- As per the invoice and certificate issued by M/s. Voltas Limited, it has been certified that the machines were installed and commissioned on 30.03.2013. Thus, from these evidences, it is quite evident the machines were not only installed but ready to use as on 30.03.2013. Once this is an accepted position if the assets in the form of machinery equipment are kept ready for use, then same is eligible for depreciation as per the Income Tax Rules. As in the case of CIT vs. Integrated Technologies Ltd. [ 2011 (12) TMI 48 - DELHI HIGH COURT] upheld the similar principle that it is not necessary that the plant and machinery owned by the assessee should be actually put to use in the relevant accounting year to justify the claim of depreciation and that even if the plant and machinery or other asset is kept ready for use in the assessee s business, the assessee would be entitled to depreciation - we hold that assessee is eligible for depreciation and same is directed to be allowed. - Decided in favour of assessee.

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• 2021 (2) TMI 267
  TP Adjustment - comparable selection - Selection on the basis of turnover filter - THAT:- Excluding the companies on the basis of turnover is concerned, the issue has been settled in several decisions of the Tribunal and has been elaborately discussed by this Tribunal in the case of Autodesk India Pvt. Ltd. v. DCIT [ 2018 (7) TMI 1862 - ITAT BANGALORE ]. The Tribunal in this decision after review of entire case laws on the subject, considered the question, whether companies having turnover more than 200 crores upto 500 crores has to be regarded as one category and those companies cannot be regarded as comparables with companies having turnover of less than 200 crores. Thus we exclude the two comparable companies Infosys BPO Ltd., and TCS e-Serve Ltd. (having turnover of Rs. 1312.14 Crores and Rs. 1578.44 Crores respectively) by application of the turnover filter. The Assessee s turnover is only Rs. 94 crores (less than 100 crores and less than 1/10th of the turnover of the aforesaid two comparable companies. Therefore the aforesaid two companies are directed to be excluded from the list of comparable companies. Grant of negative working capital adjustment - HELD THAT:- Working capital adjustment itself is computed on the basis of outstanding current assets and liabilities at the year end. It means that other things being equal, an entity having higher working capital will incur more interest cost which will reduce profitability. Hence no importance shall be given to pricing aspect. Since the assessee does not have any working capital risk, the question of negative working capital does not arise TPO is directed to compute the ALP in the light of the directions as given above, after affording Assessee opportunity of being heard.

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• 2021 (2) TMI 266
  Disallowance of the depreciation on the bogus purchase of machinery - HELD THAT:- As decided in assessee s own case equipment financed by Bank of Maharashtra cannot be summarily treated as bogus. The AO has not made any inquiry from the bank in this regard. The disallowance of depreciation in respect of equipment purchased financed by Bank of Maharashtra is not warranted. The disallowance of depreciation was deleted. - Decided in favour of assessee.

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• 2021 (2) TMI 265
  Income accrued in India - Reimbursement of expenses as not income - assessee submitted that the reimbursement of expenses is not income - As argued sums from India are purely reimbursement of expenses towards activities performed by the appellant for group entities in India and hence, cannot be regarded as income taxable under the Act as well as the Double Taxation Avoidance Agreement between India and United Kingdom ( DTAA ) - non-applicability of section 44DA - alternative ground according to which income, if any, should be taxable u/s 44BB - HELD THAT:- Provisions of section 44DA of the Act were applicable where the income was by way of royalty or fees for technical services, which was received from Government or Indian concern in pursuance to an agreement made by a non-resident or a foreign company with Government or Indian concern after 31.03.2003. Since the payment in the case of the assessee was neither received from the Government nor from the Indian concern, it was hold that the provisions of section 44DA of the Act were not applicable. Applying the said parity of reasoning, we also hold that the provisions of section 44DA of the Act were not applicable to the facts of the case and the income of the assessee is to be computed u/s 44BB of the Act. Respectfully following the decision of the Tribunal in assessee s own case [ 2019 (1) TMI 1851 - ITAT DELHI] we hold that the provision of section 44DA of the Act is not applicable and income, if any, should be taxed u/s 44BB of the Act. Accordingly ground of appeal No. 1.1. by the assessee is dismissed whereas grounds of appeal No. 2 and 3 are decided in favour of the assessee. Non application of provisions of DTAA for interest income - HELD THAT:- Since the issue has been decided against the assessee by the Hon ble Jurisdictional High Court in the case of B.J Services Co. Vs. ACIT [ 2015 (5) TMI 1036 - UTTARAKHAND HIGH COURT] therefore, the ground of appeal No. 4 by the assessee is dismissed. Computation of tax on interest income - HELD THAT:- An application dated 13th October, 2020 for rectification u/s 154 of the Act wherein it was stated that the interest income was taxed twice as per Act at 40% and as per DTAA at 15%. Further surcharge and cess has also been levied on the aggregate tax amount. Since the same is pending before the AO, therefore, as agreed by both sides we remit the matter back to the file of the AO with a direction to dispose of the application before him at the earliest by deciding the issue as per fact and law after giving due opportunity of being heard by the assessee. Ground No. 5 of the assessee is accordingly allowed for statistical purposes. Non granting credit of TDS - HELD THAT:- An application u/s 154 dated 13th October, 2020 is also pending before the AO. Considering the totality of the facts of the case we restore the issue to the file of the AO with the direction to dispose of the 154 application pending before him and verify the TDS certificates and if the same is due to the assessee then grant TDS as applicable. Needless to say the AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee Levy of interest u/s 234B - HELD THAT:- Respectfully following the decision of the Tribunal in assessee s own case in the immediately preceding assessment year we hold that in the instant case the provisions of section 234B of the Act are not applicable and so also the provisions u/s 209 (1)(d) of the Act. Ground of the assessee is accordingly allowed Levy of interest u/s 234C - HELD THAT:- As per provisions of section 234C the interest on shortfall of advance tax is to be calculated on the returned income and not on the assessed income as held in various decisions. Further the rectification application filed by the assessee before the AO u/s 154 of the Act is still pending with him. Considering the totality of the facts of the case we restore this issue to the file of the AO with a direction to dispose of the said application at the earliest and decide the issue of levy of interest u/s 234C as per law. Needless to say the AO shall give due opportunity of being heard to the assessee. This ground raised by the assessee is accordingly allowed for statistical purposes.

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• 2021 (2) TMI 264
  TP Adjustment - comparable selection - MAM Selection - HELD THAT:- It is a fact that assessee had applied RPM method (though it is assessee s contention that inadvertently it is stated to have followed TNMM method in TPO study report) TPO considered the TNMM method to be most appropriate method and proceeded to work out the adjustment accordingly. RPM method has been held to be a most appropriate method for determining of ALP transaction when the assessee is trading in goods without making any value addition. DRP was not justified in rejecting the RPM method followed by assessee. We therefore, set aside the order of TPO (pursuant to the directions of DRP) to compute the ALP by following the TNMM method. Thus the ground of appeal of the assessee is allowed Foreign exchange fluctuation loss in the Profit and Loss account - revaluation of closing stock - Assessee submitted that the foreign exchange loss incurred by the assessee was on account of actual payment to suppliers and reinstatement of books of account at the end of the year - for revaluation of closing stock assessee made provision of obsolete stock and the DRP had mistakenly considered the disallowance of foreign exchange loss made by the assessing officer in the draft order as disallowance of obsolete stock and directed the assessing officer to make disallowance - HELD THAT:- It is the contention of the Revenue that the details of the valuation of closing stock was not submitted by the assessee and on the other hand it is assessee s contention that it the method of valuation has been regular followed by the assessee and required details were also submitted before the authorities. We however do not find any findings to the lower authorities on the method of valuation adopted by the assessee and the basis for its write down in the value of stock. Considering the totality of the aforesaid facts, we are of the view that the matter needs re-examination at the end of AO. We therefore restore restore the issue to the file of AO. The AO is directed to verify the submissions of the assessee. This ground of appeal is allowed for statistical purposes.

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• 2021 (2) TMI 263
  Addition u/s. 68 - genuineness of the credit could not be proved - No proper and sufficient opportunity of being heard - HELD THAT:- We are of the opinion that this case has to be restored to the file of the Assessing Officer as no adequate opportunity was given to the assessee. The Assessing Officer states that the summons was issued u/s. 131 of the Act. There is no record to show that these summons/notices were served. The Assessing Officer concluded, on the basis of surmises and conjectures that, the transactions were not genuine. CIT(A) passed an ex-parte order. But we find that notice of hearing was not served on the assessee. This is violation of principles of natural justice. We find that this bench of the ITAT in all such cases has been restoring the matter to the file of the Assessing Officer for fresh adjudication in accordance with law - Appeal of the assessee is allowed for statistical purposes.

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• Customs

• 2021 (2) TMI 262
  Provisional release of seized conveyances alongwith the goods - allegation is that that the vehicle in question was found to have carried smuggled imported goods - corrigendum issued belatedly after issuance of SCN after this Hon ble Court was seized of the matter - section 110(2) of the Customs Act - HELD THAT:- Petitioner has been belatedly issued the corrigendum to the show cause notice on 21.12.2020 that too after this Hon ble Court was seized of the matter. This Court had issued notice on 02.12.2020 noting the grievance of the petitioner that his vehicle continued to remain under seizure without any show-cause notice being issued for more than one year thus being violative of section 110(2) of the Customs Act. Therefore action of issuing corrigendum to the petitioner after the High Court had taken cognizance of the grievance of the petitioner has rendered such action highly questionable. That apart it is clearly discernible that there is a clear distinction between the conveyance used to transport the seized goods and the action of the importer which will be the subject matter of investigation. Both the issues relate to two different parties. On perusal of the extracts of statements reproduced in the show cause cum demand notice dated 29.09.2020, it prima facie, appears that though the petitioner s vehicle was hired for transportation of the seized goods, petitioner had no direct or indirect role in so far as the tampering and removal of goods was concerned - the grievance of the petitioner expressing hardship on account of availing bank loan for purchase of the seized vehicle; that he is paying monthly EMI of Rs. 33,437.00 to the bank; since 04.11.2019 his vehicle is lying stationery and not in use; it was his only source of income and he has no connection with the importer needs consideration. The impugned action of seizure of the petitioner s vehicle No.MH-46-H- 1284 as well as the order for provisional release of the vehicle calls for interference - The provisional release order dated 14.07.2020 at Exhibit D to the writ petition for release of vehicle No.MH-46-H-1284 of the petitioner is modified as under:- a. The petitioner shall furnish a bond for 10% of the value of goods seized as a pre condition for release of vehicle No.MH-46-H-1284; b. The petitioner shall furnish an undertaking that he shall cooperate with the investigation and appear before the investigating authorities as and when required. Subject to compliance of the above two conditions, the above vehicle of the petitioner shall be released forthwith - Appeal allowed in part.

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• 2021 (2) TMI 261
  Benefit of conversion from Drawback scheme to DFIA scheme - applicability of benefit at any time for the clearances which had taken place almost four years back - benefit on exports made in past after the period of 3 months are over from the date of such export - requirement of fulfilment of Circular No. 36/2010 Cus dated 23.09.2010 or not, as regards time limitation - HELD THAT:- It appears from the materials on record that the respondents herein preferred an application addressed to the Principal Commissioner Customs, Mundra for conversion of 204 shipping bills from Drawback Scheme to Duty Free Import Authorization (DFIA) Scheme. The request came to be rejected by the Principal Commissioner Customs on the ground that the same was time barred. The Principal Commissioner Customs took the view that such a request was made for conversion after three months from the date of the Let Expert Order (LEO) and if such a request is accepted, the same would be contrary to the Circular No.36/2010 Cus dated 23.09.2010. In appeal by the respondents before the tribunal, the tribunal took notice of section 149 of the Customs Act, 1962. The tribunal noticed that no time limit has been prescribed under the statutory provision of Section 149 of the Act. In such circumstances, the Circular cannot prescribe particular time period, which is otherwise not provided in a statute - From Section 149 of Customs Act, it is clear that no time limit is prescribed. The request of the appellant for conversion was rejected on the sole ground of limitation as prescribed under Board Circular No.36/2010 Cus. It is found that since the time limit has not been prescribed under the act, the same cannot be fixed by way of the circular. Therefore, if at all there is a time limit by way of circular, it is only procedural requirement. Therefore, on this ground of limitation, application could not have been rejected, particularly when circular prescribing time limit is without authority of any statutory provision, act and rules supported. It is settled law that the time limit prescribed by the Board Circular is not binding as same is not statutory provision in terms of section 49 of the Customs Act 1962 - further, in the identical case of Bectors Food Specialities Ltd. (Supra) this Tribunal, Chandigarh after considering the Hon ble Gujarat High Court judgment in the case of ANIL SHARMA AND 1 VERSUS UNION OF INDIA AND 3 [ 2017 (2) TMI 50 - GUJARAT HIGH COURT] held that the assessee was entitled for conversion of shipping bill from DBK Scheme to DFIA Scheme. Thus, Section 149 is applicable at the relevant point of time - appeal dismissed - decided against Revenue.

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• 2021 (2) TMI 260
  Smuggling - Release of three gold bars seized - petitioner urges that there was no intent on the part of the petitioner to smuggle anything - HELD THAT:- It is his hard-earned money and his marriage is due in the month of April, 2021. He, therefore, had brought this. He has urged that the process of confiscation is not as yet over and the documentary evidences which have been adduced, would need to be carefully examined by the Authority concerned before it finally adjudicates the matter, and therefore, seeks directions for the Authority concerned to apply its mind and decide the same in accordance with law. He does not press for release of the gold bars in the present petition and urges that the legal recourse which is available to him, should be efficacious. Noticing the fact that Section 123 of the Act provides for burden of proof where the goods are seized and when there is reasonable belief on the part of the Authority that they are smuggled goods, burden of proving that they are not, would be on a person from whose possession the goods were seized. The discharge of the burden and the appreciation of such evidence is function of the Quasi Judicial Authority and in the instant case, we have no doubt that the same shall be done as required under law by discharging all obligations as contemplated under the Act and other laws in existence. This petition being premature, the Court has chosen not to enter into the same and is being disposed of, without entering into the merits of the matter. The Authority concerned since is already seized with the matter, the petitioner shall be at liberty to adduce additional evidence, if it so choses. The same shall be decided in accordance with law - Petition disposed off.

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• 2021 (2) TMI 259
  Provisional release of goods - Used Rubber Tyre Cut in Two Pieces - misdeclaration of the imported goods - restricted goods or not - allegation that the importer has mis-declared the cargo in order to circumvent the import restriction imposed by the extant Foreign Trade Policy - Section 110A of the Customs Act, 1962 - HELD THAT:- The respondents are directed to assess and permit the provisional release of the goods in question upon payment of applicable duties of customs subject however to the eventual adjudication. The respondents shall release the goods after assessing and collecting the customs duty and other charges provisionally within a period of three weeks from the date of receipt of a copy of this order. The adjudication proceedings can go on. The respondents will bear in mind the usual approach adopted in the case of provisional release of goods in terms of [Section] 110A of the Customs Act. It is further declared that the petitioners are entitled to waiver in view of the handling of cargo in Customs Areas Regulations, 2009. No demurrage and detention charges shall be levied on the petitioners herein. Petition allowed.

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• 2021 (2) TMI 258
  Rectification of Order - mistake in the classification - the department had denied the exemption benefit as per S. No. 20 of Notification No. 57/2017 dated 30.6.2017 alleging that the product would fall under 85176990 - HELD THAT:- On perusal of the final order, it is found that competing classifications are CTH 85176290 by the appellant and 85176990 by the department. However, by mistake the classification confirmed by the department has been noted as 85176290 in the last sentence of para 2. This is an error apparent on the face of record which requires rectification. We hereby order that the classification mentioned in last sentence of para 2 be substituted as 85176990 instead of 85176290. Classification of product under CTH 85176990 - denial of benefit of Notification No. 57/2017 - HELD THAT:- On perusal of the final order, it is found that the Tribunal had held that the goods fall under CTH 85176290, it is sufficiently implied that the appellant would then be eligible for the benefit of Notification No. 57/2017. However, only for clarity purpose, we specify that the appellant would be eligible for the benefit of exemption Notification No. 57/2017. In para 5, before the last sentence, it is hereby added. ROM application allowed.

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• Corporate Laws

• 2021 (2) TMI 257
  Investigation of affairs of the petitioner/ CSITA by the SFIO - opinion not formed as envisaged under Section 210 of Companies Act - section 212 of Companies Act, 2013 - HELD THAT:- The said order is on the basis of the report of the Registrar of Companies dated 13.12.2017 filed under section 208, which was filed, without conducting any inspection or enquiry as provided under Section 206 / 207 and hence, the said report cannot be construed as a report under Section 208 of the Act, 2013. That apart, an opportunity of being heard as contemplated under Section 206(4) was not provided to the petitioner / CSITA, before filing the report dated 13.12.2017. It is also contended that the petitioner / CSITA has not been served with a copy of the report dated 13.12.2017, which is in violation of the principles of natural justice. Hence, it is prayed to allow the writ petitions by setting aside the report of the Registrar of Companies and the order passed by the Central Government and the consequential summons. Various complaints were received raising allegations against the petitioner / CSITA, which prompted the Central Government to order inspection of the Books of Accounts of the company on 08.08.2011 under Section 209A of the Companies Act, 1956 and the said inspection was conducted and a report pointing out various violations of the provisions of the 1956 Act, was submitted on 29.08.2012 to the Central Government, which inturn, instructed to launch prosecutions against the petitioner and its officers before the Economic Offences Court, Chennai. Subsequently, an inquiry under section 206(4) of the Companies Act, 2013 was conducted on 05.10.2015 and the Registrar of Companies, after completion of the inquiry, filed a report dated 12.01.2016 under Section 208 of the Act, 2013. Based on the same, the Central Government ordered investigation into the affairs of the petitioner by Serious Fraud Investigation Office (SFIO) under Section 212 of the Act, 2013, on 10.06.2016. The said order was challenged in W.P.No.38841/2016 before the High Court of Hyderabad. The High Court of Hyderabad, after detailed analysis, set aside the said order and remanded the matter to the Central Government for fresh consideration to exercise its power under Section 212, basing on the report dated 10.06.2016 of the Registrar of Companies, within three weeks from the date of receipt of a copy of the order. Whether the report dated 13.12.2017 submitted by the Registrar of Companies under Section 208 of the Act, 2013, is valid in law? - HELD THAT:- The principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing; and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Applying the same to the facts of the present case, the report filed by the Registrar of Companies on 13.12.2017, without complying with the provisions of section 206, sans merit. However, considering the nature of the allegations raised against the petitioner / CSITA, this Court is not inclined to quash the same, but, in the interest of justice, is inclined to treat the said report as notice under Section 206(4), to which, the petitioner / CSITA shall file its detailed explanation / objections along with documentary evidence, within a given time. Upon receipt of the same, the Registrar of Companies shall also file a consolidated report under section 208 to the Central Government in a time bound manner. Whether the order dated 07.05.2018 passed by the Central Government assigning the investigation of the petitioner / CSITA to the SFIO, is in consonance with the provisions of Section 212 of the Act, 2013? - HELD THAT:- Though it is contended on the side of the respondents that the Central Government has formed the requisite opinion before passing the order under section 212(1)(a) and (c) of the Act, 2013, the perusal of the noting proceedings circulated by the respondent officials, would not whisper anything about the opinion as contemplated under section 210 of the Act, 2013. It contains only the communications between the Central Government and the Registrar of Companies through Regional Director (SR), Chennai. Though the minutes of the Oversight Committee meeting held on 17.04.2018 reveal that upon considering the report of the Registrar of Companies and the direction of the High Court of Hyderabad, in view of the provisions of Section 212(1)(a) and (c) of the Act, 2013, a recommendation was made to investigate the affairs of the company by the SFIO, the mandate of the law under section 210, to form an opinion for ordering such investigation, was not complied with by the Central Government, before passing the impugned order dated 07.05.2018. Though it was argued on the side of the respondents that the report dated 13.12.2017 is in continuance of the earlier report dated 12.01.2016, which holds the field and no inspection / enquiry as per the provisions of law, is required, it was clearly stated in paragraph no.2 of the impugned order that the issues highlighted in the report of the Registrar of Companies, Chennai dated 13.12.2017 necessitated the Central Government to consider the order of investigation in public interest. That apart, the impugned order contains the mere extracts of the allegations referred to in the report of the Registrar of Companies and the same cannot be treated as sufficient compliance by the Central Government for exercising its drastic power. It is noteworthy to mentioning that already, the High Court of Hyderabad vide order dated 16.11.2017 in WP.No.38841 of 2016, set aside the order dated 10.06.2016 and remanded the matter to the Central Government for fresh consideration to exercise of its jurisdiction under Section 212 of the Act, 2013, on the ground that the order does not reflect forming opinion on the necessity for investigation by SFIO under Section 210. Despite the same, the Central Government passed the order dated 07.05.2018 without forming an opinion as envisaged under section 210, but merely relying upon the report dated 13.12.2017. Such attitude on the part of the respondents cannot be countenanced. According to Merriam Webster s Dictionary of Law, the word opinion means a belief stronger than impression and less strong than positive knowledge - he words is of the opinion that it is necessary to investigate impose a jurisdictional duty on Central Government to form opinion on the necessity of investigation by SFIO. Therefore, in the considered view of this Court, the Central Government is required to form an opinion, as prescribed in the provisions of Section 210 for exercising the power under section 212, as observed by the High Court of Hyderabad. The allegation against the evangelical department is that they are not doing worship for the well being of the company and its beneficiaries and stakeholders. Instead, it is doing misappropriation and illegalities by selling most of the properties belonging to the Association. It is also placed on record that due to non-submission of accounts, the beneficiaries / donars to the CSITA could not get IT exemption. Such activities cannot be permitted to be sustained, having due regard to the object of the institution, which is to preach and propagate the religion of Christianity to the world and uplift the members of the CSI. Mere preaching from the church pulpits about Christian holiness and Stewardship does not work, when it comes to managing the finance and properties of the church in the most ethical way. The corporate morality and the biblical ethics reflected in the character of God are to be combined to form a base for maintaining the CSITA s corporat Be it noted, the files circulated by the official respondents would reveal that the proceedings was initiated against the petitioner/ CSITA for the alleged misappropriation, mismanagement, fraud etc., in the year 2011. Since then, the respondent authorities have been simply exchanging the communications from one office to another, without complying with the statutory provisions, within a reasonable time - Taking note of the serious nature of the allegations raised, the inordinate and undue delay caused by the respondent authorities, cannot be simply wished away. Hence, this Court directs the respondent authorities to take action against the erring officials, departmentally. The petitioner / CSITA shall submit its detailed explanation/ objections along with documentary evidence to the report of the Registrar of Companies dated 13.12.2017, which is impugned in WP.No.32587 of 2019, treating it as a show cause notice under Section 206(4) of the Act, 2013, within a period of two weeks from the date of receipt of a copy of this order and thereafter, appear for enquiry between 17.02.2021 - 22.02.2021 - Petition disposed off.

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• 2021 (2) TMI 256
  Freezing of Bank Account - applicability of the RBI Circulars of March 27 and May 23, 2020 - Counsel argues that the opinion of the RBI, as expressed in the present writ petition, cannot be a determinant of the independent assessment of the effect of the Circulars by the court - Whether there was a concluded OTS scheme between the parties? - HELD THAT:- The materials on record, as referred to by the parties, clearly indicate that there was a concluded OTS scheme between petitioner no.1 and the respondent no.2-Bank as on August 19, 2019. The Bank s letter dated August 19, 2019 assumes particular importance in this context. However, admittedly, the petitioners failed to honour such scheme. Instead, petitioner no. 1 alleged deviation from the original proposal on the bank s part, vide letter dated August 26, 2019. Interestingly, petitioner no. 1, by its letter dated November 5, 2019, allegedly accepted the compromise proposal of UCO Bank . There could not arise any proposal being issued by the Respondent No.2-Bank, since the proposal was initiated by petitioner no. 1 itself. The bank, at best, modified the proposal and accepted it on the Bank s terms. Hence, the petitioner no. 1 cannot claim that November 5, 2019 was the date of acceptance of any proposal. The letter dated November 5, 2019 at best reopened the discussions on settlement, thereby rendering irrelevant the concluded OTS scheme already reached on August 19, 2019. Thereafter, further correspondences were exchanged between the Bank and the petitioners, each of which sought to offer new modifications to the already-concluded OTS scheme, but there was no consensus ad idem between the parties at any other juncture, fit to crystallise into a further concluded OTS scheme. As such, the several correspondences between the parties could not justify the petitioners arguments that there was an existing OTS scheme at the juncture when the RBI Circulars came in. If the petitioners take the stand that the OTS scheme was concluded on November 5, 2019, such contention has to be turned down in view of the subsequent replies of the Bank. Vide the communication dated February 13, 2020, for example, the Respondent No. 2-Bank categorically iterated that the date of acceptance of OTS would be from the issuance of sanction letter by the branch to the company, that is, August 19, 2019 - the only concluded OTS, if any, was reached on August 19, 2019 by the Bank s acceptance and sanction of the previous offer of petitioner no. 1. In the event the petitioners argue that OTS was not finalized on August 19, 2019, there is no other concluded OTS scheme that the petitioners can rely on. Since the petitioner no.1 failed to honour its commitments under the concluded OTS scheme of August 19, 2019, as mentioned above, no further extension of time on the basis of the OTS could be claimed validly by the petitioners. The Respondent no. 2-Bank, by its letter dated August 10, 2020, made it clear that, in view of the failure of petitioner no. 1 to honour payment of OTS amount as per sanction terms, the OTS was treated as failed and, as a consequence, requested petitioner no. 1 to pay up the entire outstanding due of Rs. 16.01, as on that date, with interest - The petitioners have consistently defaulted in repayment, having only paid a meagre part of the dues, let alone interest, and having subsequently defaulted on the OTS scheme as well. Thus, there is no handle in favour of the petitioners to extend the benefits of the RBI Circulars to them. In the present case, not only was there no existing OTS in place when the RBI Circulars were issued, in view of the previous OTS scheme having been revoked due to default of the petitioners, there was no scope to argue that the benefits of the RBI Circulars were applicable to the petitioners, since an incomplete OTS, in any event, cannot be a trigger for extending the benefits of the RBI Circulars - Petitioner no. 1 clearly admitted, inter alia in its letter dated December 10, 2019 (Annexure P-57 at page 180 of the writ petition), that its account had become NPA in October, 2017 (as per the Bank s version, though, it stood NPA since the year 2015). Subsequent talks of settlement, which never reached fruition, cannot afford leverage to the petitioners to claim benefits under the 2020 RBI Circulars, as those extend only to standard accounts, which character was lost by the account of petitioner no. 1 the moment it was classified as NPA long prior to the onset of the pandemic. As on February 29, 2020, the cut-off date provided in the Circulars, the account of petitioner no. 1 was already marked NPA and was not a standard account to which the benefits of the Circulars could be extended. Petition dismissed.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 255
  Seeking approval of the Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Resolution Applicants on the persuasion of this Bench agreed to increase the payment from Rs. 2,00,000/- to Rs. 10,00,000/- against the actual liability with respect to workmen employees. Accordingly, the Representative of Resolution Applicants, during the hearing, agreed to increase the amount payable to workmen employees to Rs. 10,00,000 (from Rs. 2,00,000). The Resolution Applicant has sought certain reliefs, concessions, waivers. We however are not inclined to grant such concessions or waivers. The Resolution Applicant needs to approach the authorities concerned for permits, if required (such as licenses, renewal of license, electricity connection etc.), and same will be considered by the authorities in accordance with law. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - Application allowed.

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• 2021 (2) TMI 254
  Physical possession of the mortgaged leasehold land of the Corporate Debtor into the Liquidation Estate of the Corporate Debtor - whether the leasehold land of the Corporate Debtor can be scheduled into the Liquidation Estate of the Corporate Debtor? - Whether the mortgaged land can be added into the Liquidation Estate of the Corporate Debtor? Whether the Respondents herein who are Financial Creditors who hold the property in question due to the fact that the property is pledged with them by the Corporate Debtor can be directed to be physically handed over to the Resolution Professional? - HELD THAT:- Since the Resolution Professional has to conclude the proceedings, it is highly necessary to get the possession of the property, as it is the duty of the Resolution Professional to dispose of the Liquidation Assets of the Corporate Debtor if necessary, to settle the claims of all claimants including the Financial Creditors. Since, the Building/ hospital is situated in the very same land having 16.55 Ares, no purpose will be served without getting the hospital property also into the Liquidation Assets - Moreover, the 1st Respondent Union Bank of India has no objection in handing over the possession and the 2nd Respondent Meenanchil East Urban Co-operative Bank Limited even though objected to; they have conditionally agreed to hand over possession, provided their interest is well secured. There is no doubt that the Liquidator will consider all the claims and make payments to each person/authority, as per the Regulations/ Rules. Hence, the 2nd Respondent s apprehension cannot be sustained. Both Respondents are directed to hand over the physical possession of the mortgaged leasehold land of the Corporate Debtor (both Express Lease Implied Lease lands used by the Corporate Debtor) to the Applicant in order to use as the Liquidation Estate of the Corporate Debtor - the Applicant is also allowed to add the mortgaged land (Express Lease-100.16 Ares Implies Lease- 78.45 Ares) into the Liquidation Estate of the Corporate Debtor - Liquidator is directed to strictly follow the procedures to take over the property in question, as per the Regulations.

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• Service Tax

• 2021 (2) TMI 253
  Valuation - management, maintenance or repairs or not - activity of providing parking facility in the Malls - whether the Mall owners receive any payment or consideration from the appellant or not - extended period of limitation - HELD THAT:- Issue notice, returnable within four weeks.

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• 2021 (2) TMI 252
  Rejection of application (declaration) filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of declaration under the category of investigation, enquiry or audit - whether the writ applicant was eligible to avail the benefit of the scheme under the category of investigation, enquiry or audit? - HELD THAT:- It is required to be noted that, at the time of issuing the letter dated 28.06.2019, there is no any whisper by the authority that, the amount fixed as a duty was subject to further audit. We also take the notice of the fact that, while issuing statement in Form SVLDRS -2, after considering the declaration made by the writ applicant, the amount payable Rs. 1,22,18,781.05/ determined and estimated by the authority and the same amount reflected in the impugned Form SVLDRS -2. Therefore, at the one hand, while issuing statement in Form SVLDRS -2 by the Designated Committee estimated the amount equal to the amount declared by the writ applicant in Form SVLDRS- 1 i.e. Rs. 1,22,18,781.05/ and on the other hand, without any clarification, one note appended to the Statement in Form SVLDRS -2 mentioning therein that, there was a variance in the quantification of the amount under the draft audit report and letter dated 28.06.2019. If the authority did not have agreed with the amount as declared by the writ applicant, then they should not estimated the amount equal to the amount declared by the writ applicant or they could have been estimated the higher amount against the amount declared by the writ applicant. The communication dated 28.06.2019 would indicate that the respondent No.1 had quantified the amount by way of written communication. Referring to the Circular of the Board dated 27.08.2019, more particularly para 10 (g) of the said Circular, clarified in the context of various provisions of the Act, 2019, that, the cases under an enquiry, investigation or audit, where the duty demand has been quantified on or before 30th day of June, 2019 are eligible under the scheme. Section 2(r) defines quantified as a written communication of the amount of duty payable under the indirect tax enactment. It is clarified that, such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit or audit report etc. Therefore, we hold that, in the instant case, the respondent No.1 had quantified the tax amount payable by the writ applicant and same was communicated by way of letter dated 28.06.2019. Thus, the tax dues were quantified on or before 30th June, 2019. In such circumstances, we have no hesitation to hold that, the writ applicant has duly complied with the eligibility criteria laid down under the SVLDRS Scheme, 2019 and the writ applicant was eligible to file an application as per the Scheme under the category of investigation, enquiry or audit. Action of the respondent No.1 in issuing statement in Form SVLDRS -2 was against the provisions of the Finance Act, 2019 and Rules thereunder - HELD THAT:- After filing the application in statement in form SVLDRS- 1 intimating the total tax dues of Rs. 2,52 95,051/ based on the amounts quantified and communicated to the writ applicant by letter dated 28.06.2019, the net amount payable by the writ applicant was mentioned Rs. 1,22,18,781.05/ and in response to the declaration, the Designated committee had estimated the same amount declared by the writ applicant and the same was confirmed by the writ applicant in issuing the statement in Form SVLDRS -2. Therefore, when the liability of tax amount estimated by the authority equal to the amount declared by the writ applicant, then, there is no reason for the authority to issue statement in Form SVLDRS -2. The respondent No.1 tried to defend the issuance of statement in Form SVLDRS -2 in their reply stating, inter alia that, the statement in Form SVLDRS dated 07.02.2020 was issued for the clarification with regard to the quantification amount was in variation with quantification letter dated 28.06.2019. Opportunity for personal hearing - HELD THAT:- As per the provision, if declarant is not agree with the amount determined by the Designated Committee, he having given right to hearing to explain why he is not agree with the estimated amount determined by the Designated Committee - In the instant case, there is no dispute with regard to estimated amount determined by the Designated Committee. Notice for hearing was for the limited issue with regard to agreement or disagreement with the estimated amount determined by the authority. Record shows that, in statement in Form SVLDRS -2, no specific notice for affording the opportunity of hearing was given to the writ applicant with regard to variance of quantified amount - there is no hesitation in holding that the action of the respondent No.1 issuing statement in Form SVLDRS -2 is in contravention of the Section 127 (1) read with Rule 6 (2). The decisions of rejecting the application by the respondent No.1 were in violation of principles of natural justice. It appears from the record that, no specific amount of variance being brought into notice of the writ applicant. The only remarks appended to the statement in Form SVLDRS -2 without any specification, is not sufficient to hold that, the principles of natural justice have been complied by the respondent No.1. The contents of the rejection letter would go to show that, in the absence of any clarification on the part of the Designated Committee, the application was rejected. In this circumstances, we are of the view that, no sufficient reason being assigned on the issue of variance of the amount while rejecting the application. It is required to be noted that, the amount of variance with regard to quantification having not specifically mentioned in the statement in form SVLDRS -2, nor being stated in the rejection application. Had the respondent No.1 provided the varied estimate in the statement in Form SVLDRS -2, the writ applicant would have submitted their response and sought a personal hearing. It is pertinent to note that, against the rejection of the letter dated 05.05.2020, the writ applicant had requested twice for process of the application. However, the respondent No.1 did not have assign any reason with regard to varied amount. Therefore, the whole process undertaken in this case was not fair and the mechanical rejection of the application is against the settled principles of natural justice. It is settled that, any order which has civil consequences must be passed after giving an opportunity to be heard. The statement in Form SVLDRS -2 dated 07.02.2020 is in contravention of the provisions of the Act and the Rules thereunder and the same deserves to be quashed and set aside and accordingly, it is quashed and set aside. Consequently, the impugned rejection letters dated 05.05.2020 and 11.06.2020 are also quashed and set aside - Application allowed.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 251
  Benefit of concessional rate of 2% of CST - Post GST era - Denial of benefit of purchases of HSD Diesel, Natural Gas in the course of inter-State Trade or Commerce - Declaration of C forms of the CST Act, 1956 - HELD THAT:- Issue notice. Matters be posted for final disposal on on 17th February, 2021 (NMD) - There shall be stay of operation of the impugned judgment passed by the High Court of Judicature at Madras till the next date of hearing.

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• 2021 (2) TMI 250
  Maintainability of appeal - failure to make payment of pre-deposit - HELD THAT:- It appears that the Assessment Orders for the respective years were challenged before the First Appellate Authority and Tribunal, as referred to above. However, all the appeals having been dismissed only the ground of nonpayment of pre-deposit amount and accordingly, without entering into the merits of the case, the appeals were dismissed summarily. The appeals filed before the First Appellate Court must be heard on merits, more particularly, out of Rs. 12 lakhs, the substantial amount of pre-deposit of Rs. 7,43,000/- is already deposited on different dates before the concerned authorities. We also take into consideration the statement made at the bar by learned advocate Mr. Trivedi that writ applicant will deposit the remaining amount of Rs. 4,33,000/- within a period of 8 weeks from today - Application disposed off.

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• 2021 (2) TMI 249
  Refund of the amount recovered during the search - Amount has not been appropriated by passing the audit assessment orders and the same now having become time barred - HELD THAT:- It appears from the materials on record that the writ applicants are engaged in the business of excavation and grinding of black trap stones and sale of the products like grit, rubbles etc. There is no legal justification for withholding the amount referred to above, which is otherwise refundable to the writ applicants in passing of any assessment orders for the relevant assessment years. It could be said that such withholding of the refund is contrary to the provisions of the Section 36 of the VAT Act, 2003. The respondents are directed to pay to the writ applicants an amount of Rs. 14,61,850/- together with the statutory interest @ 6 % within a period of six weeks from the date of communication of this order - Application allowed.

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• 2021 (2) TMI 248
  Legality and validity of the order of attaching the bank account of the writ -applicant in exercise of power under Section 44 of the GVAT Act - service of notice under Section 34(8A) of the GVAT Act - HELD THAT:- Ordinarily, we would not have entertained this writ -application on the ground that the impugned order dated 08.07.2019 passed under Section 34(8A) of the GVAT Act, 2003 is an appealable order. However, in view of certain pleadings in the writ -application, we thought fit to issue notice and call upon the respondents to justify its action of invoking Section 34(8A) of the Act. The communication is ordered to be taken on record. The plain reading of the afore said communication would indicate that the matter was closed for the assessment year 2010 -11 - as the condition precedent for invoking Section 34(8A) of the Act is not fulfilled in the present case, not only the impugned order dated 08.07.2019 of assessment is rendered illegal, but even the subsequent action in the form of attachment order under Section 44 of the Act would be rendered without jurisdiction. The impugned order dated 08.07.2019 passed by the respondent no.2 Annexure- D to the writ -application is hereby quashed and set aside - Application allowed.

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• 2021 (2) TMI 247
  Jurisdiction - Inter-state sales or not - resident dealer in Tamil Nadu or not - Assessing Officer was of the view that since the furnished goods manufactured by M/s.UHEL moved to other states from the State of Tamil Nadu, the State of Tamil Nadu is the appropriate State to assess the transactions under Section 9(1) of the CST Act - HELD THAT:- Section 3 of the CST Act falls under Chapter 2, which is a chapter dealing with formulation of principles for determining when sale or purchase of goods takes place in the course of inter-state trade or commerce or outside a State or in the course of import or export. Section 3 explains as to when a sale or purchase of goods is said to take place in the course of inter-state trade or commerce. To qualify as a sale to have been taken place in the course of inter-state trade or commerce, two conditions have been stipulated, which are highly exclusive on account of the use of the expression or - Therefore, if the sale or purchase occasions the movement of goods from one State or another, it would qualify for a sale in the course of inter-state trade or commerce or if a sale or purchase is effected by a transfer of documents of title to the goods during the movement from one State to another, it would qualify as a sale in the course of inter-state trade or commerce. The Tribunal took note of the sub-contract entered into between the first respondent-assessee and M/s.UEHL, dated 24.06.1983. The terms and conditions of the said subcontract have been extracted in paragraph 14 of the impugned order passed by the Tribunal. On a perusal of the same, it is abundantly clear that what has been entrusted to M/s.UEHL is only a job work. The contract entered into by the first respondent-assessee with a party in Orissa or any other State is the main contract, for which, the assessee has entered into a sub-contract by supplying raw materials, so as to enable the sub-contractor to manufacture as per the design supplied by the first respondent-assessee. The first respondent-assessee has further instructed the sub-contractor, upon permission of the job worker to despatch the goods directly to others where the contract is being performed and is being fulfilled by the first respondent. Whether movement of goods from the State of Tamil Nadu, at the instance of the sub-contractor, to another State, could be construed as a sale in the course of inter-state trade or commerce. Indisputably, the title to the goods, though in the form of a raw material, continued to remain with the first respondent-assessee. What was entrusted with the UEHL was only a job work and the specifications have been clearly set out in the sub-contract. Therefore, the Tribunal rightly took into consideration the nature of the transaction and also took note of the important fact that the contract is a composite contract executed by the first respondent outside the State of Andhra Pradesh, for which, the first respondent showed various materials pertaining to various job workers for various purpose and the contracts were executed only by the first respondent at the designated place, which is situated outside the State of Andhra Pradesh. The Tribunal has not committed any error for us to substitute our opinion. Furthermore, the manner in which the Tribunal has appreciated the nature of contract and as to how the title to the goods was never transferred to M/s.UEHL are all findings on facts, which are perverse or unsustainable for us to interfere under Article 226 of The Constitution of India - Petition dismissed.

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• 2021 (2) TMI 246
  Addition for non-maintenance of stock book - levy of additional sales tax - estimation of 1% addition for non-maintenance of stock book on the reasoning that the assessee is not a manufacturer - levy of additional sales tax for the assessment year 1996-97 since the taxable turnover did not exceed 100 crores as per amended provision of Section 2(1)(aa) - validity of deletion of consequential surcharge, additional sales tax and penalty - HELD THAT:- The substantial questions of law which have been raised for consideration has been answered in Philips India Limited vs The Assistant Commissioner (CT), Fast Tract Assessment Circle II and others [ 2004 (5) TMI 538 - MADRAS HIGH COURT ] where it was held that the provision under Section 55 of the TNGST Act and the relevant rules would be applicable for the purpose of effecting rectification. The Tamil Nadu Additional Sales Tax Act, 1970 is not a self contained code. It merely supplements Tamil Nadu General Sales Tax Act. It is necessary to read and construe the Tamil Nadu General Sales Tax Act and the Tamil Nadu Additional Sales Tax Act together. The tax case revision stands disposed of.

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• 2021 (2) TMI 245
  Maintainability of petition - availability of statutory appeal remedy of appeal - Reopening of assessment - Exemption from tax or not - tea dust - soap - hand made matches - Section 84 of the TNVAT Act - AO rejected the petition on the ground that the power under Section 84 can be invoked only for correction of clerical and arithmetical mistakes alone and therefore, the petition is not maintainable - HELD THAT:- There is a primordial mistake committed by the Assessing Officer by invoking Section 84 of the Act for reopening the assessment. Mr.Mohammed Shaffiq, learned Special Government Pleader appearing for the respondent is right in his submission that power to reopen assessment is traceable to Section 27 of the TNVAT Act. It is the further submission of the learned Special Government Pleader that at best making a reference to Section 84 of the Act in the show cause notice dated 30.04.2014 can be treated as quoting a wrong provision and if the goods sold by the appellant- Society to the fair price shops are exigible to tax, then there is an error in the assessment, which needs to be rectified. Under normal circumstances, we would have laboured on this issue, but the facts of the present case precludes us from doing so. It is not as if the Assessing Officer was not aware of what was the scope of his power under Section 84 of the Act as could be seen from the order dated 09.10.2014, wherein he states that the power can be exercised only for correction of clerical and arithmetical mistakes - thus it cannot be accepted that the submission that referring to Section 84 in the show cause notice dated 30.04.2014 was quoting a wrong provision of the Act. In any event, if the assessment has to be reopened, it requires to be done in terms of Section 27(1) of the Act. The Assessing Officer is bound to disclose as to under which Sub-Section, he proposes to bring the case of the dealer for assessing the turn over on the ground that the sale has escaped assessment or the dealer has been assessed at a lower rate than the rate at which it is assessable. A plain reading of the show cause notice dated 30.04.2014 will clearly show that there is no such proposal made by the Assessing Officer assuming the Assessing Officer invoked his power under Section 27(1) of the Act - the Assessing Officer did not go into the correctness of the claim made by the appellant by referring to G.O.P.No.272, Revenue dated 11.02.1967, which was issued when the erstwhile Tamil Nadu General Sales Tax Act was invoked and the Entry 43 of Part B of Fourth Schedule of the TNVAT Act. The reopening of the assessment is bad in law - If we are to approve the stand taken by the Assessing Officer in the order dated 09.10.2014 and hold that the power under Section 84 of the Act is to correct only arithmetical and clerical mistakes, then we have to consequently hold that the reopening of the assessment invoking Section 84 of the Act vide notice dated 30.04.2014 and the consequential revised assessment order dated 09.06.2014, as illegal. Petition is allowed.

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• Indian Laws

• 2021 (2) TMI 244
  Grant of bail - Sections 4, 5, 6 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (for short 1978 Act ) and Section 3(2) of the Haryana Protection of Interest of Depositors (in Financial Establishment) Act, 2013 - purchase of agricultural land by way of two separate registered sale deeds in his native village without disclosing any other source of income - HELD THAT:- It is noteworthy that as per statement of revenue Patwari of village of the petitioner, there was no land existing in his name up to the year 2015, but all of a sudden after joining the Company, he purchased agricultural land by way of two separate registered sale deeds for sale consideration of Rs. 40 Lakh and Rs. 80 Lakh in his native village without disclosing any other source of income - Still further, police have recovered ID No. FM110621 to substantiate that petitioner was working as Planner as well as chief ID promoter of the Company and played vital role in conspiracy with other co-accused while defrauding the public at large for receiving his booty under the garb of commission. As on today, investigation is pending with the SIT, which is headed by an IPS Officer and out of total 31 accused, 21 have been arrested so far. During the course of hearing, this Court was apprised that despite repeated non-bailable warrants, remaining 10 co-accused are evading the arrest, but again their warrants of arrest have been issued for 25-9-2020 and Investigating Agency is making best efforts to apprehend them amidst Covid-19 pandemic - Since investigation in the matter is being delayed by the co-accused and that is the prime reason that charges could not be framed in the matter, thus, prosecution is not blameworthy for the delay, if any and the petitioner cannot take any benefit of the same. Consequently, the argument that incarceration of the petitioner is being unnecessarily prolonged by the prosecution is without any basis and liable to be rejected. Police-papers reveal that petitioner received an amount of more than Rs. 1.25 Crores from the Company through different bank accounts and purchased immovable properties, thus, played an active role as planner as well as chief ID promoter for this financial fraud and as such, the contention that he has no role in the commission of offence is also liable to be rejected - It is shocking that within a period of three years of incorporation of the Company with mere share capital of Rs. 10 Lakh, accused have accumulated the amount of more than Rs. 2956 Crores through illegal means under the garb of selling non-existent products and as such, thorough investigation is required so that every wrongdoer is brought to justice. Investigation is still going on and out of total 31 accused, 10 are yet to be arrested and they are openly in league with the petitioner as well as other co-accused, who are in custody, while circulating the misleading information through social media including Whatsapp group to the effect that all are going to be released from custody very soon upon getting clean chit from the Court and as such, misguiding the victims with a calculated move so that the depositors may not co-operate the ongoing investigation - No doubt, present case is triable by the Magistrate, but at the same time, it is relevant to take note of the fact that apart from the present case, there are other 27 FIRs pending in different parts of the country against the Company as well as other accused and petitioner is deeply involved with the syndicate for running the affairs of the Company leading to alleged fraud of more than Rs. 2956 crores, thus, by no stretch of imagination, he could be termed as a victim; rather petitioner is a beneficiary. This Court is satisfied that release of the petitioner on bail at this stage would be detrimental to the pending investigation and likely to cause serious prejudice to the case of prosecution - taking into consideration the huge financial bungling as well as pendency of investigation against remaining 10 co-accused and to safeguard the interest of large number of victims, this Court is not inclined to grant the concession of bail to the petitioner - Petition dismissed.

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