TMI Tax Updates - e-Newsletter
February 9, 2024

Case Laws in this Newsletter:

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

TMI Short Notes

1. Deadline Extension for Processing E-Filed Tax Returns: Refund Claims on Income Tax Returns

  Income Tax:

2. Deadline Extended for Pharmaceutical Track and Trace System Implementation

  DGFT:

3. MCA Announces Establishment of Central Processing Centre at IMT Manesar

  Companies Law:

4. Export Obligation Compliance: Detailed SOPs for EPCG and Advance Authorization Holders

  Customs:

Articles

1. Decoding Natural Justice in GST Cases

   By: Vivek Jalan

2. LATEST CHANGES IN ‘IBC’ LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

3. Bail granted when accused willing to deposit certain amount with GST Authorities

   By: Bimal jain

4. Anti-Profiteering Law - A Boon Or Bane

   By: Rupesh Sharma

5. Rajasthan HC to decide on validity of Notification relating to Amnesty Scheme for filing of Appeals and Section 107(4) of the CGST Act

   By: Bimal jain

News

1. Monetary Policy Statement, 2023-24 Resolution of the Monetary Policy Committee (MPC) February 6 to 8, 2024

2. Quality Council of India and Open Network for Digital Commerce launch DigiReady Certification Portal to empower MSMEs and small retailers

3. GDP CONTRIBUTORS

4. Quality is important in all the aspects of life: Sh. Goyal

5. 64 Applicants with committed investment of Rs. 6,766 crore approved under PLI Scheme for White Goods (ACs and LED Lights)

6. Quality and Sustainability to define India’s journey to become developed by 2047: Shri Piyush Goyal

Notifications

GST - States

1. 08/2023-State Tax (Rate) - dated 7-2-2024 - Delhi SGST

Amendment in Notification No. 13/2017- State Tax (Rate), dated the 30th June, 2017

2. 06/2023-State Tax (Rate) - dated 7-2-2024 - Delhi SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated 30.06.2017

3. S.O. 40 - dated 12-1-2024 - Jammu & Kashmir SGST

Amendment in Notification S.O. No. 546/2023, dated the 19th of October, 2023

4. S. R. O. No. 95/2024 - dated 29-1-2024 - Kerala SGST

Amendment in Notification G.O. (P) No.62/2017/TAXES dated 30th June, 2017

5. S. R. O. No. 93/2024 - dated 29-1-2024 - Kerala SGST

Amendment in Notification G.O. (P) No.76/2017/TD. dated 30th June, 2017

6. S. R. O. No. 92/2024 - dated 29-1-2024 - Kerala SGST

Amendment in Notification G.O. (P) No.74/2017/TAXES dated 30th June, 2017

Income Tax

7. 21/2024 - dated 7-2-2024 - IT

Agreement between the Government of the Republic of India and the Government of Samoa for the exchange of Information with respect to taxes

SEBI

8. SEBI/LAD-NRO/GN/2024/165 - dated 7-2-2024 - SEBI

Securities and Exchange Board of India (Employees' Service) (Amendment) Regulations, 2024.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS-PoD/P/CIR/2024/10 - dated 8-2-2024

Revised Pricing Methodology for Institutional Placements of Privately Placed Infrastructure Investment Trust (InvIT)

Customs

2. PUBLIC NOTICE No. 03/2024 - dated 5-2-2024

Waiver of late fee for delayed filling of Bills of Entry due to Erratic functioning of ICEGATE -reg.

3. PUBLIC NOTICE NO. 01/2024 - dated 22-1-2024

Standard Operating Procedures (SOP) regarding monitoring of Export obligation fulfilment under EPCG and Advance authorization scheme-Reg.

Companies Law

4. 01/2024 - dated 7-2-2024

Relaxation of additional fees and extension of last date of filing of Form No. LLP BEN-2 and LLP Form No. 4D under the Limited Liability Partnership Act, 2008

Highlights / Catch Notes

GST

• Detention of Goods for Incomplete E-Way Bill Part B Deemed Unsustainable Without Intent to Evade Taxes.

  Case-Laws - HC : Detention of goods - penalty order - Part B of the E-Way Bill was not filled up - The High court observed that the department failed to prove any intention on the petitioner's part to evade tax and noted previous judgments directly relevant to the case. - Given the technical nature of the defect and the absence of intent to evade tax, the court found the penalty imposed u/s 129(3) of the Act unsustainable.
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• Appeal Reinstated: Court Finds No Fault in Petitioner's Filing Delay, Orders Further Review by Appellate Authority.

  Case-Laws - HC : Condonation of delay in filing appeal before the Appellate Authority - Petitioner filed the appeal within time along with a scanned copy of Order-in-Original as an annexure, but the hardcopy of the original order was forwarded to the Department of GST-I instead of GST-II inadvertently - The High court held that there was no delay attributable to the petitioner, and even if there was a delay, it appeared to be bona fide and thus liable to be condoned. - The impugned order was set aside, and the appeal was restored to the file of the Appellate Authority for further consideration on merits.
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• Retrospective GST Registration Cancellation Affects Input Tax Credit; Court Modifies Effective Date to Business Closure.

  Case-Laws - HC : Cancellation of GST registration of the Petitioner with retrospective effect - The High Court held that, Cancelling registration with retrospective effect affects customers' input tax credit, and the proper officer must consider this consequence before making such a decision. - The court modified the order of cancellation to operate from 01.10.2019, the date the business was shut down.
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• Court Permits Delay in Revocation Filing if Taxes, Fees, and Formalities Met.

  Case-Laws - HC : Condonation of delay in filing the revocation application - Revocation of cancellation of registration - The High Court condoned the delay subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities.
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• Cinema Tickets Not in 'Exception Category'; GST Applied, No Anti-Profiteering Breach Detected Despite Price Increase.

  Case-Laws - CCI : Profiteering - supply of “Services by way of admission to exhibition of cinematography films”. - The Commission concluded that there was no 'Exception Category' of tickets, and the term was coined by the DGAP. The Respondent had sold 'Exception Category' cinema tickets only after 23.08.2019, charging GST @ 18%, and no benefit of tax reduction was required to be passed on to these tickets. - The Commission further noted that the Respondent increased the base prices of 'Exception' category tickets after about 6 months from 23.08.2019, after passing on the benefit of tax reduction. This increase in base prices did not attract the Anti-Profiteering Provisions.
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• Dismissal of Profiteering Charges Over ITC in GST Project "Devaan" Under CGST Rules 2017.

  Case-Laws - CCI : Profiteering - residential flats and commercial shops - The Commission found that the Respondent had not profiteered through additional ITC in respect of the project "Devaan" post-GST. Consequently, the proceedings initiated against the Respondent under Rule 133(4) of the CGST Rules, 2017 were dropped.
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Income Tax

• Supreme Court Rules Sales Tax Subsidy as Capital Receipt, Upholding Gujarat High Court's Decision.

  Case-Laws - SC : Characterization of receipt - sales tax subsidy - The supreme court held that, we are conscious of the fact that this Court while dismissing the Civil Appeal which arose in the case of M/s Munjal Auto Industries Limited has sustained the judgment of the Gujarat High Court passed in the said case. In the circumstances, we find that the observations of the Gujarat High Court would have a bearing on the present case and therefore, we observe that consequent upon holding that the sales tax subsidy receipt by the respondent-assessee being treated as a capital receipt, the natural consequences as a result of the said declaration would follow.
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• Tax Evasion Case Quashed: Court Rules No Intentional Delay After Quick Payment Following Notice.

  Case-Laws - HC : Offence punishable u/s 276C(2) r.w.s. 278B of the Income Tax Act - Delay of 8 years in payment of tax - willful attempt to evade the tax or not? - Tax liability declared in the ITR as self-assessment but the tax and interest were not paid - The High Court observed that, The action on the part of the applicants to pay the tax due under five days of the notice militates against the stand of the Income Tax Department that there was an intent to evade the tax throughout. - Consequently, the HC held that in the facts of the case the continuation of the prosecution for the offence punishable u/s 276C(2) amounts to abuse of the process of the Court - Prosecution proceedings quashed and set aside.
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• Court Rules for Assessee: No Consent Form Signature Required Without Incriminating Evidence in Tax Assessment Case.

  Case-Laws - HC : Assessment u/s 153A - completed assessment - As regards the stand of the respondent/revenue, that the appellant/assessee had refused to sign the consent form, Appellant submits that the consent form was framed in such a manner that if the appellant/assessee were to sign the form, he would end up incriminating himself even when position taken by him was that he did not maintain a bank account with the Geneva branch of HSBC Bank. - In view of the submission of the assessee and in the absence of incriminating material, the HC decided the question of law in favor of assessee and deleted the additions.
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• Tax Reassessment Notice Issued Late, Deemed Illegal and Void by Court Due to Missed Limitation Period.

  Case-Laws - HC : Reopening of assessment u/s 147 - period of limitation - The High Court observed that, the three-year time period of A.Y 2016-17 had ended on 31.03.2020. Accordingly, the Impugned Notice, dated 21.07.2022, is beyond 3 years’ time period. Further, the said notice is for alleged escaped income a sum which is less than Rs. 50,00,000/- and thus, the said notice cannot take the benefit of extended period of limitation which is beyond three years till ten years. - Accordingly, the HC held that, the Notice is illegal, unsustainable and void ab initio and is liable to be set-aside.
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• Court Quashes Income Tax Reassessment Order Due to Lack of Evidence on Cash Transactions u/s 148A(d.

  Case-Laws - HC : Validity of reopening of assessment u/s 147 - order passed u/s 148A(d) - reason to believe - The High Court observed that, the assessing officer would state that no prudent businessman will simply withdraw crores of cash from his bank account and again will deposit it at various stage. This is a personal opinion of the assessing officer. However, for the purpose of reopening an assessment there should be a tangible material placed by the assessing officer to show that there was escapement of income from the payment of income tax. - The HC allowed the appeal and the order passed u/s 148A(d) and the consequential notice u/s 148 of the Act are quashed
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• Court Remands Case for Lack of Recorded Reasons in Tax Reassessment; Authorities Must Justify Actions Even Briefly.

  Case-Laws - HC : Validity of reassessment proceedings - order passed u/s 148A(d) - the High Court observed that, While affirming the proposal in the show cause notice, the authorities are expected to record reasons, at least brief reasons, and if not brief reasons, as to why the proposal in the show cause notice is to be confirmed despite the assessee submitting the reply. - Since even in an ex parte proceedings, the authority has to record reasons for coming to a conclusion as to why the case has been taken out for re-opening of the assessment. - The HC restored back the matter before the AO to the stage of the show cause notice u/s 148A(b).
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• Court Upholds ITAT Decision: Discrepancy in Book Entries Not Grounds for Additions u/s 41(1.

  Case-Laws - HC : Addition u/s. 41(1) - Difference between the amount payable as per books of accounts and amount as per the confirmation received from the creditor - The High Court observed that, the additions u/s 41(1) were made for the differences which arose on account of only book entries. - Admittedly, the assessee had actually made the payment in the later year and the party has accounted receipt in the same financial year which resulted into differences in the balance as added by the Assessing Officer. - Consequently, the HC affirmed the decision of ITAT deleting the addition.
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• Reassessment Proceedings Valid; ITAT Remands Case to AO for Further Examination of Unexplained Cash Deposits.

  Case-Laws - AT : Validity of reassessment proceedings u/s 147/148 - Unexplained cash credit and application of section 115BB - The ITAT while upheld the reassessment proceedings sicne AO had sufficient basis to form a belief of income escapement, based on non-explanation of cash deposits. However, the ITAT observed that before rejecting the assessee’s explanations as fabricated or invalid, it was necessary to examine the concerned parties to the agreement. Therefore, the ITAT remanded the issue back to the AO for fresh adjudication.
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• Tax Tribunal Rules Capital Gains Exempt Under India-Mauritius DTAA, Allowing Taxpayer to Claim Benefits on Equity Sale.

  Case-Laws - AT : Treaty benefits - ‘gains from alienation of shares' - taxability or otherwise of capital gain from sale of equity shares under Article 13(4) of India-Mauritius DTAA - The ITAT observed that, No doubt, the assessee has offered the capital gain under Article 13(3B) of the Treaty in its revised return. However, that will not preclude the assessee from claiming benefit under Article 13(4) of the Treaty when the capital gain clearly falls within the ambit of Article 13(4) of the Treaty. - Accordingly, ITAT allowed the claim of the assessee.
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• Transfer Pricing Adjustments Invalid for 2016-17 Due to Omission of Section 92BA(i) from Income Tax Act.

  Case-Laws - AT : TP adjustment - specified domestic transactions (SDT) - The ITAT held that since the provision (Section 92BA(i)) was omitted without a saving clause effective from 01/04/2017, any reference for TP adjustment to SDT under this clause was invalid. Therefore, for A.Y. 2016-17, no TP adjustment could be made under SDT, and the grounds of the assessee were allowed.
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• Draft Assessment Order Mandatory: Tribunal Rules Non-compliance as Jurisdictional Error, Renders Final Order Void.

  Case-Laws - AT : Validity of assessment u/s 144C - Whether the passing of the draft assessment order as prescribed under section 144C(1) of the Act is mandatory or not? - Waiver/admission/undertaking of the Assessee for not challenging the draft order before the Ld.DRP u/s 144C - The tribunal concluded that failure to follow the prescribed procedure constitutes a jurisdictional error, rendering the final assessment order illegal and void ab initio. - The tribunal further held tha, there can be no estoppel on issues of law or jurisdiction, and waiver or admission by the Assessee does not confer jurisdiction on the Assessing Officer.
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• Tribunal Confirms Toll Collection as Intangible Asset, Grants Depreciation, Adjusts Deduction Under Income Tax Act.

  Case-Laws - AT : Depreciation on right to collect toll tax on road developed by the Assessee - The Tribunal recognized the right to collect toll on roads developed by the appellant as a commercial right, an intangible asset under Section 32(1)(ii) of the Act. - Accordingly, AO directed to grant depreciation on the toll collection right as an intangible asset and to adjust the deduction under Section 80IA(4) based on this allowance.
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• Revision Upheld: Incorrect Calculation of Long-Term Capital Gains Using Inflation Index on Foreign Currency Assets.

  Case-Laws - AT : Revision u/s 263 by CIT - Irregular allowance of long-term capital loss wherein it has been held that the assessee has applied the cost of inflation index on foreign currency while computing the capital gain on the assets acquired out of foreign currency - The Tribunal upheld the revision proceedings by observing that, by computing long term capital gain by incorrect method assessee has got the benefit of Foreign Exchange Fluctuation as well as cost inflation index both which is not in accordance with Income tax Act.
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• Unsold Flats as Stock: ITAT Rules ALV Should Be Assessed as Business Income, Not Property Income, Post-2017 Amendment.

  Case-Laws - AT : Income from house property - Determining the ALV of flats disclosed in the stock in trade as per the Accounting standards and policies being fallowed consistently by the assessee - ITAT held that the ALV of the unsold flats held as stock in trade should not be computed under the head "Income from Property" but should be assessed as business income. The ITAT relied on the amendment in the Finance Act 2017, which applied prospectively from the assessment year 2018-19, to support its decision.
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• Tribunal Rules for Appellant, Deletes Tax Additions; Genuineness of Share Transactions Proven, Appeal Allowed.

  Case-Laws - AT : Additions u/sec 68 in respect of sale of shares and u/sec 69 in respect of estimated commission expenditure - The Tribunal, relying upon the judicial precedents, found that the appellant had substantiated the genuineness of the purchase and sale of shares through banking channels and documentation. The lack of independent inquiry or substantive evidence from the AO to refute the appellant's claims led to the decision to delete the additions made under sections 68 and 69C, thereby allowing the appeal in favor of the appellant.
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• Domestic Companies Must Levy Dividend Tax on Non-Residents per Income Tax Act, Not DTAA; Refund Claims Denied.

  Case-Laws - AT : Taxability of dividends - dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s) - The Tribunal held that, additional income tax payable by the domestic company shall be at the rate mentioned in Section 115- O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. - Claim of refund of excess Dividend Distribution Tax (DDT) rejected.
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Customs

• Tariff Value Notification for R.B.D. Palmolein Oil Enforceable from Official Gazette Publication Date, Not Earlier.

  Case-Laws - HC : Effective Date of Notification - Prescribing tariff value prescribed therein, for the earlier import of R.B.D. Palmolein oil - The High Court noted that in an earlier case the Division Bench had clarified that the notification would be enforceable only from the date it was notified and published in the Official Gazette, i.e., on 06.08.2001. Therefore, any liability accruing from that notification would be applicable only from that date onwards, not from 03.08.2001.
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• Court Rules on Import Violation of Agrochemicals; Fine Paid, Goods Should be Released for Home Use.

  Case-Laws - HC : Release of goods - insecticides, pesticides and other agrochemicals including technical such as “Cyantraniliprole Technical” - Import through Port which is not a specified port Import - prohibited goods or not - The High Court held that, petitioner has imported such goods at the place other than the places specified in Rule 45 of the Insecticides Rules, 1971, the petitioner is penalized and redemption fine is imposed for committing such mistake for which the petitioner has already paid Rs. 5,00,000/- towards redemption fine imposed by the respondent authority. In such circumstances the respondent authority ought to have permitted the petitioner for clearance of the goods on payment of redemption fine for home consumption.
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• Tribunal Confirms Penalty for Overvaluation of Exported Garments, Offers Partial Relief by Reducing Fine Amounts.

  Case-Laws - AT : Imposition of redemption fine and penalty - Overvaluation export of readymade garments - The CESTAT observed that, to ascertain the value of goods, the Revenue has done market survey in the presence of the representative of the appellant and in the market survey, it was found that the export goods are over valued and the appellant has accepted the same. - the Revenue not agreed upon that transportation charges and profit margin cannot be the double of the goods in the facts and circumstances of the case. - Therefore by giving partial relief, the tribunal while confirming the order, reduced the amount of redemption fine and penalty.
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• Tribunal Overturns Penalties Due to Lack of Witnesses and Gold Purity Testing in Smuggling Case.

  Case-Laws - AT : Imposition of penalty - Smuggling - Gold bars of foreign origin - illegally imported goods - CESTAT held that, once the two Appellants disputed the fact of recovery of confiscated gold bars from them and also disputed the panchnama dated 30.03.2019, the panch witnesses were required to be offered for cross-examination so that the truth of the contents of the panchnama and the recovery made from the two Appellants could have been established. The Revenue has also not got the confiscated gold bars tested by touchstone method to test the purity of the confiscated gold bars. Consequently, the tribunal set aside the penalties and dropped the proceedings.
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Indian Laws

• Lender Banks Must Share Audit Reports, Give Borrowers a Chance to Respond Before Fraud Classification.

  Case-Laws - HC : Declaring the account as "Fraud" - Following the decision of Supreme Court, the High Court held that, the lender banks should provide an opportunity to a borrower by furnishing a copy of the audit reports and allow the borrower a reasonable opportunity to submit a representation before classifying the account as fraud. Consequently, HC held that the decision of the respondent banks declaring the account of the company as fraud is hereby quashed and set aside. - Matter remitted back to the bank and let the respondents concerned, after furnishing the copies of the forensic audit report and supplementary forensic audit report so also reasonable opportunity to the petitioners to submit the representation, complete the proceedings by passing order.
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IBC

• Tribunal Rules Advance Payment for Share Purchase Not Financial Debt; Application Dismissed Due to Limitation Period.

  Case-Laws - AT : Initiation of CIRP u/s 7 of the IBC - financial debt or not - Period of limitation - Advance paid subject to execution of the share purchase agreement - NCLT rejected the application as the appellant does not falling within the category of financial creditor - The tribunal highlighted that the transaction was ostensibly for the purchase of a specific property, and the appellant should have asserted its rights within the stipulated three-year period. Since no default date was established, and the transaction did not meet the criteria of financial debt, the tribunal upheld the order of NCLT.
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Service Tax

• CESTAT Confirms Additional Commissioner's Authority to Adjudicate Under Finance and Excise Acts; Assessee's Appeal Dismissed.

  Case-Laws - AT : Jurisdiction - competency of the Additional Commissioner to adjudicate and finalize the assessment - CESTAT held that, the Commissioner (Appeals) has also considered this issue of jurisdiction of Additional Commissioner and referred to Section 83 of the Finance Act, 1994 and Section 12E of the Central Excise Act, 1944 to hold that the Additional Commissioner had jurisdiction to adjudicate the show cause notice issued by the Assistant Commissioner. Therefore, the grievance of the assessee on this issue discarded.
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• CENVAT Credit Allowed for Prefabricated Shelters: Tribunal Rules Shelters Are Movable, Eligible for Credit Recovery.

  Case-Laws - AT : Recovery of CENVAT Credit alongwith interest and penalty - input or not - pre-fabricated building green house shelter - used for providing the output service - The Tribunal examined the characteristics of the pre-fabricated shelters and concluded that their attachment to the earth was for stability and functionality rather than permanent annexation. - Relying on the precedents and legal analysis, the Tribunal determined that the shelters qualified as capital goods and were eligible for Cenvat credit. CESTAT rejected the Department's argument that the shelters became immovable property due to their attachment to the ground.
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• Tribunal Overturned: High Court Rules Service Tax Fully Remitted, Demand Against Appellant Dismissed.

  Case-Laws - HC : Demand against Retention of the service tax collected on behalf of the principal by the petitioner/assessee - The High court found that the appellant had indeed remitted the entire amount of service tax collected either to the principal or directly to the Department. - The High court concluded that the Tribunal's finding regarding the retention of service tax was unsustainable, as it was contrary to the admitted factual backdrop of the case. Consequently, the demand raised against the appellant set aside.
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Central Excise

• Appellants win cash refunds under GST Act as Tribunal rules on Cenvat Credit, Input Tax Credit eligibility.

  Case-Laws - AT : Cash Refund of Customs Duty / CVD - appellant could not avail the Cenat Credit - Section 142(3) of the CGST Act, 2017 - The Tribunal ruled in favor of the appellants, allowing their appeals for cash refunds under Section 142(3) of the CGST Act, 2017. The decision was based on the decision of larger bench interpretation that the appellants, unable to avail Cenvat Credit or Input Tax Credit under the GST regime, are eligible for cash refunds. - Refund to be allowed subject to verification.
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• Supreme Court Upholds CESTAT's Classification of Savoury Oats/Silk Oats Under CETH 1104 12 00, Dismissing Appeal.

  Case-Laws - SC : Classification of Savoury Oats / Silk Oats - Following the judgment of Supreme Court [2015 (4) TMI 356 - SUPREME COURT], the CESTAT held that, The product Savoury Oats / Silk Oats merit classification under CETH 1104 12 00 and not under 1904 20 00 as determined by the authorities below. - While challenging the decision of CESTAT, department sought review of impugned decision. - Supreme Court dismissed the appeal of the revenue.
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• Tribunal Approves Duty Refund for Unfulfilled EPCG Export Obligations; No Cenvat Credit Used by Importer.

  Case-Laws - AT : Refund of the CVD and SAD as the appellant did not avail Cenvat Credit - The appellant imported capital goods under EPCG scheme. As export obligation could not be fulfilled, the appellant paid Customs duties viz., BCD, CVD and SAD along with interest thereon - Rejection on the ground that the import conditions were not fulfilled - Tribunal allowed the claim of the appellant since there are no legal grounds in the impugned order to have rejected the claim for refund.
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Case Laws:

• GST

• 2024 (2) TMI 427
  Levy of GST - royalty - consideration either for sale of goods or service provided or not - whether the royalty payment is tax and not consideration in the context of the privilege parted by the State allowing the petitioner and others to mine sand? - HELD THAT:- Reliance has been placed on a Constitution Bench decision of the Supreme Court in INDIA CEMENT LIMITED VERSUS STATE OF TAMIL NADU [ 1989 (10) TMI 53 - SUPREME COURT ], wherein, nature of royalty payment was considered and it was opined to be in the nature of tax. List after two months - Until further orders, payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed.

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• 2024 (2) TMI 426
  Detention of goods - penalty order - Part B of the E-Way Bill was not filled up - Intent to evade tax present or not - HELD THAT:- Upon consideration of the arguments made by counsel appearing on behalf the parties and upon perusal of the documents, it is clear that the department has been unable to indicate any intention of the petitioner to evade tax. The defect is of a technical nature only and without any intention to evade tax. Accordingly, the penalty imposed under Section 129(3) of the Act is not sustainable. The writ petition is allowed.

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• 2024 (2) TMI 425
  Condonation of delay in filing appeal before the Appellate Authority - Petitioner filed the appeal within time along with a scanned copy of Order-in-Original as an annexure, but the hardcopy of the original order was forwarded to the Department of GST-I instead of GST-II inadvertently - HELD THAT:- Section 107 of the GST Act stipulates filing of an appeal within a period of three months from the date on which the decision or order is communicated to the appellant and empowers the Appellate Authority to permit it to be presented within a further period of one month - In the instant case, appellant, on 26.11.2022 i.e. within five days of the filing of the appeal through the online portal, sent the hardcopy of the order appealed against by post to the Office of Commissioner of Central Tax. Petitioner subsequently learnt that the hardcopy of the original order was forwarded to the Department of GST-I instead of GST-II. There is no dispute that the petitioner filed the appeal within time along with a scanned copy of Order-in-Original as an annexure. Said filing was done within a period of three months, thereafter, petitioner sent the original Order-in-Original by post, however, to an incorrect Department - Action of the petitioner was clearly bonafide and the error was not of a nature that could have led to the order rejecting the appeal solely on the ground of limitation. Had the petitioner been informed immediately on the receipt by GST-I, petitioner would have rectified the error immediately, however, as per the communication placed on record by the petitioner, petitioner was informed by the officers of GST-I about the incorrect filing and immediately thereafter, petitioner took the remedial steps. Since the action of the petitioner is bonafide and petitioner appears to be diligently prosecuting the appeal, we are of the view that there is no delay attributable to the petitioner in filing of the appeal. Consequently, it is held that the appeal has been filed within time - the impugned order dated 18.05.2023 is set aside. Appeal is restored on the file of Appellate Authority i.e Commissioner of Central Sales Tax, Appeals-II. Said Officer is directed to dispose of the appeal in accordance with law on merits. Appeal allowed.

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• 2024 (2) TMI 424
  Cancellation of GST registration of the Petitioner with retrospective effect - cancellation on the ground that the Taxpayer found Non-Functioning/Not Existing at the Principal Place of Business - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically - Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period - Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The order of cancellation is modified to the extent that the same shall operate with effect from 01.10.2019, i.e. the date business was shut down - Petition disposed off.

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• 2024 (2) TMI 423
  Removal of blockage of Input Tax Credit (ITC) in the Electronic Credit Ledger of the petitioner - suppliers obtained GST registration on the basis of fabricated documents - HELD THAT:- In order to establish that the transactions with M/s.Vetrivel Traders and M/s.Shri Vaari Steels were genuine, the petitioner is under an obligation to produce documents to establish purchase and receipt of the relevant goods. Such documents may be in the form of invoices, e-way bills, lorry receipts, delivery challans, bank statements and the like. In the communication dated 17.11.2023 to the respondent, the petitioner has stated that these documents are with the central authorities. As regards the documents relating to transactions with M/s.Vetrivel Traders, it appears from communication dated 08.12.2023 that the said documents were provided later to the respondent. It is unclear from the documents on record as to whether documents pertaining to purchases from M/s.Shri Vaari Steels were provided. In any case, the petitioner is under an obligation to provide the same. Since a request was made by the petitioner on 08.01.2024 to release the blocked ITC in the Electronic Credit Ledger, it is just and necessary that the respondent takes a decision with regard to such request expeditiously. This writ petition is disposed of by directing the respondent to consider and dispose of the representation dated 08.01.2024 within thirty days from the date of receipt of further documents from the petitioner after taking into account all documents produced by the petitioner to establish that the transactions were genuine.

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• 2024 (2) TMI 422
  Recovery of CGST and SGST alongwith interest - evasion of GST - period July 2017 to March 2021 - HELD THAT:- Having regard to the discussion made in respect of Agenda Item 13[iv] of the 22nd GST Council Meeting, held on 06.10.2017, wherein it has been observed that annuity is a consideration for the service provided by concessionaires to NHAI and the Notification dated 13.10.2017 issued under sub-section [1] of Section 11 of the CGST Act, 2017 read with provisions contained in sub-section [3] of Section 11 of the CGST Act, 2017, this Court is of the considered view that the petitioner has been able to made out a prima facie case for interim relief. It is also noticed that Hon ble Karnataka High Court has already set aside the Circular dated 17.06.2021 by the afore-mentioned Judgment. It is, therefore, provided that till the returnable date, the impugned Demand-cum-Show Cause Notice dated 29.09.2023 shall be kept in abeyance. Issue notice, returnable on 06.03.2024.

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• 2024 (2) TMI 421
  Seeking direction upon the respondents authority concerned to bear the additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post-GST regime without updating the Schedule of Rates (SOR) - HELD THAT:- This writ petition is disposed of by giving liberty to the petitioners to file appropriate representation, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. On receipt of such representations the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representation after consulting with all other relevant departments concerned. Petition disposed off.

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• 2024 (2) TMI 420
  Principles of natural justice - ex-parte order - order passed without granting any opportunity of personal hearing to the Petitioner - HELD THAT:- Considering the contentions raised by the learned counsel appearing for the parties, but, however without expressing any opinion on the merits of the case, since the State Tax officer while passing the order dated 18.11.2023 has not been given opportunity of hearing to the Petitioner, the said order cannot be sustained in the eye of law. Accordingly, the order dated 18.11.2023 is liable to be quashed and is hereby quashed. The writ petition is disposed off.

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• 2024 (2) TMI 419
  Tax demand which is 1817 times what was really due and payable - error in the E-way bill or not - inadvertent mistake or not - HELD THAT:- It appears that there is a clear error in the punching and because of which the system calculated a tax amount which was certainly not commensurate with the actual E-way bill when the tax amount was only Rs. 3081/-. Considering these issues, an appropriate decision could have been taken by the Designated Officer in consultation with the higher authorities - following the principles as discussed in the decision of this Court in Star Engineers (I) Pvt. Ltd. [ 2023 (12) TMI 729 - BOMBAY HIGH COURT] , it is opined that the Petitioner needs to be permitted to correct the bonafide mistakes, more particularly considering that there is no loss of revenue to the Department. It is deemed appropriate to dispose of this Petition - petition disposed off.

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• 2024 (2) TMI 418
  Condonation of delay in filing the revocation application - Petitioner complies with all the requirements of paying the taxes, interest, late fee, penalty etc. due, the 3B Return Form filed by the Petitioner - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The writ petition is disposed off.

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• 2024 (2) TMI 417
  Detention of goods u/s 130 of the Central Goods Service Tax/Punjab Goods Service Tax Act, 2017 - HELD THAT:- It is not disputed that the petitioner as such is a proprietorship concern which is situated in the State of Uttar Pradesh. Vide the order dated 18.01.2024 passed by the authorities, a specific finding has been recorded that the supply chain of the petitioner-firm has been verified to be ingenuine and on the purchases which they have made at an earlier point of time, the said persons have not paid any tax. In such circumstances, a finding has been recorded that there are bogus transactions made for defrauding the exchequer. In view of the fact that a prima facie finding has already been recorded, which the petitioner is free to challenge, it is opined that deposit of 25% of the amount by cash and for balance furnishing of bank guarantee would be the adequate remedy as such to ensure that the interest of the State is secured as it would be almost impossible to enforce the surety bonds of a person who does not belong to this State. The writ petition is disposed off with liberty to the petitioner to challenge order dated 18.01.2024 passed in Form GST MOV-11. The vehicle and the goods shall be released on furnishing of 25% of the amount mentioned in MOV-11 order and the balance outstanding amount shall be secured by furnishing of a bank guarantee.

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• 2024 (2) TMI 416
  Cancellation of Registration of petitioner - the impugned order also does not disclose the grounds on which the authorities concerned were compelled to issue the cancellation of the registration - violation of principles of natural justice - HELD THAT:- The impugned order dated 11.07.2022 and the rejection of the revocation of the order dated 26.12.2023 stands set aside/quashed. However, since the impugned orders have been passed without affording any opportunity of hearing to the petitioner, it is ordered that the impugned order dated 11.07.2022 itself be treated as a show cause notice and the petitioner may enter appearance before respondent No.1 and submit a detailed reply on or before 09.02.2024. The petitioner would also be at liberty to submit returns which they have not yet filed along with the late fees on application for delayed submission of returns so that the registration of the petitioner gets restored. Since the setting aside of the order dated 11.07.2022 would automatically restore the registration of the petitioner, it is made clear that if any Input Tax Credit (ITC) remains unutilized, the petitioner shall not be permitted to utilize the same till the finalization of the show cause proceedings. The Writ Petition stands allowed.

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• 2024 (2) TMI 415
  Condonation of delay in filing the revocation application - Revocation of cancellation of registration - compliance all the requirements of paying the taxes, interest, late fee, penalty etc. due, the 3B Return Form filed by the Petitioner - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off.

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• 2024 (2) TMI 414
  Condonation of delay in filing the revocation application - Revocation of cancellation of registration - Petitioner complies with all the requirements of paying the taxes, interest, late fee, penalty etc. due, the 3B Return Form filed by the Petitioner - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The writ petition is disposed off.

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• 2024 (2) TMI 413
  Profiteering - supply of Services by way of admission to exhibition of cinematography films . - Benefit of tax reduction not passed on section 171 of CGST Act - HELD THAT:- This Commission has carefully gone through the Reports dated 31.12.2020, 03.03.2023 and 30.11.2023 furnished by the DGAP as well as all the other material placed on record and finds that the Respondent has reduced the rate of GST from 28 % to 18% on all categories of tickets w.e.f. 04.02.2019 and hence he has passed on the benefit of rate reduction by charging commensurate prices - The Commission also finds that there is no Exception category tickets and it was a term coined by DGAP in its report dated 31.12.2020. It referred to six specific movies for which application for rate revision was made by the Respondent to the Licensing Authority. The Respondent had sold Exception Category cinema tickets w.e.f. 23.08.2019 only. The Respondent has charged CST @ 18% on the Exception category tickets w.e.f 23.08.2019 and hence no benefit of tax reduction was required to be passed on these tickets. The Commission further finds that the Respondent has increased the base prices of Exception category of tickets after about 6 months w.e.f. 23.08.2019 after he had passed on the benefit of tax reduction w.e.f. 04.02.2019 and further charged GST @ 18%, hence this increase in the base prices does not attract the Anti-Profiteering Provisions. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Accordingly, the proceedings initiated against the Respondent under Rule 133 (4) of the CGST Rules, 2017 are hereby dropped.

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• 2024 (2) TMI 412
  Profiteering - residential flats and commercial shops - requirement to pass benefit of ITC on to the home/shop buyers or not - Section 171 of CGST Act - HELD THAT:- The Commission finds that in respect of the project Devaan ITC as percentage of turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 1.13% and during the GST period 01.07.2019 to 06.03.2020 it was 0.31%. It clearly confirms that the Respondent has not profiteered through additional Input Tax Credit in respect of project Devaan post-GST. Therefore, the Respondent is not required to pass on the benefit of ITC to his home/shop buyers for the period 01.07.2019 to 06.03.2020. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Accordingly, the proceedings initiated against the Respondent under Rule 133 (4) of the CGST Rules, 2017 are hereby dropped.

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• Income Tax

• 2024 (2) TMI 428
  Validity of the assessment framed u/s 147 - borrowed belief to empower reassess the assessee - addition on account of investment in the disproportionate assets found by the CBI in search as being from unexplained sources - HELD THAT:- Assessment under the taxation laws is year specific. Therefore belief of escapement of income for a valid assumption of jurisdiction to assess income u/s 147 of the Act must be year specific. Law does not permit reopening basis a consolidated belief of escapement of income for several years together , particularly which does not specify AO s belief of income escaping assessment for the different years concerned. AO u/s 147 of the Act can reassess income only when he forms a belief of income of that year having escaped assessment. Reasons recorded therefore for reopening cases have to provide basis of belief of escapement of income year specific. AO s belief must be based on some tangible material, having a live link or nexus with the income allegedly escaping assessment. Reassessment cannot be resorted to on the basis of vague, indefinite or remote information. Where reassessment proceedings are initiated on the basis of information received from other departments/sources without examining them, it cannot be said that the same was based on belief of the AO that income had escaped assessment. Applying the law on reopening of assessments u/s 147 of the Act as noted above by us to the facts of the case we find merit in the contention of assessee that the jurisdiction assumed by the AO to reopen the case of the assessee was invalid. The reasons for arriving at this finding are very obvious. No specific recording of escapement of income for the assessment year reopened by the AO. Consolidated reasons recorded for all impugned years. Reasons are vague - The reasons record the consolidated figure of disproportionate assets found by the CBI pertaining to all the impugned years before us. There is no recording of income escaping assessment for each particular assessment year being sought to be reassessed. The reasons are clearly vague mentioning income escaping assessment exceeding Rs. 1 lacs that too when all details of assets found with the assessee by way of CBI report were available with the AO mentioning even the date of investment. As stated above the law empowers him to reopen the assessment for a particular A.Y only on his satisfaction of income having escaped assessment for the said year. In the absence of the same the said reasons cannot therefore , we hold, empower the AO to reopen the case of the assessee for the assessment years involved. Belief of escapement of income borrowed from the preliminary report of the CBI with no application of mind by the AO to the same - In the present case the report of the CBI lists all assets clearly mentioning the fact of the names of different persons in which it was found invested, including his wife and father. The report notes the fact of both the relatives having sources of income and thereafter goes on to state that the assets are disproportionate to the disclosed source of income of the assessee and his wife. Clearly it is just a preliminary report of the CBI, who have in a general manner attributed all assets found to belong to the assessee. This report of the CBI certainly cannot be said to qualify as information leading to belief of escapement of income of the assessee. As decided in Andaleep Sehgal [ 2019 (8) TMI 515 - DELHI HIGH COURT] affirmed by the Hon ble Apex court [ 2021 (3) TMI 194 - SC ORDER] strengthens our finding as above wherein reopening resorted to by the AO based solely on investigation of Enforcement Directorate was set aside finding no independent inquiry conducted by the AO for arriving at his belief of escapement of income as in the said case to be borrowed belief not sufficient to empower him to reassess the assessee u/s 147 of the Act. Thus, CBI report, we hold, could not have constituted information for the AO to form belief of escapement of income. Thus no hesitation in holding that reopening resorted to by the AO in all the impugned years before us being not in accordance with law. Decided in favour of assessee. Penalty levied u/s 271(1)(c) - Since we have held all the assessment orders to be invalid, Penalty orders has no legs to stand upon, and therefore, penalty appeals of the assessee are also allowed.

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• 2024 (2) TMI 411
  Condonation of delay - delay in filing the appeal before the High Court - HELD THAT:- Pursuant to our order [ 2024 (1) TMI 804 - SC ORDER] the Commissioner of Income Tax (International Taxation-I), New Delhi has filed an affidavit clearly stating that pursuant to the impugned order of the ITAT 2016 (3) TMI 680 - ITAT DELHI] a decision was taken not to file an appeal. That it was only after coming to know that in the case of M/s Vodafone South Limited, the ITAT, Bangalore Bench [ 2015 (1) TMI 1018 - ITAT BANGALORE] had given a decision in favour of the Department that as an afterthought it was decided to file an appeal in the instant case. We do not think that the said explanation has any merit in explaining the delay in filing the appeal before the High Court and neither can it be construed to be a sufficient cause for condoning the same. In the circumstances, the High Court was justified in dismissing the appeal filed under Section 260A of the Income Tax Act on the ground of delay. We do not find any merit in the special leave petition(s) as the impugned order not call for any interference.

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• 2024 (2) TMI 410
  Disallowance u/s 40(a) (ia) - AO decision to add back the amount, on the ground that the TDS has not been deducted - Addition was upset by the CIT(A) who noticed that the payee i.e. the Delhi Transport Corporation had reflected the amount as its tax liability in its returns - As decided by HC [ 2018 (5) TMI 2145 - DELHI HIGH COURT] issue decided in assessee favour as covered by a judgment of Ansal Land Mark Township (P) Ltd. - [ 2015 (9) TMI 79 - DELHI HIGH COURT ] and Rajinder Kumar - [2013 (7) TMI 454 - DELHI HIGH COURT ] HELD THAT:- As heard learned senior counsel for the appellant and learned counsel for the respondent. The Civil Appeal is dismissed.

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• 2024 (2) TMI 409
  Reopening of assessment u/s 147 - breach of section 11(3)(d) - eligibility of reason to believe - misuse or abuse of funds by the trustees of the trust - violation of section 11(2) read with section 11(3)(d) of the Act as payment was made to CIMS Hospital Pvt. Ltd. for Linac machine - as decided by HC [ 2019 (4) TMI 291 - GUJARAT HIGH COURT] reasons recorded it is evident that the AO has consciously decided that there was violation of section 11(3)(d) of the Act, and since on the reasons recorded, the AO could not have formed the belief that income chargeable to tax has escaped assessment, the impugned notice u/s 148 of the Act lacks validity and cannot be sustained. HELD THAT:- We have heard learned senior counsel for the petitioner and learned counsel for the respondent at length. The special leave petition is dismissed.

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• 2024 (2) TMI 408
  Unverifiable sundry Creditors - Disallowances of 25% of total bogus creditors - As decided by HC [ 2018 (2) TMI 1876 - GUJARAT HIGH COURT] CIT(Appeals) and Tribunal correctly limited the additions to 25% - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.

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• 2024 (2) TMI 407
  Characterization of receipt - sales tax subsidy - whether has to be treated as a capital receipt and not to be added as part of the income of the assessee? - As petitioner contended that although these special leave petitions may be disposed of in terms of the order passed by this Court while sustaining the order passed in the aforesaid case of M/s Munjal Auto Industries Limited [ 2018 (5) TMI 1738 - SC ORDER] had also taken note of the fact that, if, the sales tax subsidy is held to be a capital receipt then the natural consequences of the said fact should follow. Our attention was drawn order in the case of M/s Munjal Auto Industries Limited[ 2013 (10) TMI 650 - GUJARAT HIGH COURT] which order was sustained by this Court [ 2018 (5) TMI 1738 - SC ORDER] by placing reliance on another judgment of this Court in M/s Chaphalkar Brothers, Pune [ 2017 (12) TMI 816 - SUPREME COURT] . Therefore, the said direction may also be issued in the instant special leave petitions also. Assessee drew our attention to another judgment of Gujarat High Court in the case of Commissioner of Income Tax Central-II vs. Ellora Time Private Limited[ 2011 (6) TMI 853 - GUJARAT HIGH COURT] which order was also sustained by this Court in Ajanta Limited [ 2016 (4) TMI 1460 - SC ORDER] wherein on an identical question no such consequential direction was issued inasmuch as the special leave petitions were simply dismissed. HELD THAT:- Having noted the submissions at the Bar, we are conscious of the fact that this Court while dismissing the Civil Appeal which arose in the case of M/s Munjal Auto Industries Limited has sustained the judgment of the Gujarat High Court passed in the said case. In the circumstances, we find that the observations of the Gujarat High Court would have a bearing on the present case and therefore, we observe that consequent upon holding that the sales tax subsidy receipt by the respondent-assessee being treated as a capital receipt, the natural consequences as a result of the said declaration would follow. The special leave petitions are disposed of in the aforesaid terms. Pending application(s), if any, shall stand disposed of. Application u/s 264 - treatment to sales tax subsidy - HELD THAT:- Following the order passed in SLP(C) [supra] this Civil Appeal is also dismissed subject to the observations made in the aforesaid Special leave petitions.

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• 2024 (2) TMI 406
  Validity of Income Tax Settlement Commission order - as argued Commission had not considered the Rule 9 report and did not permit the filing of further enquiry report before passing the final order u/s 245D(4) - Department is also aggrieved with sufficient opportunity for hearing having not been afforded - Counsel, on the last occasion, contended that there was no order u/s 245D(2B) of the Act, wherein the Commission was under an obligation to call for a report within 30 days HELD THAT:- Section 245D delineates a procedure by which the Commission has to deal with an application under Section 245(C). Within seven days from the date of receipt of the application, a notice has to be issued to the assessee to show cause as to why the application should be proceeded with and after hearing the applicant, the Commission is empowered to either reject the application by order in-writing or allow it to be proceeded with. Sub-section(2A) deals with the situation prior to the amendment by the Finance Act, 2007. Sub-section (2B) requires the Commission to call for a report from the Commissioner, with respect to applications allowed to be proceeded with. It also mandates that such report shall be placed before the Commission, within a period of 30 days from receipt of the notice. Section 245D(2C) provides that within 15 days of receipt of a report, the Commission could declare the application to be invalid, after hearing the applicant. The second proviso also requires that if no report has been furnished within the aforesaid period, the Commission shall proceed further even in the absence of the report of the Commissioner. The order u/s 245D(1) was passed on 24.11.2017 directing the application to be proceeded with. A report was called for from the Principal Commissioner of Income Tax u/s 245D(2B), which was received after the due date. Hence, Section 245D(2C) requires the application to be proceeded with in the absence of the report, which, as admitted in the supplementary counter affidavit, reached the Commission after the expiry of 30 days. Section 245D(3)(ii), however, requires an application referred to in sub-section (2D), allowed to be further proceeded with under that sub-section, to be proceeded with after calling for report from the Commissioner. The Rule 9 report with respect to the applicant was submitted by the office of the Commissioner, which has been dealt with by the Commission. Commission specifically extracted the objections raised in the Rule 9 report with respect to the respondent Nos. 2 and 3, who were individuals and respondent Nos. 4 and 5, Private Limited Companies; whose Directors were the respondent Nos. 2 and 3. It is also seen that the request for adjournment made on the ground of the officer being deputed for election duty, was considered and rejected. The Commission has specifically noticed that the report of the Assessing Officer was due on 28.02.2019, while the General Elections were announced only on 10.03.2019. Department s request to take up the case after the General Election was also found to be not permissible since the elections would be over only on 23.05.2019 and the applications were getting time barred as on 31.05.2019. The Department was also represented before the Commission. We find absolutely no reason to interfere with the same on the ground of absence of reasonable opportunity of hearing having not been afforded, especially since the Department was represented and heard as also the existence of the Rule 9 report before the Commission. As we noticed, after extracting various objections raised, the same was considered by the Commission. Valuation of a building, the valuation submitted by the Valuation Cell of the Department assessed it at 6.21% above the value shown in the books of account; which was a negligible difference not permissible of additions. The contention with respect to the gifts received from the father and brother not being genuine, was negatived finding the presence of the brother, who deposed in accordance with the submission of the applicant. The gifts were also channeled through banks and the donors were close relatives of the donee, who were working abroad and had maintained NRI accounts through which the transactions were occasioned. Payments as disclosed from an agreement of sale, which were also found to be in tune with the payments received by the respondent Nos. 2 and 3. The other issues were stated to be issues in which no adverse inference could be drawn against the applicants. As reiterated that we find absolutely no reason to interfere with the order passed, especially since the procedure under Section 245D was scrupulously followed by the Commission. We reject the writ petition leaving the parties to suffer their respective costs.

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• 2024 (2) TMI 405
  Offence punishable u/s 276C(2) r.w.s. 278B of the Income Tax Act - Delay of 8 years in payment of tax - willful attempt to evade the tax or not? - Tax liability declared in the ITR as self-assessment but the tax and interest were not paid - HELD THAT:- There is an essential distinction between the cases where failure or breach leads to civil liability, even in the nature of imposition of monetary penalty, and the cases which entail punishment as a sequel to the commission of offences. Ordinarily in the cases where the breach or failure leads to civil liability, mens rea is not considered as an essential ingredient and proof of mere failure or breach in itself may be sufficient. In contrast, where the punishment is to be imposed, existence of mens rea is ordinarily considered as an essential ingredient of the offence, save and except the cases where the punishment is imposed on the principle of strict liability. From the text of the provisions contained in Section 276C(1) and the use of the expressions, wilful attempt to evade it becomes clear that Section 276C professes to punish an act or omission on the part of the assessee designed to evade the liability to pay the tax and not a mere failure to pay the tax. There are provisions in the Income Tax Act, 1961 which take care of interest (of the revenue) of recovering the due tax amount alongwith interest and/or penalty where the tax has not been paid within time. It is the wilful evasion of tax due which is the crux of the offence u/s 276C(2) and not a mere failure to pay tax. In a given case, if it could be demonstrated that though the assessee was in a position to pay tax, interest on penalty, the assessee evaded payment of tax by dishonestly disabling himself from payment of tax, interest or penalty or fraudulently dealt with his assets or property with intent to evade the payment of tax, interest or penalty, different considerations may come into play. However, mere failure cannot be equated with wilful attempt to evade. To sum up, on a plain reading the provisions contained in Section 276C(2) do not indicate that mere failure to pay the tax, interest or penalty falls within the dragnet of the said provision. Even otherwise, it is a well settled rule of construction of penal statutes that if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty. (Tolaram Relumal and another vs. State of Bombay [ 1954 (5) TMI 20 - SUPREME COURT] Thus reverting to the facts of the case, there is material to indicate that within five days of the show cause notice the applicants had deposited the tax due as declared in the return for AY-2010-2011. Since the applicants had declared the income and assessed the self-assessment tax, it cannot be urged that there was an attempt to evade the tax. It was neither a case of under reporting of income nor that of showing diminished tax liability. The action on the part of the applicants to pay the tax due under five days of the notice militates against the stand of the Income Tax Department that there was an intent to evade the tax throughout. It is not disputed on the date of the lodging of the complaint, no tax was due, and even the applicants deposited the amount of Rs.4,47,420/- towards interest on the due amount. We find substance in the submissions on behalf of the applicants that in the facts of the case the continuation of the prosecution for the offence punishable u/s 276C(2) amounts to abuse of the process of the Court. It is true there was delay of about eight years in paying the amount of self-assessment tax. In this proceeding, it may not be appropriate to delve into the veracity of the claim of the applicants that on account of death of Mr. P. G. Purohit they were unaware of the tax liability. It is the conduct of the applicant, after being served with the show cause notice, that assumes significance. Payment of tax due under five days of the service of the show cause notice, underscores the bona fide of the applicants. Thus, the aspect of delay, which was forcefully canvassed on behalf of respondent No. 2, does not detract materially from the applicants claim. Thus offence punishable u/s 276C(2) of the Act, 1961 cannot be said to have been made out.

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• 2024 (2) TMI 404
  Re-opening under Section 147 - Addition made on amounts which did not form part of the reasons recorded for reopening - considering issues only spelt out in the original notice under Section 147 - assessee s case was reopened on the basis of information relating to accommodation entry received - As decided by ITAT [ 2023 (4) TMI 634 - ITAT DELHI ] no addition was made in the assessment order on this amount since the amount had already been added in the order u/s 153A - In addition was made u/s 68 of the Act in respect of the amount received from 5 persons which did not form part of the reasons recorded for reopening of the case, in these circumstances, the case laws of Jet Airways (I) Ltd. ( 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] are fully applicable and there is no infirmity in the well-reasoned order of ld. CIT (A). HELD THAT:- While the addition of accommodation entry received need not detain us, since this amount came to be added subsequently in terms of the order made under Section 153A of the Act and is dated 30 March 2014, the ITAT has adversely commented upon the addition u/s 68 on the ground that the same did not form part of the reasons which were spelt out in the original notice under Section 147 of the Act. Matter requires consideration. We accordingly, admit the instant appeal on the following question of law: A. Whether Ld. ITAT has erred on the facts and circumstances of the case in not appreciating Explanation 3 of Section 147 of the Income Tax Act, 1961 and whether the same would empower the Assessing Officer to assess or reassess income in respect of any issue which has escaped assessment notwithstanding the reasons recorded under sub-section (2) of Section 148 having not alluded to the same or formed the basis for reopening? Let the matter be called again on 27.03.2024.

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• 2024 (2) TMI 403
  Validity of final assessment order passed u/s 143(3) - as argued said assessment order has been passed without waiting for the directions to be passed by the Dispute Resolution Panel (DRP) - HELD THAT:- This Court in the cases of S.R.F. Ltd. vs. National Faceless Assessment Centre, Delhi Anr. [ 2021 (7) TMI 1298 - DELHI HIGH COURT] ; Anand NVH Products Private Limited vs. National E Assessment Centre Delhi Anr. [ 2021 (8) TMI 1262 - DELHI HIGH COURT] and Honda Cars Limited vs. Deputy Commissioner of Income Tax [ 2021 (6) TMI 820 - DELHI HIGH COURT] has decided a similar issue in favour of assessee and remitted the matter to the DRP for consideration under Section 144(C) of the Act. Keeping in view the aforesaid, present writ petition is allowed and the assessment order dated 16th November, 2023 passed u/s 143(3) of the Act is quashed and the AO is directed to pass a fresh assessment order after receipt of the directions from the DRP.

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• 2024 (2) TMI 402
  Early disposal of the rectification applications - Rectification application to issue refund against the Short-Grant of TDS credit as well as brought forward of loss and unabsorbed depreciation - early disposal of the rectification applications - HELD THAT:- As emphasized u/s 154(8) of IT Act the statutory period to dispose of a rectification application is six months from the end of month in which the application was received , which already stands expired in the present cases. Circular No.14/2001 dated 9th November, 2001 and Instruction No. 01/2016 dated 15th February, 2016 issued by the Central Board of Direct Taxes (CBDT) states that time-limit of six months is to be strictly followed by Assessing Officer while disposing applications filed by the assessee/deductor/collector under section 154 of the Act . Keeping in view the limited relief sought in the present matters, the writ petitions along with the applications are disposed of with a direction to the respondent no.1 to decide the petitioner s rectification applications dated 30th June, 2021 and 29th January, 2020 by way of a speaking order in accordance with law within eight weeks and consequential refunds along with up-to-date interests, if any, be released to the petitioner in further eight weeks time.

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• 2024 (2) TMI 401
  Assessment u/s 153A - completed assessment to be reopened only if incriminating material is found during the course of search - addition made based on the AO s view that the appellant/assessee has undisclosed deposits with a foreign bank i.e., HSBC Bank, Geneva - HELD THAT:- What emerges is that the respondent/revenue did not secure any incriminating material qua the appellant/assessee in the course of search that was carried out on 14.11.2011. The material that it had in its possession pertained to the period before the date of search. As regards the stand of the respondent/revenue, that the appellant/assessee had refused to sign the consent form, Appellant submits that the consent form was framed in such a manner that if the appellant/assessee were to sign the form, he would end up incriminating himself even when position taken by him was that he did not maintain a bank account with the Geneva branch of HSBC Bank. In support of this plea, our attention has been drawn to the consent form which the appellant/assessee was called upon to execute. Inter alia, the consent form required the appellant /assessee to furnish the account number(s), master particulars, name(s) of account holders, name(s) of the beneficial owner(s)/settlor(s)/beneficiaries, and if the account was held through an entity, whether he had the necessary legal authority to grant access qua the subject account. Given that the appellant/assessee has denied the ownership of the subject account and the respondent/revenue has not been able to place before the court reliable material which would have us believe that the appellant s/assessee s stand was not correct, we are of the view that the question of law framed in the matter would have to be answered in favour of the appellant/assessee and against the respondent/revenue. The absence of incriminating material has persuaded us to take this view. As indicated hereinabove, no incriminating material, even according to the respondent/revenue, was found during the search. The material on which the respondent/revenue relied on was not of a quality that would persuade us to hold that the stand taken by the appellant/assessee, which is, that he did not maintain an account with the Geneva branch of HSBC Bank, was incorrect. Given the conclusion that we have arrived at and the position of law enunciated in the judgments referred to hereinabove, i.e., Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Abhishar Buildwell P. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] that a completed assessment can be reopened only if incriminating material is found during the course of search under Section 132 of the Income-tax Act, 1961, the question of law is answered in favour of the appellant/assessee and against the respondent/ revenue.

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• 2024 (2) TMI 400
  Reopening of assessment u/s 147 - period of limitation - whether Notice u/s 148 issued beyond limitation period prescribed U/s 149 and thus is time barred and void? - HELD THAT:- The Income Tax Act has provided a strict time-line to complete the assessment or reassessment proceedings under Section 147 of the Income Tax Act, 1961, once initiated under Section 148 of the Income Tax Act, 1961. If the said proceedings are not completed within the stipulated time-line, it will be barred by limitation. Thus the very initiation of reassessment proceeding is wholly without jurisdiction. Any notice under Section 148 of the I.T Act, 1961 is normally three years from the end of the relevant assessment year (in this case A.Y 2016-17) and extendable beyond 3 years till 10 years, provided the income which has escaped assessment is Rs. 50,00,000/- or more which is absent in the impugned Notices as indicated herein above. The three-year time period of A.Y 2016-17 had ended on 31.03.2020. Accordingly, the Impugned Notice, dated 21.07.2022, is beyond 3 years time period. Further, the said notice is for alleged escaped income of Rs. 39,21,450/- which is less than Rs. 50,00,000/- and thus, the said notice cannot take the benefit of extended period of limitation which is beyond three years till ten years. Thus, the Impugned Notice dated 21.07.2022, issued under Section 148, is barred by the limitation period prescribed under Section 149 of the Act. Accordingly, the Impugned Notice issued u/s 148, is barred by the limitation period prescribed under Section 149 and is illegal, unsustainable and void ab initio and is liable to be set-aside and consequently, all subsequent actions/notice/orders are also liable to be quashed. It is a well-established principle of law that if the foundation of any proceeding is illegal and unsustainable in law, then all consequential proceedings or order are also bad in law. Since the impugned notice u/s 148 of I.T Act, 1961, is illegal and unsustainable in law, accordingly, the Impugned Re-assessment order passed under Section 147 and the Notice of Demand issued under Section 156 are also bad in law and unsustainable and the same, is hereby, quashed and set aside. Decided in favour of assessee.

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• 2024 (2) TMI 399
  Validity of reopening of assessment u/s 147 - order passed u/s 148A(d) - reason to believe - Mandation to provide tangible material placed by AO to show that there was escapement of income from the payment of income tax - HELD THAT:- In the instant case, on perusal of the impugned order in the writ petition we find that there are glaring omissions and more particularly the condition precedent for exercise of the power of reopening the assessment are conspicuously absent. Though the order passed appears to be an elaborate order, the conclusion is only in one paragraph. AO has stated that the bank statements in respect of the transactions done for the financial year 2015-16 (assessment year 2016-17) has to be mandatorily verified to examine the nature of transactions. This cannot done by the assessing officer because the proceedings initiated by the assessing officer for reopening the assessment for the assessment year 2016-17 has been quashed. Therefore, this is a glaring omission in the order impugned in the writ petition. Apart from that, the assessing officer would state that no prudent businessman will simply withdraw crores of cash from his bank account and again will deposit it at various stage. This is a personal opinion of the assessing officer. However, for the purpose of reopening an assessment there should be a tangible material placed by the assessing officer to show that there was escapement of income from the payment of income tax. This being conspicuously absent as could be seen from the annexure to the show cause notice the reopening proceedings have to be held to be bad in law. Thus the appeal and the writ petition are allowed and the order passed u/s 148A(d) and the consequential notice u/s 148 of the Act are quashed. Decided in favour of assessee.

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• 2024 (2) TMI 398
  Validity of reassessment proceedings - order passed u/s 148A(d) and the final assessment order u/s 147 challenged as non-speaking order - HELD THAT:- While affirming the proposal in the show cause notice, the authorities are expected to record reasons, at least brief reasons, and if not brief reasons, as to why the proposal in the show cause notice is to be confirmed despite the assessee submitting the reply. The reading of the order gives an impression that on account of default of the assessee in not submitting the reply to the show cause notice, it was a fit case to issue notice under Section 148 of the Act. This is our considered opinion would not be the appropriate procedure. Since even in an ex parte proceedings, the authority has to record reasons for coming to a conclusion as to why the case has been taken out for re-opening of the assessment. Therefore, we are of the view that the proceedings has to be re-done with the matter by giving a fresh opportunity to the appellant assessee to submit a reply to the show cause notice u/s 148A(b) of the Act, the orders which are impugned in the writ petition and set aside. The matter is restored to the file of the assessing officer to the stage of the show cause notice u/s 148A(b).

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• 2024 (2) TMI 397
  Addition u/s. 41(1) - Difference between the amount payable as per books of accounts and amount as per the confirmation received from the creditor - ITAT deleted the addition - HELD THAT:- As it is clear that the additions u/s 41(1) were made for the differences which arose on account of only book entries. Admittedly, the assessee had actually made the payment in the later year and the party has accounted receipt in the same financial year which resulted into differences in the balance as added by the Assessing Officer. Since the difference has been explained which was only on account of the book entries, in our considered opinion, there is no error in the order of the ITAT. No substantial question of law.

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• 2024 (2) TMI 396
  Validity of Order u/s 148A(d) and subsequent final assessment order u/s 147 - availability of alternative remedy - Orders challenged on legality of the merit of the impugned assessment order as appellable order under the statute - HELD THAT:- Petitioner could not point out any procedural irregularity or illegality in the proceeding subsequent to the order u/s 148A(d) of the Act and in passing the final assessment order u/s 147 of the Act or that the aforesaid final assessment order was passed without granting any opportunity of hearing to the petitioner. On perusal of the impugned assessment u/s 147 we find that it contains detailed reasoning based on facts and evidences and this Court in exercise of its constitutional writ jurisdiction under Article 226 of the Constitution of India cannot act as an assessing officer or an appellate authority to reappreciate those evidences and findings and substitute with its own in addition statutory alternative remedy by way of appeal is available to the petitioner. Writ petition is dismissed on the ground of availability of alternative remedy without going into the merit of the impugned assessment order.

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• 2024 (2) TMI 395
  Validity of reassessment proceedings u/s 147/148 - Additions towards u nexplained cash credit and application of section 115BB - HELD THAT:- On perusal of the reasons recorded u/s 148, it is emanating that the Ld. AO has mentioned the details pertaining to information received /collected by him which was flagged by DIT (systems) in accordance with CBDT s instructions dated 04.03.2021. The details have been analyzed on the basis of information submitted by the assessee in response to a summon u/s 131(1A), wherein according to the Ld. AO, the assessee failed to explain about the cash deposit in the bank and accordingly the basis for reason to believe has formed, thereby it is construed that the income has escaped assessment. Under such circumstances, the contention of the assessee that the jurisdiction assumed by the Ld. AO u/s 147 of the Income Tax Act was invalid on account of insufficient reasons to believe and on the basis of fallacious assumption cannot be accepted. Ld. CIT(A) has, thus, rightly decided the issue against the assessee, which, therefore, does not require any interference. In the result ground no. 1 of the assessee stands dismissed. Source of cash deposit into bank - Assessee has requested the Ld. AO for verification of the veracity of documents i.e., agreements duly signed by assessee, seller party and the witnesses. Since the agreements were not registered the same were treated as fabricated, invalid and afterthought. Ld. AO have not considered it appropriate to summon the seller or to call them for personal hearing to check the genuineness of transaction, so as to arrive at the correct position pertaining to the explanations of the assessee w.r.t. cash deposits, by taking the excuse of time barring assessment. AO has placed his reliance on the assumption that the contentions and explanations offered by the assessee are beyond human probabilities, however, in order to establish that such contentions are wrong the requisite Suo moto inquiries which should have been done by the Ld. AO are not considered necessary, even after the request of the assessee. Such action of the Ld. AO was found to be against the principle of natural justice, thus, in order to check the veracity of documents and genuineness of the transactions, which are the root transactions from where the cash was generated as explained by the assessee but in the opinion of revenue authorities those documents are afterthought and fabricated. In our considered opinion before dislodging the contention or explanation of the assessee, Ld. AO should have examined the parties to the said documents. Thus we hereby find it appropriate to direct the Ld. AO to re-adjudicate the issue by confronting the parties to the transactions which is the basis and source of cash as explained by the assessee. Accordingly, we set aside the order of Ld. CIT(A) and restore the issue back to the files of Ld. AO for fresh adjudication. Appeal of the assessee is partly allowed for statistical purposes.

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• 2024 (2) TMI 394
  Disallowance of interest expenditure - interest-free advances given to the related parties - HELD THAT:- From the perusal of the Balance Sheet of the assessee we find that the assessee has share capital and reserves and surplus which is more than interest-free loan, advanced by the assessee to the related parties. We find that the Hon ble Jurisdictional High Court in CIT v/s Reliance Utilities Power Ltd., [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] held that if funds are available with the assessee, which are sufficient to meet the investment, then the presumption would arise that the investment is made out of funds so available with the assessee. Accordingly, we find no basis in the proportionate disallowance of interest expenditure made by the AO and upheld by the learned CIT(A). Disallowance on account of sales promotion expenses - HELD THAT:- As per the assessee, the entries pertaining to aforesaid expenditure were passed through a common ledger named Ramesh Chand (employee of the company responsible as a cost centre). It is further the plea of the assessee that the said entry was passed to the said account only for the sake of accounting convenience so that all the expenses related to sales promotion paid to agents/drivers/mechanics can be accumulated under one ledger. We find that a similar issue came up for consideration in the preceding assessment year before the coordinate bench of the Tribunal in Lakozy Motors Ltd [ 2018 (5) TMI 2170 - ITAT MUMBAI] wherein restored the issue to the file of the AO for examination afresh. During the hearing, AR submitted that in the remand proceedings, the AO made the disallowance of 15% of the aforesaid expenditure and the same has been accepted by the assessee. Since it is undisputed that the nature of the expenditure is similar to the preceding year, therefore the AO is directed to restrict the disallowance to 15% of the aforesaid expenditure in the present case. As a result, ground No. 2 raised in assessee s appeal is partly allowed. Disallowance u/s 14A read with Rule 8D - Assessee specifically submitted that during the year under consideration, no dividend income was earned by it out of the investments - HELD THAT:- We find that in Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. We further find that in Pr.CIT v/s Kohinoor Project (P) Ltd. [ 2020 (1) TMI 1161 - BOMBAY HIGH COURT] rendered similar findings and dismissed the Revenue s appeal on a similar issue. Since, in the present case, the assessee has not earned any dividend income, therefore, respectfully following the aforesaid judicial pronouncements, disallowance of expenditure under section 14A read with Rule 8D is not sustainable. We further find that vide amendment by the Finance Act, 2022, the non-obstante clause and explanation were inserted in section 14A of the Act to the effect that the section shall apply even if no exempt income has accrued or arisen or has been received during the year. We find that while dealing with the issue of whether the aforesaid amendment by the Finance Act, 2022 is prospective or retrospective in operation in PCIT vs M/s Era infrastructure (India) Ltd, [ 2022 (7) TMI 1093 - DELHI HIGH COURT] held that the amendment by Finance Act, 2022 in section 14A is prospective and will apply in relation to the assessment year 2022 23 and subsequent assessment years. Thus, even in view of the aforesaid amendment also, the disallowance under section 14A read with Rule 8D is not permissible in the present case. Disallowance computed under section 14A read with Rule 8D is directed to be deleted. Decided in favour of assessee.

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• 2024 (2) TMI 393
  Treaty benefits - gains from alienation of shares - taxability or otherwise of capital gain from sale of equity shares under Article 13(4) of India-Mauritius DTAA - beneficial tax rate under grandfathering clause - treating the assessee as a conduit company set up - assessee is non-resident corporate entity and tax resident of Mauritius holding a valid TRC - HELD THAT:- As decided in SARVA CAPITAL LLC, C/O DINESH MEHTA CO., CAS [ 2023 (11) TMI 692 - ITAT DELHI] Departmental authorities have miserably failed to establish the fact of the assessee, being a conduit company with reference to Article 27A of India-Mauritius DTAA (Limitation on Benefit clause). Therefore, having regard to the relevant facts and ratio laid down in the judicial precedents, discussed above, we have no hesitation in holding that the assessee, having been granted a valid TRC, has to be treated as tax resident of Mauritius, hence, eligible to avail benefit under India-Mauritius DTAA. There cannot be any dispute with regard to assessee s claim of exemption under Article 13(4) of India-Mauritius DTAA, as, undisputedly, the shares were acquired prior to 01.04.2017. Therefore, the gain derived from sale of such equity shares is taxable only in the country of residence of the assessee, i.e., Mauritius and not in India. However, in so far as the capital gain arising from sale of shares of Veritas Finance Pvt. Ltd. is concerned, the facts are slightly different. Though, in the original return of income, the assessee claimed the resultant capital gain to be exempt under Article 13(4), however, subsequently, the assessee filed revised return of income offering the capital gain to tax under the provisions of Article 13(3A) read with Article 13(3B) of the Treaty by claiming beneficial tax rate under grandfathering clause. The word shares bas been used in a broader sense and will take within its ambit all shares, including preference shares. Thus, since, the assessee had acquired the CCPS prior to 01.04.2017, in our view, the capital gain derived from sale of such shares would not be covered under Article 13(3A) or 13(3B) of the Treaty. On the contrary, it will fall under Article 13(4) of India-Mauritius DTAA, hence, would be exempt from taxation, as the capital earned is taxable only in the country of residence of the assessee. No doubt, the assessee has offered the capital gain under Article 13(3B) of the Treaty in its revised return. However, that will not preclude the assessee from claiming benefit under Article 13(4) of the Treaty when the capital gain clearly falls within the ambit of Article 13(4) of the Treaty. In view of the aforesaid, we allow assessee s additional ground and hold that the capital gain derived by the assessee from the sale of equity shares is not taxable in terms of Article 13(4) of the India-Mauritius DTAA. Appeal of assessee allowed.

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• 2024 (2) TMI 392
  TP adjustment - specified domestic transactions (SDT) for advisory services charge paid to its related parties and on account of payment of commission expenses to non-executive Directors - Effect of clause 92BA(i) as been omitted from the statute by the Finance Act, 2017 w.e.f. 01/04/2017 - assessee s contention before us is that, once the provision itself has been omitted from the statute, the entire reference in transfer pricing adjustment itself is invalid - HELD THAT:- We hold that once SDT provisions has been omitted from the statute, then even for A.Y.2016-17, no TP adjustment can be made under SDT. Accordingly, ground Nos.2-15 is treated as allowed. Disallowance u/s. 14A - assessee is a core investment company for non-banking financial services and its main business is lending and investing in good companies - assessee had shown exempt income - assessee had suo-moto disallowed u/s. 14A - assessee had worked out the disallowance by taking investment which has yielded dividend income and has moved those investments which have not yielded any exempt income - HELD THAT:- After relying upon CBDT Circular 5/2014 dated 11/02/2014. Before us ld. Counsel submitted that in so far as assessee suomoto disallowance under Rule 8D(2)(i), there is no dispute. However, with regard to disallowance of interest under Rule 8D(2)(ii), he submitted that assessee had huge surplus funds and therefore, in view of the decision of CIT vs. South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] no disallowance of interest can be made. However, in so far as disallowance under Rule 8D(2)(iii) is concerned, the only condition of the assessee is that no disallowance should be made with respect to investment which had not yielded any exempt income. Thus, it has been submitted that this issue is covered in favour of the assessee by the decision of the Tribunal in assessee s own case right from A.Y.2008-09 to 2012-13. Accordingly, the contention of the assessee is upheld that only exempt yielding investment should be worked out for the purpose of disallowance which has been done by the assessee. Accordingly, the disallowance made by the ld. AO over and above suomoto disallowance offered by the assessee is deleted. Disallowance u/s. 14A in book profit u/s. 115JB - HELD THAT:- This issue now stands covered by the series of judgments in the case of Vireet Investments Pvt. Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] and judgment of Bhushan Steel Ltd [ 2015 (9) TMI 1424 - DELHI HIGH COURT] - Accordingly, disallowance u/s. 14A in the book profit is deleted. Depreciation on printers, routers, scanners and computer software @ 60% upheld.

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• 2024 (2) TMI 391
  Validity of assessment u/s 144C - Whether the passing of the draft assessment order as prescribed under section 144C(1) of the Act is mandatory or not? - HELD THAT:- We have given thoughtful consideration to the peculiar facts and circumstances of the case and observe that jurisdictional High Court in the case of SHL India Pvt. Ltd vs DCIT ( 2021 (7) TMI 1208 - BOMBAY HIGH COURT] held that provisions of section 144C of the Act clearly mandates that the AO is required to pass and furnish a draft assessment order in the first instance and therefore failure to follow the procedure as prescribed u/s 144C(1) of the Act, would be a jurisdictional error and not merely procedural error or irregularity. Straight way passing a final assessment order u/s 92CA(4) amounts to complete contravention of the provisions of section 144C of the Act is an incurable illegality. Such order would be illegal and without jurisdiction and entail the final assessment order as void ab-initio sans jurisdiction. Even the provisions of section 292B of the Act cannot confer and validate the jurisdiction on the Assessing Officer, which is otherwise non-existing. Hence passing of the draft assessment order as prescribed under section 144C(1) of the Act is mandatory. Question no. 1 is answered accordingly. Estoppel from challenging the assessment order which was passed on the basis of the admission by the Assessee itself - Whether on the waiver/admission/undertaking of the Assessee for not challenging the draft order before the Ld.DRP u/s 144C of the Act, the AO is competent to pass the assessment order under section 92CA(4) of the Act without passing a draft assessment order as prescribed u/s 144C? - HELD THAT:- It clear that there cannot be any estoppel on the issue of law pertaining to jurisdiction and order passed without jurisdiction, the same can be raised at any time and the principle of estoppel will not apply. Waiver of any legal right can not entail passing the order otherwise than the mandate of law. Passing of the proposed order of assessment u/s 144(C)(1) of the Act is sine qua non before passing of the assessment order and consent of parties cannot confer jurisdiction, which is otherwise not available. Hence we are of the view that the Assessee cannot be estopped from challenging the assessment order, which is otherwise based on the waiver/admission/undertaking of the Assessee. Further may be there is waiver/admission/undertaking of the Assessee for not challenging the draft order before the Ld. DRP u/s 144C of the Act, but still the AO is not empowered to pass the assessment order under section 92CA(4) of the Act directly, without passing a draft assessment order as prescribed u/s 144C(1) of the Act. Hence the questions no. 2 and 3 are answered accordingly. In the instant case, as we have observed above that the Assessee has categorically admitted before the Assessing Officer that it does not want to challenge the draft assessment order before the Ld. DRP under section 144C of the Act , and therefore the AO on such waiver/admission/undertaking of the Assessee, passed the final assessment order u/s 143(3) rws 92CA(4) of the Act directly and thus at this stage can not be allowed to make u turn as it is settled law that construction which permits one to take advantage of one s own wrong or impair one s own objections under the statue should be disregarded. Maxim Nullus commodum capere potest de injuria sua propria has a clear mandate of law that, a person who by manipulation of a process, frustrates the legal rights of others, should not be permitted to take advantage of his wrong or manipulations. There is no estoppel against the issue of law or jurisdiction of the authorities and waiver/undertaking of party(ies) cannot bestow the jurisdiction which is otherwise do not exist and also can not bypass the procedure established by law. Hence we are of the considered view, that the final assessment order dated 13/03/2015 u/s 143(3) read with section 92CA(4) of the Act passed by the AO, without passing the draft assessment order as prescribed u/s 144C(1) of the Act, is without jurisdiction and void-ab-initio. Hence, the assessment order itself is quashed.

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• 2024 (2) TMI 390
  Depreciation on right to collect toll tax on road developed by the Assessee - depreciation on right to collect toll on such road as intangible asset u/s 32(1)(ii) - Whether depreciation may be granted treating the said road under the category allowed as Intangible Assets @ 25%? - Disallowance of deduction allowable u/s 80IA (4) replacing the amount of amortised value of deduction with allowable depreciation - admission of additional ground - HELD THAT:- Whether the Assessee is eligible for depreciation on right to collect toll tax on road developed by the Assessee or not is already decided by the co-ordinate bench in Assessee s own case bearing [ 2021 (6) TMI 94 - ITAT MUMBAI] for assessment year 2005-06 and 2006-07. These orders of ITAT were followed by the co-ordinate benches in Assessee s case for assessment year 2008-09, 2009-10 and 2010-11[ 2021 (9) TMI 1536 - ITAT MUMBAI] Thus, it is clear that the right to set up infrastructure facility and collect toll on that is a commercial right, which is an intangible asset in terms of provisions u/s 32(1) (ii) of the Act. Therefore, the Assessee is entitled to claim depreciation. Before CIT (A), the Assessee has made the claim by raising an additional ground, which was incorrectly not admitted. As the issue is squarely covered in favour of the Assessee and the ground should have been admitted by the CIT (A), therefore this non-admission is not sustainable. On the merits, in Assessee s own case we direct the Ld. AO to grant depreciation on the right to collect toll tax on infrastructure facilities considering same as intangible asset entitled to depreciation at the rate of 25%. We also direct the Ld. AO to re-compute the deduction allowable to the Assessee u/s 80IA (4) by replacing the amount of amortised value of deduction with allowable depreciation. Appeal of the Assessee is allowed.

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• 2024 (2) TMI 389
  Revision u/s 263 by CIT - Irregular allowance of long-term capital loss wherein it has been held that the assessee has applied the cost of inflation index on foreign currency while computing the capital gain on the assets acquired out of foreign currency - HELD THAT:- As PCIT has given a reason that the order of the learned assessing officer is not in accordance with the concept of cost inflation index. In fact, assessee has not invested in foreign currency but in INR. Even other second proviso to section 48 is only with respect to Nonresident Assessee. By computing long term capital gain by incorrect method assessee has got the benefit of Foreign Exchange Fluctuation as well as cost inflation index both which is not in accordance with Income tax Act. In view of this, to this extent, on this issue we find that the jurisdiction assumed by the learned PCIT holding that there is an irregular allowance of long- term capital loss of Rs. 99,675.31 lakhs and higher capital loss of Rs 502.62 Cr is justified. Therefore, on this issue the order under section 263 of the income tax act passed by the learned PCIT is sustained. Excess bad debts allowed - Order of the PCIT does not show that what is the error in allowing the claim of the assessee wherein the amount is debited to the profit and loss account as write off .therefore, on this issue we do not find that there is any error in the order of the learned assessing officer in allowing the claim of the assessee which is after calling for the explanation and correctly allowed. Therefore, on the same issue of the bad debts allowed the order of the learned PCIT is not sustainable. Accordingly, ground number 3 of the appeal is allowed to the extent indicated above. Provision for depreciation of investment - The provision for securities held as investment was added to the total income of the assessee PCIT found that the book loss claimed by the assessee have been claimed by the assessee as realized loss on investment and reduced from the book loss of investment. Therefore, he was of the view that the amount is being actual loss and not a provision for depreciation of investments so it was required to be disallowed and added to the total income of the assessee. The AO has not verified this amount. During hearing before us, nothing was shown to us that this issue was examined by the learned assessing officer. Therefore, this issue is squarely covered by the explanation 2 to section 263 of the act where the assessing officer has not made any enquiry on the issue and has allowed the claim of the assessee, to such extent the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue. Therefore, on this issue we uphold the order of the learned PCIT. Excess deduction allowed u/s 36 (1) (via) - only argument of the learned authorized representative is that the quantum deduction is linked to the total income and therefore any enhancement made in the income returned to additions/disallowances impact the quantum of deduction. However, we find that it cannot be the case that the amount of deduction is allowable to the assessee higher than what is not claimed in the return of income without there being a revised return before the LD AO. Therefore, it is in clear violation of the decision of Goetz India limited [ 2006 (3) TMI 75 - SUPREME COURT] Therefore, we uphold the action of the learned PCIT in holding that claim allowed by the assessing officer higher than that claimed in the return of income without assessee filing any revised return is definitely erroneous and prejudicial to the interest of the revenue - action of the learned PCIT is upheld in holding that assessee has been allowed excess deduction u/s 36 (1) (viia). Excess grant of deduction under section 36 (1) (vii) of the act with respect to the aggregate rural advances - There is an error in the order of the learned assessing officer in granting deduction merely on the submission of the assessee and without making any enquiry about the various branches, which are claimed to be eligible for deduction under this section on the advances. Thus, non-examination of the details clearly makes the order of the learned assessing officer erroneous and prejudicial to the interest of revenue. Further, it is the claim of the assessee that this is based on the audit objection raised by the Director-General of Audit, Mumbai. We do not find any infirmity in the order of the PCIT because even if there is an audit objection, he has applied his mind independently and held that order of the AO is erroneous to that extent. In the result on this issue, we hold that the learned PCIT has correctly assumed the jurisdiction and correctly held that the order of the learned AO is erroneous and prejudicial to the interest of revenue. To that extent, the order of the learned PCIT is sustainable on this issue. Accordingly, ground number 6 of the appeal is dismissed. Excess deduction u/s 36 (1) (viii) - Admittedly, no revised return was filed by the assessee on this account. The only claim of the assessee is that the quantum of deduction is linked to the total income and therefore the enhancement in the income returned due to additions/disallowances which has impacted the quantum of deduction. The learned PCIT has held that in view of the decision of the honourable Supreme Court [ 2006 (3) TMI 75 - SUPREME COURT] the allowance of claim higher than the amount claimed in the return of income without revising the return of income makes the order of the learned assessing officer is erroneous and prejudicial to the interest of revenue. We do not find any infirmity in the order of the learned principal Commissioner of income tax on this account is not following the decision of the honourable Supreme Court makes the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue. Excess allowance of deduction u/s 36 (1) (vii) - During the course of assessment proceedings neither there is any discussion not there is any detail called for by the assessing officer and therefore we do not find infirmity in the order of the learned principal Commissioner of income tax in holding that not making any enquiry by the learned assessing officer on this aspect makes the order of the learned AO erroneous so far as judicial to the interest of the revenue. Accordingly, we dismiss ground number 9 of the appeal of the assessee. Appeal filed by the assessee is partly allowed.

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• 2024 (2) TMI 388
  Income from house property - Determining the ALV of flats disclosed in the stock in trade as per the Accounting standards and policies being fallowed consistently by the assessee - scope of amendment in the finance Act 2017 under section 23(5) - AR contentions are the amendment in finance Act 2017, in respect of provisions u/sec 23 (5) of the Act is applicable to unsold inventory of flats disclosed under stock in trade is effective from A.Y.2018-19 and not to the present A.Y. 2012-13, therefore, there is no provision to assess notional rent/ALV of unsold flats u/sec 22 of the Income Tax Act in the year under consideration HELD THAT:- We consider it appropriate to refer to the observations in case of NMS Enterprises [ 2023 (1) TMI 1345 - ITAT MUMBAI] though in the context of revision u/sec. 263 of the Act has dealt on the applicability of provisions of section 23(5) of the Act prospectively and granted relief We considering the facts, circumstances and the amendment, the annual value of unsold flats held as stock in trade has to considered as per the amendment in the finance Act 2017 under section 23(5) of the Act is applicable from A.Y 2018-19 and the present case is A.Y. 2012-13. Accordingly we fallow the judicial precedence and rely on the ratio of the legal decisions and the applicability of amendment u/sec 23(5) of the act and we set aside the order of the CIT(A) and direct the assessing officer to delete the addition of annual let out value ( ALV) of the unsold flats and allow the grounds of appeal in favour of the assessee.

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• 2024 (2) TMI 387
  Additions u/sec 68 in respect of sale of shares and u/sec 69 in respect of estimated commission expenditure - addition made on non establishing the genuineness of the impugned Long Term Capital Gains - HELD THAT:- As assessee has furnished the financials, details of broker and the transactions status. AO has doubted the purchase and sale of shares and observed that the price rise is not commensurate with the financials of the investee company. The assessee has substantiated with all details and information and the AO has relied on the investigation report of income tax department and treated the long term capital gains on sale of shares as not genuine. Further the A.O. has not made any enquiry or independent investigation and relied on the statement of the parties in the survey u/sec 133A of the Act and the assessee s name is not included in the list of investigation report. The fact remains that the assessee has submitted the requisite details in respect of purchase and sale of shares were not disproved. The transaction of purchase and sale of shares is through banking channel. Further as discussed in the above paragraphs the Hon ble Tribunal in Shi Jatinder Kumar Jain Vs ITO [ 2022 (8) TMI 21 - ITAT CHANDIGARH] dealt on the same scrip of share and for the same assessment and has granted relief to the assessee. Accordingly, we set aside the order of the CIT(A) and direct the assessing officer to delete the additions and allow the grounds of appeal in favour of the assessee.

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• 2024 (2) TMI 386
  TP Adjustment - benchmarking the royalty payment - TPO is directed to include Technical Know-how fee and exclude software expenses and other expenses while benchmarking the royalty payment - HELD THAT:- Similar issue came for consideration before this Tribunal in assessee s own case in for the assessment year 2015-16 2016-17 [ 2024 (2) TMI 290 - ITAT BANGALORE] as held that no separate benchmarking of royalty payment is required i f the TNMM approach has been adopted at entity level and this issue is decided in favour of the assessee. Taxability of dividends - Dividend Distribution Tax (DDT) - dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s) - whether CIT(A) has erred in not appreciating that under India Japan DTAA, the dividends are taxable at the rate of 10% and such rate is also applicable for discharge of DDT? - Appellant submits that DDT paid in excess of 10% is liable to be refunded - HELD THAT:- This issue came for consideration before Special Bench in the case of Total Oil India Pvt. Ltd. [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] wherein it answered the following question in favour of the revenue as held where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec. 115-O of the Act, such additional income tax payable by the domestic company shall be at the rate mentioned in Section 115- O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. Nevertheless, we are conscious of the sovereign s prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. Decided against assessee. Levy of interest u/s 234B 234C of the Act, which is consequential and mandatory in nature and to be calculated accordingly.

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• Customs

• 2024 (2) TMI 385
  Demand of custom duty raised under Section 28B of the Customs Act 1962 - proceedings initiated were barred by limitation or not - it was held by High Court that There is no substantial question of law that arises for consideration by this Court in this appeal - HELD THAT:- There are no reason to interfere in the matter - The special leave petition is hence, dismissed.

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• 2024 (2) TMI 384
  Violation of Condition No. 104 contained in Customs Notification No. 21/2002 (as amended by Notification No. 61/2007) - it was held by CESTAT that there is no violation by the importer-appellant to the post import condition No. 104 of Notification No. 21/07, as amended. Accordingly, under the undertaking given by the importer, it was required to offer only non-scheduled passenger service - HELD THAT:- The view taken by the Tribunal is concurred with - appeal dismissed.

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• 2024 (2) TMI 383
  Maintainability of petition - availability of alternative remedy - Direction to respondents to not to arrest the petitioner against the summons issued under Section 108 of Customs Act 1962 - seeking expeditious disposal of enquiry pertaining to the Seizure of Betel Nuts, pending since May 2023 preferably within a stipulated time period - HELD THAT:- It is not in dispute that so far as the maintainability of the writ petition under Article 226 of the Constitution of India is concerned, the same is maintainable with only rider that such power should be exercised sparingly and the same has been considered in paragraph-17 of the judgement in Choodamani Parmeshwaran Iyer [ 2023 (7) TMI 1008 - SUPREME COURT] . The writ petition is not entertained - petition dismissed.

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• 2024 (2) TMI 382
  Finalization of assessment and the issue of classification and thereafter release the goods - issuance of Certificate for waiver of demurrage and other charges in terms of Rule 6(1) of Handling of Cargo in Customs Area Regulations 2009 - HELD THAT:- The Petitioner waives issuance of a show cause notice in respect of the goods which are the subject matter of Bill of Entry No. 8560406 dated 31st October 2023. An order similar to the Order dated 5th January 2024 be passed in respect of the goods which are the subject matter of Bill of Entry No. 8560406 within a period of two weeks from the date of intimation of this Order. This shall be without prejudice to the right of the Petitioner to challenge the said order being so passed by filing an Appeal and to raise all contentions in the Appeal as may be permitted in law. Petition disposed off.

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• 2024 (2) TMI 381
  Constitutional validity of Notification No.36 of 2021 dated 03.08.2001 and Notification No.40 of 2001 dated 28.08.2001 - Effective Date of Notification - Prescribing tariff value prescribed therein, for the earlier import of R.B.D. Palmolein oil - HELD THAT:- Given the fact that the Division Bench already has considered veracity of the said notification and reached to a conclusion that the said notification is bad to the extent of it being made applicable from 03.08.2001 instead of 06.08.2001 - the same view is endorsed here and there are no reasons to interfere with the said notification. Since the Notification No.40 of 2001 also is identically same, the said notification also is held to be proper, however, it is made clear that the effect of the said notification also would be applicable from the date it was published in the Official Gazette and not from any earlier period of time. In view of the submission made by the learned counsel for the petitioner that under protest, the petitioner had cleared the entire liability, it is made clear that the petitioner can and will be at liberty to avail the appropriate benefits from the Department in terms of the aforesaid two notifications being made applicable from the date on which they were published in the Official Gazette - the Writ Petition is disposed of.

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• 2024 (2) TMI 380
  Release of goods - Confiscation - redemption fine - penalty - insecticides, pesticides and other agrochemicals including technical such as Cyantraniliprole Technical - Import through Port which is not a specified port Import - prohibited goods or not - re-export of back to origin without any basis or justification - whether Petitioner has no privity with the manufacturer in the China ie, the Country of Origin? - HELD THAT:- It is clear that the petitioner has accepted the mistake on importing the goods contrary to the provision of Section 45 of the Insecticide Act, 1968 which is already reproduced in the averments quoted herein above from the affidavit-in-reply of the respondents and therefore the same are not repeated herein. The petitioner has also paid Rs. 5,00,000/- toward redemption fine as imposed vide the impugned order. In such circumstances, the respondent authority has committed an error by directing the petitioner to redeem the goods only for back to the origin purpose inspite of the fact that the petitioner has paid the required duty under the Act. It is also not the case of the respondent authority that the goods are imported in violation of any provisions of the Customs Act, but in view of the Rule 45 of the Rules the petitioner could not have imported the goods at part which is not specified in the said Rule, the goods therefore have been confiscated as per Section 111 and 112 of the Customs Act, 1962 - the respondent authority ought to have permitted the clearance of the goods to the petitioner on payment of the redemption fine for home consumption. It is opined that as the petitioner has imported such goods at the place other than the places specified in Rule 45 of the Insecticides Rules, 1971, the petitioner is penalized and redemption fine is imposed for committing such mistake for which the petitioner has already paid Rs. 5,00,000/- towards redemption fine imposed by the respondent authority. In such circumstances the respondent authority ought to have permitted the petitioner for clearance of the goods on payment of redemption fine for home consumption. As the breach of Rule 45 of the Insecticides Rules, 1971 is remedied by imposition of the redemption fine towards confiscation of the goods, the goods would be required to be cleared for home consumption and could not have been ordered to be deported. The impugned order is modified to the extent that the petitioner be permitted to clearance of goods for home consumption, as payment of the redemption fine of Rs. 5,00,000/- is already been paid - petition allowed.

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• 2024 (2) TMI 379
  Imposition of redemption fine and penalty - export of readymade garments - Overvaluation of goods to claim undue export benefits - inferior quality goods or not - HELD THAT:- To ascertain the value of goods, the Revenue has done market survey in the presence of the representative of the appellant and in the market survey, it was found that the export goods are over valued and the appellant has accepted the same. The learned authorized representative of the Revenue not agreed upon that transportation charges and profit margin cannot be the double of the goods in the facts and circumstances of the case. In that circumstances, it is held that the Adjudicating Authority has rightly held the goods are liable for confiscation. Accordingly, redemption fine and penalty are imposable on the appellant. The redemption fine and penalty are on higher side, accordingly, the redemption fine reduced to Rs. 2,00,000/- and penalty to Rs. 1,00,000/- - appeal allowed in part.

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• 2024 (2) TMI 378
  Imposition of penalty under Section 112(b) of the Customs Act, 1962 - Smuggling - Gold bars of foreign origin - illegally imported goods - Burden to prove foreign origin of gold - no corroborative evidences - HELD THAT:- While the Revenue has initiated the present proceedings against the Appellants on the basis of recovery of confiscated gold bars from Shri Rakesh Kumar and Shri Girish Chandra, both the said persons have disputed the said recovery. As per them, the subject gold bars were not recovered from them and they were falsely implicated in the matter. The two Appellants were therefore disputing the correctness of the Panchnama dated 30.03.2019. Law in this regard is well settled that Panchnama is merely a record of what the panch sees and the only use to which the panchnama can be put is that when the panchas go into the witness box, the panchnama can be used as a contemporary record to refresh his memory. Once the two Appellants disputed the fact of recovery of confiscated gold bars from them and also disputed the panchnama dated 30.03.2019, the panch witnesses were required to be offered for cross-examination so that the truth of the contents of the panchnama and the recovery made from the two Appellants could have been established - In the present case, though the opportunity to cross-examine the two panch witnesses was allowed but the said panch witnesses never appeared for cross-examination. In this view of the matter, it would not be safe to conclude regarding recovery of confiscated gold bars from the two Appellants only on the basis of panchnama, without corroborating the contents of the same with some other evidences. There is also no allegation in the show cause notice on the basis of call record details that the location of Shri Rakesh Kumar and Shri Girish Chandra was in Kolkata anytime during the period from 28.03.2019 to 30.03.2019. Further, as rightly pointed out by the Ld. counsel for the Appellants, the call record details is also in respect of some other phone numbers, the reference of which is not coming from the recorded statements or the enquiry made and have been straightaway referred to in the show cause notice. Thus, no concrete evidence is forthcoming in favour of the revenue on the basis of call record details. The Revenue has also not got the confiscated gold bars tested by touchstone method to test the purity of the confiscated gold bars. In these circumstances, the initial burden to prove foreign origin of subject gold bars has not been established - The entire case of the Revenue appears to be based on assumptions and presumptions and the same cannot take place of substantive evidence and accordingly, it cannot be held that the Appellants have in any manner dealt with the goods liable to confiscation under Section 111 of the Customs Act and consequently they cannot be subjected to penalty. Since the initial burden of proving the alleged illegal importation of gold bars of foreign origin has not been discharged by the Revenue and no corroborative evidence has been brought on record to support the case made out against Shri Girish Chandra and Shri Rakesh Kumar, the proceedings against the Verma Brothers also cannot sustain - Appeal allowed.

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• Insolvency & Bankruptcy

• 2024 (2) TMI 377
  Initiation of CIRP u/s 7 of the IBC - financial debt or not - Period of limitation - Advance paid subject to execution of the share purchase agreement - NCLT rejected the application as the appellant does not falling within the category of financial creditor - whether the amount of Rs. 1.25 crores paid by the Appellant to Shri Shabir Nirban, ex-Director of the Respondent Company constitute a financial debt as defined in IBC and whether the section 7 application filed regarding the purported financial debt deserved to be admitted? - HELD THAT:- It is noted from the definition of debt and default as enumerated in section 3(11) and 3(12) of the IBC that the financial debt had to be in the shape of liability and non-payment of such liability in the given time would cause default. In the present situation again, no date of default is made out and so we it is found that neither the said transaction is in the shape of a financial debt or in commercial effect of borrowing is evidenced and no default is also made out. As argued by the Learned Counsel for Respondent, and also admitted by the Learned Counsel for Appellant, the said transaction of Rs. 1.25 crores was ostensibly against the purchase of the property situated at Teen Batti, Walkeshwar Road, Mumbai, which was capable of redevelopment under the provision of the Development Control Regulation 33(7) and the value of property in view of this development potential was more than Rs. 15 crores. Therefore, a total consideration as claimed by the Appellant as about Rs.4.5 crores does not appear to constitute a tenable argument as a total amount of Rs. 4.5 crores would not be sufficient consideration for acquisition of the said property - it is considered necessary to go any further into the nature of the contract, whether written or otherwise between the two parties suffice to say that if transaction was made in December, 2014 against the purchase of a specific property, the Appellant should have asserted its right within the stipulated period of three years being the specific purchase of the contract to try to enforce such contract through IBC does not appear to be correct legal course of action. It is noted that in SANJAY D. KAKADE VERSUS HDFC VENTURES TRUSTEE COMPANY LTD AND ORS [ 2023 (11) TMI 1219 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] , this Tribunal has considered a written Share Subscription and Shareholders Agreement between the shareholders as proof of financial debt. Quite obviously there is a delay in signing of shareholder subscription agreement, which was in consideration in the said appeal - the ratio laid down in the matter of Sanjay D. Kakade vs. HDFC Ventures Trustee Company Ltd. and Others does not apply in the facts and circumstances of the present case. The Adjudicating Authority has not committed any error in dismissing the section 7 application - the appeal is devoid of merit and consequently it is dismissed.

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• Service Tax

• 2024 (2) TMI 376
  Taxability - scope of the term gross amount charged - Outstanding dues from Associated Enterprises as per Section 92A of the Income Tax Act, 1961 - it was held by CESTAT that The dispute herein is squarely covered in favour of Appellant/Assessee by the ruling of the Hon ble Delhi High Court in the case of THE PR. COMMISSIONER OF GST, DELHI -SOUTH COMMISSIONERATE VERSUS MCDONALDS INDIA PVT. LTD. [ 2017 (10) TMI 514 - DELHI HIGH COURT] where it was held that The Court is satisfied that no error has been committed by the CESTAT in answering the issue in favour of the Assessee, viz., that the aforementioned amendments to the FA 1994 as well as the ST Rules cannot be made retrospective. HELD THAT:- There are no to reason interfere in the matter - civil appeal dismissed.

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• 2024 (2) TMI 375
  Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - the reason for rejection is stated that the applicant/appellant is a co-noticee, wherein the main applicant, M/s. Shakambhari Ispat Power Limited has not yet applied and settled their case in SVLDRS and as such, the appellant s application cannot be processed and is rejected as per the provisions of the scheme - HELD THAT:- At the relevant time, an appeal was pending before the Commissioner of Appeal, CGST Central Excise, Siliguri (Appeal), Commissionerate. On receipt of the said form SVLDRS 4, the Commissioner of Appeals by order dated 11th November, 2020 has disposed of the appeal as deemed to have been withdrawn in accordance with the provisions of Section 127 (6) of the Finance (No. 2) Act, 2019 - it is factually not in dispute that the main applicant viz., M/s. Shakambhari Ispat Power Limited had applied under the scheme and the said application has been accepted and SVLDRS- 4 had been issued by the designated committee on 12th August, 2020. The reason for rejection of the application of the appellant cannot be sustained - Petition allowed.

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• 2024 (2) TMI 374
  Demand against Retention of the service tax collected on behalf of the principal by the petitioner/assessee - business auxiliary service for the commissioner received by the appellant - HELD THAT:- A perusal of the facts involved in the case would give a clear picture of the total amount of Rs.38,53,951/- towards service tax collected by the petitioner on behalf of the principal, of the said amount, an amount of Rs.20,15,629/- un-disputedly stands remitted by the appellant to the principal and there was a balance of amount of Rs.15,75,182/- which was not paid by the appellant to the principal and there is said to have been an illegal retention of the same - Inspite of that there is a finding by the Tribunal that the contention of the petitioner so far as the retention of the amount of Rs.15,75,182/- collected till 2014, seems to be per se contrary to the materials and documents available with the department. So also is contrary to the documents which the appellant herein had produced before the authorities concerned and had also contended even uptill the stage of the CESTAT which has not been properly appreciated by the same. Where admittedly an amount of Rs.20,156,29/- at the first instance itself was transferred by the appellant to the principal and the balance of Rs.15,75,182/- amount collected also having subsequently been deposited with the department directly establishes the fact that the entire service tax collected by the appellant herein to the tune of Rs.35,90,811/- stand paid either to the Principal or to department and as such there was no retention of the service tax collected by him beyond 23.07.2013. The said finding for the aforesaid reasons being unsustainable, deserves to be and is accordingly set aside. The demand raised for the payment of Rs.38,53,951/- stands set aside/quashed - Appeal closed.

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• 2024 (2) TMI 373
  Jurisdiction - competency of the Additional Commissioner to adjudicate and finalize the assessment - the Learned Additional Commissioner has observed in Order-in-Original dated 31.03.2008 vide Corrigendum dated 10.02.2007, the Adjudicating Authority was changed to The Additional Commissioner of Service Tax 17-B-IAEA M.G.Road, New Delhi - HELD THAT:- It is found that the Commissioner (Appeals) has also considered this issue of jurisdiction of Additional Commissioner and referred to Section 83 of the Finance Act, 1994 and Section 12E of the Central Excise Act, 1944 to hold that the Additional Commissioner had jurisdiction to adjudicate the show cause notice issued by the Assistant Commissioner - there are no infirmity in the jurisdiction of the Additional Commissioner to adjudicate the show cause notice. Taxability - consulting engineer s service - activities of the appellant in relation to computer software - benefit of exemption Notification No. 04/1999-ST dated 28.02.1999 - HELD THAT:- On examining the agreement entered into between the appellant and Yamaha India it is found that the appellant is engaged in the business of software development which is exempted from service tax in view of the Notification No. 04/1999-ST dated 28.02.1999 and Circular No. 70/19/2003-ST dated 17.12.2003. It is also found that the nature of services as provided in the agreement are in relation to operation, development and facilitation of software and without said services, the usage of software would be redundant - Tribunal in the case of Nokia (India) Pvt. Ltd. cited [ 2006 (1) TMI 1 - CESTAT NEW DELHI] has observed that the advisory support service relating to software clearly falls within the domain of the service by a software engineer and accordingly software support services were exempted from payment of service tax under the category of consulting engineer s service. The activities of the appellant are specifically made taxable under Section 65 (105) (zzzze) of the Finance Act, 1994 w.e.f. 16.05.2008 under the category of Information Technology Software Services and the appellant is registered under the provisions of service tax under this category and regularly discharging service tax liability and the same is not in dispute, but during the disputed period from 01.10.2002 to 12.03.2004, the activities of the appellant were not subject to service tax in view of the exemption notification as well as the Circular issued by the CBEC Circular No. 70/19/2003-ST dated 17.12.2003. The period in dispute, the activities of the appellant were exempted by Notification No. 04/1999 dated 28.02.1999 and the Circular No. 70/19/2003-ST dated 17.12.2003. When the appellant is not liable to pay service tax, the question of demanding interest and imposing penalty does not arise - the impugned order set aside - appeal allowed.

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• 2024 (2) TMI 372
  Interest on delayed payment of refund - HELD THAT:- The said issue has been examined by this Tribunal in the case of Tribunal in the case M/s. Fujikawa Power and other vs. CCE, Chandigarh-I [ 2019 (11) TMI 1197 - CESTAT CHANDIGARH] wherein this Tribunal has observed appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum. The appellant is held entitled for the interest on the amount of refund sanctioned at the rate of 12% to be calculated from the date of payment till the date of disbursement. Appeal allowed.

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• 2024 (2) TMI 371
  Recovery of CENVAT Credit alongwith interest and penalty - input or not - pre-fabricated building green house shelter - case of Revenue is that pre-fabricated building green house shelter does not appear either to be contained in or consumed for providing the output service that the appellant were alleged to have wrongly availed the utilised Cenvat credit of said service tax - HELD THAT:- In the present case, it is not at all in dispute that the appellant is engaged in setting up of positive infrastructure and provision of such structure to various telephone companies. The said positive infrastructure that is the tower, shelter etc. is created out of MS angles, and channels which used to be brought to the site in CKD condition and with the help of nuts and bolts were got assembled and erected as towers and shelters on the site after being fabricated and erected these structures were got fastened to the earth. There is no denial to the fact that the products brought in CKD condition were the excisable commodity when these admitted facts are glanced in light of above definition of Section 3 of Transfer of Property Act, it is clear that the tower or shelter erected with the help of nut and bolts to a foundation on earth to provide stability and functionality does not qualify to mean attached to the earth . There are no no reason to accept the findings of the order under challenge with the irrespective that some other party is before Hon ble Supreme Court on the same issue, especially when there is no stay of order in that case by the Supreme Court - it is held that goods in question, the pre-fabricated shelter is not immovable property but is the Capital Good for which the appellant is entitled to take credit of duty paid. The order under challenge is hereby set aside - Appeal allowed.

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• 2024 (2) TMI 370
  CENVAT Credit - input services - Outdoor Catering Services - denial on the account of raising of invoice after 14 days - HELD THAT:- As a matter of fact, neither in the Show Cause Notice, nor in the Order-in-Original there is any dispute that this amount was not paid by the service provider so as to deny the Cenvat Credit. So far as the denial of the same on account of raising of the invoice after 14(fourteen) days from the date of provision is concerned, it is noted that this is not a normal invoice for which this provision would be applicable. This invoice is specifically raised for the Service Tax paid by the service provider for the past period. Therefore, there are no infirmity for the Appellant taking Cenvat Credit. Further, the entire demand of 1,52,82,260/- is for the period August 2008 to September 2009, wherein there was no exclusion clause for taking Cenvat Credit on Outdoor Catering Services . Therefore, the confirmed demand of Rs.1,52,82,260/- is set aside. Second confirmed amount of Rs.98,12,269/- - HELD THAT:- It is found that almost the entire Cenvat Credit pertains to the invoices raised before 31.03.2011. From the tables annexed to the Show Cause Notice, it is found that in the case of one service provider, they have raised the Bills on 01.04.2011, which clearly show that the service has been provided during the month of March 2011 only. In case of another service provider they have raised the Bill on 31.03.2011, but the credit has been taken in the month of July 2011. Therefore, the clarification given in the cited Circular fully applies to these Bills - the confirmed demand of Rs.98,12,269/- is set aside. Appeal allowed.

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• Central Excise

• 2024 (2) TMI 369
  Classification of Savoury Oats / Silk Oats - Following the judgment of Supreme Court [ 2015 (4) TMI 356 - SUPREME COURT] , the CESTAT held that, The product Savoury Oats / Silk Oats merit classification under CETH 1104 12 00 and not under 1904 20 00 as determined by the authorities below. - While challenging the decision of CESTAT, department sought review of impugned decision. - HELD THAT:- Looking into the findings of fact, this is not a case in which the said prayer can be considered. The appeals are dismissed.

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• 2024 (2) TMI 368
  Refund of the CVD and SAD as the appellant did not avail Cenvat Credit - The appellant imported capital goods under EPCG scheme. As export obligation could not be fulfilled, the appellant paid Customs duties viz., BCD, CVD and SAD along with interest thereon - Rejection on the ground that the import conditions were not fulfilled - HELD THAT:- CENVAT Credit Rules 2004 includes capital goods in the definition of inputs . The reason and legal provisions why the learned Commissioner (Appeals) came to the conclusion that duty paid on excisable goods which are inputs alone are eligible and duty paid on capital goods cannot be refunded, is not discussed and is hence not clear. It is also noted that the Original Authority had not disputed the eligibility to CENVAT credit for the capital goods under CCR,2004. The impugned order is hence based on a new ground. A rounded examination of the issue has not been done. The reasons given by the Original Authority and the judgment of M/S. SERVO PACKAGING LIMITED VERSUS COMMISSIONER OF G.S.T. AND CENTRAL EXCISE, PUDUCHERRY [ 2020 (2) TMI 353 - CESTAT CHENNAI] ] do not form a part of the impugned order into which the OIO has merged. There are no legal grounds in the impugned order to have rejected the claim for refund. The appellant on the other hand has made out a strong case in their favour - appeal allowed.

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• 2024 (2) TMI 367
  Cash Refund of Customs Duty / CVD - appellant could not avail the Cenat Credit - Section 142(3) of the CGST Act, 2017 - Jurisdiction to entertain the refund claim - HELD THAT:- The issue as to whether such matters of cash refund claimed under Section 142(3) could be decided by this Tribunal was before the Larger Bench in the case of M/S. BOSCH ELECTRICAL DRIVE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, CHENNAI [ 2023 (12) TMI 1145 - CESTAT CHENNAI-LB] , decided by the Larger Bench on 21.12.2023. The Larger Bench had concluded that the CESTAT has the jurisdiction to take up the Appeals of such nature - the LB decision in the case of Bosch Electricals would be squarely applicable to the present appeals. This makes it clear that the only recourse available to the assessee who pay the Service Tax, Excise Duty in the form of CVD + SAD or IGST or Excise Duty subsequently after 01.07.2017, is to get the refund in terms of Section 142(3) of the CGST Act 2017. So far as the case law cited by the Learned AR in respect of M/S. AUROBINDO PHARMA LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI II [ 2022 (5) TMI 394 - CESTAT CHENNAI] and M/S. SERVO PACKAGING LIMITED VERSUS COMMISSIONER OF G.S.T. AND CENTRAL EXCISE, PUDUCHERRY [ 2020 (2) TMI 353 - CESTAT CHENNAI] , Chennai Bench is concerned, in both these cases the decisions were given prior to the Larger Bench taking its clear view on this issue. Since the Larger Bench had taken the view that the only recourse available to the appellant is to get the cash refund in terms of Section 142(3) to claim cash refund, these two case laws are not applicable presently. Appeal allowed.

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• 2024 (2) TMI 366
  Rejection of abatement claimed by the appellant under Rule 96 ZO(2) of the Central Excise Rules, 1944 - production has taken place during the period of closure or not - whether the appellant is eligible to claim the abatement for 188 days at various periods of intervals during the period 01.10.1997 to 08.02.2000, as provided under Rule 96ZO(2) of the Central Excise Rules, 1944? - HELD THAT:- The Appellant themselves admitted that they could not fulfill all the conditions as prescribed under Rule 96ZO(2) of the Central Excise Rules to avail the abatement. The Appellant explained the reasons for not submitting the Meter reading every time they closed the production and gave the intimation letter to the concerned authorities. The Appellant submits that they could not produce the reading of Electricity Meter every time they closed the production as the Meter room was sealed and fully kept under the control of West Bengal State Electricity Board - the reason given by the Appellant is not convincing. It is found that the Appellant claimed the abatement for 188 days at various periods of intervals during the period 01.10.1997 to 08.02.2000. The first period for which abatement sought was for a period of 24 days from 01/10/97 to 24/10/97. This means that after closure of the production for 24 days, the Appellant had commenced their production on 25/10/97. For production of goods from 25/10/97 onwards, they would have either used the electricity provided by the state electricity board or used other source of power from generating sets. If the electricity connection is given again on 25/10/97, they could have easily informed the department about the meter reading at the time of reopening the meters. If the appellant has used other source of power for production, then they should have produced those evidences to the department to substantiate their claim that during the period of closure claimed by them they have not used the other source of power for producing the goods, to claim the abatement. The Appellant has produced neither of the above to convince the department that no production has taken place during the periods of closure as claimed by them. It is not the case of the Appellant that they have continuously closed the production during the period from 01.10.1997 to 08.02.2000. They have been closing and restarting the production on various intervals. Every time they closed or re-started the production, the Appellant has not made any effort to submit the Electricity Meter reading. If the Electricity Meter was continuously sealed for the entire period from period 01.10.1997 to 08.02.2000, then the Appellant should have intimated the other source of power used for production during re-start of the production at various periods of intervals - the Appellant has not fulfilled all the conditions as prescribed in Rule 96 ZO(2) of the Central Excise Rules, 1944 to claim the abatements - the Appellant are not entitled to claim the abatement for the 188 days as claimed by them, as they have not fulfilled all conditions as prescribed under Rule 96ZO(20 of the Central Excise Rules, 1944. The impugned order passed by the Commissioner is upheld - appeal dismissed.

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• Indian Laws

• 2024 (2) TMI 365
  Dishonour of Cheque - post dated cheque - Vicarious Liability - Offences by companies u/s 141 of NI Act - failure to appreciate that the petitioners had resigned from the accused Company - cheque handed over to the respondent no. 2 and returned unpaid much later and after the resignation of the petitioners - HELD THAT:- While Sub-section (1) of Section 141 makes every person who, at the time the offence was committed, was in charge of and responsible for the day-to-day affairs and conduct of the business of the company, to be deemed to be guilty of the offence , unless he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such an offence, Sub-section (2) of Section 141 makes any director, manager, secretary, or other officer of the Company, with whose consent or connivance of or due to whose neglect the offence has been committed by the company to be deemed to be liable to be proceeded against and punished under Section 138 of the NI Act. In the present case, it is the case of the respondent no. 2 that even the cheque, on the basis of which the complaints have been made, were given by the company and taken by the respondent no. 2 on the assurance of the petitioners herein that the said cheques would be duly honoured at the time of their presentation. These cheques are stated to be given post the date of the alleged resignation of the petitioners. It is also important to note that there were other Directors arrayed as accused in the complaint(s), however, against them such averment is not specifically made. The averments made in the paragraphs 5 and 7 are specifically made against the petitioners herein. In any case, whether this averment of the respondent no. 2 is correct or not, has to be tested during the trial. There are no merit in the challenge made by the petitioners in the present petitions - petition dismissed.

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• 2024 (2) TMI 364
  Declaring the account as Fraud - Violation of principles of natural justice (audi alteram partem) - Validity of decision of the respondent banks taken in the Joint Lenders Meeting dated 29.09.2020 declaring the account of M/s Syntex Industries Limited (Company) as fraud - opportunity to deal with the forensic audit report and/or the supplementary forensic audit report not provided - HELD THAT:- Rule of audi alteram partem has been read into clauses 8.9.4 and 8.9.5 of the Master Directions of 2016 on frauds. The Apex Court in State Bank of India and Others v. Rajesh Agarwal and Others [ 2023 (3) TMI 1205 - SUPREME COURT ] has also directed that consistent with the principles of natural justice, the lender banks should provide an opportunity to a borrower by furnishing a copy of the audit reports and allow the borrower a reasonable opportunity to submit a representation before classifying the account as fraud coupled with passing of a reasoned order on the objections addressed by the borrower. Undisputedly, in the present case, no such steps have been taken by the respondent lender banks and therefore, on this limited ground of violation of principles of natural justice, the decision of the respondent banks declaring the account of the company as fraud is hereby quashed and set aside. The matter is remitted and let the respondents concerned, after furnishing the copies of the forensic audit report and supplementary forensic audit report so also reasonable opportunity to the petitioners to submit the representation, complete the proceedings by passing order. The petition stands partly allowed.

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