TMI Tax Updates - e-Newsletter
March 11, 2023

Case Laws in this Newsletter:

GST Income Tax PMLA Indian Laws

Articles

1. PROPOSED INVENTORY VALUATION BY COST ACCOUNTANT

   By: ANIL ANIKHINDI

2. Number of cases are multiplied by several type of INTERLOCUTORY APPLICATIONS the system need to be checked to reduce IA and other aspects which cause delay in delivery of justice.

   By: DEVKUMAR KOTHARI

3. INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS BY FINANCIAL CREDITOR(S)

   By: DR.MARIAPPAN GOVINDARAJAN

4. Refund cannot be denied for an inadvertent error which was subsequently rectified

   By: Bimal jain

5. Parallel proceedings cannot be initiated by Central/ State Tax Authorities on the same subject matter

   By: Bimal jain

News

1. MoU on semiconductor Supply Chain and Innovation Partnership between India and US signed following the Commercial Dialogue 2023 

2. 624.81 lakh National Pension System (NPS) subscribers, with Y-o-Y growth of 22.88%

Notifications

GST - States

1. (04/2023) FD 16 CSL 2023 - dated 1-3-2023 - Karnataka SGST

Amendment in Notification (02/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

2. (03/2023) FD 16 CSL 2023 - dated 1-3-2023 - Karnataka SGST

Amendment in Notification (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

3. (02/2023) FD 16 CSL 2023 - dated 1-3-2023 - Karnataka SGST

Amendment in Notification (13/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

4. (01/2023) FD 16 CSL 2023 - dated 1-3-2023 - Karnataka SGST

Amendment in Notification (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

5. F.12(11)FD/Tax/2023-108 - dated 28-2-2023 - Rajasthan SGST

Amendment in Notification No. F.12(56)FD/Tax/2017-Pt-I-41 dated the 29th June, 2017

6. F.12(11)FD/Tax/2023-107 - dated 28-2-2023 - Rajasthan SGST

Amendment in Notification No. F.12(56) FD/Tax/2017-Pt-I-40, dated the 29th June, 2017

Highlights / Catch Notes

GST

• High Court Sets Aside Assessment Orders Due to Violation of Natural Justice u/s 75(4); Personal Hearing Skipped.

  Case-Laws - HC : Validity of demand notice with assessment order - The sum and substance of Section 75(4) is that a personal hearing shall be granted in all matters prior to finalisation of assessment except where the stand of the assessee is intended to be accepted by the Department. - the officer has grossly erred in proceeding to finalise the impugned assessment in violation of the principles of natural justice. - the impugned orders are set aside - HC
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• Advance Ruling Applies Only to Parties Involved, Not Universally Applicable to Others, Clarifies Authority.

  Case-Laws - AAAR : Scope of advance ruling issued in another case - right in rem or right in personam - The appellant has conveniently overlooked the basic nature of the ruling given by the Authority for Advance Ruling. The said rulings are in the nature of “in personam” and not “in rem” and therefore their applicability as well as their protection cannot be sought by the others who were not party to the said proceedings. - AAAR
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• Tipper Body Construction: 28% GST for Owned Chassis, 18% GST for Customer-Supplied Chassis.

  Case-Laws - AAR : Classification of supply - activity of building and fabricating of Tipper Body and mounting the same by the applicant on the chassis - If the activity of fabrication and mounting of body is done on the chassis owned by applicant and using his own inputs & capital goods, the same shall amount to supply of goods and will attracting 28% of GST - On the contrary if the activity of fabrication and mounting of body is done on the chassis supplied by the customer using their own inputs & capital goods amounts to supply of service, merits classification and will attracting 18% of GST. - AAR
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Income Tax

• High Court Upholds ITAT Decision: Payments to US Company Not Taxable in India u/s 195, Citing DTAA.

  Case-Laws - HC : TDS u/s 195 - payments made by the assessee for marketing services to the US Company as taxable in India as FTS [Fee for Technical Services] - US Company does not have any permanent establishment in India - order under Section 201(1) & 201(1A) - India- USA DTAA - Order of ITAT deleting the demand sustained - HC
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• High Court Rules Demand Notice with Draft Assessment Order u/s 144C Enforceable; Section 292B Doesn't Correct ACIT Error.

  Case-Laws - HC : Validity of demand notice while issuing draft Assessment order u/s 144C - Curable defect u/s 292B - It is settled that demand notice stems out of an order of assessment and it is enforceable. It meets the assessee with civil consequences. The argument on behalf of the Revenue that the demand notice was not enforced is fallacious and noted only to be rejected. We have carefully considered Section 292B of the Act. The mistake which the ACIT has done in passing the final order at the stage of draft order is not curable under Section 292B of the Act. - HC
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• Court Orders Fresh Evaluation of Assessment u/s 147; AO to Provide Hearing After Ignoring Response.

  Case-Laws - HC : Reopening of assessment u/s 147 - order passed u/s 148A(d) - non disposal of response filed by the petitioner - AO directed to carry out a de novo exercise. AO will also accord a personal hearing to the authorized representative of the petitioner. - HC
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• High Court Invalidates Order on Assessment Reopening Due to Mismatch in Notices u/ss 148A(b) and 148A(d).

  Case-Laws - HC : Validity of reopening of assessment - In the impugned order, the Assessing Officer (AO) seems to have completely gone off the rails i.e., in a completely different direction, by adverting to the fact that petitioner/assessee entered into two sale transactions concerning penny stock scrips of Prikh Herbals Ltd./Safal Herbs Ltd. - Clearly, there is a dissonance between the show cause notice issued under Section 148A(b) and the impugned order passed under Section 148A(d) of the Act. Thus the impugned order and notices are set aside. - HC
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• Trust's Audi Purchase: Expense Allowance Questioned for Luxury Status, Past Claims Accepted Without Issue.

  Case-Laws - AT : Assessment of trust - purchase of luxury car i.e. Audi Car - purchase of for the benefit of trustess only or not for charitable use? - Merely because the vehicle happens to be luxury car should not be reason to make disallowance when in earlier years, claim of assessee was accepted - AT
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• Trust's 12A Registration Denied, Affecting Section 11 Exemption; Genuine Charitable Activities Under Scrutiny by Commissioner.

  Case-Laws - AT : Exemption u/s 11 - application u/s 12A for grant of registration was rejected - the appellant Trust has been an ongoing entity, actually carrying its activities, therefore, the Commissioner has been bound to record the finding to the effect whether the activity or activities actually carried on by the Trust were genuine and charitable in nature, in accordance to the objects of the Trust - AT
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• TPO's 'NIL' ALP Decision on WeWork Management Fee Unjustified; Assessee Relies on WeWork's Expertise for India Operations.

  Case-Laws - AT : TP adjustment in respect of management fee - When the TPO alleges that the assessee has not received any of the above services, it would indicate that the very relationship based on which the assessee company and WeWork Global have been established as AE would be nonexistent. - it is beyond doubt that the assessee is wholly dependent on the use of know-how, patents, copyright, trademark, licences, franchise and other services of We Work Global, for its day to day operation in India. - TPO is not justified in treating the ALP of management fee paid by assessee to WeWork Global at ‘NIL’. - AT
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• Tax Deduction for Bad Debts: No Proof Needed Before Writing Off u/s 36(1)(vii) and 36(2) of Income Tax Act.

  Case-Laws - AT : Bad Debts - once the deduction made by the clients account is debited and the assessee’s accounts are credited, the conditions laid down by section 36(1)(vii) read with section 36(2) are fulfilled and such amounts are allowable as a bad debt in the computation of total income. - assessee is not required to establish that such debts have actually become bad before writing off the same in the books of accounts - AT
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• Assessment Reopening and Addition Justified: AO Had "Reason to Believe" Based on Sections 133(6) and 131 Inquiries.

  Case-Laws - AT : Reopening of assessment u/s 147 - addition u/s 68 - Reason to believe - It cannot be said that there was no basis that the AO to frame “reason to believe” and in such situation it cannot be said that the ld. AO has issued notice u/s 148 upon the assessee as void-ab-initio. Since the ld. AO had made instant enquiry u/s 133(6) and u/s 131 of the Act from the directors of the companies, from where share premium was received by the assessee company and he discovered that assessee company had rooted its own fund/unaccounted money through the shareholders company - CIT(A) is wrong in treating the notice issued u/s 148 AO was void-ab-initio - AT
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• Slump sale between Indian subsidiaries of foreign holding company not an international transaction under Income Tax Act Section 92B.

  Case-Laws - AT : TP Adjustment Transaction of slump sale between the subsidiaries of Foreign Holding Company - To be considered as an international transaction or not - The meaning of international transaction ‘contained in section 92B of the Act is plain and clear. It does not envisage that if a resident AE is a subsidiary of a foreign holding company, the transaction between such Indian subsidiary and another Indian company would fall within the ambit of international transaction as defined u/s. 92B of the Act. - AT
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Indian Laws

• Supreme Court Overturns ITAT Member's Compulsory Retirement Due to Unproven Allegations, Lacking Public Interest Justification.

  Case-Laws - SC : Compulsorily Retirement of Members of Income Tax Appellate Tribunal (ITAT) - Various unproven allegation of different kinds - An allegation made by the appellant’s ex-wife for bigamy - Once the parties had arrived at a settlement and a decree of divorce by mutual consent was passed by the concerned Court, the allegations of bigamy etc. levelled by the appellant’s wife loses significance since the case was never taken to trial for any findings to be returned by the Court on this aspect - The impugned order passed by the respondents does not pass muster as it fails to satisfy the underlying test of serving the interest of the public. - SC
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• MHI Criticized for Violating Natural Justice by Blacklisting Company from PLI Scheme Without Hearing.

  Case-Laws - HC : Debarment/Blacklisting form participation in Production Linked Incentive Scheme (PLI Scheme) - The MHI, however, by virtue of its decision to debar/blacklist JBM Electric, has thrown to the wind every known principle of natural justice. The competent authority needed to bear in mind, if nothing else, that JBM Electric, which, according to it, is the delinquent applicant, needed to be heard before a decision was reached as to the penalty imposed on it on account of the alleged infraction - HC
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Case Laws:

• GST

• 2023 (3) TMI 426
  Validity of demand notice with assessment order - Violation of principles of natural justice (audi alterem partem) - opportunity of personal hearing not provided - Benefit of concessional rate of composite supply of works contract - N/N. 11 of 2017 dated 28.06.2017 - HELD THAT:- The personal hearing has, admittedly, not been fixed by date or time and this is a gross flaw in this order, which this Court is tired of pointing out. The petitioner has also in compliance with the notice, filed a submission on 29.11.2022, though without any supporting documents. The sum and substance of Section 75(4) is that a personal hearing shall be granted in all matters prior to finalisation of assessment except where the stand of the assessee is intended to be accepted by the Department. Thus, on this score, the officer has grossly erred in proceeding to finalise the impugned assessment in violation of the principles of natural justice. The impugned orders are set aside and these Writ Petitions are allowed.

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• 2023 (3) TMI 425
  Seeking to restrain the Respondents themselves, their officers, subordinates, servants and agents from taking any steps pursuant to the impugned Summary Order - order and the show cause notice are issued without giving an opportunity and without accompanying reasoned adjudication order i.e. only summary - principles of natural justice (audi alterem partem) - violation of statutory provisions u/s 73 of the Maharashtra Goods and Services Tax Act, 2017 and Rule 142 of the MGST Rules. HELD THAT:- Despite direction that the reply affidavit should only deal with the aspects of unreasoned order, still 20 pages reply has been filed various contentions taking. In the reply affidavit, in para 5 (iv), it is accepted that only summary of the order is issued without mentioning the reasons for dis-allowance. It is stated that hearing was given and reasonable opportunity was granted. However, it is clear the officer has not passed a detailed order, and hence, the grievance of the Petitioner that without detailed order remedy of appeal is illusory, will have to be accepted. There was particular reason why it was directed that reply affidavit be filed on the limited ground of breach of principles of natural justice, because if proceedings have to be remanded, then upon remand, the authority can apply his mind after giving an opportunity. Therefore, the contentions raised in the reply affidavit, which seek to comment on the merits of the claim, shall be treated as prima facie. The Writ Petition is disposed of setting aside the impugned order.

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• 2023 (3) TMI 424
  Classification of goods - Scope of advance ruling issued in the another cases - right in rem or right in personam - roof mounted Air conditioning unit especially for use in railway coaches (manufactured as per railway design) - classifiable under HSN- 8415 1090- IGST 28% or under HSN 8607 99 - IGST 18% as parts of Railway Coaches/ Locomotives? - HELD THAT:- The parts or accessory which are not suitable for use solely or principally with the articles of Chapter 86 to 88 are not to be included in the said chapter. On the obverse, parts or accessory which are suitable for use solely or principally with the articles of Chapter 86 to 88 are to be included in the said chapter. But the said section note has to be read in conjunction with the Section Note 2 of the said section. The harmonious construction of the said section notes brings out the fact that section note 2 excludes certain goods from the domain of the expression, parts or parts and accessories . As for the remaining good that is not excluded by virtue of the said section note the same can be classified as part or accessory only if it is suitable for use solely or principally with the goods of the said Section. The appellant has cited certain judgments in his submissions. Some of them are Westinghouse Saxby Farmer Ltd vs. Commissioner of Central Excise Kolkata [ 2021 (3) TMI 291 - SUPREME COURT ], G.S. Auto International Ltd. Vs Collector of Central Excise, Chandigarh [ 2003 (1) TMI 700 - SUPREME COURT ], Diesel Component Works Vs. Commissioner of Central Excise [ 2000 (6) TMI 68 - CEGAT, COURT NO. I, NEW DELHI ]. The discussions in these judgments as well as the factual matrix detailed therein, it is clear that the specific exclusion provided to HSN 84.01 to 84.79 do not apply in above judgments. Accordingly, the judgment cited by the appellant varies from the instant appeal both on law and facts. The judgments mentioned above relates to the Chapter 73 and 76 of the erstwhile Central Excise Tariff Act, 1985 and not applicable in the instant case. The appellant has conveniently overlooked the basic nature of the ruling given by the Authority for Advance Ruling. The said rulings are in the nature of in personam and not in rem and therefore their applicability as well as their protection cannot be sought by the others who were not party to the said proceedings. Thus, the subject goods i.e. Roof Mounted Air-Conditioning unit manufactured by the appellant are classifiable under HSN Heading 8415.

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• 2023 (3) TMI 423
  Classification of supply - supply of goods or supply of services - activity of building and fabricating of Tipper Body and mounting the same by the applicant on the chassis owned and supplied by the customer - applicable rate of GST - HELD THAT:- Circular no. 52/26/18-GST dated 9th August, 2018 provides a clarification regarding applicability of GST on various goods and services which includes Bus Body Building as the supply of motor vehicle or job work - the contents of the circular issued by the Board are self-explanatory in nature. The advance ruling sought by the party gets squarely covered under Para 12.2 and 12.3 of the said circular. If the activity of fabrication and mounting of body is done on the chassis owned by applicant and using his own inputs capital goods, the same shall amount to supply of goods and shall merit classification under HSN 8707, attracting 28% of GST. On the contrary if the activity of fabrication and mounting of body is done on the chassis supplied by the customer using their own inputs capital goods amounts to supply of service, in terms of CBIC Circular dated 09.08.2018 and merits classification under SAC 9988, attracting 18% of GST.

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• Income Tax

• 2023 (3) TMI 422
  TDS u/s 195 - payments made by the assessee for marketing services to the US Company as taxable in India as FTS [Fee for Technical Services] - US Company does not have any permanent establishment in India - order under Section 201(1) 201(1A) - India- USA DTAA - Revenue s case is payments made to the US Company for marketing services take the character of FTS and chargeable to tax in India - according to the Revenue the royalties and fees for included services may also be taxed in the Contracting State - Tribunal held that the services received by the assessee cannot be considered as Royalty or Fee for included services to deduct TDS - HELD THAT:- In the case on hand, the services have been rendered in USA. In contradistinction in the case of GVK Industries Limited [ 2015 (2) TMI 730 - SUPREME COURT ] the advice of a Company called NRC [Non-Resident Company] was taken by GVK Industries for financial structure and with its advice GVK Industries had approached Indian Financial Institutions with IDBI [Industrial Development Bank of India] Bank acting as lead financier for its Rupee loan requirement and for a part of its foreign currency. In view of the admitted fact that the services were utilized in USA, we are persuaded to accept the authority in Lufthansa s Case [ 2015 (5) TMI 873 - DELHI HIGH COURT ] Therefore, in our considered opinion, the findings returned by the ITAT do not call for any interference. Decided against revenue.

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• 2023 (3) TMI 419
  Reopening of assessment u/s 147 - carry forward of deficit which issue was pending before the Apex Court when the case was reopened and secondly, wrong claim of exemption under section 11(1)(a) - HELD THAT:- We find merit in the Petition. It would be appropriate to mention about the case of CIT v/s. Institute of Banking Personnel Selection (IBPS) [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] which held that income derived from the trust property has also got to be computed on commercial principles and if the commercial principles are applied then the adjustment of expenses incurred by the Trust for charitable and religious purposes in the earlier years against income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and that such adjustment will have to be excluded from the income of the Trust under section 11(1)(a) of the Act. It is further well settled in the case of Director of Income-tax (Exem) v/s. MIDC [ 2013 (3) TMI 654 - BOMBAY HIGH COURT] where this Court had allowed the assessee s claim to carry forward the deficit relying on the decision of this Court in the matter of CIT v/s. Institute of Banking [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] In the present case, the AO had recorded in the assessment order u/s 143 (3)that the petitioner was registered with the Director of Income- Tax exemption Mumbai, under section 12A of the Act and that during the year the Petitioner had claimed exemption u/s 11 of the Act. The reasons recorded in the letter dated 30th April 2015 evince that the AO has come to the conclusion that income has escaped assessment on the perusal of the records . There is no question of any failure to disclose any material fact necessary for assessment as held in the case of Income-tax Officer vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] AO s the reason to believe must be based on some new tangible material which was not available at the time of passing the original Assessment Order as held in the case of Lalitha Chem Industries (P) Ltd. [ 2013 (11) TMI 1494 - BOMBAY HIGH COURT] Petitioner had rightly claimed carry forward and set off of deficit. Consequently, the impugned order rejecting the objections deserve to be set aside. Appeal of assessee allowed.

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• 2023 (3) TMI 418
  Reopening of assessment u/s 147 - reasons to believe - tangible material with the AO justifying reopening of the assessment - set off of the long-term capital loss against the long-term capital gain of the current year could not have been allowed while taxing the long-term capital gain - HELD THAT:- In the case of ITO v/s. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] the Supreme Court held that the duty of the assessee does not extend beyond making a true and full disclosure of the primary facts. Once he has done that his duty ends, it is for the Income Tax Officer to draw the correct inference through primary facts. It is not responsibility of the assessee to advise the Income Tax Officer with regard to the inference which he should draw from the primary facts. If the Income Tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. As based upon the reasons recorded, one needs to scrutinize whether there was any tangible material with the Assessing Officer justifying reopening of the assessment or can it be said to be a case of review and change of opinion by the said officer. On the perusal of the papers and the reasons mentioned in the notice for reopening we find that AO has not mentioned what was the new tangible material to justify the reopening and what was the material fact which was not truly and fully disclosed. In the absence of any new tangible material available with the Assessing Officer, and in view of the fact that there is a general presumption that an order of assessment u/s 143(3) has been passed after proper application of mind and considering the fact that in the present case, the AO had sought clarification with regard to the details of sale of property and transfer of shares, details whereof were submitted during the course of the proceedings, it certainly goes to show that the issue with regard to transactions with all parties had been gone into by the said AO. There is no failure on the part of the petitioner to disclose any material facts and consequently the reopening is invalid in view of the proviso of Section 147 of the IT Act. In this regard reliance is placed on Tata Sons [ 2022 (2) TMI 496 - BOMBAY HIGH COURT] where the Court held that when there is a discretion in the assessment order connected with the issue for which the reassessment is initiated, the reopening was struck down as being without jurisdiction on the ground of change of opinion - once the facts and claims were enquired into during the original assessment, a notice on the same would be construed as a change of opinion, for the purposes of reopening of the assessment. In the present case, the petitioner has disclosed all the primary facts to the respondent as can be evinced from the responses to the original proceedings. We are, accordingly, of the opinion that the original assessment was completed with, after having considered all the facts and material. Thus the impugned notice u/s 148 and assessment order passed u/s 143 (3) r.w.s. 147 are quashed and set aside - Decided in favour of assessee.

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• 2023 (3) TMI 417
  Reopening of assessment u/s 147 - reassessment proceedings initiated after six years - indexed cost of acquisition, litigation cost and capital gain in the alleged transaction was less than Rs.50 Lakhs - HELD THAT:- In this case, prima facie, there is some material on the basis of which a notice for reopening of escaped assessment has been issued. It would be for the petitioner/assessee to show that there are no reasons for reopening the assessment or the valuation of escaped assessment is less than Rs.50 Lakhs which dis-entitles reopening of the assessment after the prescribed statutory period. It would be difficult for us to render our findings regarding correctness or otherwise of the grounds shown in the show-cause notice. If the Authorized Officer has formed the opinion that income tax has escaped and reassessment is necessary, if he has formed the opinion that the valuation of escaped assessment is more than Rs.50 Lakhs based on some material and has also recorded reasons, it is for the petitioner/assessee to establish that the view taken by the Authorized Officer is contrary to the material on record or it is perverse. When the challenge to the show-cause notice is based on disputed questions of facts, this Court would be slow in entertaining the writ petition in exercise of jurisdiction under Article 226 of the Constitution of India particularly, when decision of authority would be susceptible to appeal in terms of Section 246 of the Act. We are not inclined to entertain the writ petition. Hence, the writ petition is dismissed accordingly.

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• 2023 (3) TMI 416
  Validity of demand notice while issuing draft Assessment order u/s 144C - Curable defect u/s 292B - in the draft assessment order ACIT has ordered issuance of demand notice and to initiate penalty proceeding u/s 271(1)(c) - HELD THAT:- Section 144C lays down a detailed procedure. Under Section 144C(1), the AO is required to forward a draft of the proposed order of assessment to the assessee. Assessee may file its acceptance or objection before the DRP and the AO. If assessee intimates its acceptance or no objections are received within 30 days, the AO shall complete the assessment. Where the DRP receives any objection from the assessee, it shall issue necessary directions to the AO to enable him to complete the assessment after considering the documents/material mentioned in Section 144C (6)(a) to (g) which includes the draft order. Before issuing the directions, the DRP may also make such further enquiry by any Income Tax Authority. Upon receipt of the directions from DRP under Sub- Section 5, the AO shall, in conformity with the directions, complete the assessment within one month from the end of the month in which such direction is received. A notice of demand under Section 156 may be issued after completion of the assessment under Section 144C(13). In the case on hand, though it is claimed by the Revenue that order dated December 28, 2018 was a draft assessment order, we may record that the ACIT has directed issuance of demand notice and also initiated penalty proceedings. As in Vijay Television Case [ 2014 (6) TMI 540 - MADRAS HIGH COURT] , the said order along with demand notice was served on the assessee. It is settled that demand notice stems out of an order of assessment and it is enforceable. It meets the assessee with civil consequences. The argument on behalf of the Revenue that the demand notice was not enforced is fallacious and noted only to be rejected. We have carefully considered Section 292B of the Act. The mistake which the ACIT has done in passing the final order at the stage of draft order is not curable under Section 292B of the Act. We have considered the appeals both on delay and merits.

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• 2023 (3) TMI 415
  Stay of Recovery - HELD THAT:- CIT has not dealt with its application, preferred before him, in respect of the order passed by AO u/s 220(6). The record shows, that the petitioner has preferred an application dated 01.02.2023 which, it appears, has not been disposed of by the CIT. In these circumstances, CIT is directed to dispose of the application at the earliest, though not later than four weeks from the date of the receipt of a copy of the order passed today. CIT will accord a personal hearing to the authorized representative of the petitioner, and also allow filing of written submissions. In case an order is passed by the CIT, which is adverse to the interests of the petitioner, the order of the CIT will not be given effect to, for a period of two weeks from the date when the order is received by the petitioner.

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• 2023 (3) TMI 414
  Reopening of assessment u/s 147 - order passed u/s 148A(d) - non disposal of response filed by the petitioner - HELD THAT:- This is not a satisfactory disposition of the response filed by the petitioner; in particular, having regard to the fact that the petitioner claims that relevant evidence in the form of challans was placed, both at the time of initial scrutiny assessment and thereafter. Accordingly, the impugned order dated 30.07.2022 passed u/s 148A(d) and the consequent notice of even date i.e., 30.07.2022 issued u/s 148 are set aside. AO will carry out a de novo exercise. AO will also accord a personal hearing to the authorized representative of the petitioner. For this purpose, the AO will issue a notice, which will set forth the date and time of the hearing.

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• 2023 (3) TMI 413
  Validity of reopening of assessment - allegation that assessee taken a fictitious loan from an accommodation entry provider and had entered to fictitious purchases of shares of unlisted companies in the aforementioned FY - argument of difference between the show cause notice issued under Section 148A(b) and the impugned order passed under Section 148A(d) - HELD THAT:- In the reply, the petitioner took the position that insofar as the allegation leveled that she had taken a fictitious loan from Mr Jignesh Shah is concerned, the same is not correct. The petitioner says that she has not entered into any transaction with Mr Jignesh Shah. The contract notes generated during the course of the transactions were submitted along with reply. It was also asserted by the petitioner that all transactions were made through banking channels. The petitioner took the position that the shares of the aforementioned entities were sold in the succeeding AY i.e., AY 2017-18 via Screen Based Real Time trading mechanism, provided by the National Stock Exchange, via SMC Global Securities Limited. As asserted by the petitioner that securities transaction tax had been paid on the sale of shares. It is also averred that short term capital gain earned on the sale of the said shares was offered for levy of tax at the rate of 15% under Section 111A of the Act, in AY 2017-18. It is not in dispute that insofar the explanation offered by the petitioner that it had not entered into any transaction with Mr Jignesh Shah is concerned, it had been accepted. In the impugned order, the Assessing Officer (AO) seems to have completely gone off the rails i.e., in a completely different direction, by adverting to the fact that petitioner/assessee entered into two sale transactions concerning penny stock scrips of Prikh Herbals Ltd./Safal Herbs Ltd. The sale transaction, as disclosed in the impugned order, is pegged at Rs.18,35,000/-. Clearly, there is a dissonance between the show cause notice issued under Section 148A(b) and the impugned order passed under Section 148A(d) of the Act. Thus the impugned order and notices are set aside. Liberty is, however, given to the Assessing Officer (AO) to carry out the exercise de novo, albeit, as per law.

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• 2023 (3) TMI 412
  Validity of reopening of assessment - notice time barred under the unamended provision - HELD THAT:- As per first proviso to Section 149 of the Income Tax Act, the impugned notice dated 22.7.2022 issued to the petitioner under Section 148 for the assessment year 2014- 2015 is without jurisdiction because it was already time barred under the unamended provision. As submitted identical controversy, the Calcutta High Court as well as Punjab High Court and the Division Bench of this Court at Jaipur have passed interim orders. Issue notice of the writ petition as well as stay application to the respondents. Rule is made returnable in four weeks. In the meantime, further proceedings as a consequence of the impugned notice dated 22.7.2022 (Annexure-11) shall remain stayed.

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• 2023 (3) TMI 411
  Reopening of assessment u/s 147 - reasons to believe - formation regarding the assessee trust beneficiary of the accommodation entries received from SHAM/bogus companies - HELD THAT:- There is no dispute with regard to the fact that the AO was provided with certain information by the Investigation Wing which was related to availing of accommodation entries from the entity related to Shri Pradeep Kumar Jindal. Therefore, the case laws relied upon by the Ld. Counsel for the assessee would not help hence, re-opening of the assessment is in accordance with law. Thus, Ground Nos. 1 to 3 raised by the assessee are dismissed. Addition u/s 68 - assessee submitted that the entire amount has been offered to tax and has been included in voluntary donation - As the case laws relied upon by the Ld. Counsel for the assessee would not help as he could not controvert the fact that during the course of assessment proceedings, Ld.AR of the assessee had offered the amount for taxation. Therefore, looking to the facts of the present case, the assessee could not rebut the findings of AO. Coupled with the fact that during the course of assessment proceedings, Ld.AR of the assessee had offered the impugned amount for taxation thus, grounds are devoid of merit. Ground Nos. 5 to 8 raised by the assessee in this appeal are hence, dismissed.

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• 2023 (3) TMI 410
  Assessment of trust - purchase of luxury car i.e. Audi Car - purchase of care for the benefit of trustess only or not for charitable use - Whether applying of Section 13(3) is also quite arbitrary and unjustified as none of the employee are in relation of the Trustee, Members or board of the society whose used the car? - whether said car is purely used for education and charitable purposes - HELD THAT:- Assessee society was maintaining an Audi car of lower model but replaced it with higher model. Both the cars are luxury cars. CIT(A) has categorically noted the factum of sale of old Audi car in his impugned order. However, the AO disallowed the expenses treating the same as not for charitable purposes. The expenditure would be allowable if it relates to running of school. The AO has not brought any material to rebut the claim of the assessee that the vehicle was being used for principal and staff of school. Merely because the vehicle happens to be luxury car should not be reason to make disallowance when in earlier years, claim of assessee was accepted - direct the AO to delete the disallowance. The grounds raised in this appeal are allowed.

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• 2023 (3) TMI 409
  Addition u/s 69A - Unexplained cash deposits during demonetization period - unexplained income of the Appellant - case was taken up for limited scrutiny under CASS for depositing cash during the demonetization period - Assessee explained it as savings and gifts received by the appellant on occasion of first marriage and also on occasion of fixation of second marriage in 2016 - as contended that depositing money in bank account is one form of investment on which the assessee was earning interest and the addition could have been made u/s 69 only and not u/s 69A - HELD THAT:- The assessee has not filed any cash flow statement. However, it cannot be presumed that assessee was not having any cash in hand or past savings. Looking to the facts and circumstances, I deem it fit and proper to restrict the addition to the extent of 30%. I order accordingly.

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• 2023 (3) TMI 408
  Reopening of assessment u/s 147 - unexplained cash credit - information received from Investigation Wing that the assessee had received an accommodation entry - Nobody is appearing on behalf of the assessee ever - HELD THAT:- Nobody is appearing on behalf of the assessee despite several notices and several notices have returned unserved. As can be seen from the records, the appellant neither appeared before the AO during the assessment proceedings to explain the cash credit nor filed any explanation on the same during the appellate proceedings. Same was the case when the original assessment was done by the ld. AO after issuing a notice u/s 148. Though the matter was set aside by Hon ble ITAT to the AO after the appeal of the assessee was dismissed by the then CIT(A), yet the appellant did not appear before the ld. AO during the reassessment proceedings as a result of such setting aside of the earlier assessment. In various letters sent during the appellate proceedings by post, the appellant has only stated that the assessment was completed without jurisdiction and has neither elaborated the same nor has submitted a justification behind saying so. At the same time, no explanation for the cash credit was filed either before the AO or during the appellate proceedings. Thus authorities below have taken a correct view of the matter and the order of the ld. CIT (A) is well reasoned and does not need any interference - Decided against assessee.

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• 2023 (3) TMI 407
  Late fee u/s. 234E - delay in filing the TDS statement - contradictory views on issue - intimation u/s. 200A - assessee s contention before the AO was that the provisions of section 234E of the Act was inserted by the Finance Act, 2012 w.e.f. 1.7.2012 - HELD THAT:- It is not in dispute that if the ratio laid down by the Hon ble Karnataka High Court in the case of Fatehraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT ] is applied then the levy of interest u/s.234-E of the Act would be illegal for returns of TDS in respect of the period prior to 1.6.2015. The present appeals of the Assessee relate to TDS returns filed prior to 1.6.2015 and therefore levy of interest u/s.234E of the Act would not be valid, following the ratio laid down by the Hon ble Karnataka High Court. It is no doubt true that three Hon ble High Courts of Gujarat and Kerala have taken a view contrary to the view taken by the Hon ble Karnataka High Court in the case of Fatehraj Singhvi (supra). If there is conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court is binding in the jurisdictional area of the respective High Court. See Subramaniam -vs.- Siemens India Ltd. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT ] The Court further added that in cases where there is a conflict between the decisions of non-jurisdictional High Courts, the ITO must take the view which is in favour of the assessee and not against him. In CIT - vs.- Sunil Kumar [ 1994 (7) TMI 42 - RAJASTHAN HIGH COURT ] it was held that the decision of the Jurisdictional High Court is binding on the Income tax Authorities and the Tribunal within the jurisdiction of the Court and the contrary decision of another High Court is not relevant, and that a point decided by the Jurisdictional High Court can no longer be considered to be a debatable issue. In the case of Mahadev Cold Storage [ 2021 (6) TMI 506 - ITAT AGRA ] it was held that although a centralized NFAC had been created by the notifications, it had to be ensured that where an appellate order was passed by the NFAC, the decision of the jurisdictional high court with jurisdiction over the AO should be followed and applied by the NFAC. Relief should not be refused to the taxpayer merely because there was a conflicting decision of a non-jurisdictional high court. Thus we are of the view that the levy of interest u/s.234E of the Act in the present case cannot be sustained and the same is directed to be deleted and the appeal of the Assessee is allowed.

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• 2023 (3) TMI 406
  Revision u/s 263 by CIT - second round of revisionary proceedings u/s 263 - addition of unexplained cash credit - As per CIT assessment order framed u/s 143(3) is erroneous and prejudicial to the interests of the Revenue - As per CIT A.O passed the order without carrying out detailed investigation/ verification/ independent enquiry regarding identity, creditworthiness of the shareholders also the genuineness of transactions relating to share capital that was intended to be carried out and merely accepted the submission of the assessee in this regard - HELD THAT:- Where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the judgment of CIT vs. Nirav Modi, [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] We find that in the case of CIT vs. Anil Kumar [ 2010 (2) TMI 75 - DELHI HIGH COURT] has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. In the present case we observe that in the assessment proceedings u/s 143(3) of the Act were carried out in the case of the assessee for AY 2012-13 and ld. AO vide order held the share capital and share premium of Rs. 71.9 Cr as unexplained cash credit. The return of income was originally filed on 19.11.2011 at a loss of Rs. 74,252/-. In the second round of assessment proceedings ld. AO issued a notice u/s 142(1) of the Act dated 11.11.2016 and called for complete details about the share capital and share premium received by the assessee company as well as complete details of the investor companies. Complete details have been filed by the assessee. The finding of ld. AO in itself makes it amply clear that complete details were filed and the directors of the investor companies personally appeared before ld. AO on being called for by issuing summons u/s 131 - Their statements were recorded u/s 131 of the Act on oath and they also referred to various books of accounts and other relevant documents. Ld. AO was satisfied with the source of funds, identity and creditworthiness of the share applicants and genuineness of the transactions. The above finding clearly indicates that ld. AO conducted a complete enquiry and also examined all the relevant details as were directed by ld. Pr. CIT in the directions given in the order u/s 263 of the Act dated 17.10.2016. We also note that this is the second round of assessment proceedings. Even in the first round of the proceedings also all the share applicants replied directly to ld. AO enclosing the details of bank statement, financial audited balance sheet and profit and loss account, income tax return and other identity proof. Again in the second round, each and every detail have been examined by ld. AO. Therefore, complete enquiry has been conducted. Directors of the investor companies were called for and they have appeared and accepted the transactions. It is not the case of no enquiry or incomplete enquiry. In this is a case of complete enquiry conducted by ld. AO taking into consideration all the angles which need to be taken for examining such type of transactions which in some cases are bogus or in the nature of accommodation entries. We also find that ld. Pr. CIT has merely given directions but for coming to this conclusion he ought to have first discussed that what details remained to be called for by ld. AO. Ld. Pr. CIT ought to have conducted the preliminary enquiry and had found some discrepancies or some glaring fact which could indicate that the alleged share capital and share premium are bogus in nature. As considering the fact that in a case where ld. AO conducted detailed enquiry and the assessee has filed complete documentary evidences to the satisfaction of ld. AO and coupled with these documentary evidences the investors of the alleged share applicant companies have appeared before ld. AO and recorded the statements on oath explaining that the investor companies had sufficient legitimate fund to justify the investment in equity share capital of the assessee company and based on these details and submissions and detailed enquiry ld. AO after making proper application of mind and taking a view permissible under the law was satisfied that the assessee has duly explained the alleged share capital and share premium and which thus, do not call for any addition u/s 68. Pr. CIT grossly erred in assuming the jurisdiction u/s 263 of the Act and also erred in holding the assessment order dated 30.12.2016 as erroneous and prejudicial to the interests of the Revenue - Decided in favour of assessee.

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• 2023 (3) TMI 405
  Rectification of mistake u/s 154 - Levy of interest u/s 234E - Processing of statements of tax deducted at source u/s 200A - Scope of amendment to section 200A(1) of the Act by insertion of clause (c) thereto by Finance Act, 2015 w.e.f. 01.06.2015 - HELD THAT:- Appeals in the instant case arise not out of Intimations under section 200A(1) r/w s. 234E of the Act, but u/s. 154 of the Act, denying the assessee s claim for cancelling such levy. As also the fact that there is a conflict of judicial opinion in the matter, with contrary decisions as in Fatheraj Singhvi v. UoI [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] so that the matter cannot be regarded as a mistake of law per se, justifying rectification u/s. 154 of the Act. Reference in this context may also be made to the decision in CIT v. Aruna Luthra [ 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT] We are, therefore, not in agreement with the ld. CIT(A), who has distinguished the former decision as well as in Laxmndas Bhatia Hingwala Pvt. Ltd [ 2010 (12) TMI 105 - DELHI HIGH COURT] cited before him by the assessee, as being in respect of the power u/s. 254(2) of the Act. His reliance for the purpose on the decision in the case of CIT v. South Indian Bank Ltd. [ 2000 (12) TMI 6 - SUPREME COURT] and CIT v. Hero Cycles Ltd. [ 1997 (8) TMI 6 - SUPREME COURT] , is misplaced. The same stand pursued to find as ousting debatable issues from the purview of s. 154. The decision by the Hon ble jurisdictional High Court is binding within it s territorial jurisdiction, settling the issue for that jurisdiction. Any order inconsistent therewith is thus to be necessarily regarded as mistaken. It would have been a different matter if only the decisions by the Hon ble Karnataka and Gujarat High Courts were available. Rather, in such a case, the latter having considered the former, it is the latter that would prevail. We, therefore, find the orders by the Revenue authorities as not sustainable in law, i.e., for the State of Kerala. We, accordingly, have no hesitation in allowing assessee s appeals inasmuch the processing is for a period prior to 01/6/2015. Appeals filed by the assessee are allowed.

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• 2023 (3) TMI 404
  Addition of prior period expenditure - AO had considered the fact that the expenditures are allowable on accrual basis - HELD THAT:- CIT(A) on facts and law following order of co-ordinate bench in DCIT-6, Kanpur vs. UP State Handloom Corporation Ltd. [ 2014 (11) TMI 1268 - ITAT LUCKNOW] wherein it was held that if any disallowance is required to be made in regard to it, same can only be made with respect to net prior period expenses debited to the profit and loss account of the current year. Reliance in this regard can also be placed on the judgment in PCIT-7 vs. M/s. Mazagaon Dock Ltd. [ 2019 (8) TMI 1860 - BOMBAY HIGH COURT] wherein as sustained the findings of Tribunal for netting of prior period income against prior period expenses. No interference is required. The ground is decided against the Revenue. Disallowance of staff welfare expenses - based on the opinion reported in 3CD report, the disallowance was made as the expense was not actually incurred - HELD THAT:- During the year under consideration, Ld. CIT(A) seems to have been carried with the fact that as expenditure was allowed in previous years, same should be allowed on principal of consistency but as every assessment is independent and if no evidence is on record to show that out of this reserved created to meet an exigency, at any point of time in the past or in the present year an expenditure has been incurred towards payment of compensation to the pilot, then the on principal of consistency alone allowing it is not justified. Thus, Bench is inclined to allow this ground of appeal in favour of Revenue. Provision for maintenance expenses, obsolescence of spares and redelivery - HELD THAT:- As the matter of fact is that in assessee s own case for A.Y. 2006-07. [ 2017 (12) TMI 1857 - ITAT DELHI] the issue has been decided in favour of the assessee by following co-ordinate Bench judgment in ACIT vs. M/s. ACIT-5(2), Mumbai vs. Jet Airways (I) Ltd. [ 2010 (10) TMI 1243 - ITAT MUMBAI ] which is also being relied by the Ld. CIT(A). Ld. DR could not cite any distinguishing fact or question of law involved, thus, this ground is decided against the revenue.

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• 2023 (3) TMI 403
  Exemption u/s 11 - application u/s 12A for grant of registration was rejected - Charitable activity u/s 2(15) - Objects of institutions or society trust AND genuineness of activities - PCIT (E ) stated that the applicant society has not submitted the certified copy of memorandum of association and bye-laws as submitted in the office of registrar of societies and firms/Joint stock Companies, thus in the absence of which the genuineness of activities of the society can not be corroborated with the stated aims and objects and the genuineness of the activities thereof - contention of the appellant that he has been granted provisional registration in form 10AC - HELD THAT:- The applicant trust has been created an arrangement whereby it is not only laundering its income but also diverting the same in the hands of the trustee/members. Thus, the CIT(E) held that the applicant trust is not established for the purpose of charity as its activity are restrictive and not in the interest of public at large rather it is misused as an instrument in the hands of trustee/members and thus, the activities carried out by it are not genuine by any definition. The assessee has merely alleged that PCIT(Exemptions) has not considered completely the information/ evidence brought on record in correct perspectives while denying the registration u/s 12AA - The assessee failed to file corroborative documentary evidence before the PCIT and even before us, in rebuttal to the observation of the PCIT that the activities of Applicant trust were not in consonance to the objectives of the Trust. In our view, the appellant Trust was not established for the purpose of charity. Meaning thereby that the appellant Trust was involved in activities which are not genuine by any definition. Since, the appellant Trust, is an ongoing entity, at the stage of grant of registration u/s 12AA of the Act, the Ld. CIT(Exemption) is supposed to examine both the objects of the Trust and genuineness of its activities in consonance to its objectives. In the present case, the appellant Trust has been an ongoing entity, actually carrying its activities, therefore, the Commissioner has been bound to record the finding to the effect whether the activity or activities actually carried on by the Trust were genuine and charitable in nature, in accordance to the objects of the Trust - the instant appellant trust has although have undertaken activities but contrary to the objects of the Trust. In our view, the PCIT while considering applications for grant of registration under section 12AA, is bound to examine not only objects of institutions or society trust, to ascertain genuineness of activities but he is also free to call for audited accounts or other such documents for recording satisfaction where society, trust or institution genuinely seeks to achieve object which it professes. - Decided against assessee.

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• 2023 (3) TMI 402
  Validity of reopening of assessment u/s 147 - transaction of purchase of property - Period of limitation - HELD THAT:- We find no error or legal infirmity in the finding of the Ld. CIT(A) on the legal issue of validity of reopening of the assessment u/s 147 of the act. In the present case, purchase transactions of the-appellant were dated 18.02.2009 falling in AY 2009-10 and second transaction was dated 08.06.2009 falling in AY 2010-11. The period of limitation as per the provisions of the Income Tax Act for reopening assessment for the assessment year 2010-11 was to expire on 31/03/2017. The Assessing Officer has issued notice u/s 148 of the Action that date, therefore in respect of 2nd transaction dated 08/06/2009 the notice of reassessment was issued well within time. Thus, in our view, the reopening of the assessment in respect of purchase transaction dated 08/06/2009, the same was being within the period of limitation and hence rightly upheld as valid. Accordingly, the decision of the CIT(A) on this issue is sustained. Reassessment proceedings being unaccounted investment in purchase of land - Admittedly, the appellant has been granted relief by deleting the disputed quantum addition in respect of one transaction. However, the 2nd transaction has been confirmed. CIT (A) further observed that there is no bar in holding that more money exchanged hands which partakes character of payment though connected to transaction but not in respect of consideration. The appellant is obliged to tender explanation about source of this extra money which he has failed. There is no infirmity or perversity in the finding of the Ld. CIT(A) to the facts on record in sustaining the action of the AO in respect transaction dated 08/06/2009. Accordingly, the AO is directed to recalculate the amount of extra money/premium/on Money invested by the appellant in this transaction and accordingly reduce the addition made in the assessment.

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• 2023 (3) TMI 401
  Parallel proceedings under the Income tax Act and IBC - IBC Code overriding anything inconsistent contained in any other enactment, including the Act - liquidation proceedings had commenced as per the order of NCLT - HELD THAT:- Similar issue was dealt by the coordinate bench of ITAT, Mumbai in the case of Pratibha Industries Ltd. [ 2022 (6) TMI 1362 - ITAT MUMBAI] which has held that where insolvency petition was filed against the assessee company and liquidation proceedings were in progress, as in case of parallel proceedings under the Act and IBC, the IBC had overriding effect over the provisions of the Act, thus, cross appeals filed by the revenue and assessee against the order of Ld. CIT(A) deserve to be dismissed. Considering the facts and circumstances of the present case and the observations noted above and also by following the decision of the coordinate bench of ITAT, Mumbai referred above, we hereby dismiss the appeals filed by the revenue and the assessee so also the cross objection filed by the assessee, with a liberty to both the assessee and the Official liquidator to recall the present order by filing appropriate application within the permissible limitation, as and when the occasion so warrants. In the present case also, as held by the coordinate bench of ITAT, Mumbai referred above, the issue of limitation in filing fresh appeal, if need be, is to be dealt in accordance with the decision of Hon ble Supreme Court in the case of New Delhi Municipal Council Vs. Minosha India Ltd. (supra) [ 2022 (5) TMI 1123 - SUPREME COURT]

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• 2023 (3) TMI 400
  Correct head of income - income from rent earned from lease - business income or income from house property - CIT (A) error in following ITAT decision treating the income of the assessee as business income - HELD THAT:- The assessee had accepted the nature of income as Income from House Property . So, there is no question about the change of the head of income in other stage. Considering the assessee s declaration in assessment, the Income from House Property cannot be treated as Income from Business in this impugned assessment year. AO correctly pointed out about the disparity in value of Annual Lease Rent in respect of licence fees received by the flagship company of the assessee. There is no res integra in the order of Coordinate Bench with the assessee as there is distinguishable fact. In the appeal order the observation of the ld. AO was not discussed properly. We find the order of the ld. CIT(A) is perverse. In our considered view, we set aside the order of the CIT(A) remit back the ground of the revenue to the CIT(A) for further adjudication denovo. Needless to say, that the ld. CIT(A) shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings - Appeal of the revenue is allowed for statistical purpose.

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• 2023 (3) TMI 399
  TP adjustment in respect of management fee - these payments were made after deducting taxes prescribed under the relevant DTAA - TPO conclusion on Alleged failure of the assessee to prove the actual receipt of the said service - HELD THAT:- Section 92A(2)(g) get attracted only when one AE provides service to the other AE by allowing the AE to use the know-how, patents, trademark, franchise, etc. and the business of the assessee is wholly dependent on such IP/franchise. Once the foundational condition is receipt of IP/franchise of which the assessee company s business is wholly dependent and only on that basis, the AE relationship was established, consequently TP provisions were applicable, it is unsustainable then to turn around and hold that the assessee did not receive the IP/franchise from its deemed AE. When the TPO alleges that the assessee has not received any of the above services, it would indicate that the very relationship based on which the assessee company and WeWork Global have been established as AE would be nonexistent. The very fact that the entire business model of the assessee is dependent on foreign AE which has provided the concept, design, trademark, software, etc. for the assessee s day to day operation clearly establishes that services were rendered by the foreign AE to the assessee (independent of the legal point that the AE relationship itself has been established only due the existence of the services and in absence thereof, AE relationship would fail, and consequently, the jurisdiction of the TPO itself would also fail.) Therefore on the facts on record, it is beyond doubt that the assessee is wholly dependent on the use of know-how, patents, copyright, trademark, licences, franchise and other services of We Work Global, for its day to day operation in India. Thus TPO is not justified in treating the ALP of management fee paid by assessee to WeWork Global at NIL . It is ordered accordingly. Interest on CCDs issued by the assessee - assessee had issued 33,75,000 Compulsory Convertible Debentures (CCD) to WeWork Netherlands under the Debenture Subscription Agreement - HELD THAT:- The Bangalore coordinate bench of the Tribunal in the case Summit Development Pvt. Ltd.[ 2022 (11) TMI 1323 - ITAT BANGALORE] had held that CCD are in the nature of debt and cannot be recharacterised as equity till the time the same is converted into equity. In the instant case the assessee had duly made disallowance u/s 94B of the Act in its return of income for the relevant assessment year. The said disallowance therefore address the issue of thin capitalisation in the manner envisaged by the Legislature. Hence, it cannot be disallowed under TP provisions on the same basis. It is submitted that the assessee is not arguing that the TP provisions ought not to apply where a disallowance is made under Section 94B of the Act but only is contending that thin capitalisation cannot be the basis for such TP disallowance and the same may be tested for arm s length compliance and held to be excessive based on benchmarking exercises. In such an event, the excessive interest of ALP will account for permanent disallowance, while balance interest would be subject to Section 94B of the Act which would be in the nature of a temporary disallowance permitted to be carry forward - Thus the impugned TP adjustment with reference to payment of interest on CCD is deleted. Assessee appeal allowed.

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• 2023 (3) TMI 398
  Reopening of assessment u/s 147 - non-issuance of notice u/s 143(2) - undisclosed sources u/s 69 - HELD THAT:- Where the Revenue challenges the filing of return of income, the onus is on the assessee to demonstrate that the return of income has been duly filed which require uploading the return of income on the e-filing portal as well as verification thereof through either online or physical mode. Only where the return has been uploaded and duly verified, it can be said that the return of income has been filed with the department. In the instant case, though the assessee has submitted a copy of ITR V with e-filing acknowledgement number with date of filing as 16/05/2018, it is unclear whether after e-filing, the return of income has been duly verified by the assessee or not. Only where it is established that the assessee has duly filed the return of income in response to notice u/s 148 which is e-filed and verified in the mode and manner as prescribed, the question of issuance or non-issuance of notice u/s 143(2) arises for consideration and in absence thereof, it would be pre-mature to decide the necessity and legality of issuance of such notice. We also find that the assessee has raised this ground before the ld CIT(A) as well, however, there is no adjudication and finding recorded by the ld CIT(A). Therefore, we deem it appropriate to set-aside the said ground of appeal to the file of the ld CIT(A) to decide the same as per law and the ground is thus allowed for statistical purposes. Assessee did not avail of opportunity during the remand proceedings - It is noted that during the course of appellate proceedings, the assessee had moved an application for submitting additional evidence in form of copy of sale deed, copy of Form 15CB/CA and Form 26AS and these documents were then sent to the AO for verification and a remand report was called. The AO thereafter vide letter dated 9/11/2020 has sought certain additional documentation from the assessee in form of working of capital gains, copy of purchase deed and copy of bank statement with ICICI Bank. The ld AR has submitted that the assessee never received the said communication and even the remand report was not confronted to the assessee. We find that the additional evidence submitted by the assessee especially given that the assessment was completed u/s 144 as well as additional documentation required by the AO are essential and critical for determination of issue under consideration. We therefore deem it appropriate that the matter is set-aside to the file of the ld CIT(A) to consider the additional evidences and decide the same as per law after providing reasonable opportunity to the assessee. Mechanical grant of approval under section 151 - Both the parties have fairly submitted that even though the assessee has raised this ground of appeal before the ld CIT(A), there is no adjudication and finding recorded by the ld CIT(A). In view of the same and also given that on other grounds of appeal, we have set-aside the matter to the file of ld CIT(A), we deem it appropriate to set-aside this ground of appeal as well as to the file of the ld CIT(A) to decide the same as per law after providing reasonable opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2023 (3) TMI 397
  Renovation and Repair expenditure in respect of Misc. receivables disallowed - Assessee admitted voluntarily undisclosed income on various Heads for different assessment years - assessee made disclosure on account of inflated sales and wages expenses and duly offered for taxation as undisclosed income - assessee argued that statement recorded during the survey proceedings cannot be the basis of addition - HELD THAT:- Hon ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala [ 1971 (9) TMI 64 - SUPREME COURT] held that an admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. Assessee has not produced any details evidences and not maintained proper books of accounts. Assessee has not submitted any details of the wages which were inflated before any of the Lower Authorities. Assessee having its offices all over India and no evidence has been given as to which particular wages were bogus expenses, when these bogus expenses were debited in the books of accounts, how the money was taken out and how such money was utilized for the purposes of renovations and repairs. No books of accounts have been maintained for such undisclosed transactions. In the absence of any such co-relation between the inflation of wages and unexplained expenditure disclosed on account of renovations and repairs, the claim of telescoping does not arise. Also in the case of Bhagwandas D. Vachhani [ 2015 (4) TMI 269 - GUJARAT HIGH COURT] has clearly held that it is burden upon the assessee to give sufficient explanation for the source of the amount. After considering all materials, statement or the record or when no record of books of account is produced or when no transactions by showing co-relation are demonstrated by the assessee and the opinion is to be formulated by the A.O. cannot be disturbed. Thus the submissions made by the assessee does not hold it good with proper evidences and the same is rejected - the alternative claim of depreciation on the assets capitalized on Renovation and Repair expenditure of Rs. 2.5 crores on Kerala Property Fire Safety Institute at Baroda are found to be a legally valid claim. Therefore,the matter is remanded back to the file of the AO to verify into the expenses claimed, capitalized and allow appropriate depreciation in accordance with law. Thus ground no. 1 is partly allowed. Addition in respect of bad debts and also unverifiable amount of deduction from customers - HELD THAT:- It is seen that the assessee during the course of assessment proceedings, the assessee had submitted full details of bad debts on account of lower payments made by its clients, while settling the dues. Further the entire bill for sales raised by the assessee had been accounted for in the profit and loss account. Once a part of such sales is not paid by the clients, it takes the nature of bad debts. Further the provisions of section 36(1)(vii) read with section 36(2) makes it clear that even a part of the income accounted for in the current year also can be claimed as a bad debt. Therefore the findings arrived by the Ld. CIT(A) namely once the deduction made by the clients account is debited and the assessee s accounts are credited, the conditions laid down by section 36(1)(vii) read with section 36(2) are fulfilled and such amounts are allowable as a bad debt in the computation of total income. Further the assessee is not required to establish that such debts have actually become bad before writing off the same in the books of accounts - Decided against revenue. Unverifiable amount of Deductions from customers , the same is also allowed in favour of the assessee.

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• 2023 (3) TMI 396
  Disallowance of expenditure u/s 14A read with Rule 8D - whether disallowance u/s 14A read with Rule 8D can exceed the quantum of exempt income earned in a particular assessment year? - HELD THAT:- As per the settled legal principle in the decisions cited before us, the disallowance u/s 14A read with Rule 8D cannot exceed the quantum of exempt income earned during the year. In view of the aforesaid, we direct the Assessing Officer to restrict the disallowance under Section 14A read with Rule 8D to the exempt income earned during the year. In the result, additional ground is partly allowed. TDS u/s 194C OR 194I - payment towards bus hire charges and wharfage - Disallowance u/s 40(a)(ia) - order passed under section 201(1) and 201(1A) - HELD THAT:- Payments made towards bus hire charges and wharfage required deduction of tax at source under section 194C of the Act and accordingly, demand raised under sections 201(1) and 201(1A) cannot be raised. Admittedly, the assessee has deducted tax on both the payments applying the provisions of Section 194C of the Act. Thus, no infirmity in the decision of learned Commissioner (Appeals). Accordingly, ground raised is dismissed. In the result, the appeal is dismissed. Computing book profit u/s 115JB - whether disallowance under section 14A read with Rule 8D can be made - HELD THAT:- We are of the view, the issue is no more res integra in view of the decision of the Hon ble Delhi High Court in PCIT Vs. Bhushan Steel Ltd [ 2015 (9) TMI 1424 - DELHI HIGH COURT] and the decision of the Hon ble Special bench of the Tribunal in case of ACIT Vs. Vireet Investments (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein, it has been held that while computing book profit under section 115JB of the Act, no adjustment can be made with reference to Section 14A read with Rule 8D. In this view of the matter, we do not find any infirmity in the decision of learned Commissioner (Appeals) on the issue. Accordingly, ground raised is dismissed. In the result, appeal is dismissed.

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• 2023 (3) TMI 395
  Reopening of assessment u/s 147 - addition u/s 68 - Reason to believe - onus is on the assessee to prove the identity, creditworthiness and genuineness of the transaction which he had failed at the time of scrutiny proceedings - HELD THAT:- We find that it cannot be said that the CIT(A) while allowing the appeal of the assessee that there was no material before the assessing officer to brought on record any satisfaction or reason to believe that income chargeable to tax has been escaped assessment, therefore, notice issued u/s 148 was void-ab-initio. In the present appeal, AO has issued notice u/s 148 on the basis of information received from DIT that the assessee has received share application money from several entities which were only engaged in business of providing accommodation entry to the beneficiary concern. It cannot be said that there was no basis that the AO to frame reason to believe and in such situation it cannot be said that the ld. AO has issued notice u/s 148 upon the assessee as void-ab-initio. Since the ld. AO had made instant enquiry u/s 133(6) and u/s 131 of the Act from the directors of the companies, from where share premium was received by the assessee company and he discovered that assessee company had rooted its own fund/unaccounted money through the shareholders company - we are not convinced with the view taken by the CIT(A) by which he treating the notice issued u/s 148 AO was void-ab-initio and allow the appeal of the assessee without going through the merits of the case. Therefore, we remand back to the whole issue to the file of the ld. CIT(A) to decide the merits of the case. Ground nos. 1 is allowed and ground no. 2 taken by the revenue is allowed for statistical purposes.

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• 2023 (3) TMI 394
  Unexplained deposit of cash in the two Bank Accounts - case was selected for limited scrutiny through CASS for the issue cash deposit during the demonetization period - HELD THAT:- Admittedly, it is an undisputed fact that the assessee has been regularly filing her income tax returns for past several years as tabulated hereinabove reporting substantial income in her hands. Deposit of cash in Bank accounts during the demonetization period arose out of unavoidable circumstances, which prevailed during that time. The amount deposited by the assessee which is adequately substantiated and supported by gross total income as well as the exempt income reported by her in regular returns of income, placed on record. There is nothing brought on record by the authorities below to demonstrate anything otherwise or contrary in respect of the returns filed by the assessee. No justification in the approach adopted by AO in making an addition of Rs.5,50,000/- by giving an adhoc relief of Rs.1,00,000/- on an estimate basis by assuming that the assessee had cash in hand of Rs.1,00,000/- on 08.11.2016 i.e. on the date of announcement of demonetization. We accordingly direct the ld. Assessing Officer to delete the addition made in this respect. Accordingly, the grounds taken by the assessee are allowed.

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• 2023 (3) TMI 393
  Employee contribution of provident fund and ESI paid beyond due date - adjustment u/s 143 (1) - HELD THAT:- Hon ble Apex Court in CHECKMATE SERVICES P. LTD. VERSUS COMMISSIONER OF INCOME TAX-1 [ 2022 (10) TMI 617 - SUPREME COURT] has expounded that the employees contribution retains its character as income (albeit deemed) by virtue of section 2(24)(x) unless the conditions spelt by Explanation to section 36(1)(va) are satisfied i.e. depositing such amount received or deducted from the employee on or before the due date. Elaborating upon the same, further Hon ble Apex Court had held that employer s liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction form the employees income and held in trust by the employer. Hence, the above adjustment as done by the CPC u/s 143(1)(iv) and has now the sanction of Hon ble Apex Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] - assessee s thrust that the issue is debatable is not at all sustainable inasmuch as it is not relevant as per the extant provision of law contained in section 143 (1). Clarifies the matter from the very beginning itself. In this view of the matter, in our considered view, there is no infirmity in the order of ld. CIT (A). Hence, we uphold the same. Appeal of the assessee stands dismissed.

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• 2023 (3) TMI 392
  Weighted deduction u/s 35(2AB) in respect of capital expenditure - AO has made disallowance on the ground that the said amount has not been approved by the DSIR - HELD THAT:- AO has relied upon the proviso to section 35(2AB)(1) of the Act which was applicable to the assessment years beginning on or after April 1, 2021. Whereas the appeal before us pertains to the assessment year 2017-18. As it is clear that an assessee is allowed to claim deduction of a sum equal to two times the expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building). It is admitted position that DSIR had approved capital expenditure of INR 14,33,000. Therefore, the appellant was, in our view, entitled to claim deduction of INR 28,66,000 being two times the amount of capital expenditure of INR 14,33,000 approved by the DSIR and incurred by the appellant during the relevant previous year. Accordingly, addition of INR 14,33,000 made by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) is deleted. Assessee appeal allowed.

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• 2023 (3) TMI 391
  TP Adjustment Transaction of slump sale between the subsidiaries of Foreign Holding Company - To be considered as an international transaction or not - HELD THAT:- The agreement for purchase of asset, on the basis of slump sale is between two resident companies/AEs. It is an admitted fact that both the aforesaid companies are subsidiaries of Foreign Holding Company i.e. MWH Europe Ltd. A bare reading of section 92B defining international transaction would show that there is no such condition that the transaction between two resident companies, subsidiary of a Foreign Holding Company shall be deemed as international transaction for the purpose of section 92C - Since, the asset purchase agreement is between two resident companies such transaction cannot be regarded as international transaction. The meaning of international transaction contained in section 92B of the Act is plain and clear. It does not envisage that if a resident AE is a subsidiary of a foreign holding company, the transaction between such Indian subsidiary and another Indian company would fall within the ambit of international transaction as defined u/s. 92B of the Act. Thus, we do not agree with the findings of authorities below that the transaction of slump sale between the assessee and MWH ResourceNet (India) Pvt. Ltd. is an international transaction. Valuation of assets u/s 50B - HELD THAT:- Another facet of slump sale transaction is that the assessee has not furnished Form 3CEA along with the return of income. The assessee purportedly filed form 3CEA on 23/03/2013 before AO during draft assessment proceedings. However, the draft assessment order was already passed on 22/03/2013 i.e. a day prior to the filing of form 3CEA. The assessee pointed this fact during the course of objection raised before the DRP. No finding was given by the DRP on this issue. It is relevant to mention here that filing of Form 3CEA was a mandatory requirement for determining the value of the asset. The assessee has furnished the same at a belated stage. Taking into consideration entirety of facts we deem it appropriate to restore this issue back to the file of AO for the limited purpose of ascertaining the value of transaction for the purpose of section 50B of the Act. Addition on account of unbilled receivables - DRP and AO have treated the aforesaid amount reflected in the Balance Sheet as the income of the assessee and AO made addition of the aforesaid amount - HELD THAT:- . Assessee on instructions from the assessee stated at Bar that aforesaid amount has already been offered to tax . Assessee we deem it appropriate to restore this issue to the file of Assessing Officer for the limited purpose of verification of the fact whether the amount has been offered to tax by the assessee. If it is so, no addition on this account is warranted. The ground No.7 of the appeal is allowed for statistical purpose in the terms aforesaid. Denial of deduction u/s 10A - DRP not satisfied with the nature of documentation, accounts maintained by the assessee upheld rejection of books of account of the assessee - HELD THAT:- We find that the DRP after holding that the accounts of the assessee are not proper, erred in coming to the conclusion that assessee did not earn any profit from eligible undertaking. - there is no link between the first conclusion about unreliable nature of the books of account of the assessee and denial of deduction u/s.10 A - deduction u/s.10 A of the Act is allowable on the profit of eligible undertaking. Therefore, assuming that the accounts of the assessee are not reliable, it cannot be held that assessee did not earn any profit from the eligible undertaking. The assessee is eligible for deduction u/s. 10A of the Act to the extent of profit of eligible unit are determinable. The ground No. 8 to 10 of the appeal are restored to the file of AO to determine correct profit eligible for deduction u/s.10A - The assessee is directed to furnish necessary documents before the Assessing Officer to substantiate and determine eligible profit for deduction u/s 10 A of the Act. AO is directed to decide the issue afresh, in accordance with the law. The ground No. 8 to 10 of appeal are allowed for statistical purpose with above directions. Claim of depreciation on Pune unit - This ground is consequent to disallowance of deduction u/s. 10 A - As we have already set-aside the issue of allowability of deduction u/s.10 A of the Act to the file of Assessing Officer, this ground is also required to be restored to the file of the Assessing Officer. Non consideration of revised computation of income filed during the course of assessment proceedings - assessee pointed that the DRP had directed the Assessing Officer to consider revised computation of income - HELD THAT:- As Assessing Officer has not given effect to the direction DRP. This issue is restored back to the file of Assessing Officer to comply with the direction of DRP to consider revised computation of income. The ground No.12 of the appeal is allowed for statistical purpose.

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• 2023 (3) TMI 390
  Difference between Form 26AS and P L A/c - Amount which was not reconciled by the assessee - submission of the learned Counsel for the assessee that although full reconciliation was filed before the learned CIT (A), however, the same was not properly appreciated by CIT (A) - HELD THAT:- We find the assessee before the AO has stated that the difference is due to accounting policy adopted by the Auditors. Even in the submission given before the AO, still there is reconciliation difference - We find that the assessee has filed certain details before the learned CIT (A) reconciling the difference. CIT (A) has not given any finding on such reconciliation while sustaining the addition - we deem it proper to restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case - Assessee 1st ground allowed for statistical purposes. Unexplained cash deposit - HELD THAT:- As we find from the Paper Book filed by the assessee that although the assessee has not filed any details before the Assessing Officer, however, the assessee has filed the invoice wise details on which cash was received - It is also an admitted fact that the number of invoices shows that the assessee has raised the invoices on which cash was received which was deposited in the Bank - The turnover of the assessee has not been disputed by the Assessing Officer. Since all these invoices are part of the total sales, therefore, we are of the considered opinion that the learned CIT (A) is not justified in sustaining the addition - 2nd issue raised by the assessee is allowed.

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• 2023 (3) TMI 389
  Assessment u/s 144C - TP adjustment on the ground that modified return was not filed by the assessee - transfer pricing adjustment for the covered transaction - assessee filed an application before the DRP stating that it has entered into unilateral Advance Pricing Agreement (APA) with CBDT and that the assessment year 2018-19 is also covered under the APA - AO passed final assessment order retaining the TP adjustment on the same amount in the draft assessment order on the ground that as per the information available on the system till date the assessee has not filed any modified return of income u/s 92CD and therefore he is retaining the TP adjustment as in the draft assessment order - HELD THAT:- We notice that the assessee has filed a modified return on 28.03.2022 - We also notice that the assessee ha paid the tax due on 15.02.2022 - AO in his order dated 31.05.2022 has stated that the TP additions are retained on the ground that there is no information available on the system that the assessee has filed the modified return. On perusal of the facts and evidences as mentioned herein above with regard to the modified return having been filed along with the payment of tax, we hold that the statement of the AO is not factually correct. We therefore direct the AO to consider the modified return filed by the assessee giving effect to the APA entered into with the CBDT which covers the TPA adjustment for AY 2018-19. The AO is directed to pass the final assessment order accordingly after giving reasonable opportunity of being heard to the assessee. Appeal filed by the assessee is allowed.

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• 2023 (3) TMI 388
  TP Adjustment - Comparable selection - application of turnover filter - HELD THAT:- Four companies listed whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. Functional dissimilarity - Set aside the question of comparability of CES Ltd., to the TPO/AO to examine as to whether the functional profile of the assessee and the assessees in the decisions cited by the learned AR remains the same in Assessment Year 2017-18 as it was in Assessment Year 2016-17. We set aside the question of comparability of Manipal Digital Systems Pvt.Ltd., to the TPO/AO to examine as to whether the functional profile of the assessee and the assessees in the decisions cited by the learned AR remains the same in Assessment Year 2017-18 as it was in Assessment Year 2016-17.

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• PMLA

• 2023 (3) TMI 421
  Money laundering - scheduled offences - attachment of property - petitioners have already suffered pre trial custody for more than four years in respect of the scheduled offence, the investigating agency did not arrest the petitioners under Section 19 PMLA when investigation begins, that they are senior citizens of approximately 66 ,70, 68 and 67 years of age respectively and properties of petitioners have even attached and petitioners have deposited the alleged amount of Rs. 11,88,000/- and 50,00,000/- in the respective matters. It is further submitted that the total period of incarceration in case of conviction is only seven years and Section 45 PMLA will not be applicable as it is pre-amendment. HELD THAT:- Issue notice. In the meantime, the petitioners be not arrested but shall continue to cooperate with further investigation.

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• 2023 (3) TMI 387
  Maintainability of petition - petition for mandatory bail under Section 16(2) has been filed even after filing of alleged charge sheet - Section 167(2) of Cr.P.C. - HELD THAT:- The present petition was filed on 17.01.2023 nearly after 53 days after the statutory period of 60 days, as such, it cannot be said that the right of bail under Section 167(2) of Cr.P.C and the petition are maintainable. In the event of an application being made on 26.11.2022, the approach of this Court would have been on the circumstances prevailing then. However, when no application was made on the 60th day and the petitioner suffering dismissal order of bail on 07.12.2022, cannot urge the Special Court to entertain an application for default bail which was filed on 17.01.2023 taking recourse to the judgment of this Court in the case of C.Parthasarathy s case [ 2022 (6) TMI 164 - TELANGANA HIGH COURT ]. The prayer for directing the Special Judge to entertain the default bail application vide SR No.548 of 2023 which was filed on 17.01.2023 nearly 113 days after his arrest. Statutory bail application under Section 167(2) of Cr.P.C has to be made on the date on which the right accrues which may be 60 or 90 or 180 days or 12 months as the case may be. Filing an application subsequently and asking the Court to entertain the application as status quo ante , cannot be permitted. The Criminal Petition is dismissed.

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• 2023 (3) TMI 386
  Territorial Jurisdiction - FIR is registered in Mumbai and properties seized were all forwarded to the Adjudicating Authority in Delhi - predicate Offence - Search and Seizure - Constitutional Validity of search conducted under Section 17 of the Prevention of Money Laundering Act - HELD THAT:- The Hon ble Supreme Court in the case of Vijay Madanlal Choudhary and others vs. Union of India and others [[ 2022 (7) TMI 1316 - SUPREME COURT] ] has held that once the predicate offence is ended in discharge or acquittal, the proceedings initiated by the ED cannot be proceeded. Of course, there is no second thought in the decision rendered by the Hon ble Supreme Court and the Co-ordinate Bench of this Court. However, in this case the main objection by the learned Special counsel for respondent is that the FIR in predicate offence and FIR in ED case were all registered at Mumbai and the properties seized were all forwarded to the Adjudicating Authority at Delhi and this Court cannot quash or stay the proceedings which has no territorial jurisdiction. The judgment of the Madras High Court in S. Ilanahai vs. The State of Maharashtra [ 2015 (1) TMI 1487 - MADRAS HIGH COURT ] and the Delhi High Court in Sayed Mohd. Masood vs.Union of India and Another [[ 2014 (3) TMI 300 - DELHI HIGH COURT] ] were categorically held that when the FIR is registered in some other State, merely the petitioner-accused staying in Karnataka State and bank account is operating at Karnataka, this Court cannot take the cognizance and quash or stay the criminal proceedings in favour of the petitioner. The decision rendered by the Madras High Court as well as the Delhi High Court is agreed upon that this Court has no jurisdiction to entertain the petition and pass any order against the respondent-ED when the case was registered at Mumbai and properties were seized and forwarded to the Adjudicating Authority at Delhi. Therefore, the only option available to the petitioner is to approach the Mumbai Court having territorial jurisdiction and also an alternative and efficacy remedy available before the Adjudicating Authority at Delhi. Therefore, this Court cannot interfere and pass any order with the action taken by the respondent-ED in the case registered at Mumbai. Petition dismissed.

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• 2023 (3) TMI 385
  Seeking grant of Regular Bail - Money Laundering - predicate offence - huge bungling, fraud and forgery - twin conditions of Section 45 of the PMLA satisfied or not - HELD THAT:- In the present case, this is an admitted case of the prosecution that after lodging the ECIR on 14.04.2012, the E.D. has not tried to arrest the present applicant under Section 19 of the PMLA. Even after release of the present applicant from jail in the predicate offence in the year 2015, the present applicant was called twice by the E.D. under Section 50 of the PMLA to record his statement on 23.12.2016 and 10.06.2019 where the applicant appeared and recorded his statement but the E.D. has not arrested the applicant under Section 19 of the PMLA. Therefore, it is clear that considering the proper cooperation of the present applicant in the investigation and evidences, material and allegations against the applicant, the Investigating Officer did not find it proper to arrest the applicant under Section 19 of the PMLA. Notably, the statutory rights of the present applicant defined under Section 204 (3) 208 Cr.P.C. have been violated by the Investigating Agency inasmuch as he has not been provided copy of complaint, copy of statements and other relevant documents. The Apex Court in re; Aman Preet Singh [ 2021 (10) TMI 1 - SUPREME COURT ] and Satender Kumar Antil [ 2022 (8) TMI 152 - SUPREME COURT ] has categorically observed that arrest of any person is not mandatory in each and every case but before curtailing the liberty of an accused person, the relevant facts and circumstances should be visualized. In the present case, prima facie, there was no requirement to take the applicant into custody when he appeared before the learned trial court pursuant to the summons being issued inasmuch as he has never flouted the process of law, he cooperated in the investigation throughout, the Investigating Agency has never thought to arrest him under Section 19 of the PMLA despite he appeared before the E.D. to record his statement twice pursuant to the summons being issued under Section 50 of the PMLA and there was no request of the E.D. before the learned trial court to the effect that arrest of the present applicant is warranted - thus, it appears that the learned trial court has taken the custody of the present applicant without following the settled proposition of law of the Apex Court in Aman Preet Singh and Satender Kumar Antil. The applicant- Govind Prakash Pandey directed to be released on bail in the aforesaid crime case on his furnishing a personal bond and two sureties of Rs.1,00,000/- each before the Trial Court concerned with the conditions imposed - bail application is allowed.

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• Indian Laws

• 2023 (3) TMI 420
  Suit for declaration instituted by respondent nos. 1, 2 and 3/ original plaintiffs - maintainability of the suit before a Civil Court - As the original borrower defaulted in repaying the loan, appellant-bank initiated proceedings under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- The underlying principle forming the basic layout and purpose of the introduction of the SARFAESI Act has remained unchanged since the time of its incorporation. It is abundantly clear from a bare reading of Section 34 of SARFAESI Act that the same is applicable to only such cases which are governed by and thus are within the purview of the SARFAESI Act or the RDDBFI Act. A perusal of the whole SARFAESI Act reveals that there is no bar of any kind for a Civil Court to proceed with such actions which are beyond the domain of the SARFAESI Act of the RDDBFI Act. The jurisdiction of a Civil Court has not been ousted and has only been restricted by introduction of the SARFAESI Act. The Hon ble Supreme Court in a recent judgment in BANK OF RAJASTHAN LTD. VERSUS VCK SHARES STOCK BROKING SERVICES LTD. [ 2022 (11) TMI 1325 - SUPREME COURT] , though pertaining to RDDBFI Act, which contains the para materia provisions as the SARFAESI Act, while dealing with the transfer of civil proceedings, has held that the DRT, being a Tribunal and a creature of the Statute, does not have any inherent power which inheres in Civil Courts such as Section 151 of the Code. The facts of the present case disclose that the respondents instituted a suit for declaration qua reliefs arising out of non-issuance of Sale Deed and for waiver of wrongful imposition of interest by the appellant-bank alongwith other reliefs dependent thereupon, which reliefs were beyond the scope of the SARFAESI Act or the RDDBFI Act and resultantly, the only forum, which could/can grant such reliefs, was/is a Civil Court - Admittedly, though the appellant-bank in its reply dated 20.01.2020 categorically stated that no action under SARFAESI Act had yet been initiated against respondents and that it would initiate necessary proceedings under the SARFAESI Act and RDDBFI Act to protect its interest, till date no proceedings of any kind have been initiated to that effect. Whence no claim or scope thereof was left to be adjudicated for appellant-bank to initiate proceedings under the SARFAESI Act, the respondents could not have been and certainly cannot be rendered remediless. In any event, the intention of the legislature could not have been to take away the integral right of respondents to take legal recourse by instituting a suit for their claims. Appellant-bank in such circumstances cannot be allowed to take cover of/for its in-action(s) under the SARFAESI Act as the same cannot and does not come in the way of any party like respondents to initiate a suit for seeking remedies before a Court of law being a Civil Court which are conferred by or under SARFAESI Act or the RDDBFI Act. The present appeal is not maintainable either in law or on facts. Appellant-bank cannot be permitted to carry dead remains to flog a dead horse and cannot be perpetually allowed to hunt for something which is nonexistent and which it, in fact, cannot be permitted under law. Appeal dismissed.

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• 2023 (3) TMI 384
  Compulsorily Retirement of Members of Income Tax Appellate Tribunal (ITAT) - Various unproven allegation of different kinds - An allegation made by the appellant s ex-wife for bigamy - Wilful disobedience of the order - Communication of decision of the President of India to compulsorily retire him, in exercise of powers conferred under Rule 56(j) of the Fundamental Rules - HELD THAT:- The scope of judicial review in respect of an order of compulsory retirement from the service, is fairly limited. The law relating to compulsory retirement has been the subject matter of discussion in a number of cases where certain settled legal principles. In Ram Ekbal Sharma v. State of Bihar and Another [ 1990 (4) TMI 309 - SUPREME COURT ] it was observed that in order to find out whether an order of compulsory retirement is based on any misconduct of the government servant or the said order has been made bona fide, without any oblique or extraneous purpose, the veil can be lifted. In Nand Kumar Verma v. State of Jharkhand and Others [ 2012 (2) TMI 727 - SUPREME COURT ] this Court has once again highlighted the permissibility of ascertaining the existence of valid material by a Court for the authorities to pass an order of compulsory retirement. In a recent judgment in the case of Nisha Priya Bhatia v. Union of India [ 2020 (4) TMI 890 - SUPREME COURT ], confronted with the question as to whether action taken under Rule 135 of the Research and Analysis Wing (Recruitment Cadre and Service) Rules, 1975 is in the nature of a penalty or a dismissal clothed as compulsory retirement so as to attract Article 311 of the Constitution of India, this Court has held that the real test for this examination is to see whether the order of compulsory retirement is occasioned by the concern of unsuitability or as a punishment for misconduct . In the present case, as per the material placed on record, the APARs of the appellant reflect that over the past several years, his integrity was being regularly assessed as Beyond doubt and this remained the position till as late as 31st July, 2019, when his work performance was assessed for the period from 1st April, 2018 to 31st March, 2019 and found to be upto the mark. In his APARs for the past one decade, till the period just prior to the order of his premature retirement, the respondents were consistently grading the appellant as Outstanding . No adverse entries were made by his superiors in the APARs of the appellant insofar as his work performance was concerned. No aspersion was cast either on his conduct or character during all this period. As per the service records, his efficiency and integrity remained unimpeachable throughout his career. The inference drawn from the above is that the appellant s service record being impeccable could not have been a factor that went against him for the respondents to have compulsorily retired him. Once the parties had arrived at a settlement and a decree of divorce by mutual consent was passed by the concerned Court, the allegations of bigamy etc. levelled by the appellant s wife loses significance since the case was never taken to trial for any findings to be returned by the Court on this aspect - there appears no justification for the respondents to have raised the spectre of a series of complaints received against the appellant during the course of his service that had weighed against him for compulsorily retiring him, more so, when these complaints were to the knowledge of the respondents and yet, his service record remained unblemished throughout. Nothing has been placed on record to show a sudden decline in the work conduct of the appellant so as to have compulsorily retired him. It is noticed that though FR 56(j) contemplates that the respondents have an absolute right to retire a government servant in public interest and such an order could have been passed against the appellant any time after he had attained the age of fifty years, the respondents did not take any such decision till the very fag end of his career. The impugned order of compulsory retirement was passed in this case on 27th September, 2019 whereas the appellant was to superannuate in ordinary course in January, 2020. There appears an apparent contradiction in the approach of the respondents who had till as late as in July, 2019 continued to grade the appellant as Outstanding and had assessed his integrity as Beyond doubt - The impugned order passed by the respondents does not pass muster as it fails to satisfy the underlying test of serving the interest of the public. It is deemed appropriate to reverse the impugned judgment dated 31st May, 2022 and quash and set aside the order dated 27th September, 2019 passed by the respondents, compulsorily retiring the appellant. Resultantly, the adverse consequences if any, flowing from the said order of compulsory retirement imposed on the appellant, are also set aside - Appeal allowed.

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• 2023 (3) TMI 383
  Debarment/Blacklisting form participation in Production Linked Incentive Scheme (PLI Scheme) - grievance is that JBM Electric (and by association, all companies which were part of the JBM Group, which included JBM Ecolife) had been debarred from participation in all future tenders and the interconnected PLI Scheme up until 31.03.2027 - main thrust of its appeal was that it had been knocked out of the race for being awarded the subject contract, although it had tendered the lowest bid, albeit, only on the ground that its sister concern i.e., JBM Electric had been debarred/blacklisted - violation of principles of natural justice. Whether debarment/blacklisting of JBM Electric by MHI in the given circumstances was justified? - if the Court were to hold that MHI was not justified in debarring/blacklisting JBM Electric, what impact it would have on the fate of JBM Ecolife, both concerning the subject tender as well as tenders that MHI will float in the future? HELD THAT:- Once the material based on which GGR was calculated, was placed by JBM Electric for consideration and evaluation by the PMA i.e., IFCI Ltd., it becomes evident that the financial expert who advised JBM Electric had a different understanding of how GGR had to be calculated - UOI has asserted that there is only one way of understanding the purport, scope and ambit of what constitutes GGR. This argument is founded on the approach recommended by ICAI while preparing combined financial statements. It is no one s case, least of all UOI s, that JBM Electric was called upon to draw combined financial statements of all entities which formed part of the group. Instead, what has emerged is that JBM Electric was required to, inter alia, provide the revenue earned by each of the companies that formed part of the group which in turn was derived from manufacturing automotive and auto components. The summation of the revenues earned by each entity in the group was required to be given as GGR. A perusal of the clauses of the Guidance Note would show that where consolidated financial statements are not available and financial information LPA 327/2022 500/2022 Pg. 27 of 46 is required in certain situations, such as the takeover of entities, demergers, spin-offs or IPOs concerning entities which may or may not form part of the group such information, if sought, can be presented as a combined financial statement or carve-out financial statements. JBM Electric, as advised, it appears, verily believed that intra-group sales could be included in arriving at GGR. JBM Electric s stand is that what they have included in its intra-group sales transaction is only the revenue component and not the trading/input sales. It has also been argued that each of such constituents is independently carrying out its manufacturing activity and the product manufactured by one group company which is bought by another constituent of the group is acquired as raw material, which once worked upon, morphs into a new product before it is sold to an unconnected third party/customer. The purchasing constituent company, thus, makes a value addition before offloading the product to an unconnected third party/customer. Therefore, the contention advanced on behalf of JBM Electric is that it had rightly included intra-group sales while calculating the GGR - from the point of view of JBM Electric, it would be a case of misconception. If that is the position, it is opined that MHI could not have straightaway debarred/blacklisted JBM Electric without issuing a proper show-cause notice and calling upon it to explain its position. Blacklisting/debarment is a grave civil consequence for a business entity. It leads to a loss of reputation, goodwill and trust in business circles; which is why, even when the period of debarment/blacklisting is over, the aggrieved party continues to litigate only to defend its reputation and goodwill - we are not persuaded to accept the submission advanced on behalf of UOI that the learned Single Judge had issued a futile writ, as on remand the result would be no different. This submission of UOI is premised on the argument that there is no dispute concerning the fact that JBM Electric had factored in intra-group sales while calculating the GGR. The MHI, however, by virtue of its decision to debar/blacklist JBM Electric, has thrown to the wind every known principle of natural justice. The competent authority needed to bear in mind, if nothing else, that JBM Electric, which, according to it, is the delinquent applicant, needed to be heard before a decision was reached as to the penalty imposed on it on account of the alleged infraction - the impugned communications dated 25.04.2022 and 29.04.2022 issued by MHI and IFCI Ltd. respectively, have been correctly quashed by the learned Single Judge. The exchange of messages between Messrs. Gahoi and Goel raises concerns with regard to the purity of the process. It is obvious that the system for evaluation put in place under the aegis of MHI is less than foolproof and is amenable to influence and interference from third parties. MHI needs to enquire into this aspect of the matter so that in the future, such incidents don t occur. The first impugned judgement is set aside. Consequently, the communication dated 26.04.2022 whereby JBM Ecolife has been held to be no longer eligible to continue its participation in the subject tender process would have to be quashed. This would also be the fate of the other communication dated 26.04.2022 which was served on JBM Ecolife by the e-tender administrator whereby it was informed that its bid was found to be Non-Responsive for Technical Evaluation - appeal disposed off.

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