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TMI Tax Updates - e-Newsletter March 11, 2024 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Two parallel proceedings in respect of the same period are not permissible under GST Law GST APPEALS WHEN NOT TO BE FILED AMOUNT DEPOSITED AT MIDNIGHT DURING INVESTIGATION IS NOT VOLUNTARY News On International Women’s Day, CBIC provisions gender inclusive facilities and encouraging women participation in International Trade through two circulars Ministry of Corporate Affairs revises threshold limits for value of Assets and Turnover for purposes of combination filings under Competition Act, 2002 as a step towards ‘Ease of doing Business’ Notifications Customs 19/2024 - dated 8-3-2024 - Cus (NT) Customs airports — Appointment for specified purposes - Amendment in Notification No. 61/94-Customs (N.T.) dated the 21st November, 1994 Law of Competition S.O. 1131(E) - dated 7-3-2024 - Competition Law Central Government exempts the enterprises from regulation combination under section 5 of Competition Act, 2002 S.O. 1130(E) - dated 7-3-2024 - Competition Law Central Government in consultation with the Competition Commission of India enhances the time limit for applicability of section 20(3) of Competition Act, 2002 CCI/Reg-C.R./2024 - dated 6-3-2024 - Competition Law Competition Commission of India (Commitment) Regulations, 2024 B-14011/2/2024-ATD-II - dated 6-3-2024 - Competition Law Competition Commission of India (Determination of Turnover or Income) Regulations, 2024 B-14011/1/2024-ATD-II - dated 6-3-2024 - Competition Law Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024 SEBI SEBI/LAD-NRO/GN/2024/167 - dated 8-3-2024 - SEBI Securities and Exchange Board of India (Index Providers) Regulations, 2024. SEBI/LAD-NRO/GN/2024/166 - dated 8-3-2024 - SEBI Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2024 SEZ S.O. 1167(E) - dated 6-3-2024 - SEZ Seeks to rescinds the Notification Number S.O. 1030(E) dated 30th March, 2017 - De-notification of the entire area of 1.51 hectares - set up a Sector Specific Special Economic Zone for IT/ITES at Sadarmangala Village, Sadaramangala Industrial Area, Whitefiled, Bengaluru, in the State of Karnataka. S.O. 1166(E) - dated 6-3-2024 - SEZ Seeks to rescinds the Notification Number S.O. 2137(E) dated 13th June, 2016 - De-notification of the 4.05 hectares area for Information Technology and Information Technology Enabled Services at Outer Ring Road, Rachanahalli Village, Nagavara, District- Bangalore, Karnataka S.O. 1165 (E) - dated 6-3-2024 - SEZ Central Government de-notifies an area of 532.17 hectares, thereby making resultant area as 500.10 hectares at villages of Dwarakapuram, Palepalem, Menakur, Konetirajupalem of Naidupet Mandal and Palachuru village of Pellakuru Mandal in Tirupati District (Erstwhile Nellore District) in the State of Andhra Pradesh Circulars / Instructions / Orders Customs 02/2024 - dated 8-3-2024 Encouraging Women participation in International Trade 03/2024 - dated 8-3-2024 Inclusion of gender specific infrastructure facilities to be provided by the Custodian CCSP-CFS/AFS/ICD under the HCCAR, 2009 Highlights / Catch Notes Income Tax Disallowance of interest expenses incurred for non-business purposes - The ITAT found that the interest expenditure claimed by the assessee was allowable due to the presence of significant interest-free funds available to cover interest-free advances. - Citing Commissioner of Income Tax V/s. Reliance Utilities & Power Ltd., the ITAT established that when interest-free and interest-bearing funds are available, a presumption arises that investments are made from interest-free funds if they are sufficient to cover such investments. - The High Court dismissed the appeal of the Revenue, finding no merit in it. Visit to Get Source Validity of the order of ITAT deleting the various additions made by the AO - The appellant, Revenue, contested various additions made by the Assessing Officer, including negative brokerage, stock discrepancies, credit balance issues, unexplained cash credits, disallowed interest payments, and losses on securities transactions. However, the ITAT found the Assessee's explanations satisfactory for each issue, ruling in favor of the Assessee and deleting the additions. The High Court upheld the ITAT's decision, emphasizing the importance of evidence-based assessments and rejecting conclusions based on conjecture. Visit to Get Source Substantial question of law to be made u/s 260A - prerequisite of admission of the appeal before the High court - The ITAT hold that the assessee had correctly offered the net amount to tax and deleted the additions made by the AO - Further, the ITAT allowed the cross-objection of the assessee and hold that the reopening of the case of the assessee tantamounts to change of opinion which is not permissible as per Section 147 - The court found that the questions raised by the appellant did not constitute substantial questions of law, as they primarily pertained to disputed facts rather than points of law. Hence, the appeal was dismissed. Visit to Get Source Validity of reopening of assessment - period of limitation to issue notice - validity of a notice issued under Section 148/148A - scope of Taxation and other laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) application - The High Court refers to a previous judgment and concludes that the notices issued for the Assessment Year 2013-2014 are barred by limitation due to the amendments to the Finance Act and the provisions existing prior to the amendment. - The Court specifically addresses various contentions raised by the Department regarding the applicability of different legal provisions and notifications, ultimately ruling in favor of the petitioners. Visit to Get Source Disallowance u/s 14A - disallowance of administrative expenditure to arrive at average total asset for computing disallowance as per formula prescribed by Rule 8D on the opening and closing of gross block of fixed assets - Validity of order of ITAT remanding the matter to the AO for proper verification and adjudication - The High Court acknowledged previous decisions and directed the matter to be remanded to the Tribunal for fresh consideration regarding the disputed grounds. Visit to Get Source Reopening of assessment u/s 147 - initiating notice u/s 148A(b) - alleged information received from DDIT (Inv.), Mumbai that the petitioner opted accommodation entries - The High court noted that the purpose of the inquiry u/s 148A was to determine whether a case for reassessment was made out. It found that the petitioner's admission of the transaction between him and AEPL, not being reflected in the income tax return, constituted a prima facie case for reopening the assessment. - Further, the HC held that the objections raised by the petitioner were more in the nature of explaining why the transaction amount should not be taxable, which would be examined in detail during reassessment proceedings. Visit to Get Source Levy of penalty u/s 271B - Sufficient / reasonable cause for the delay in filing the tax audit report. - The appellant argued that the delay was due to the late receipt of the audit report from the Joint Registrar. The ITAT, after examining the facts and circumstances, found that the appellant had demonstrated a reasonable cause for the delay, and the penalty imposed by the Revenue was unjustified. As a result, the tribunal allowed the appellant's appeal and directed the deletion of the penalty. Visit to Get Source Addition on account of diamond set received as gift by the appellant - The CIT(A) accepted the appellant's submission that the diamond set was indeed gifted by his late father. However, CIT(A) granted relief only to the extent of cost of Acquistion and confirmed the additions of difference amount between market value and cost - The Tribunal found that since the cost of acquisition of the diamond set was proved, the market value at the time of marriage should not be added to the appellant's income. - Tribunal decided to delete the addition entirely, considering the proven cost of acquisition of the diamond set. Visit to Get Source Penalty u/s 271B - assessee had failed to get his account audited u/s 44AB - The assessee explained that the delay in furnishing the Audit Report was due to the death of his elder brother, who managed the financial affairs, and his own critical medical condition during the relevant year. - The ITAT noted that the Tax Audit Report was filed along with the revised return within the permissible time as allowed under section 139(5) of the Income Tax Act. - The Tribunal held that there was reasonable cause for the delay in furnishing the Tax Audit Report and therefore concluded that the penalty imposed under section 271B was not justified. Visit to Get Source Assessment u/s 153C - Addition u/s 69A - Certain incriminating documents/information contained in the seized material pertained to the assessee, the proprietor found from third party - The ITAT observed that As AO has used his imagination in applying the provision of section 69C for making the impugned addition, the impugned addition made by the Ld. AO in both the AY(s) is not sustainable because it is based on mere suspicion, surmise and conjectures and not on legally sound footing - The Tribunal allowed the assessee's appeals and directed the Assessing Officer to delete the impugned additions in both AYs. Visit to Get Source Exemption u/s. 11(1)(d) - contributions received from students towards development and welfare funds of the school - voluntary contribution or otherwise - The ITAT confirmed the disallowance of exemption under section 11(1)(d) of the Act, holding that the contributions received from students/parents were not voluntary and lacked a written direction to form part of the corpus donation. - However, tribunal observed that, receipts would nevertheless form part of the assessee’s regular receipt, i.e., from the activity of running the school and, accordingly, liable for exemption u/s. 11(1)(a), i.e., if otherwise exigible, in accordance with law. Visit to Get Source Rectification u/s. 154 - claim of the assessee that the CPC, Bengaluru in the intimation issued u/s. 143(1) had wrongly taken its income under the head "Profit and gains from the business or profession" at Much Higher Amount instead of Rs. Nil and raised a consequential demand towards tax and interest(s). The Tribunal examined the circumstances and found that since the CPC accepted the income as declared in the revised return, there was no apparent mistake in the record. The rejection of the rectification application was deemed appropriate. The ITAT also observed that the application was filed after the limitation period, further strengthening the rejection decision. Visit to Get Source Levy of penalty u/s 271B - failure to get accounts audited in terms of provisions of section 44AB - Determination of turnover in the context of a share broker's income - The Appellate Tribunal ruled in favor of the assessee, holding that only commission income earned constitutes turnover for a share broker, not the sale consideration of shares. It also rejected the Revenue's argument regarding the proviso to section 44AB. - As a result, the Tribunal directed the deletion of the penalty imposed under section 271B of the Act. Visit to Get Source Addition u/s 68 - onus prove - non-compliance by the lender - Treating the loan transaction as a mere accommodation entry - The Tribunal observed that loose paper found in the course of search do not constitute incriminating material belonging to the assessee per se. As noted, the AO himself has found the other transactions mentioned in the loose paper to be correct and worthy of acceptance. - The Tribunal found that the transactions were conducted through proper banking channels with sufficient documentation and repayment indicating genuine transactions. Furthermore, the Tribunal held that additions based on assumptions or extrapolations without tangible material for the specific assessment year were not permissible, leading to the dismissal of the Revenue's appeal. Visit to Get Source Revision u/s 263 - successor PCIT / CIT did not agree with his predecessor - second revision order - assessment has been set aside or de novo assessment - sending of the proposal by the successor-Assessing Officer - Share application money - identity and creditworthiness of the share subscribers - The appellant argued against the validity of the revision order, stating that the assessment order was passed after proper enquiries and verifications, and subsequent actions by the PCIT were unjustified. The Tribunal found in favor of the appellant, holding that the subsequent revision order was not sustainable under the circumstances. Visit to Get Source Unexplained cash credit u/s 68 - Bogus capital introduced by the partners of the assessee-firm - as per CIT(A) Agriculture income shown by the partners was highly inflated and actually there was not enough income to justify the capital introduction - the Tribunal ruled in favor of the appellant, stating that the addition should have been made in the hands of the partners if their creditworthiness was in question. The quantum of income returned by the partners was accepted by the Revenue under a different head, indicating their creditworthiness. - The Tribunal partly allows the appeal, ruling in favor of the appellant regarding the addition of fresh capital and directing a reduction in the ad-hoc disallowance of expenses. Visit to Get Source Customs Maintainability of Refund claim - Order of assessment was not challenged - the Tribunal upheld the department's action, stating that customs duty is to be charged based on the current value under the Customs Act, not the seizure value. The appellant's lack of challenge to the initial duty assessment in the form of an appeal was noted, with references to legal precedents emphasizing that a refund claim cannot stand without challenging the assessment order that became final. Visit to Get Source Levy of penalty - Smuggling of Gold - seizure - Commissioner (Appels) set aside the penalty - The Tribunal found insufficient evidence to establish the Respondents ownership. Statements of key witnesses lacked consistency, and procedural irregularities in the examination of witnesses weakened the case. Therefore, the court upheld the impugned order, dismissing the Revenue's appeal and maintaining the decision to set aside the penalty on the Respondents. Visit to Get Source Penalty on daily wager - confiscation of the seized Gold - The appellant was apprehended by customs officers while carrying two pieces of gold bars without possessing proper documents. Despite claiming innocence, the appellant failed to provide evidence to support his case. The goods were confiscated, and a penalty was imposed, which was later reduced considering the appellant's financial circumstances. - The penalty imposed on the appellant reduced by the Tribunal to Rs. 25,000 considering his status as a daily wage earner and his financial condition. Visit to Get Source Seizure of Gold Bars - Confiscation - Penalty u/s 112(b) - The case involves the interception of the Appellant carrying 17 pieces of gold of foreign origin in Kolkata. Despite not claiming ownership of the gold bars, the Appellant was penalized under Section 112(b) of the Customs Act, 1962. The Tribunal affirmed the absolute confiscation of the gold bars but reduced the penalty from Rs. 20 Lakhs to Rs. 2 Lakhs, considering the financial circumstances of the Appellant. Visit to Get Source Mandatory penalty u/s 114A of the Customs Act, 1962 not imposed - imported goods as “Polyester Bed Sheet”- mis-classified the impugned goods - The case involves a dispute over the classification of imported goods. The Revenue contended that the goods should be classified as "Polyester Woven Fabrics" under CTH 5407, while the respondent classified them as "Polyester Bed Sheet" under CTH 6304. The Tribunal ruled in favor of the respondent, determining that the goods were correctly classified as "Bed spreads" under CTH 6304 and dismissed the appeal filed by the Revenue. Visit to Get Source condonation of delay in filing appeal before the Commissioner of Customs (Appeals) - time limit prescribed u/s 149 - The appellant's appeal challenging the rejection of their request to amend a Bill of Entry was dismissed by the Commissioner of Customs (Appeals) due to being filed after the prescribed time limit. The appellant failed to provide sufficient cause for the delay, resulting in the dismissal of the appeal before the Tribunal also. Visit to Get Source Smuggling of gold - Imposition of penalties u/s 112 - The appellants were intercepted along with their luggage, which was found to contain smuggled gold bars. However, the appellants claimed they were unaware of the contents of the bags and that they were innocently carrying them. - The penalties imposed on the appellants set aside by the Tribunal, as they were found to be innocent of any involvement in the smuggling of gold. Visit to Get Source Indian Laws Dishonour of Cheque - acquittal of accused - The trial court's failure to record the accused's statement under Section 342 of J&K Cr.P.C. did not render the trial invalid, but the failure to question the accused about the demand notice violated procedural requirements. - The High court upheld the trial court's decision, emphasizing the necessity of recording the accused's statement and the requirement of endorsement on cheques for part payments, in accordance with legal precedent. Visit to Get Source Dishonour of Cheque - Seeking setting aside of summoning order - vicarious liability on partner of a firm - The name of the petitioner is conspicuously not mentioned as an accused or a person responsible for the affairs of the said partnership firm. - The Delhi High Court quashed the summoning order against a 65-year-old lady, accused in a case involving cheque dishonour under Section 138 of the Negotiable Instruments Act, on grounds of insufficient evidence of her involvement in the day-to-day affairs of the partnership firm accused of issuing the bounced cheques. Visit to Get Source Declaration of bodies corporate, their promoters and directors, as “wilful defaulters” - Lack of transparency and due process in the Union Bank's procedure for declaring the petitioner a wilful defaulter - The High Court concluded by allowing Union Bank to withdraw its previous orders regarding the petitioner's status as a wilful defaulter and mandated a redo of the proceedings with proper disclosure and adherence to due process, thereby setting guidelines for future proceedings under the RBI's Master Circular on Wilful Defaulters. Visit to Get Source Disciplinary proceeding against the govt officer - Punishment of withholding of 10% of monthly pension for a period of three years - misconduct - failure to maintain absolute integrity - The Bombay High Court in 2024 quashed the punishment order dated April 26, 2013, against a petitioner, which had imposed a withholding of 10% of monthly pension for three years, as well as the judgment dated January 23, 2020, by the Central Administrative Tribunal. The court found that the punishment was not sustainable due to the absence of proof of grave misconduct or pecuniary loss to the government, and that there was no violation of the specified Conduct Rules under which the petitioner was charged. Visit to Get Source IBC Prayer for condonation of delay in filing the Appeal - Dismissal of section 9 application - The NCLAT observed that the NCLT order clearly indicated the dates of hearing and pronouncement. It referenced Supreme Court judgments to establish the commencement of the limitation period from the date of pronouncement. Distinctions were drawn between cases where orders were pronounced unequivocally and cases where no substantive order was passed before uploading. The NCLAT dismissed the delay condonation application, as jurisdiction to condone the delay was limited to 15 days, ultimately rejecting the appeal. Visit to Get Source Service Tax Inordinate delay in adjudication of show cause notices (SCN) - The petitioner, a steamer agent, challenged show cause notices issued by the Service Tax Commissionerate alleging short-payment of service tax. Despite the petitioner's objections and requests for expedited adjudication, there was a significant delay of almost 12 years. The court found the delay unjustifiable, violating principles of natural justice and statutory provisions. Consequently, the show cause notices were quashed. Visit to Get Source Classification of service - Manpower Recruitment - Activity of deputing certain manpower for undertaking activities such as preparing and planning for melting, doing melting of required material in furnace, pouring of liquid metal in temperature backed shell, deliver poured shell to knock out department - Job work - The core issue was whether the services fell under "Manpower Recruitment or Supply Agency Service" or should be classified differently. The Tribunal, after examining the specifics of the appellant's activities and referencing similar precedents, concluded that the appellant's services were more aligned with "Business Auxiliary Service." This decision underlined the importance of the nature of the contract and the actual control over manpower in determining service classification for tax purposes. Visit to Get Source Levy of service tax on advances received from customers - The Revenue alleged that the advances were taxable, but the appellant argued otherwise, citing a lack of concrete evidence and failure to identify specific taxable services. The CESTAT New Delhi sided with the appellant, emphasizing the necessity of identifying the taxable service and consideration received for it before levying service tax. The Tribunal set aside the impugned order, citing precedents and principles of natural justice. Visit to Get Source Refund of the Service Tax paid - The case involves the Appellant's claim for a refund of Service Tax paid under a lease agreement, contending that the service provided by the lessor constitutes construction services, not renting of immovable property. However, the Appellant failed to provide sufficient evidence to support their claim, leading to the dismissal of their Appeals by both the Adjudicating Authority and Commissioner (Appeals). The Tribunal upheld the lower authorities' decision, emphasizing the Appellant's inability to provide evidence to prove their case. Visit to Get Source Central Excise Area Based Exemption - The appellant, engaged in the manufacture of pharmaceutical products in Sikkim, applied for a special rate of value addition at 73.5% for FY 2009-10 to claim a refund of central excise duty. The application was rejected by the authorities, citing a value addition of 58.86%. The appellant contested this, arguing that the actual cost of raw materials should be considered, not a notional value. The appeal was allowed by the tribunal, and the impugned order was set aside, granting the appellant relief. Visit to Get Source Case Laws: GST 2024 (3) TMI 440 Levy of GST - royalty payment - petitioner has vehemently urged that the royalty payment is tax and not consideration in the context of the privilege parted by the State allowing the petitioner and others to mine sand - HELD THAT:- Reliance has been placed on a Constitution Bench decision of the Supreme Court in India Cement Ltd. and Others vs. State of Tamil Nadu and Others [ 1989 (10) TMI 53 - SUPREME COURT] , wherein, nature of royalty payment was considered and it was opined to be in the nature of tax. Also, it has been shown that a similar controversy is engaging the attention of the Supreme Court in M/s Lakhwinder Singh vs. Union of India Ors. [ 2021 (11) TMI 336 - SC ORDER] . On 04.10.2021, the Supreme Court has held Until further orders, payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed. Until further orders, payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed - List along with Writ Tax No.18 of 2024. 2024 (3) TMI 439 Seeking grant of anticipatory bail - ITC availed on forged and fictitious papers by registering bogus firms and without any business activity - GST registration of two fake firms obtained using the details of the informant - HELD THAT:- The argument although of learned Additional Advocate General is of not entertaining the anticipatory bail of the applicant on the count that non-bailable warrant has been issued against him on 10.08.2023 for which paragraphs 5 6 of the counter affidavit have been placed but the facts which transpires in the present matter are that the first information report was lodged on 04.05.2023 against unknown persons, the name of the applicant surfaced in the matter on 20.07.2023 in CD No. 41, the non-bailable warrant was issued on 10.08.2023 and the anticipatory bail of the applicant was rejected by the Sessions Judge concerned on 06.10.2023 and as such the non-bailable warrant was issued just after 20 days of his name surfacing in the matter and as such ignoring the question of issuance of non-bailable warrant against the applicant during investigation, as of now, the Court has considered the matter on its own merit. In Pokar Ram v. State of Rajasthan and others [ 1985 (4) TMI 341 - SUPREME COURT] the Apex Court had observed that relevant considerations governing the court's decision in granting anticipatory bail under Section 438 Cr.P.C. are materially different from those when an application for bail by a person who is arrested in the course of investigation. It further held that courts must be cautious and circumspect in exercising powers of anticipatory bail as it intrudes the sphere of investigation. In the case of Central Bureau of Investigation Vs. Santosh Karnani and another [ 2023 (4) TMI 1302 - SUPREME COURT] the law of anticipatory bail was reiterated. It was further held that corruption poses a serious threat to our society and must be dealt with iron hands. It not only leads to abysmal loss to the public exchequer but also tramples good governance. The common man stands deprived of the benefits percolating under social welfare schemes and is the worst hit. It is held that there is a need to be extra conscious. Looking to the nature of the case, the gravity of offence, the fact that the present matter relates to an economic offence, the law laid down by the Apex Court in such matters, the magnitude of offence, the modus as adopted to swindle money from the Government exchequer and the fact that custodial interrogation may be required for further investigation in the matter which is a well organised crime to go to its root and thus this Court does not find it a fit case for grant of anticipatory bail. The anticipatory bail application is rejected. 2024 (3) TMI 438 Subsequent initiation of the proceedings under Section 74(1) of the C.G.S.T Act - petitioner discharged his entire tax liability along with the accrued interest immediately upon the finding of the audit team having been made available to the petitioner - Irregular availment of Input Tax Credit - suppression of facts or not - Availability of a statutory alternative remedy of appeal - HELD THAT:- The fact which needs to be considered is that admittedly there was some wrongly availment of I.T.C. by the petitioner in respect of certain exempted tax. This fact was highlighted in the provisional audit report which has been made available to the petitioner by the audit team. The said provisional report was served upon the petitioner on 14.10.2021. The petitioner accepting the said finding immediately discharged the tax liability along with the accrued interest on 28.10.2021, i.e., within a span of around two weeks time, which was much thereafter that the petitioner s audit report was published on 10.11.2021 and where in the audit report itself it has been highlighted that the petitioner has since cleared off all the tax liability and has also paid the relevant interest also up to date. Admittedly, the show cause notice was thereafter has been issued much thereafter on 20.04.2022. Admittedly in the instant case, the show cause notice was issued on 20.04.2022, however, during the course of the audit itself certain discrepancies were pointed out by the audit team. Even much before of the final audit report being published, the petitioner is said to have paid the entire tax liability along with the updated interest on 28.10.2022. In the said circumstances, the case of the petitioner is one which that would fall strictly under Sub-Sections (5) and (6) of Section 73 where it has been emphatically laid down by the law makers that any person chargeable with tax, if he pays the amount of tax along with the interest payable there on, proper officer upon receipt of such information shall not initiate any further proceedings under Sub-Section (1) and all the proceedings shall have to deemed to be concluded. Applicability of Section 74 would come into play only if the conditions stipulated in Section 73 has not been met with by the taxpayer i.e. to say in the event if the conditions stipulated in Sub-Section (5) of Section 73 is not honored by the taxpayer in spite of the tax liability being brought to his knowledge - Further, keeping in view the provisions of Sub-Sections (5) and (6), it will go to establish that once having discharged their tax liability also by paying interest on the said tax payable, then no further proceedings could be drawn for the same tax any further. The attempt of the learned Senior Standing Counsel trying to bring the conduct of the petitioner within the purview of fraud, misstatement and suppression of fact would not be sustainable and the said contention stands negated by the Bench simply for the reason that Sub-Section (1) of Section 73 permits a taxpayer to even clear wrongly availed I.T.C. and also wrongly utilized I.T.C. and it is this what is alleged against the petitioner of having wrongfully and irregularly availed I.T.C. The action on the part of the respondents in initiating the show cause proceedings under Section 74 and passing of the impugned order dated 15.11.2023 both would be in excess of their jurisdiction and the same therefore deserves to be and are accordingly set-aside / quashed. Availability of a statutory alternative remedy of appeal - HELD THAT:- Since the challenge to the impugned order in original and the show cause notice at the first instance itself is not sustainable in the eye of law in terms of Sub-Sections (5) and (6) of Section 73. The petitioner cannot be forced to undergo the entire process of litigation under the statute once when the issuance of show cause notice itself was per se bad and since it is a case of excess of jurisdiction exercised by the respondents, the petitioner has a right to avail a Writ remedy rather than undergoing the process of appeal, revision etc. under the statute. Petition allowed. 2024 (3) TMI 437 Condonation of delay in filing petition - whether the Petitioner has approached this Court only to evade the pre-deposit? - HELD THAT:- The Petitioner was served with a notice dated 16.08.2023 specifically granting 7 days time to file a reply and show cause on the point of delay. The Petitioner was also given an opportunity of hearing in person on 21.08.2023 at 11.00 a.m. and submit all documents alongwith evidences as may be desired. The Petitioner was put to notice that if it fails to avail of these opportunities of hearing, the Department would proceed to pass an order. As the Petitioner did not participate in the hearing and did not appear in person and did not submit reply, the impugned order dated 29.08.2023 was passed. Since the Petitioner has preferred this Petition within limitation, though it has not approached the appellate authority which the Commissioner (GST-Appeal), it is found that it is an incorrect submissions of the Petitioner that it was not granted any opportunity of hearing. In this circumstance, the issue to the extent of violation of the principles of natural justice, is not in the picture. This Petition is disposed off as withdrawn - Since the Petitioner has approached this Court within limitation, the Petitioner relegated to the Commissioner (GST Appeals) on the condition that the Petitioner would file the appeal within seven days from today. Income Tax 2024 (3) TMI 436 Disallowance of interest expenses incurred for non-business purposes - AO has disallowed interest paid to banks and others on the ground that assessee diverted interest bearing funds for giving interest free advances - ITAT deleted addition - HELD THAT:- ITAT came to a factual finding that assessee had huge interest free sundry creditors balance with him and the Assessing Officer has failed to recognize the same. ITAT came to a finding, with which we agree, that when interest free funds and interest-bearing funds are mixed together, they loose their respective identity and hence, the presumption should be that assessee has used interest free funds to give interest free advances. The ITAT in the impugned order has given a table of the position of funds and has concluded that even for Assessment Year 1989-1990 interest free funds available with assessee was sufficient to take care of interest free advances made. Therefore, the ITAT is justified in coming to the conclusion that the interest expenditure claimed by assessee was allowable. Addition u/s 68 in respect of cash credits - ITAT deleting the addition made by holding that the additions were made by the AO without proper examination of evidences furnished and proper reasoning - HELD THAT:- For credit from one Paresh Patel ITAT has accepted, and rightly so, the explanation of assessee that the confirmation letter for Rs. 1,38,772/- only referred to the closing balance at the end of the year and the same was carried forward in the succeeding year. The ITAT has also come to a factual finding that Paresh Patel has confirmed the balance available on 31st March 1991 also and the amount was repaid on 14th June 1991. Similarly with regard to cash credit from one Nitin Patel, there is a factual finding that there was a confirmation letter for the year ending 31st December 1986 and the ledger account furnished showed that the outstanding balance was repaid subsequently. The ITAT also has come to a factual finding that there was no reason to suspect this cash credit. The next item related to cash credit from one Ranak Pate ITAT has come to a finding on facts that the creditor was having a opening balance of Rs. 1,25,000/- and interest have been regularly paid and this creditor is continuing from the earlier years. Similarly with regard to cash credit from one Sudha Patel, from one V.C. Patel and from one Vithalbhai Patel, the ITAT has come to a factual finding that the Assessing Officer has not properly examined the ledger account of assessee because these parties also had share trading transactions and major portion of the credit has been repaid during the year and the Assessing Officer has accepted the debit entries of the trading transactions as genuine. Therefore, no case is made out for interference. Addition made under various heads - ITAT deleted addition by holding that the matter was reached finality by the order of CIT(A) which was not contested by the Revenue as such the same disallowance cannot be made while completing the set aside assessment - HELD THAT:- It is noted by the ITAT that various types of additions aggregating to this amount were made by the Assessing Officer in the original assessment proceedings and in the appeal filed by assessee, the CIT(A) deleted these additions. The Revenue did not prefer an appeal challenging the order of the CIT(A) and hence, the same has attained finality. The ITAT has noted only assessee went in appeal before ITAT challenging the additions confirmed by the CIT(A) and the ITAT has also restored those additions, which were confirmed by the CIT(A), to the file of the Assessing Officer for fresh examination. We would, therefore, agree with the ITAT that the Assessing Officer could not have assessed these various additions again since the CIT(A) had deleted the same in the first round of proceedings and the concerned matters have attained finality. We would also agree with the ITAT that the CIT(A) in the second round of proceedings correctly held that the Assessing Officer was not legally entitled to make these additions again in the second round of proceedings. Therefore, on this issue no substantial question of law arise. 2024 (3) TMI 435 Addition made on account of negative brokerage - ITAT deleted addition as Tax Authorities have not given proper justification in presuming that the loss shown by the assessee is bogus one and constitutes negative brokerage - HELD THAT:- Noting the illustrations, the ITAT has decried the AO s finding of these transactions to be bogus transactions without bothering to examine contract notes supporting these transactions. More so since the contract notes were seized by the Revenue and were in the custody of the Department itself. Despite holding crucial evidence sufficient to test the veracity of testing Assessee s explanation, the AO proceeded to hold the transactions as bogus transactions only on the basis of his own perceptions based on conjectures and surmises. ITAT held the transactions to be sufficiently explained and also observed that the AO not having made any addition of identical nature in the earlier years or subsequent year despite the operation of Assessee being identical in nature for all the years. We find that the entire issue is based on a factual appreciation of evidence before the AO and examined by the ITAT. We agree with the findings of the ITAT on this issue. No substantial question of law arises in the issue. Addition on account of a disparity/mismatch in the stock of shares - According to the AO, the statement of closing stock when compared with the list of closing stock of shares as furnished by Assessee did not tally - ITAT deleted addition - HELD THAT:- ITAT has delved in detail in the issue and held that there was nothing on record to contradict the explanation of Assessee. As per the market mechanism, Assessee is entitled to sell his rights in favour of another person instead of applying for the shares. This right to apply for shares cannot be understood to be an undisclosed asset . Assessee has furnished specific information with corroborating evidence and no substantial question of law arises from this issue. We, thus, agree with the view of the ITAT regarding deletion of the addition by the AO relating to undisclosed stock. Addition on account of credit balance in the account of M/s Champaklal Devidas - assessee had failed to discharge its onus to prove the genuineness of the claim - ITAT deleted addition and noticed the observation of CIT (A) that the accounts relating to AY 1987-88 were very much available with the AO and hence his observation that there was no evidence was incorrect - HELD THAT:- As repayment made by Assessee in subsequent years were considered while holding the transaction to be bogus. Most importantly, the ITAT noticed that the assessment of J. P. Gandhi was also done by the same AO and the profits declared by him were all accepted. All the transactions were routed through bank accounts. The mere fact that Champaklal Devidas has not charged interest on the outstanding loan does not justify holding the transactions to be bogus. The ITAT has relied on the well-settled proposition of law that tax authorities are not entitled to sit in an arm chair of a businessman to regulate business affairs. Hence, the third issue also based on facts and the view of the AO on the basis of general observations, surmises and conjectures de hors any substantial material as rejected by the ITAT is correct. Addition of unexplained cash credit - ITAT perused the opening balance of each of the lenders and concluded that the amounts were not received by way of fresh credit and thus there is no question of assessing the same under Section 68 - HELD THAT:- There is sufficient material provided by Assessee and hence, the ITAT has deleted this addition correctly. Disallowance of interest paid to bank and others - ITAT has discussed at length the method of usage of bank overdraft facility to purchase and sell securities and deleted addition - HELD THAT:- Drawing support from a decision of this Court in the case of Commissioner of Income Tax v Reliance Utility and Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] ITAT directed the AO to delete this disallowance. Even on the issue relating to disallowance of interest paid on security, the ITAT held that AO was persuaded to direct additions without examining the ledger account of Assessee and only on general presumptions. The ITAT has further held that no case of bogus booking is made out. The entire issue is based on the ledger accounts and evidence before the AO, perused by the CIT(A) and, thereafter by the ITAT. It is clearly based on facts in the case and no question of law arises for our consideration. Disallowance of loss on securities transactions - AO disallowed this claim only on the basis that Assessee has passed general entries to book losses. In the second round of proceedings, the AO changed his reasoning and held that Assessee failed to furnish explanation - ITAT noticed vouchers relating to transactions filed by Assessee and also that the transactions were by way of account payee cheque only thus deleted addition - HELD THAT:- ITAT held that a conclusion of booking bogus loss cannot be drawn without constructive examination of evidence. The further issue of levy of interest under Sections 139(8) and Section 217 of the Act is consequential and hence, does not require separate adjudication. Thus on all the issues, the ITAT has overturned the directions of AO on facts and appreciation of evidence and material on record. The ITAT has thus rejected the appeal preferred by the Revenue. Gravity of the matter, being related to the Harshad Mehta scam - The gravity of the scam as referred to by Revenue does not permit us to go beyond the materials available on record and substitute our view with that of the ITAT, which is firmly based on perusal of evidence and findings on record. The AO has failed to base his findings on examination of relevant evidence which was either in the possession of the Revenue itself or ought to have been collected in a systematic manner justifying his conclusions. We do not find any infirmity in the view taken by the ITAT in the impugned judgment and order. 2024 (3) TMI 434 Substantial question of law to be made u/s 260A - prerequisite of admission of the appeal before the High court - The ITAT hold that the assessee had correctly offered the net amount to tax and deleted the additions made by the AO - Further, the ITAT allowed the cross-objection of the assessee and hold that the reopening of the case of the assessee tantamounts to change of opinion which is not permissible as per Section 147 - HELD THAT:- From a bare reading of the Section, it is apparent that an appeal to the High Court from a decision of the Tribunal lies only when a substantial question of law is involved, and where the High Court comes to the conclusion that a substantial question of law arises from the said order, it is mandatory that such question(s) must be formulated. The expression substantial question of law is not defined in the Act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements. A finding of fact may give rise to a substantial question of law, inter alia, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. (See: Madan Lal Vs. Mst. Gopi Anr. R [ 1980 (8) TMI 204 - SUPREME COURT] and Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi[ 2008 (12) TMI 724 - SUPREME COURT] ) As in the instant case no substantial question of law arises from the order of the Tribunal as the appellant has raised all the question of facts and have disputed the fact findings of the ITAT in the garb of substantial questions of law which is not permitted by the statute itself. This Court refrains from entertaining this appeal as there is no perversity in the order passed by the ITAT since the ITAT has dealt with all the grounds raised by the appellant in the order impugned and has passed a well reasoned and speaking order taking into consideration all the material available on record. Tribunal being a final fact finding authority, in the absence of demonstrated perversity in its finding, interference with the concurrent findings of the CIT (A) as well as the ITAT therewith by this Court is not warranted. For the aforesaid reasons, we have no hesitation in holding that no question of law, much less any substantial question of law arises from the order of the Tribunal requiring consideration of this court. 2024 (3) TMI 433 Validity of reopening of assessment - period of limitation to issue notice - validity of a notice issued under Section 148/148A - scope of Taxation and other laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) application - provisions of the new reassessment law introduced by the Finance Act, 2021 - HELD THAT:- As decided in THE NEW INDIA ASSURANCE COMPANY LIMITED [ 2024 (1) TMI 803 - BOMBAY HIGH COURT ] as per the unamended Section 149(1)(b) of the Act, the outer time limit to issue a notice under Section 148 was 6 years from the end of the relevant assessment year and thus, for AY 2013-14, the time limit expired on 31st March 2020. Under the amended provision, a notice under Section 148 can be issued within a period of 3 years or 10 years, the latter available only after fulfilling certain stipulated additional conditions, including the limitation provided for by the first proviso to Section 149(1) of the Act. The first proviso to Section 149(1) stipulates that no notice under Section 148 can be issued at any time in a case for any assessment year, if a notice under Section 148 could not have been issued at that time on account of being beyond the time limit specified under the unamended Section 149(1)(b), i.e., as it stood prior to the Finance Act, 2021. Applicability of Section 149 to be seen qua the notice under Section 148 and not with respect to the notice issued under Section 148A(b) or the order passed under Section 148A(d) of the Act. In the present case, as for AY 2013-14, the 6 years period expired on 31st March 2021, extended under Section 3(1) of TOLA. Therefore, the impugned notice dated 28th July 2022, which is under challenge in the petition, is barred by limitation. Reassessment notices issued for AY 2013-14 are patently barred by limitation as the six years limitation period under the Act (as extended by Section 3 of TOLA) expired by 31st March 2021. However, even on the Revenue s demurrer and assuming that such reopening notices could travel back in time and that the provisions of TOLA protected such reopening notices (we do not agree), even then, in so far as the notices issued for AY 2013-14 is concerned, would in any case be barred by limitation. We record that this order is restricted only to the point of limitation since the impugned notices had been issued for the Assessment Year 2013-2014, after the amendment to the Finance Act on 01.04.2021, and that too under the provisions existing prior to the amendment to the Finance Act. - Decided in favour of assessee. 2024 (3) TMI 432 Disallowance u/s 14A - disallowance of administrative expenditure to arrive at average total asset for computing disallowance as per formula prescribed by Rule 8D on the opening and closing of gross block of fixed assets - Validity of order of ITAT remanding the matter to the AO for proper verification and adjudication - HELD THAT:- As it is not in dispute nor it is controverted by learned senior standing counsel for the respondent that For the Assessment Years 2009-10 and 2010-11 the coordinate Bench of the Tribunal has allowed the interest expenditure on the assessee and also restricted the disallowance on administrative expenses upto Rs. 10.00 lakhs and Rs. 15.00 lakhs for the respective Assessment Year for making disallowance u/s 14A of the Act and such orders passed by the coordinate Bench of the Tribunal are confirmed by this Court while dismissing the Tax Appeals of the Revenue being. [ 2018 (8) TMI 922 - GUJARAT HIGH COURT] . Admittedly, the Tribunal has not considered such decisions and only referred to and relied upon the submissions made by the authorised representative of the assessee to decide the issue for disallowance under Section 14A of the Act. The impugned order of the Tribunal is required to be set aside and matter is required to be remanded to the Tribunal to decide such grounds afresh de novo. 2024 (3) TMI 431 Reopening of assessment u/s 147 - initiating notice u/s 148A(b) - alleged information received from DDIT (Inv.), Mumbai that the petitioner opted accommodation entries - allegation of non-affording of opportunity of oral hearing and also non-supply of certain documents - HELD THAT:- Basis of initiating notice u/s 148A(b) was information regarding transaction between the petitioner and Allbright Electricals Pvt. Ltd. Section 148A(a) provides that the AO shall, before issuing any notice u/s 148, conduct an enquiry, if required, with the prior approval of the specified authority, with respect to the information which suggests that income chargeable to tax has escaped assessment. AO initiated enquiry with regard to the information, as contained in the annexure appended to the notice, and elaborately dealt with, which is referred to herein above. The information, in our opinion, taken as it is, definitely suggests that the income chargeable to tax has escaped assessment. Use of the word suggest denote the legislative intent that that no conclusion at that stage is required to be arrived at but only a prima facie consideration is necessary to initiate proceedings u/s 148A. The materials, which have been disclosed, can neither be said to be patently false, much less irrelevant or extraneous to the relevant assessment year and the transactions made by the petitioner. The petitioner was given an opportunity of being heard. Though number of grounds were urged by the petitioner, apart from his demand for supply of various documents and material from which the information was collected and shared with the petitioner, they are more in the nature of explaining the transaction to say that the transaction amount of Rs. 50,00,000/-was not taxable. However, this is not the stage where assessment has to be carried out. The Assessing Authority, at this stage of making enquiry u/s 148A, does not make any assessment but the purpose of enquiry is to find out whether any income chargeable to tax has escaped assessment. Clause (d) of Section 148A clearly reveals that after receipt of reply in response to the notice under Clause (b), the Assessing Officer is required to decide, on the basis of material available on record, including the reply of the assessee, whether or not it is a fit case to issue notice u/s 148. Therefore, the enquiry u/s 148A is intended to decide whether a case of reopening of assessment is made out or not. Therefore, from the very nature of the enquiry contemplated u/s 148A, it cannot be said that a detailed enquiry and minute examination and scrutiny of each and every material on record and hearing to the assessee is necessary at this stage. Once the information which suggests that income chargeable to tax has escaped assessment, a case for reopening of the assessment is made out. Once it is admitted that heavy transaction has been made between the petitioner and Allbright Electricals Pvt. Ltd. and the same having not been disclosed in the return of income/audit, it is clear that the aforesaid transaction amounts to escaped income for the relevant assessment year. Therefore, in our opinion, admission of the petitioner himself makes out a case for reopening of the assessment u/s 148. Though the reasons which have been assigned by the AO in the order impugned are brief in nature, it cannot be said that the order is non-speaking or mechanical in nature. Non-disclosure of heavy transaction by the petitioner with Allbright Electricals Pvt. Ltd., in the ITR/Audit and the same having been made a basis to reopen assessment by issuing notice u/s 148, cannot be termed as arbitrary, whimsical or perverse, so as to warrant interference by this Court in exercise of jurisdiction under Article 226 of the Constitution of India. The decisions, which have been cited by the petitioner, are distinguishable on facts. Present is a case where party had accepted that certain transactions had escaped assessment. In case of serious dispute with regard to the information or transaction having escaped assessment, non-affording of opportunity of hearing or non-supplying documents, was held to be unfair, arbitrary and unsustainable in law and relief was provided. The judgments cited at the bar by the petitioner are, therefore, distinguishable on facts. No case is made out for interference at this stage. WP dismissed. 2024 (3) TMI 430 Levy of penalty u/s 271B - Delay in filing of Tax Audit report u/s. 44AB - delay was due to the late receipt of the audit report from the Joint Registrar (Kerala Co-operative Societies). - HELD THAT:- It needs to be appreciated that as against obtaining a tax audit report, or indeed a statutory audit report, as under the Companies Act, which are to be from independent auditors, who could be pursued in the matter, and are obliged by law to limit the number of auditees, a cooperative society under the Kerala Act is by law obliged to get it s accounts audited only from the specified Authority thereunder, who is to conduct the annual audit of accounts of all such societies and, further, within the time limit prescribed under the Act. Once therefore the assessee has done all it could within it s means in the facts and circumstance of it s case, visiting it with penalty which cannot be a result of a mechanical exercise, defeating the purpose and intent of s. 273B, would be unfair. In this view of the matter, we think that the assessee s case qualifies for non-imposition of the impugned penalty. We may though clarify that we are not in agreement with the assessee that the default u/s. 44AB, which attracts penalty u/s. 271B, is a technical or venial breach of law, particularly where the audit reports are furnished during the course of the assessment proceedings, which plea the assessee also banks on with reference to some case law. This aspect stands considered in detail per several decisions by this Bench of the Tribunal. Besides, the decision in Peroorkada SCB Ltd. v. ITO [ 2020 (1) TMI 624 - KERALA HIGH COURT] , binding on us, would allay all doubts in the matter. In the facts of that case, the assessee, who had furnished only the audit report from the Jt. Registrar, contended, on that basis, sufficient compliance of s. 44AB. The same did not find approval of the Hon ble Court, which held that only furnishing both the reports, as mandated by the provision, would be in sufficient compliance of the law. To conclude, the assessee has been able to reasonably demonstrate existence of a reasonable cause for the two-month delay attending the compliance of the provisions of s. 44AB. The Revenue has, in our view, acted mechanically inasmuch as there is nothing to suggest that the assessee s conduct is, as claimed, not bona fide. The impugned penalty is accordingly directed for deletion - Decided in favour of assessee. 2024 (3) TMI 429 Addition on account of jewellery found in Bank Locker u/s 69A r.w.s 115BBE - appellant was not owner of the jewellery so found - HELD THAT:- The bench noted at the time of opening of bank locker 141.10 gms of jewellery was found during search jewellery of 700 gms estimated to be lying at the residence of the assessee. While search action at the residence of the assessee, no jewellery was found at his residence. Fact of existence of any such jewellery came on record only through statement recorded at the time of operation of the bank locker this indicate that assessee was forced to admit some jewellery and even after such admission no attempt was made to physically examine any such jewellery at the residence of the assessee. We also find that father of assessee s wife Shri Hukmi Chand Jain has not claimed any credit in relation to his daughter [i.e. assessee s wife] in his assessment. Therefore, jewellery if any of assessee s daughter lying at his mother s residence has already been considered in the hands of his father. Though assessee had declared about 500 gms of jewellery in wealth tax return of HUF, no credit for the same is has been granted. Further, against the total assessed quantity of 841.10 gms, assessee is entitled for credit of 950 gms as per Board s Circular [500 gm for assessee wife, his daughter 250 gm and assessee s son 100 gms and 100 gms for assessee]. As against the eligible 950 gms the total found quantity is 841.10 gms therefore, no addition is required to be made in the hands of the assessee considering the CBDT guideline and therefore, we direct the to delete the addition of Rs. 3,86,552/-. Based on this observation the ground no. 1 raised by the assessee is allowed. 2024 (3) TMI 428 Addition on account of diamond set received as gift by the appellant - Valuation of gift at cost of Acquistion or market value at the time of gift - The CIT(A) accepted the appellant's submission that the diamond set was indeed gifted by his late father. However, CIT(A) granted relief only to the extent of cost of Acquistion and confirmed the additions of difference amount between market value and cost - HELD THAT:- When the cost of acquisition is proved the market value as on the date of marriage difference of 2 lac can not be added as income of the assessee. The assessee also submitted that such gift given by father who alternatively expired on 06.01.2016 and therefore, the affidavit of the mother of the assessee submitted to supplement the assessee s claim. Since this affidavit is not controverted by bringing any contrary to the matter. The statement made by the assessee supported by his mother s affidavit that his father has given the diamond set gift for his daughter in law cannot be valued at market price when the CIT(A) has already considered the relief to the extent of Rs. 3 lac there is no reason to sustain the addition of Rs. 2 lac being the cost of diamond set and market value at the time of marriage. This set of fact supported by version of the assessee and his mother on affidavit we direct to delete the addition sustained by the CIT(A). With this observation the appeal of the assessee is allowed. 2024 (3) TMI 427 Penalty u/s 271B - assessee had failed to get his account audited u/s 44AB - sufficient cause - The assessee explained that the delay in furnishing the Audit Report was due to the death of his elder brother, who managed the financial affairs, and his own critical medical condition during the relevant year. - HELD THAT:- Section 44AB casts an obligation upon the assessee to get accounts audited before the specified date and furnish by that date the report of such audit. It is not the case of the Revenue that the original return e-filed on 04.10.2013 was not within time prescribed u/s 139(1) of the Act. Section 139(5) of the Act permits an assessee to file revised return before the completion of assessment. Assessee has filed revised return within the legally permissible time along with Audit Report. During the course of assessment proceedings itself it was explained by the assessee that delay was caused due to the death of his elder brother who was looking after the financial affairs of the assessee s business. Before the Ld. CIT(A) in reply uploaded on the ITBA Portal on 06.10.2021, it was submitted that the assessee himself was going through a critical medical condition in the year under consideration. It was also submitted that the delay in furnishing Audit Report in time was caused due to inadvertent mistake committed by his Chartered Accountant. The assessee s explanation has merely been disbelieved. In our opinion, there was reasonable cause for failure in furnishing the Tax Audit Report in time. As stated earlier, it is not a case of not getting the accounts audited in time. We, therefore, hold that the impugned penalty u/s 271B is not exigible which we hereby vacate. Assessee appeal allowed. 2024 (3) TMI 426 Assessment u/s 153C - Addition u/s 69A - Certain incriminating documents/information contained in the seized material pertained to the assessee, the proprietor found from third party - During assessment proceedings the common plea of the assessee in both the AY(s) was that merely entries found in the Hajir Johri ledger of M/s. JBL supposedly in the name of M/s. S.K. Impex, the proprietary concern of the assessee does not tantamount to actual transactions having taken place in the absence of any corroborative evidence such as bills, invoices, challans etc HELD THAT:- AR submitted before us that Ms. Parul Ahluwalia nowhere in her statement identified that alleged cash transactions related to the assessee. No specific questions in this regard were asked from her. Nothing is forthcoming from the side of the Revenue to controvert the above pleadings of the assessee. As during the course of assessment proceedings the show cause notice dated 09.12.2021 issued to the assessee does not have any whisper about the statement of Ms. Parul Ahluwalia that her statement is being used adversely against the assessee. It is submitted by the Ld. AR that the assessee got the knowledge of such statement only on receipt of assessment order. If that is the scenario, the question of allowing the assessee an opportunity to cross-examine Ms. Parul Ahlulwalia does not arise. In fact this has not taken place. Therefore, we are of the opinion that the statement of Ms. Parul Ahluwalia recorded during search of M/s. JBL cannot legally be adversely used against the assessee. In taking this view, we are supported by the decision of SMC Share Brokers Ltd. [ 2006 (8) TMI 110 - DELHI HIGH COURT] wherein the court held that where statement of a third person is acted upon without giving an opportunity to cross examine him, principles of natural justice has not been followed and order would not be valid. This decision was rendered in the context of order under section 158BD which is equally applicable in the case of the assessee to order passed under section 153C of the Act. As AO has used his imagination in applying the provision of section 69C for making the impugned addition in both the years treating the alleged cash transactions as expenditure incurred by the assessee towards purchase of gold/bullion from M/s. JBL, theCIT(A) was in a fix. So he confirmed the impugned addition in AY 2016-17 u/s 69C as unexplained expenditure and in AY 2017-18 under section 69A as unexplained money. In our view the impugned addition made by the Ld. AO in both the AY(s) is not sustainable because it is based on mere suspicion, surmise and conjectures and not on legally sound footing and the Ld. CIT(A) admittedly confirmed the addition based alone on facts which emerges from the details and findings made by the Ld. AO - Assessee appeal allowed. 2024 (3) TMI 425 Exemption u/s. 11(1)(d) - contributions received from students towards development and welfare funds of the school - voluntary contribution or otherwise - corpus donation - onus to prove. - Alternative claim towards exemption as regular school fee receipt. HELD THAT:- The assessee s case before us, as before the Revenue authorities, who found it a wholly unsubstantiated, was that there is nothing to infer that the contributions, received once a year, are not voluntary and, further, there is nothing in law to indicate that the direction accompanying the contribution is to be in writing. We are wholly unimpressed. Going by it s version, the assessee means to say that all the students or, more correctly, their parents, come together, once a year, at a specified time, and agree to contribute a specific sum toward corpus donation to the assessee, one each for the school building and EWS, and of course de hors the assessee, who has therefore no role therein. The amount fixed may, further, vary from (say) lower to middle to senior school students. Further, they do this religiously each year, without fail, and irrespective of financial standing of the recipient-society, their individual financial position at the relevant time, the number of their school/college going wards and the need for the funds by the assessee for these two avenues of investment. This becomes all the more quizzical, considering that the contributions are stopped immediately on a student graduating from the school, the same is constant across years and irrespective of the number of students studying (during the relevant period) in the assessee s school and the need for funds by the school for these two avenues of investment. This is as bizarre as it can get, and the assessee s case, clearly a make-believe, only needs to be stated to be rejected. There is nothing voluntary about the said contributions, and there is quid pro quo; the students paying the same as a part of their annual charge to the assessee, which allocates the same to different heads of account or, rather, specifies the same, as it does the other elements of the school fee, viz. tuition fee, laboratory fee, sports fee, extra-curriculum activity fee, etc. The onus to show that it s claim/s falls within the four corners of the exemption provision is on the assessee, which agrees with the latest decision by the constitutional bench decision of the Apex Court in Dilip Kumar Co [ 2018 (7) TMI 1826 - SUPREME COURT] . They have no hesitation in confirming the impugned orders and, accordingly, uphold the disallowance of exemption u/s. 11(1)(d) of the Act. The impugned receipts would nevertheless form part of the assessee s regular receipt, i.e., from the activity of running the school and, accordingly, liable for exemption u/s. 11(1)(a), i.e., if otherwise exigible, in accordance with law. Toward this, we find the AO has considered the same, including the impugned sum as part of income derived from property held under trust. He computes exemption u/s. 11(1)(a), i.e., on account of application of income. Addition of income u/s. 2(24)(x) r/w s. 36(1)(va) - As there is, no scope, therefore, in computing income of a charitable or religious institution, which is to be u/s. 2(24)(iia), applying the principles of commercial accounting inasmuch as the exemption there-from is with reference to the application of income, implying real income. The same is accordingly deleted. 2024 (3) TMI 424 Rectification u/s. 154 - claim of the assessee that the CPC, Bengaluru in the intimation issued u/s. 143(1) had wrongly taken its income under the head Profit and gains from the business or profession at Rs. 35,09,675/- instead of Rs. Nil and raised a consequential demand towards tax and interest(s) u/ss. 234B and 234C - HELD THAT:- Admittedly, the assessee firm had revised its return of income on 03.09.2011 declaring an income. As is discernible from record, the CPC, Bengaluru vide intimation u/s. 143(1) of the Act dated 24.02.2012 had accepted the income disclosed by the assessee firm in its revised return of income. Considering the fact that the assessee firm had itself filed its return of income (revised) declaring an income we are unable to comprehend as to on what basis the acceptance of the said returned income by CPC, Bengaluru could be held as suffering from a mistake apparent from record rendering the same amenable for rectification u/s. 154 of the Act. As observed by the CIT(Appeals), and rightly so, as intimation issued by the CPC, Bengaluru was based on the revised return of income filed by the assessee firm, and no adjustment had been carried out, therefore, the A.O in absence of any mistake apparent from record had rightly rejected its application u/s. 154 - Appeal of the assessee is dismissed 2024 (3) TMI 423 Levy of penalty u/s 271B - failure to get accounts audited in terms of provisions of section 44AB - Determination of turnover in the context of a share broker's income for the purpose of Tax Audit - HELD THAT:- As the assessee is admittedly a share broker, therefore, the decision in the case of Hasmukh M. Shah [ 2002 (3) TMI 199 - ITAT AHMEDABAD-A] will clearly apply to the present case, following which we hold that the sale consideration of the shares sold by the assessee, on which it earned commission/brokerage is not turnover, and cannot be constitute its turnover. It is only the commission income earned by it which can be rightly treated as its turnover and the income in the present case falling well below the limit prescribed by section 44AB of the Act for subjecting the Books of accounts to audit, amounting to Rs. 1,55,614/- only, there was no case for the assessee to have got its books audited in terms of provisions of the said section. In the light of the same, therefore, we find that there is no case for levy of penalty under section 271B of the Act for not getting its books audited u/s 44AB of the Act. Exception to the applicability of the main section - Where the majority of the transactions are through transparent banking channel, the requirement of getting books audited gets diluted to a certain extent, and therefore, the proviso raises the limit of getting audit done from the turnover of rupees one crores to rupees five cores. The basic plank for audit to be done, where the turnover exceeds a particular limit, is not taken away by the proviso. It only raises the bar from rupees one crores to rupees five crores. Therefore, the contentions of the ld.DR that the proviso refers to the aggregate of receipts, is an incorrect understanding of the provision. Therefore, the contention of the ld.DR, we find is of no merit, and is rejected. The penalty levied in the present case therefore is not sustainable and we direct deletion of the same. Decided in favour of Assessee. 2024 (3) TMI 422 Addition u/s 68 - onus prove - non-compliance by the lender - Treating the loan transaction as a mere accommodation entry - CIT(A) deleted the additions - HELD THAT:- As both assessee as well as lender have produced tell-tale evidences to support the propriety of loan transaction albeit in the remand proceedings. The loan from Sunmoon has not only carried charge of interest but has also been partly repaid prior to search. Such traversing facts requires to be given due weightage. The lender has confirmed the loan. The capacity of loan has not been doubted by the Revenue Authorities. Thus, when seen on standalone basis, one cannot say that identity, creditworthiness of lender and genuineness of transaction is lacking in any manner to a reasonable person instructed in law. Thus, statutory discretion vested with the AO under Section 68 is fairly required to be exercised in favour of the assessee as rightly held by the CIT(A). We also simultaneously note that the AO himself has legitimized the transactions with different parties appearing under the head Entry in the loose paper by accepting the bonafides of transactions qua different entities. The transaction with Sunmoon was disputed in isolation on the grounds of non-compliance by the lender. As loose paper found in the course of search do not constitute incriminating material belonging to the assessee per se. As noted, the AO himself has found the other transactions mentioned in the loose paper to be correct and worthy of acceptance. The only transaction qua Sunmoon has been questioned, that too, owing to non responsive lender in the course of original proceedings. As a corollary, the provision of Section 68 has been applied dehors any incriminating material found in the course of search. Such course of action is not permissible in law in the light of Abhisar Buildwell ( 2023 (4) TMI 1056 - SUPREME COURT] The statement made by the Director of the assessee is required to be read down owing to its retraction. In such circumstances existing the present case, it is difficult to accept the stand of the Revenue that loan from Sunmoon is a mere accommodation entry where it has been demonstrated that the assessee has incurred interest cost as well as displayed his intention to make repayment thereof. Decided against revenue. Unaccounted sales - AO has made estimated addition being 1% of the total sales holding it to be unaccounted sales on the basis of statement of the Director in the course of search proceedings - CIT(A) has referred to several decisions to hold that there is no scope of extrapolation in the search assessment based solely on assumptions and surmises in the absence of any tangible material qua the relevant assessment year - HELD THAT:- We have perused the process of reasoning adopted by the CIT(A) carefully and see no reason to depart therefrom. As observed in several judicial precedents, the additions based on extrapolation of material relating to different other years is not permissible in a search assessment. We thus see no error in the conclusion drawn by CIT(A). The action of the CIT(A) reversing the adhoc additions made by AO without any tangible material qua A.Y. 2013-14 in question is justified on facts as well as in law and thus does not call for any interference. The appeal of the Revenue on this point thus does not hold any water. 2024 (3) TMI 421 Revision u/s 263 - second revision order - assessment has been set aside or de novo assessment - sending of the proposal by the successor-Assessing Officer - As per CIT assessment order was erroneous and prejudicial to the interest of Revenue for want of proper enquiries on the part of the AO while framing the assessment on various issues viz. share application money including the identity and creditworthiness of the share subscribers, charging of interest u/s 201(1A), rental income from the vehicles and depreciation thereupon - HELD THAT:- In this case, the earlier assessment order was set aside for de novo assessment which means that all the issues were open before the AO - The assessee, under the circumstances, was entitled to furnish explanations and evidences on each of the issue that was open before the AO and in relation to which the details were called upon by the AO. There was neither any statutory power nor otherwise any other law requiring the Assessing Officer to only enhance or assess the same income which was earlier assessed. Such a proposition would be against the spirit of the law. When an assessment has been set aside or de novo assessment, all the issues in the assessment are open before the AO, assessee as well also gets the right to plead, explain and furnish evidence on each of the issues. The outcome of the fresh assessment order is neither dependent nor can be based on the earlier assessment order which has been held to be erroneous and prejudicial to the interest of the revenue. If in the outcome of the fresh assessment order, the resultant assessed income is less than the earlier assessed income, the said order, by any fiction of law, cannot be termed as erroneous. In the case in hand, AO noting that in the fresh assessment proceedings, the assessed income of the assessee would be less than the earlier assessment income, sought necessary directions from the ld. PCIT-4, Kolkata in this respect and the ld. PCIT-4, Kolkata after considering this aspect has categorically directed the Assessing Officer that if after making necessary enquiries/verifications, even if the assessed income was coming out to be less than the earlier assessed income, he should pass the order accordingly. AO after getting the aforesaid directions, passed the impugned order. Thereafter , sending of the proposal by the successor-Assessing Officer on the ground that the income assessed vide subsequent assessment order was less than the income assessed vide earlier assessment order in itself, was a wrong and illegal proposal and the subsequent action of the ld. PCIT, in exercise of revision jurisdiction on the said proposal, cannot be held to be justified. Moreover, the assessee has already been subjected to two assessment proceedings, wherein, the assessee had already furnished necessary details and evidences and under the circumstances, the assessee cannot be burdened with further assessment proceedings on the same issue, by way of reopening of the assessment only on the ground that the certain more enquiries are required to be made by the Assessing Officer. Such an action cannot be held to be justified as under such circumstances, there will be no finality of the assessment and every time, the assessment order passed by Assessing Officer could be subjected to revision order by the ld. PCIT alleging that more enquiries are needed. The assessment cannot be kept open in perpetuity. There must be some finality to the proceedings. For exercising of revision jurisdiction for the second time or thereafter, there must be mention of specific and strong grounds warranting such revision of assessment order. The revision jurisdiction for want of mere enquiries cannot be exercised at the whims and wishes of the PCIT. Since, in the case in hand also, the impugned assessment order was passed by the Assessing Officer after getting approval of the then PCIT-4, Kolkata, therefore, merely because of successor-PCIT-4, Kolkata did not agree with his predecessor, that does give him right to exercise his revision jurisdiction which would amount to questioning the wisdom of his predecessor, who has not found any fault with the assessment order in question. Such a course of action would, in our view, is impermissible in law. In view of this, the impugned order passed u/s 263 of the Act, in our view, is not sustainable in the eyes of law and the same is accordingly quashed. Appeal of the assessee stands allowed. 2024 (3) TMI 420 Unexplained cash credit u/s 68 - Bogus capital introduced by the partners of the assessee-firm - as per CIT(A) Agriculture income shown by the partners was highly inflated and actually there was not enough income to justify the capital introduction - HELD THAT:- The identity of the partners was not doubted. We have also noted the fact that these partners have confirmed having introduced aforestated capital in the assessee-firm. Where the identity of the partners was not doubted and partners had confirmed introduction of capital in the assessee-firm during the year, the issue stands covered by the decision of Pankaj Dyestuff Industries [ 2005 (7) TMI 601 - GUJARAT HIGH COURT] wherein held that addition, if any, in such circumstances ought to have been made in the hands of the partners alone who had owned up the money introduced as capital as belonging to them but failed to prove their creditworthiness. Even otherwise we find that the returns filed by these partners prove their creditworthiness since the income though returned as agricultural income was not accepted by the department in toto but the portion not accepted was treated as income from other sources of these partners. Thus the quantum of income returned by these partners was accepted by the Revenue albeit under different head of income. Thus there can be no case of the Revenue now to hold that creditworthiness of the partners is not proved on account of their agricultural income not being accepted by the Revenue. Thus we hold that the addition made to the income of the assessee as unexplained capital of partners, is not sustainable and the same is therefore directed to be deleted. The ground no.2 is allowed. Adhoc disallowance of expenditure incurred by the assessee - assessee contended before us that in the preceding year in the case of the assessee, the disallowance had been restricted to Rs. 1,50,000/-, and he pleaded for relief accordingly in the present case also - HELD THAT:- DR was unable to controvert the above contention of the Ld.CIT(A). Thus we direct the AO to restrict the expenditure to Rs. 1,50,000/-. Decided partly in favour of assessee. Customs 2024 (3) TMI 419 Maintainability of appeal - time limitation - Recovery of the Amounts during the Pendency of Appeal - Circular No. 984/8/2014-CX - encashment of the Bank Guarantee - HELD THAT:- In view of the circular, the position on recovery is clear. The authorities are expected to act accordingly and we see no reason as to why the circular would not be followed, subject to the petitioner following the conditions stipulated therein. In view of the statutory alternative remedy of appeal and as the petitioner is also ready to approach the appellate authority by complying with the statutory conditions within the period of limitation of 60 days, the writ petition is being disposed of finally, providing that the petitioner shall file the statutory appeal by complying the statutory pre-deposit condition, within the limitation period of 60 days from the date of the order impugned in this petition, dated 30.12.2023 and thereupon he may approach the competent authority with proof of deposit along with copy of memo of appeal, as per the circular against the recovery for rest of the amount. Since the period of limitation of 60 days for filing appeal has yet not expired, till the period of limitation of 60 days is over, any coercive action pursuant to clause (4) in the impugned order will not be taken against the petitioner. The Writ Petition is disposed of finally in the aforesaid terms - As a sequel thereto, miscellaneous petitions, if any pending, shall also stand dismissed. 2024 (3) TMI 418 Maintainability of Refund claim - Order of assessment was not challenged - whether in the absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty can be entertained? - HELD THAT:- From the letter, it is evident that the these letters are in nature of assessment order determining the duty payable on the gold sought to redeemed as per the order. Appellant had not challenged the determination of the duty as per these letters/ assessment orders before the appellate authority and got the order modified in appeal. It is settled law that appellant refund claim wherein the order determining the duty is not challenged and modified in appeal by the appellate authority, refund claim is not maintainable. Refund proceedings in terms of Section 27 of the Customs Act, 1962 are only executionary and duty amounts cannot be redetermined in such proceedings. Thus, the refund claim filed by the appellant without any challenge to the two letters determining the duty payable in terms of Section 125 (2) is maintainable, till the time assessment made in the said letters is set aside by the appropriate appellate authority. Appeal is dismissed. 2024 (3) TMI 417 Levy of penalty - Smuggling of Gold - seizure - Commissioner (Appels) set aside the penalty - Burden of proof is on the Department - evidence to prove the owner of the confiscated gold - HELD THAT:- We find that merely because a person had filed a Writ Petition in the High Court and had not responded to the summons by the officers till the dismissal of the Writ Petition by the High Court, no inference can be drawn that he was guilty or complicit in dealing with the smuggled gold. Ld AR has mis-understood the expression so far as may be to mean that the adjudicating authority may or may not follow the procedure u/s 138B. All that it means is that they apply to other proceedings as they apply to prosecutions. However, some words in sub-section (1) such as court do not apply to the other adjudication proceedings and in such case, the court must be replaced by adjudicating authority and the provisions may be read accordingly. So far as may be only means with appropriate substitution of words as they apply to adjudication proceedings and do not mean that it is upto the adjudicating authority to follow the procedure u/s 138B or not. Thus, the two statements cannot be relied upon. As far as the telephonic calls are concerned, learned Senior Counsel does not dispute that Shri Amit Goel not only knew both Shri Rajesh Kumar (as an operator in the gold market) and Shri Pankaj Kumar (as his employee) but also that he would frequently call them. He also does not deny that Shri Goel had called them in the morning of the day of seizure. His explanation is that he called Shri Pankaj Kumar because he had not reported for work and called Shri Rajesh Kumar to enquire about the gold prices. These were part of the statement of Shri Amit Goel. We find that these are plausible explanations for the calls made. It does not emerge from the investigation as to what was discussed during the calls because the CDRS do not give recording of what was discussed but only who called whom and for how long. It also does not appear that during investigation, Shri Pankaj Kumar and Shri Rajesh Kumar were either questioned about what was discussed in that morning on phone with Shri Amit Goel nor were they confronted with the statement of Shri Amit Goel on this issue. This leaves the statement of Shri Rajesh Kumar who was examined and cross examined and there were sufficient contradictions in his statements during cross examination. Searches were conducted at both the residence and office premises of the respondent quite early during the investigation but nothing incriminating was found. Setting aside the penalty - Revenue s prayer to restore the penalty imposed on Shri Amit Goel by setting aside the impugned order is based on the fact that Shri Goel had called Shri Rajesh Kumar and Shri Pankaj Kumar on that day and based on four statements. In the absence of any evidence to the contrary, the plausible explanation regarding the reasons for the calls must be accepted. Of the four statements, two are not relevant as the procedure followed u/s 138B was not followed. Of the remaining two statements, Shri Pankaj Kumar retracted his statement and stood by the retraction during the cross-examination. There was no re-examination by the department to disprove this hostile evidence. This leaves with the statement of Shri Rajesh Kumar who had, during cross-examination, contradicted himself. Hence, this evidence is not sufficient to hold that Shri Amit Goel was the owner of the confiscated gold and that had sent it to Shri Rajesh Kumar through Shri Pankaj Kumar and therefore, restore the penalty imposed on him u/s 112. Thus, we uphold the impugned order and dismiss Revenue s appeal. The miscellaneous application also stands disposed of. 2024 (3) TMI 416 Penalty on daily wager - confiscation of the seized Gold - HELD THAT:- We find that in this case, it is a fact on record that the appellant was carrying a contraband goods, which are notified items in terms of Section 123 of the Customs Act, 1962 and the appellant has failed to show the licit documents for possession of the same. Thus, the gold has rightly absolutely confiscated and the same has not been claimed by the appellant being owner of the same. Further, it is a fact on record that the appellant is a poor fellow, who is a daily wager and has come to the city at Kolkata for earning purposes. Taking into account the financial condition of the appellant, although the appellant is liable to be penalized, but the quantum of penalty is reduced to Rs.25,000/-. Hence, the appeal is disposed off. 2024 (3) TMI 415 Seizure of Gold Bars - Confiscation - Penalty u/s 112(b) - HELD THAT:- As can be seen from the Section 112(b), that mere carrying, keeping or dealing in any other manner with any goods which are liable for confiscation, would entail penalty u/s 112(b). Appellant was carrying 17 gold bars of foreign origin which is not disputed by either side and was not carrying any documentary evidence. Though as per the factual details, it may be possible to come to a conclusion that the Appellant would not be financially strong to possess the gold bar worth of Rs. 90 lakhs, still even as a person carrying this gold bars without proper documentary evidence, he would be required to be imposed with penalty u/s 112(b) of the Customs Act, 1962. However considering the fact that the Appellant is a small time gold melting person, I take the view that imposing penalty of Rs. 20 Lakhs on him when the absolutely confiscated gold bars are worth of Rs. 90 Lakhs, is very harsh on him. Only on this ground, I reduce the penalty from Rs. 20 Lakhs to Rs. 2 Lakhs. It is seen from the Appeal Papers that he has already deposited Rs. 1.5 Lakhs while filing the Appeal. After adjusting this amount, the Appellant is required to pay balance Rs. 50,000/- which should be fulfilled by him by 30th June 2024. The absolute confiscation order is not challenged. Hence, I affirm the same - Thus, Appeal stands disposed off thus. 2024 (3) TMI 414 Mandatory penalty u/s 114A of the Customs Act, 1962 not imposed - imported goods as Polyester Bed Sheet - mis-classified the impugned goods - confiscation - redemption fine - duty - Penalty imposed u/s 112(a) - HELD THAT:- Following the decision of Tribunal in the case of Commissioner of Customs (Port), Kolkata v. M/s. Silpha Finvest P. Ltd. [ 2024 (3) TMI 246 - CESTAT KOLKATA] . We are of the view that the respondent imported Bed sheets which are having merit classification under CTH 6304 of the Customs Tariff Act, in these circumstances, the charge of suppression of facts is not sustainable against the respondent. Therefore, we do not find any merit in the appeal filed by the Revenue. Accordingly, the same is dismissed. 2024 (3) TMI 413 condonation of delay - in filing appeal before the Commissioner of Customs (Appeals) - time limit prescribed u/s 149 - HELD THAT:- The appeal has to be filed before the Commissioner (Appeals) within 60 days, though a period of 30 days after the expiry of the initial period of 60 days can be condoned if the appellant is able to satisfy the Commissioner (Appeals) that it was prevented by sufficient cause from filing the appeal within the period of 60 days. The submission advanced by the authorized representative before the Commissioner (Appeals) that there is no time limit prescribed u/s 149 of the Customs Act was, therefore, correctly rejected by the Commissioner (Appeals) as this fact was irrelevant for the purpose of computation of limitation provided for filing an appeal before the Commissioner (Appeals). The Commissioner (Appeals), therefore, in the absence of any explanation provided by the appellant for condoning the delay, committed no error in dismissing the appeal. The present appeal is, therefore, without any merit and is, accordingly, dismissed. 2024 (3) TMI 412 Smuggling of gold - Imposition of penalties u/s 112 - HELD THAT:- We find that the appellants have never admitted that they were having any knowledge of smuggling of gold. The trolley bags were exchanged by Shri Pahalad Soni and Chhotu, which were having gold in the handle. They were bonafidely carrying the bags. Therefore, as they have no knowledge about the gold concealed in the bags and these facts are not disputed by the Revenue. We also find that that the appellants had never admitted that they have any knowledge during carrying of the gold in the bags and Shri Pahalad Soni, who is held to leader of the group, has admitted that he has changed their bags by the trolley bags which are carrying gold. Thus, the appellants are totally innocent in the said act of smuggling of gold by Shri Pahalad Soni or Chhotu. Therefore, the penalties on the appellants are not imposable. Accordingly, the penalties imposed on the appellants are set aside and the appeals are allowed with consequential relief, if any. Corporate Laws 2024 (3) TMI 411 Seeking grant of bail - long incarceration of the applicant without any hope of commencing the trial at least for a few years - serious ailments with which the applicant has been suffering at the age of 62 years - offences punishable under Section 447 of the Companies Act, 2013 and Sections 417, 420 r/w 120-B of the Indian Penal Code, 1860 - HELD THAT:- The Hon ble Supreme Court in case of Jainam Rathod [ 2022 (4) TMI 1421 - SUPREME COURT ] has granted bail to the applicant who was being prosecuted for violation of the provisions of Section 447 of the Act of 2013 as well as various provisions of the Indian Penal Code, 1860, including Sections 406, 417, 418, 420, 467, 468, 471, 474 and 477A. A Special Leave petition preferred by the appellant was dismissed by the Supreme Court on 27th January, 2020 with observations that it was always open for the appellant to move a fresh application for bail - The Hon ble Supreme Court has also noted it s judgment in the case of Serious Fraud Investigation Office V. Nittin Johari [ 2019 (9) TMI 570 - SUPREME COURT] while granting bail to the appellant Jainam. The appellant was released in light of the fact that in the absence of a fair likelihood of the trial being completed within a reasonable period, personal liberty of the appellant is to be protected in case of delay in conclusion of the trial. It is well settled that if co-accused in the case are equally placed, meaning thereby, on the same pedestal then there is no reason to deny bail to the accused where other co-accused are not in custody. Indubitably, investigation is over and the applicant s detention is no more required in judicial custody. Nothing is to be recovered at the instance of the applicant. Almost all the evidence is in the form of documents, which is in the custody of the respondent No. 1. Learned Senior Counsel would contend that there is no reasonable apprehension of the applicant absconding or fleeing away from justice since he has always been co-operating with SFIO s investigation for which he has been called for almost 30 times. A look out notice has already been issued against the applicant which shall deter him from leaving the country. Learned Senior Counsel submits that the applicant would surrender his passport - Since the case is predominately based on documentary evidence and investigation will mainly involve analysis of accounting entries and financial statements and other documents, the Counsel submits that there would no question of tampering with the same. Dehors merits and demerits as well as the statutory embargo as contemplated in Section 212 (6) (ii) of the Act of 2013, powers of this Court under Article 21 of the Constitution are unfettered, in the sense, while exercising constitutional jurisdiction, statutory restrictions, per se, do not oust the ability of this Court to grant bail on the ground of violation of part III of the Constitution; inarguably, statutory restrictions vis-a-vis constitutional jurisdiction will have to be harmonized. The applicant Hari Sankaran be enlarged on bail subject to fulfilment of conditions imposed - bail application allowed. Insolvency & Bankruptcy 2024 (3) TMI 410 Prayer for condonation of delay in filing the Appeal - Dismissal of section 9 application - HELD THAT:- The order clearly mentions both the date i.e. date of hearing i.e. 21st September, 2023 and date of pronouncement i.e. 25th September, 2023. Order also indicates that counsel for the operational creditor i.e. Appellant was present and the order was pronounced in the presence of the Learned Counsel for the Appellant. In view of the law laid down by the Hon ble Supreme Court in V. Nagarajan [ 2021 (10) TMI 941 - SUPREME COURT] , the period for filing the Appeal shall commence from the date when order is pronounced in presence of Learned Counsel for the Appellant, the submission of the Appellant relying on Judgment of Sanjay Pandurang Kalate [ 2023 (12) TMI 1249 - SUPREME COURT] in paragraph 20 is to be considered - Paragraph 20 as quoted were in reference of the facts of the case of Sanjay Pandurang Kalate, where although order was pronounced subsequently but earlier date was put in the order. The present is a case where both the date of hearing and date of pronouncement has been clearly mentioned in the order hence the observation of para 20 in Sanjay Pandurang Kalate has no relevance in the presence case. The Appeal have been filed beyond 15 days after expiry of the limitation, we are unable to condone the delay since our jurisdiction to condone the delay is limited to 15 days only as per Section 61(2) proviso of the Code. Delay Condonation Application is dismissed. PMLA 2024 (3) TMI 409 Seeking for transfer of investigation of Case - money laundering case involving public distribution system scam in which a cabinet Minister of the State of West Bengal was arrested - Whether the facts and circumstances in the case on hand would fall within the parameters as mentioned by the Hon ble Supreme Court in STATE OF WB. ORS. VERSUS COMMITTEE FOR PROTECTION OF DEMOCRATIC RIGHTS WB. ORS. [ 2010 (2) TMI 1118 - SUPREME COURT] ? - whether ED was justified in seeking for transfer of the cases to CBI? - whether the State of West Bengal was justified in seeking to set aside the constitution of SIT and allow them to retain the powers to investigate those cases and proceed further? HELD THAT:- Merely because ED had not sought for transfer of the predicate offence to CBI would not disentitle them to seek for a transfer of the three cases to an independent agency. It is not in dispute that the case investigated by ED involves a sitting Minister of the West Bengal Government, the person whose premises were to be searched namely, Shahjahan is a very influential person in the ruling party and has been on the run for over 50 days and apprehended only on 29 th February, 2024. Above all, the circumstances under which FIR No. 7 of 2024 which was registered by the Inspector-in-charge, Nazat Police Station is clouded with suspicion for more than one reason. In Paragraph 13 and 14 of the interim order dated 11th January, 2024, the learned Single Bench has recorded a finding that an officer-in-charge who has registered an FIR had signed it at 10:30 A.M. in the morning on the complaint of the security guard of Shahjahan could not have signed another FIR on the same day based on a complaint of a Sub-Inspector of Police (Suo Moto). Therefore, the Court observed that there was a clear inconsistency between the two FIRs which disclose completely different version of the incident and the Court s mind is not free from doubt that FIR No. 7 of 2024 may have been pre-timed based on a procured complaint to show prior FIR on the same day against the officials of ED and therefore, the allegations made by ED cannot be brushed aside. It is no doubt true that the order passed in CRR 164 of 2024 dated 11.01.2024 is only an interim order. The case which has been registered by ED, investigating into the public distribution system scam involves highly politically powerful persons which include the accused Shahjahan. Thus, what is required, is a fair, honest and complete investigation and this alone will retain the public confidence in the impartial working of the State agencies. There are no hesitation to hold that this confidence has been shaken and there can be no better case than the case on hand which requires to be transferred to be investigated by CBI. It is a pitiable state of affairs when we hear the allegation made by ED that they were not even given the copy of the FIR registered based on their complaint in FIR No. 9 of 2024 and they were able to secure a certified copy only after they file the writ petition. The accused who has been apprehended on 29th February, 2024 after being on the run for more than 50 days is not an ordinary citizen. He is an elected representative of the public, holding the highest office in a Zilla Parishad, he was fielded as the candidate at the elections held for the said post by the political party which is ruling dispensation. Thus, it has become imperative and absolutely necessary for doing complete justice and enforcing the fundamental rights of the public in general and the public of the locality that the cases be transferred to the Central Bureau of Investigation for investigation and to proceed further. The order passed by the learned Single Bench constituting the Special Investigating Team is set aside - Petition allowed. Service Tax 2024 (3) TMI 408 Inordinate delay in adjudication of show cause notices (SCN) - delay for a period of almost 12 years - Short payment of service tax - non-inclusion of Ocean Freight and other allied charges in the value of taxable service - HELD THAT:- The Respondents have not explained as to why, after issuing the show cause notices in 2009, 2010 and 2011, they could not complete the adjudication for a period of more than 12 years. It is the case of the Petitioner that, from 2013 to 2020, Respondent No. 2 did not take any steps for adjudication of the show cause notices. In response thereto, the Respondents have referred to letters being issued in 2015 and in 2017. Despite the Petitioner putting the Respondents to the strict proof of proving that these letters had been issued to the Petitioner, the Respondents have not produced the said letters nor proved that the Petitioner had received those letters. In the absence of any such proof having been furnished by the Respondents, the statement in the Petition that, from 2013 to 2020, Respondent No. 2 did not take any steps for adjudication of the said show cause notices, have to be accepted - the delay in completion of the adjudication of the show cause notices for a period of almost 12 years cannot be attributed to the Petitioner. Further, in the absence of any explanation from the Respondents for the said delay, the impugned show cause notices are required to be quashed and set aside. The Petitioner is also justified in relying upon the decision of the Coordinate Bench of this Court in Writ Petition No. 468 of 2021 dated 21st August, 2023, (of which, one of us, G.S. Kulkarni, J, was a member) [ 2023 (8) TMI 1050 - BOMBAY HIGH COURT] in its own case, where on similar facts, the show cause notices were quashed on the ground of delay in adjudication of the show cause notices. Petition allowed. 2024 (3) TMI 407 Classification of service - Manpower Recruitment or Supply Agency Service or not - activity of deputing certain manpower for undertaking activities such as preparing and planning for melting, doing melting of required material in furnace, pouring of liquid metal in temperature backed shell, deliver poured shell to knock out department - HELD THAT:- The matter is no longer res-integra as this Tribunal has already decided this matter in the case of NARESH K SOLNAKI VERSUS C.C.E. S.T., RAJKOT [ 2023 (9) TMI 652 - CESTAT AHMEDABAD] where it was held that when the agreement between the service provider and recipient is for a particular job and not for supply of man power, the activity cannot be classified under Man Power Recruitment or Supply Agency Service . The impugned order-in-appeal is without any merit and therefore set aside - appeal allowed. 2024 (3) TMI 406 Non-discharge of applicable service tax on advances received from customers - Department has neither alleged nor indicated the exact taxable service which was agreed upon to be provided against the said advances received - HELD THAT:- It is found that the Adjudicating Authority fails to understand that in demanding the service tax, the twin conditions i.e. identification of the particular service rendered and the payment received for such service, either before, during or after providing of such service, were to be satisfied - Learned Commissioner has considered the appellant submission that 90% of their income is towards air travel agency service and that in provision of such service no advances were being taken. Interestedly, Learned Commissioner uses the submission of the appellant to come to the conclusion that if 90% of the receipts is for the air travel agency service, the rest 10% is towards other services rendered or to be rendered by them and in terms of Section 67 of the Finance Act 1994 such amounts are includable in the gross value of service for the purpose of levying of service tax. It cannot be understood as to how the Commissioner comes to the conclusion that this 10% of the income or advances shown in the books of accounts of the appellants leads to the inevitable conclusion that the amounts were for provision of certain services - there are no specific service has been identified by the Adjudicating Authority, while accepting in principle that duty evasion cannot be proved with mathematical precision, the same cannot be established by applying a mathematical formula - Courts and Tribunal have been consistently holding that service tax cannot be fastened without identifying the specific service provided and consideration received or to be received for the same. Tribunal has held in the case of Shubam Electrical [ 2015 (6) TMI 786 - CESTAT NEW DELHI] which was upheld by Supreme Court in [ 2016 (5) TMI 1055 - DELHI HIGH COURT] that We notice that in the show cause, neither any period has been specified nor any amount of demand quantified. The show cause notice does not refer to any agreement between the appellant and the telephone company so as to identify the exact nature of service rendered. It also does not name the taxable services allegedly rendered by the appellant. These deficiencies in a show cause notice are fatal and such a show cause notice is per se unsustainable as it disables the assessee to defend itself, thereby being violative of the principles of natural justice. The impugned order is not legally sustainable and is liable to be set aside - appeal allowed. 2024 (3) TMI 405 Invocation of Extended period of Limitation - non-payment of service tax under RCM on transportation charges - availability of CENVAT Credit - Revenue neutrality - HELD THAT:- The appellant was required to pay service tax on transportation services under Reverse Charge Mechanism (RCM). If the said charges would have been paid by the appellant, the same were entitled to take the cenvat credit to the appellant. Therefore, it is a situation of revenue neutrality as the appellant himself has to take the credit of the same. In that circumstances, a show-cause notice issued to the appellant on 06.04.2016 for the period October, 2012 to March, 2013, is barred by limitation as held by this Tribunal in the case of M/S ASMITHA MICROFIN LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE SERVICE TAX, HYDERABAD-III COMMISSIONERATE [ 2019 (9) TMI 122 - CESTAT HYDERABAD] , wherein this Tribunal has held It has been well settled at the hands of the Apex Court in the case of JET AIRWAYS (INDIA) LTD. VERSUS COMMISSIONER [ 2018 (1) TMI 210 - SC ORDER] that extended period of limitation cannot be invoked in revenue neutral cases. Therefore, the entire demand is hit by limitation and therefore needs to be set aside. Therefore, following the precedent decision of the decision of this Tribunal, it is held that the extended period of limitation is not sustainable in this case - the impugned order set aside - appeal allowed. 2024 (3) TMI 404 Levy of Service tax - Business Auxiliary Service or not - consideration received by the Appellant from M/s. Flender Limited for non-compete agreement for a period of 3 years - onus of prove on department regarding taxability of service (shifting burden) - restriction of utilization of CENVAT Credit availed on common input services over and above 20% - interest and penalty. Levy of Service tax - Business Auxiliary Service or not - consideration received by the Appellant from M/s. Flender Limited for non-compete agreement for a period of 3 years - HELD THAT:- There is no room for any assumption or presumption in a taxing statute. In order to bring any service within the scope of 'Business Auxiliary Service' the promotion of client's business must be direct - there is no clause in the agreement which promotes the business of Flender. In this regard, the Appellant cited the decision of the Tribunal, in the case of M/S JETLITE (INDIA) LIMITED VERSUS CCE, NEW DELHI [ 2010 (12) TMI 40 - CESTAT, NEW DELHI] , wherein it has been held that the onus is on the Department to establish the taxability of the service. It is found that the Revenue has not discharged this responsibility - In the instant case, it has not been spelt out in the Notice under which sub-clause of the Business Auxiliary Service the activity of the Appellant can be classified - As the Notice has not specified the specific sub-clause in the definition of 'Business Auxiliary Service' where the services rendered by the Appellant can be classified, it is held that that the demand confirmed in the impugned order under the category of 'Business Auxiliary Service' is not sustainable. Restriction of utilization of CENVAT Credit availed on common input services over and above 20% - HELD THAT:- The restriction of utilization of CENVAT Credit availed on common input services over and above 20% has been prescribed in Rule 6(3) of the CENVAT Credit Rules, 2004. However, in respect of the services specified in Rule 6(5) of the CENVAT Credit Rules, 2004, there is no such restriction - Rule 6(5) is an exception to the other provisions of Rule 6. Full credit can be availed and utilized in respect of the common input services specified in Rule 6(5) of the CENVAT Credit Rules, 2004. The only condition is that the said input services should not be exclusively used in the manufacture of exempted goods or providing exempted services. In the present case, the Appellant has been providing output services such as 'Business Auxiliary service', Storage and Warehousing Service', and 'Maintenance and Repair Service' and paying service tax on them. Thus, it is evident that the credit availed on the input services have not been used exclusively for providing any exempted output service - Since the Appellant has utilised full credit only in respect of those input services specified in Rule 6(5) of CCR 2004, it is held that the Appellant has rightly availed and utilized the CENVAT Credit as provided under Rule 6(3)(c) and Rule 6(5) of the CENVAT Credit Rules, 2004. Accordingly, the demand confirmed in the impugned order on this count is not sustainable. Interest and penalty - HELD THAT:- Since the demand of service tax confirmed in the impugned order is not sustainable, the question of demanding interest and imposing penalty does not arise. The impugned order set aside - appeal allowed. 2024 (3) TMI 403 Refund of the Service Tax paid on the balance 70% portion - agreement to take on lease with Rajarhat IT Park Ltd. - renting of immovable property or construction services - availment of 70% abatement on construction of complex service - appellant submits that Commissioner (Appeals) has not appreciated the factual details and has dismissed their appeal without proper consideration - violation of principles of natural justice - HELD THAT:- On going through the Agreement of Lease between the Appellant and Rajarhat IT Park Ltd, it is found to be a pure Lease Agreement. Nowhere, is it specified that it is a part of any Sale Agreement or Sale Deed. On going through the receipts issued by Rajarhat, it is seen that they have simply mentioned the amount collected by them without mention of any Service Tax component or Service Tax registration taken by the service provider. The Appellant has been charged Service Tax by the service provider under the heading of renting of immovable property for the Lease Agreement entered with them. However, the Appellant has taken a different stand stating that the service provided by the service provider is that of construction of commercial complex and accordingly in that case the, the service provider should have been granted the abatement of 70% in terms of Sl. No. 12 of Notification 26/2012-ST dated 20/6/2012. The Appellant being the service recipient, the Appellant is not allowed to question the classification adopted by the service provider. The service provider in this case has treated the service as renting of immovable property and has collected the Service Tax @ 12.36% (as per the Appellant himself) and has also filed the ST-3 Returns accordingly with their jurisdictional office. The service provider has, at no point of time claimed that this has been done by him by way of mistake and actually they are providing only the service of construction of commercial property . In such a case, the Appellant as a recipient of service is precluded from changing the classification adopted by the service provider to claim the present refund. As a matter of fact, the refund cannot be claimed by him and the Appeal basically fails on this count itself. Both the lower authorities have clearly held that no evidence in a proper form has been provided by the Appellant to satisfy these queries and the Adjudicating Authority has rejected their refund claim on this ground and even the lower Appellate Authority has dismissed their Appeal only on this ground. There are no reason to interfere with the detailed findings given by the Adjudicating Authority as well as by the Commissioner (Appeals), since the Appellant is not in a position to prove anything contrary even at this stage - appeal dismissed. Central Excise 2024 (3) TMI 402 Process amounting to manufacture or not - benefit availed on Henko Stain Champion Detergent Powder cleared from the factory on payment of duty in cash - Denial of benefit of N/N.21/2007-CE dated 25.04.2007 on the ground that goods which have been subjected to packing or repacking only and is not subject to any other process amounting to manufacture - Invocation of Extended period of Limitation - HELD THAT:- At the time of filing of the refund claim by the appellant in terms of Notification No.32/99-CE dated 08.07.1999, the refund claims were sanctioned by passing a speaking order during the period from 25.04.2007 to 31.01.2008. In that circumstances, a showcause notice issued to the appellant by invoking extended period of limitation on 15.03.2012, is not sustainable as held by the decision of the Hon ble Jammu Kashmir High Court in the case of COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE VERSUS KRISHI RASAYAN EXPORTS PVT. LTD. [ 2023 (7) TMI 661 - JAMMU AND KASHMIR AND LADAKH HIGH COURT] , wherein the Hon ble High Court has held The revenue, if it is of the opinion that the Adjudicating Authority has made an erroneous refund in favour of assessee to which it was not otherwise eligible, can avail the remedy of filing appeal or revision under the Act. So long as the orders stand as having attained finality, the same cannot be tampered with by the Adjudicating Authority by launching collateral proceedings purportedly under Section 11A of the Act. As this case also, the demand has been raised against the appellant by invoking extended period of limitation whereas initially, the refund claims were sanctioned to the appellant by passing a speaking order, therefore, the extended period of limitation is not invokable. Accordingly, the impugned demand is set aside. Appeal allowed. 2024 (3) TMI 401 Area Based Exemption - Rejection of application for special rate of value addition at the rate of 73% - payment of excise duty through PLA after utilizing the CENVAT credit available as per N/N. 20/2007-CE dated 25.04.2007 - HELD THAT:- From formulae prescribed in N/N. 20/2008-CE dated 27.03.2008, it is clear that for fixation of special valuation rate, the actual cost of raw materials is to be considered only not the notional value. In that circumstances, as the Adjudicating Authority has considered the notional cost of raw materials, which is not correct, therefore, the impugned order is set aside. The impugned order set aside - Appeal allowed. CST, VAT & Sales Tax 2024 (3) TMI 400 Condonation of delay in filing rectification application - Refusal to entertain the rectification application of the petitioner on the ground that the same was time barred - attachment of bank account - HELD THAT:- It is to be noted that the Supreme Court in In Re: Cognizance for Extension of Limitation [ 2022 (1) TMI 385 - SC ORDER] allowed the limitation to be extended till February 28, 2022. The petitioner, in the present case, has filed the application on March 11, 2022, that is, only 11 days after the end of the above period. Furthermore, petitioner s case is that it was not made aware of the order dated March 18, 2017 and it came to know about the said order only on September 14, 2021 when its bank account was attached. Without going into hyper technicality with regard to period of limitation, this Court keeping in mind the Supreme Court judgment for extension of period of limitation and the fact that Section 5 of the Limitation Act would apply to Section 31 of the VAT Act is of the view that the delay in filing the rectification application should be condoned. In light of the same, the order dated April 6, 2022 passed by the Tribunal is quashed and set aside with a direction upon the Tribunal to hear the rectification application of the petitioner on merit and decide the same within four months from date. Petition allowed. Indian Laws 2024 (3) TMI 399 Dishonour of Cheque - acquittal of accused - evidence on record has not been properly appreciated by the learned trial court - appellant submits that the evidence produced by the respondent/accused before the trial court does not rebut the said presumption as the same is contradictory and un-reliable in nature - whether there was a compromise between the parties in pursuance whereof any payments were made by the respondent to the appellant? - HELD THAT:- The facts relating to issuance of cheques and dishonour of the cheques for insufficiency of funds are not in dispute, therefore, in terms of Section 139 of the NI Act, it has to be presumed that the appellant has received the cheques in discharge of whole or part of the debt or liability. However, the said presumption is rebuttable, as is clear from the provisions contained in Section 139 of the NI Act. The Supreme Court has, in the case of RANGAPPA VERSUS SRI MOHAN [ 2010 (5) TMI 391 - SUPREME COURT] while discussing the legal position as regards the nature of presumption that arises under Section 139 of the NI Act and the standard of proof required to rebut such presumption, observed it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of preponderance of probabilities . Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. From a perusal of the afore-quoted observations of the Supreme Court, it is clear that once a presumption arises in terms of Section 139 of the NI Act on the basis of the facts proved on record, the person against whom presumption is drawn is not precluded from rebutting it and proving the contrary. It is also clear that the rebuttal does not have to be conclusively established but the person against whom the presumption has arisen, has to adduce such evidence in support of his defence that the Court may either believe the defence to exist or consider its existence to be reasonably probable. The standard of reasonability has to be that of a prudent person. Adverting to the facts of the instant case, the respondent/accused while making his statement under Section 242 of the J K Cr. P.C. has clearly stated that after issuance of the cheques in question, there was a compromise between the parties before SHO, Police Station, Chanderkote, DW-Diljit Singh as the appellant/complainant had held up his vehicle at Chanderkote. It is his defence that during the compromise an amount of Rs. 50,000/- was paid to the complainant and the balance amount was paid to him after withdrawing the same from the ATM after some days, but in spite of this, he did not return the cheques. In order to establish this defence, the respondent/accused has examined DW-Shafiq Ahmad and DW-Mohd Amin, who were working as Mates with the respondent. The statement of the then SHO, Police Station, Chanderkote, Diljit Singh has also been recorded. The defence of respondent/accused that he had paid the cheque amount to the appellant, even before the same were presented for encashment, appears to be probable. So far as the allegation regarding receipt of demand notice by respondent/accused is concerned, the same has never been put to him to seek an explanation from him at the time of recording his statement under Section 242 of J K Cr.PC. The learned Magistrate did not explain the particulars of the fact relating to service of demand notice upon him while recording his statement under Section 242 of the J K Cr. P.C., though it is an essential ingredient of offence under Section 138 of NI Act. The statement of the accused under Section 342 Cr.P.C. has not been recorded at all by the learned trial Magistrate on the ground that no such statement was required to be recorded in a summons trial case. Thus, even the evidence regarding service of demand notice has not been put to the accused for seeking his explanation. The view taken by the learned trial Magistrate that there was no requirement of recording the statement of the accused under Section 342 Cr. P.C. is not in accordance with law. Thus, even in summons trial cases a criminal court is obliged to question the accused generally on the case after the witnesses of the prosecution have been examined. It is a settled law that the incriminating circumstances, regarding which no explanation has been called from the accused, cannot be used against him while deciding veracity of the accusation against him. The evidence which has not been put to an accused has to be eschewed from consideration. Therefore, the evidence, as regards service of demand notice upon the respondent/accused having not been put to him, cannot be taken into consideration while deciding the veracity of the accusations against him. If the drawer of the cheque pays a part of whole of the sum between the period the when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque. Therefore, unless the part payment is endorsed on the cheque as per the Section 56 of the NI Act, the complaint under Section 138 of NI Act would not be maintainable once part payment is made by the accused - even if the contention of the learned counsel for the appellant that payment of Rs. 2,10,000/- by the accused to the appellant is not sufficiently proved, still then in the absence of endorsement on the cheques regarding receipt of Rs. 40,000/-, the complaint could not have proceeded. This Court is of the considered view that the accused/respondent has succeeded in probablizing his defence so as to rebut the presumption that had arisen in favour of the appellant/complainant. The view taken by the learned trial court is definitely a passible one, as such, this Court does not find any ground to interfere in the impugned judgment passed by said court - Appeal dismissed. 2024 (3) TMI 398 Dishonour of Cheque - Seeking setting aside of summoning order - vicarious liability on partner of a firm - requirements of Section 141 of the NI Act, satisfied or not, especially in view of the fact that in a previous complaint between the same parties, with respect to the same subject matter, the present petitioner was not named as an accused (as a person in-charge of conduct of day to day affairs of the accused partnership firm). HELD THAT:- In the present case as noted hereinabove, the allegation with respect to the present petitioner is to the extent that she alongwith with other accused in the said complaint were partners of the partnership firm and are responsible for the day to day affairs of the Accused No. 1 and are incharge and in control and management of the Accused No. 1 . A further reading of the complaint reflects that the subject matter of the same was a Development Agreement dated 16.03.2018 for developing a land owned by respondent no. 2. It is an admitted case that the said agreement has not been signed by the present petitioner. It is a matter of record that respondent no. 2, in the previous complaint filed on the basis of said Development Agreement did not implead the present petitioner as an accused. The name of the petitioner is conspicuously not mentioned as an accused or a person responsible for the affairs of the said partnership firm. In the complaint that is the subject matter of the present petition, no averment has been made by respondent no. 2, to state that the petitioner, although not named in the previous complaint but on account of some subsequent development, came to know that she was incharge of affairs and also responsible for conduct of business of the accused partnership firm at the relevant time. In view of the fact that the previous complaint did not name the present petitioner, it was incumbent upon respondent no. 2 to place on record more particulars about the role of the present petitioner in the complaint. The petitioner is admittedly a 65 years old lady and the accused partnership firm is a family concern. The reliance placed by respondent no. 2 on Income Tax Returns for the financial year 2015-16, filed under the signatures of the petitioner cannot bring her case within Section 141 of the NI Act. As held in SIBY THOMAS VERSUS M/S. SOMANY CERAMICS LTD. [ 2023 (10) TMI 487 - SUPREME COURT] it is be shown that the petitioner was responsible for the affairs of the partnership and in control of the same for the relevant transaction, .i.e., present cheques in question which are dated 27.07.2018 and 05.08.2018. Admittedly, the petitioner is not a signatory to the cheque. Apart from the above basic averment, nothing has been placed on record to show the petitioner s involvement in the firm or with respect to the subject transaction. The summoning order dated 25.07.2019, arising out of CC No. 344/2019, qua the petitioner, is hereby quashed - petition allowed. 2024 (3) TMI 397 Declaration of bodies corporate, their promoters and directors, as wilful defaulters - seeking various declaratory reliefs whereby adherence to principles of natural justice, including provision of inspection of relevant material, is sought to be read into the due process stipulated by the Respondent No. 2, the Reserve Bank of India - HELD THAT:- The Union Bank is firmly of the view that it is not obligated to provide any material to prove its allegations and that the onus is on the Petitioner to prove his innocence. Therefore, the stance of Union Bank is in conflict with first principles of the rule of law in India. Put differently, once a bank has accused someone of being a wilful defaulter (without providing supporting material), the person accused has to shoulder the onus and burden of proving his innocence. The affidavit in reply makes no bones about the Union Bank s belief that no underlying material needs to be disclosed to any noticee under the Master Circular - There cannot be a concept more alien to the constitutional protections available under the rule of law in India. The aforesaid stance flies in the teeth of the imperative requirements of transparency stipulated by the RBI in the Master Circular. It is now trite law that in proceedings that can inflict serious civil consequences on any citizen, the noticee should be able to appreciate the case made out against him so that he may deal with the allegations to the best of his ability. The only means of doing so is to provide detailed proper notice of the reasons for having formed a prima facie view when calling upon the noticee to show cause why such prima facie view must not translate into a final view. Such an approach would enable the noticee to understand in a cogent manner the case that he is supposed to meet. Union Bank is granted liberty to make a proper disclosure of materials and information on which the SCN is based. Once such disclosure is made to the Petitioner, the Petitioner is at liberty to submit a fresh reply to the SCN, after which a reasoned draft order may be issued by the Identification Committee. This draft order of the Identification Committee shall be served on the Petitioner so as to enable him to make his representation to the Review Committee why the said order ought not to be confirmed. Thereafter, a reasoned final order may be passed by the Review Committee, if it is found that there has been a wilful default attributable to the Petitioner. The Union Bank is permitted to withdraw the final order dated 28th February, 2023 passed by the Review Committee as also the draft order dated 5th August, 2022 purported to have been passed by the Identification Committee, insofar as it relates to the Petitioner - Any agency, including Respondent Nos. 3 to 6, that has published or disseminated the name of the Petitioner identifying him as a wilful defaulter on the strength of the orders that now stand withdrawn by Union Bank, shall forthwith remove such identification from publicly accessible information resources. Petition disposed off. 2024 (3) TMI 396 Disciplinary proceeding against the govt officer - Punishment of withholding of 10% of monthly pension for a period of three years - misconduct - failure to maintain absolute integrity - lack of devotion to duty - violation of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964 - HELD THAT:- Neither the inquiry report nor the order of punishment dated 26th April, 2013 passed by the Disciplinary Authority has recorded any finding about doubtful integrity of the petitioner. The Disciplinary Authority in his order, on the other hand, records a categorical finding that the charge of lack of integrity against the Charged Officer could not be substantiated . It is also to be noticed that even the Inquiry Officer has not found any such material on record which would lead him to doubting the integrity of the petitioner; the finding rather is that there was no malice or mala fide intent on the part of the petitioner and further that there was no allegation of any corrupt practice or extending undue benefit to the importer, against the petitioner. Accordingly, neither is there any material nor any finding recorded by the Inquiry Officer or the Disciplinary Authority about doubtful integrity of the petitioner even qua the conduct of the petitioner which became subject matter of disciplinary proceeding against him. To charge and punish a government servant for violation of Rule 3(1)(i) of the Conduct Rules, 1964, it should be proved that the officer concerned has failed to maintain absolute integrity. Since there is nothing on record which even remotely suggest that petitioner failed to maintain absolute integrity, no punishment on that count will be permissible against him. The finding recorded by the Inquiry Officer as also by the Disciplinary Authority are otherwise - in this view of the matter the petitioner in the instant case cannot be said to have found to have failed to maintain absolute integrity. So far as Rule 3(1)(ii) of the Conduct Rules, 1964 is concerned, it mandates that every government servant shall at all times maintain devotion to duty and any breach thereof will amount to misconduct - So far as the facts in the instant case are concerned, there is nothing on record; neither is there any finding recorded by the Inquiry Officer or by the Disciplinary Authority that the petitioner was habitual of failing in performance of the tasks assigned to him within the timeframe for the purpose and with the quality of performance expected of him. The petitioner was charged for solitary act of cancellation of bonds and bank guarantees without proper scrutiny and verification of documents put up before him, however, the explanation given by the petitioner was that he cancelled the bonds and bank guarantees on the recommendation of the Appraisal Officer. Apart from the solitary incident in terms of the charge memorandum, nothing is available on record which may establish the charge of the petitioner having failed habitually in performance of the tasks assigned to him. Any penalty under Rule 9 of the Pension Rules, 1972 can precipitate in two circumstances, namely, (i) if a government servant is found guilty of grave misconduct or negligence and (ii) such misconduct causes pecuniary loss to the government. From a perusal of the Inquiry Officer s report as also the findings recorded by the Disciplinary Authority in the punishment order dated 26th April, 2013, breach of either Rule 3(1)(i) or 3(1)(ii) or 3(1)(iii) of the Conduct Rules, 1964 is not made out. There is no finding on record relating to pecuniary loss caused on account of the alleged misconduct of the petitioner in the order of punishment dated 26th April, 2013. In absence of finding of proof of charge of pecuniary loss to the government and also because on the basis of material available on record of the departmental proceeding, no breach of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Conduct Rules, 1964 is found, the impugned order passed by the Disciplinary Authority dated 26th April, 2013 inflicting punishment of recovering 10% of monthly pension for a period of three years, in our opinion, is not sustainable. The order of punishment dated 26th April, 2013 is hereby quashed - writ petition allowed.
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