Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 21, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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18/2022 - dated
17-3-2022
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Cus (NT)
Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 13/2022-Customs (N.T.), dated 3rd March, 2022
GST - States
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S.O. 73 - dated
17-3-2022
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Bihar SGST
Amendment in Notification No. S.O. 110, dated the 06th May, 2020
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17/2021-State Tax (Rate) - dated
16-3-2022
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Delhi SGST
Amendment in Notification No. 17/2017- State Tax (Rate), dated the 30th June, 2017
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16/2021-State Tax (Rate) - dated
16-3-2022
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Delhi SGST
Amendment in Notification No. 12/2017- State Tax (Rate), dated the 30th June, 2017
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15/2021-State Tax (Rate) - dated
16-3-2022
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Delhi SGST
Amendment in Notification No. 11/2017-State Tax (Rate), dated the 30th June, 2017
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13/2021-State Tax (Rate) - dated
16-3-2022
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Delhi SGST
Amendment in Notification No. 01/2017-State Tax (Rate), dated the 30th June, 2017
Law of Competition
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S.O. 1193 (E) - dated
16-3-2022
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Competition Law
Amendment in Notification No. S.O. 2039(E), dated the 29th June, 2017
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of supply - supply of service or not - transfer of land, held under lease - The applicant has submitted that the impugned supply is to the Irrigation department. However, it is seen that the applicant is agreeing to do an act as per the directions of the MSFR department and not the Irrigation department and the applicant has not brought anything on record to show that the impugned services are provided to MSFR department by way of an activity in relation to any function covered under Article 243G or 243W of The Constitution of India. - AAR
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Exemption from GST or not - supply of Security Services rendered to various sites of Municipal Corporations - The Municipal Corporations may also be involved in various performing functions, for example: leasing of grounds/premises for exhibitions, marriages, etc. which are not functions entrusted to a Municipality under Article 243 W of the Constitution. Therefore, in such cases, the impugned security services without supply of material i.e pure services, rendered to the Municipal Corporations by the applicant will not be exempt under the provisions of Sr. No. 3 of Exemption Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017. - AAR
Income Tax
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Validity of reopening of assessment u/s 147 - appropriate authority - if Joint Commissioner approves the proceedings/ proposal sent by the Assessing Officer to be a fit case, then, in the opinion of this Court, the approval under Section 151 giving details of approving authority as Principal Commissioner of Income Tax in itself will not make the approval invalid - In approval under Section 151 of the Act of 1961, name, designation and office is printed. Hence, submission of learned counsel for petitioner that approval is not digitally signed is also not sustainable, more so when it bears DIN & Document Number. - HC
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Stay of demand - condition precedent for the grant of stay of the demand - Out of three Assessment Years, for AY 2012-13, as stated above, the petitioner has made an unsuccessful attempt to seek for stay. Even against the said order passed by ITAT no further appeal was filed by way of Tax Case Appeal before this Court. - Partial relief granted - the petitioner shall make payment of 20% of the demand in respect of AY 2015-16, 2016-17 and 2017-18 and 30% of the demand for AY 2012-13, within a period of four weeks from today. - HC
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Penalty u/s 271CA - short collection of TCS - When the quantum of appeal has been allowed by the ld. CIT(A), NFAC, Delhi then there is no need to impose penalty by the JCIT – TDS and subsequently confirmed by the ld. CIT(A), NFAC Delhi - AT
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Penalty u/s. 271B - delay in obtaining Tax Audit Report - Being a public sector unit, the assessee company after completion of statutory audit under Companies Act is required to obtain report by CAG. The assessee accounts for the year ended 31.03.13 were not finalized and audited before the specified dated i.e. 30th September 2013. The statutory audit was completed only on 23rd January 2014 and the reports from the CAG was obtained in March 2014, thereafter the tax audit report was undertaken only after April 2014 and the report u/s. 44AB was obtained on 17th September 2014. - No penalty - AT
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Revision u/s 263 - bogus liability towards purchases - payment in expenditure cash during the next year - The implications, if any, in respect of discharge of liability in cash in the subsequent financial year 2016-17, a liability which has been incurred in current financial year will arise u/s. 40A(3A) and not under section 40A(3), and the AO will be at liberty to examine the same as per law for the assessment year 2017-18 and not for the impugned assessment year 2016-17. - AT
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Reopening of assessment u/s 147 - Date of issuance of notice - communication in electronic form - Whether digitally signing notice would automatically amount to issuance of notice ? - Whether digitally signing a notice and issuing it are two different acts ? - mere digitally signing the notice is not the issuance of notice. Since the impugned notice under Section 148 of the Act, 1961 was issued to the petitioner on 06.04.2021 through e-mail, therefore, we hold that the impugned notice under section 148 of the Act, 1961 is time barred. - HC
Customs
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Maintainability of appeal before the High Court - appropriate forum - Claiming exemption from duty of customs on foreign going going vessel - the High Court is right in observing that the principal question in the present case is not in relation to the rate of duty but determining whether vessel AE is a foreign going vessel or not, and if the vessel AE is a foreign going vessel, Section 87 of the Act will be applicable or not. Therefore, with respect to such an issue, against the order passed by the CESTAT, the appeal would be maintainable before the High Court under Section 130 of the Act. - SC
Indian Laws
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Dishonor of cheque - framing of charge or trial - section 91 of Cr.P.C. - It is for the respondent to decide that in what way he would like to prosecute his case. Petitioner-accused cannot direct or compel respondent complainant to either lead the evidence or submit proof, as per his own choice or wishes. - HC
Central Excise
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Refund on the CVD and SAD paid for regularisation of advance licence (import licence), which have been deposited on after 01.07.2017 (implementation of GST) - The appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act - the jurisdictional Assistant Commissioner are directed to grant refunds to the appellants of the amount of SAD & CVD as reflected in the show causes notices - AT
VAT
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Input Tax Credit - evaporation/handling losses of the petroleum products - There would be no ITC for tax paid on the goods specified in Schedule E when used or disposed of in the circumstances mentioned against those goods. The circumstances mentioned in Schedule E against petroleum products and natural gas are that when used as fuel or exported out of the State. Entry 5 of schedule E is not dealing with the items mentioned at Entries 1 and 2. In other words, circumstances mentioned against Entry 5 are not applicable to petroleum products and natural gas. - HC
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Service of original demand notice from the petitioner - Failure on the part of the petitioner to produce the original demand notice, along with the appeal memorandum cannot be treated as a defect which can be cured by the petitioner. Rejection of the appeal for failure of the petitioner to produce the original demand notice is, therefore, incorrect and against law - the 1st respondent is directed to issue the certified copy of the demand notice attached with the assessment order - HC
Case Laws:
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GST
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2022 (3) TMI 795
Blocking of input tax credit - Rules 86A of GST Rules - requirement to send a statement in Part-A of GST DRC-01A under Rule 142(1A) of the CGST Rule or not - HELD THAT:- Prima facie, perusal of Form GST DRC-01A under rule 142(1A) of the Rules indicates that it is a pre-show cause notice intimation with reference to Section 73(1)/(5) or Section 74(1)/(5) to an assessee so that either he may deposit the amount of tax and interest or he may disagree to the ascertainment resulting in show cause notice under Section 73(1) or Section 74(1), as the case may be - prima facie, it appears that Section 74(1) read with Rule 142(1A) intends to afford an opportunity to the dealer/ assessee on a pre-show cause notice stage which shall ultimately benefit both, i.e the assessee and the department, and shall also reduce litigation. This also indicates to follow the principles of natural justice at a pre-show cause notice stage. Learned standing counsel prays for and is granted a week s time to file counter affidavit. Petitioner shall have three days thereafter to file rejoinder affidavit - Put up as a fresh case before the appropriate bench on 28.03.2022 at 02:00 P.M.
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2022 (3) TMI 794
Non-compliance of the principles of natural justice - non-issuance of SCN - failure to follow the procedure prescribed under Section 73 of JGST Act - HELD THAT:- A perusal of the adjudication order dated 1st November 2021 would itself show that no show-cause notice under Section 73(1) of the Act was issued and petitioner denies issuance of any summary of show-cause notice either. It is submitted that in those circumstances, the respondents may be restrained from taking any coercive steps for realizing the amount in question through the garnishee notice from the petitioner s bank Punjab National Bank. Learned counsel for the respondents-State seeks short time to file a counter affidavit - As prayed for by Mr. Rahul Saboo, learned S.C.-I, list the matter on 22nd March 2022. Counter affidavit be filed by 21st March 2022.
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2022 (3) TMI 793
Cancellation of GST registration of petitioner - petitioner did not file returns - It is submitted that the petitioner in any event would have filed only a nil return and that no prejudice has been caused to the respondents - HELD THAT:- No useful purpose will be served by keeping such assessee out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods and not by bringing them back to the Goods and Service Tax tax fold/regime only the revenue only suffer. The case of the petitioner is quite similar to the cases of the petitioner in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] where appeal filed beyond the period of limitation which some had directly filed a writ petition against the order cancelling the registration. There, also further delay was in filing the writ petition. Petition allowed.
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2022 (3) TMI 792
Principles of natural justice - validity of SCN - pre-show cause consultation before issuing the show cause notices not conducted - demand of duty is above ₹ 50 lakhs - violation of the Master Circular dated 10th March, 2017 read with Instructions dated 21st December, 2015 - HELD THAT:- Issue notice. List on 04th August, 2022.
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2022 (3) TMI 791
Classification of supply - supply of service or not - transfer of land, held under lease by FDCM, towards Kolsapada Minor Irrigation Project - amount of compensation received by FDCM against transfer of land held under lease for Kolsapada Minor Irrigation Project - applicability of exemption under Entry No 3. Of Notification No. 12/2017 Central Tax (Rate), dated 28.06.2017 - HELD THAT:- In the subject case, the applicant has agreed to do an act i.e. the applicant has agreed to relinquish its lease right on the said land in favour of Irrigation Department on the directions of the owner of the land i.e. MSFR Department. Thus the said action of the applicant is nothing but supply of services under the GST Laws and the said supply is to MSFR department for which compensation is received from the Irrigation department. The applicant has submitted that the impugned supply is to the Irrigation department. However, it is seen that the applicant is agreeing to do an act as per the directions of the MSFR department and not the Irrigation department and the applicant has not brought anything on record to show that the impugned services are provided to MSFR department by way of an activity in relation to any function covered under Article 243G or 243W of The Constitution of India. In view of non-submissions of details on this aspect by the applicant, the second question i.e. Whether exemption under entry No 3. Of Notification No. 12/2017 Central Tax (Rate), dated 28.06.2017 will be applicable on the amount of compensation received by FDCM against transfer of land held under lease for Kolsapada Minor Irrigation Project cannot be answered.
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2022 (3) TMI 790
Exemption from GST or not - supply of Security Services rendered to various sites of Municipal Corporations in relation to functions entrusted to it under Article 243 W of the Constitution of India - local authorities or not - pure services - applicability of Chapter No. 99, Sr. No. 3 of the Exemption Notification No. 12/2017 to MESCO Ltd. - HELD THAT:- The applicant has not mentioned or enumerated the functions of the Municipal Corporations in relation to which the impugned services are provided. The applicant has made a sweeping and blanket submission that its services which are in the nature of pure services and are provided to the various Municipal Corporations in relation to functions entrusted to Municipality under Article 243 W of the Constitution. Further, inspite of having been asked during the course of the final hearing, the applicant has not provided details of transactions or exact nature of functions of the said Municipal Corporations, for which security is provided. They have not submitted copies of purchase orders, bills etc., party wise details, activity wise details (for what purpose security is provided) and other relevant details. The Municipal Corporations may also be involved in various performing functions, for example: leasing of grounds/premises for exhibitions, marriages, etc. which are not functions entrusted to a Municipality under Article 243 W of the Constitution. Therefore, in such cases, the impugned security services without supply of material i.e pure services, rendered to the Municipal Corporations by the applicant will not be exempt under the provisions of Sr. No. 3 of Exemption Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017. The exemption under Sr. No. 3 of the Exemption Notification No. 12/2017 is available to the applicant for the pure services i.e. Security Services rendered to various sites of Municipal Corporations only if such pure services are supplied to the Municipal Corporations, in relation to functions entrusted to such Municipal Corporations under Article 243 W of the constitution of India.
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2022 (3) TMI 743
Input Tax Credit - seeking direction to first respondent to enable the petitioner to file respondents to either open the portal so as to enable the petitioner to again file TRAN-1 electronically or to accept manually - HELD THAT:- There is no provision under the provisions of the respective GST enactments for lapsing of the input tax credit and the credit availed on capital goods under the respective enactments. These credits are indefeasible. They were meant for being used for discharging the tax liability under the provisions of the erstwhile Central Excise Act, 1944, and under the provisions of Chapter V of the Finance Act, 1994 - there are no merits in the stand of the respondents to deny the credit, which may have been legitimately earned by an Assessee or a Dealer under the provisions of the respective enactments, which stood subsume into the respective GST enactments. The case is remitted back to the jurisdictional authorities to examine the credit in the respective returns of the petitioner which the petitioner claims to have attempted to transition by uploading TRAN-1 after the enactment of GST Act with effect from 01.07.2017 and come to an independent conclusion on the same - petition allowed by way of remand.
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Income Tax
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2022 (3) TMI 789
Validity of reopening of assessment u/s 147 - Valid sanction granted under Section 151 or not? - HELD THAT:- The sanction granted under Section 151 of the Act was on the basis of incorrect information provided to them. At the same time, if Mr. Ashish Pophare and Ms. Irina Garg had read the reasons submitted alongwith the form, they would have certainly found out the error. We have to also note that in the reasons for reopening, there is no mention about the assessment of petitioner having been completed under Section 153A read with Section 143(3) of the Act. In form 151, the amount mentioned as income originally assessed is ₹ 6,01,66,964/-, whereas income originally assessed was ₹ 11,11,34,621/-. We are also of the opinion that the Additional CIT and Principal CIT, viz., Mr. Ashish V. Pophare and Ms. Irina Garg, have mechanically accorded permission. We are of the opinion that even if only these two officials had read the report carefully alongwith the reasons recorded, this admitted error would not have crept in. The important safeguards provided in Sections 147 and 151 were lightly treated by the Officers This Court in German Remedies Limited V/s. Deputy Commissioner of Income Tax. [ 2005 (10) TMI 76 - BOMBAY HIGH COURT] has held that while granting approval it was obligatory on the part of the Commissioner to verify whether there was any failure on the part of the assessee to disclose full and true relevant facts in the return of income filed for the assessment of income of that assessment year. It was also obligatory on the part of the Commissioner to consider whether or not power to reopen is being invoked properly. In our view, the approval granted suffers from non application of mind. The notice issued under Section 148 of the Act is required to be quashed and set aside - Decided in favour of assessee.
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2022 (3) TMI 788
Reopening of assessment u/s 147 - eligibility of deduction under Section 54 - HELD THAT:- There can be no doubt in the facts of the present case that the issue of deduction under Section 54 of the Act was a subject matter of consideration by the Assessing Officer during the assessment proceedings leading to passing of the assessment order dated 15th December 2018. It would, therefore, follow that the reopening of the assessment by impugned notice dated 11th March 2021 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceedings. This change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. In an undated objections to reopening, petitioner has expressly provided that the flat, when purchased by the assessee in auction under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), was one flat comprising of an area of approximately 7500 sq. ft. alongwith four car parking spaces. Petitioner has also provided all evidences to justify that when petitioner purchased the flat, it was one residential unit/flat comprising of around 7500 sq. ft. having common kitchen and common areas. Documentary evidence to that effect was also provided. These facts have not been denied or disputed by the Assessing Officer in the order dated 8th December 2021 which is also impugned in the petition alongwith notice issued under Section 148 of the Act. In the objections, petitioner has also relied upon certain judgments where it says that Section 54/54F only requires the assessee to acquire a residential house and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the Section should be taken to have been satisfied - Even during the course of submissions today, Mr. Narayanan did not disagree with the proposition submitted by petitioner. Thus quash and set aside the Notice u/s 148.
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2022 (3) TMI 787
Validity of reopening of assessment u/s 147 - unexplained cash deposits - Eligible reasons to believe that income chargeable to tax escaped assessment for that year - HELD THAT:- DDIT issued summons under Section 131 of the Act of 1961 to the assessee. Reply submitted by assessee was not found to be satisfactory. Matter was forwarded to the Assessing Officer, who in turn, verified PAN details of assessee, recorded reasons in terms of Section 147 of the Act of 1961 and thereafter issued notice to him under Section 148 of the Act of 1961. Hence, it cannot be said that at the stage of issuance of notice, there was no prima facie material for reasons to belief that income escaped assessment. Consequently, I do not find any force in first submission of learned counsel for petitioner and it is hereby repelled Approval accorded under Section 151 of the Act of 1961 is not by appropriate authority - The words used while recommending for issuance of notice are sufficient to infer in clear terms that the Joint Commissioner of Income Tax applied his mind on proposal sent to him by the Assessing Officer, recorded his satisfaction for issuance of notice under Section 148 - Hence, even if name of approving authority is mentioned to be 'Principal Commissioner of Income Tax', the same would not make the 'approval' itself invalid. The object of Section 151 of the Act of 1961 is that approval to be accorded by the Joint Commissioner of Income Tax (in the facts of case) and if Joint Commissioner approves the proceedings/ proposal sent by the Assessing Officer to be a fit case, then, in the opinion of this Court, the approval under Section 151 giving details of approving authority as Principal Commissioner of Income Tax in itself will not make the approval invalid - in case at hand, Joint Commissioner of Income Tax recorded satisfaction on the proposal of Assessing Officer by mentioning that it is a fit case for issuance of notice. In view of above facts of the case, second ground raised is also not tenable. Approval granted u/s 151 does not bear digital signature of authority, referring to note appended to approval - The note appended says if digitally signed, the date of digital signature may be taken as date of document . Submission of learned counsel for petitioner, in the opinion of this Court, is not acceptable in view of provisions of Section 282 (a) of the Act of 1961, which provides that notice or other documents to be issued for the purpose of the Act of 1961 by any income-tax authority shall be deemed to be authenticated if name and designation is provided. In approval under Section 151 of the Act of 1961, name, designation and office is printed. Hence, submission of learned counsel for petitioner that approval is not digitally signed is also not sustainable, more so when it bears DIN Document Number. - Decided against assessee.
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2022 (3) TMI 786
Validity of Reopening of assessment u/s 147 - Notice issued after the expiry of four years - cancellation of registration under Section 12A and 12AA of the Act belief can be formed that some income has escaped assessment and the same can be provided to taxation making disallowance under Section 11 of the Act during the course of re-assessment proceedings - HELD THAT:- Revenue has been able to show that there was failure on the part of petitioner to disclose truly and fully any material fact. Usage of the expression in the reasons that assessee has failed to disclose fully and truly material facts is only to escape the restrictions provided under Section 147 of the Act. In effect there has been no failure to disclose. We say this because the reasons for re-opening expressly provides that income to the extent of ₹ 138,90,74,595/- has to be assessed because petitioner by virtue of an order dated 27th March, 2014 has become ineligible for exemption under Section 11 of the Act with effect from 1st April, 2002. It is not alleged that petitioner had actually failed to disclose any material fact. We are afraid we cannot agree with the submissions of the Revenue in as much as proviso to Section 147 of the Act expressly makes it clear that there is bar in re-opening the assessment after expiry of four years from the end of the relevant assessment year. The proviso states no action shall be taken under this section after expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year . Revenue has failed to make out a case of failure to disclose on the part of petitioner the material facts, the impugned notice dated 29th March, 2014 is not sustainable. Consequently, the order rejecting objections also have to be set aside. In the circumstances, petition is allowed .
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2022 (3) TMI 785
Validity of Reopening of assessment u/s 147 - amount which petitioner received against new unsecured non-convertible redeemable debentures was actually the sale consideration received in respect of sale of flats and that has escaped assessment within the meaning of Section 147 - HELD THAT:- In our view, this issue has been the subject matter for discussion and consideration by the Assessing Officer before the assessment order dated 26th April, 2010 was passed. Moreover, since the proposed reopening is after expiry of four years from the end of the relevant assessment years, Revenue has to show that there was failure on the part of petitioner to disclose truly and fully all material facts required for assessment. We cannot make out, from the reasons for re-opening, that there has been any such failure. The entire basis for re-opening is relying upon the balance sheet filed by petitioner. The statement of Revenue that there has been failure on the part of petitioner to disclose fully and truly all material facts is only to get over restrictions imposed in Section 147 of the Act. On this ground alone the notice has to be quashed and set aside. Moreover, since the issue of debentures has been a subject of consideration of assessment proceedings, re-opening on the same basis relying on the same primary facts disclosed based on change of opinion is not permissible. Revenue submission that issue of debentures has not been disclosed in the assessment order would not help Revenue because it is settled law that it is not necessary that the assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that a query raised was a subject of consideration of the Assessing Officer while completing the assessment. We have to note that the order rejecting petitioner s objections does not even deal with petitioner s objections on merits.
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2022 (3) TMI 784
Reopening of assessment u/s 147 - Date of issuance of notice - communication in electronic form - Whether digitally signing notice would automatically amount to issuance of notice ? - Whether digitally signing a notice and issuing it are two different acts ? - Whether issuance of notice shall take place on the date and time when it is dispatched either electronically or through other mode ? - whether merely generating notice from the Departmental Portal and digitally signing it thereafter, would amount to issuance of notice ? - HELD THAT:- After digitally signing the notice the income tax authority has to issue it to the assessee either in paper form or through electronic mail. Sub-Section (1) of Section 13 of the Act 2000 provides that dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator. The aforesaid sub Section (1) of Section 13 indicates the point of time of issuance of notice. Therefore, after a notice is digitally signed and when it is entered by the income tax authority in computer resource outside his control i.e. the control of the originator then that point of time would be the time of issuance of notice. The words issue or issuance of notice have not been defined under the Act 1961. However, the point of time of issuance of notice may be gathered from the provisions of the Act, 1961, the Rules, 1962 and the Act, 2000, as discussed above. Similar would be the position if the meaning of the word issue may be gathered in common parlance or as per dictionary meaning. Considering the provisions of Section 282 and 282 A of the Act, 1961 and the provisions of Section 13 of the Act, 2000 and meaning of the word issue we find that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the dispatch of an electronic record occurs when it enters into computer resources outside the control of the originator. Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator i.e. the assessing authority that shall the date and time of issuance of notice under section 148 read with Section 149 of the Act, 1961. We hold that mere digitally signing the notice is not the issuance of notice. Since the impugned notice under Section 148 of the Act, 1961 was issued to the petitioner on 06.04.2021 through e-mail, therefore, we hold that the impugned notice under section 148 of the Act, 1961 is time barred. Consequently, the impugned notice is quashed.
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2022 (3) TMI 783
Stay of demand - condition precedent for the grant of stay of the demand - HELD THAT:- In normal course, if an appeal is filed, which is pending, it is open to the assessee to make an application for stay, even before the Assessing Authority, as there is no condition precedent as a prior deposit for entertaining the appeal before the Appellate Authority and in such case, the Assessing Authority can use his discretion, of course by imposing certain conditions, can treat the assessee is not liable to to pay the tax for the present, that means a stay can be granted. The said stay cannot be granted by way of blanket stay, as the provision namely, Section 220 (6) of the Act makes it mandatory that a condition shall be imposed, of course from the discretion of the Assessing Authority. Petitioner has missed to file any such application in respect of three Assessment Years, i.e., 2012-13, 2015-16 and 2016-17. In all these years, the Appeal is now pending before the ITAT. Out of these three Assessment Years, for AY 2012-13, as stated above, the petitioner has made an unsuccessful attempt to seek for stay. Even against the said order passed by ITAT no further appeal was filed by way of Tax Case Appeal before this Court. When that being the situation, the assessee now come forward to make payment, which can be taken as a condition for making some interim arrangement, till the petitioner approaches the appropriate forum, to seek for stay of the demand by filing necessary application. Dispose of this writ petition with the following orders : (i) That the petitioner shall make payment of 20% of the demand in respect of AY 2015-16, 2016-17 and 2017-18 and 30% of the demand for AY 2012-13, within a period of four weeks from today. (ii) On such condition, there shall be an order of stay for a period of two months, within which, the petitioner shall approach either the ITAT or the CIT (Appeals) or the Assessing Authority as the case may be in respect of AY 2015-16 to 2017-18. (iii) Insofar as AY 2012-13 is concerned, such a course of action can be adopted by the petitioner assessee against the order passed by the ITAT in his earlier application for stay by filing appropriate appeal before the forum concerned, in accordance with law. (iv) In view of the stay granted, after making the payment, as indicated above, the attachment made in respect of the Bank Accounts can be lifted by the respondent Revenue. (v) It is made clear that, if the petitioner assessee has not complied with the payment schedule as indicated above, the stay granted now through this order shall stand automatically vacated without further reference to this Court for any further orders.
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2022 (3) TMI 782
Higher depreciation on vehicles given on lease - @40% instead of the normal rate of 25% - No evidence was produced to show that the vehicles were being run on hire - HELD THAT:- First substantial question of law relating to depreciation on leased vehicle is covered in favour of the assessee and against the Revenue in the light of the decision of the Hon'ble Supreme Court in the case of ICDS v. CIT [ 2013 (1) TMI 344 - SUPREME COURT] wherein, it was held that where leasing of machinery is a mode of carrying on business by the assessee, the assessee would be entitled to claim depreciation and when the actual use of the vehicle is in hire business, it is entitled for depreciation at a higher rate - Decided in favour of Assessee Broken period interest - Whether to be treated as revenue expenditure? - HELD THAT:- The finding of fact is to the effect that securities are held as stock-in-trade and that the income from sale therefrom is offered to tax as revenue. In the light of the admitted facts as seen from the order of the authorities, the expenditure incurred by the assessee towards broken period is liable to be allowed as revenue expenditure. There is no infirmity in this.- Decided in favour of Assessee Depreciation in the value of securities - HELD THAT:- Issue covered in favour of the assessee and against the Revenue, as per the judgment in respect of the assessee's own case relating to the assessment years 1985-86 and 1986-87 [ 2006 (2) TMI 99 - MADRAS HIGH COURT] wherein, it was concluded that the assessee Bank having all along treated the Government securities as its stock-in-trade and the Revenue having accepted this position in the earlier years, fall in market value of the securities was allowable as deduction - Decided in favour of Assessee. Interest under section 234D - HELD THAT:- Since the regular assessment has been completed only on 30.03.2004 and the amended provision of law i.e., section 234D came into operation on and from 01.06.2003, which is well prior to the completion of the regular assessment, certainly, the assessee is liable to pay interest on the excess refund amount received and enjoyed by him all these years as contemplated under section 234D of the Act. - Decided in favour of revenue.
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2022 (3) TMI 781
Validity of Assessment u/s 144B - As argued assessment order has been passed without considering the reply furnished by the Petitioner and without affording an opportunity of `Personal Hearing' through virtual mode to the Petitioner - HELD THAT:- Having heard learned counsel for the parties, this Court is of the view that the issue involved in the present writ petition is no longer res integra. This Court in the case of Bharat Aluminium Company Ltd. vs. Union of India Ors [ 2022 (1) TMI 658 - DELHI HIGH COURT] has held that the use of the expression may in Section 144B(7)(viii) is not decisive. Where a discretion is conferred upon a quasi judicial authority whose decision has civil consequences, the word may which denotes discretion should be construed to mean a command. Consequently, the requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. It was further held that the classification made by the Respondent between the matters involving disputed questions of fact and law by way of the Circular dated 23rd November, 2020 is not legally sustainable. Accordingly, the impugned assessment order dated 22nd April, 2021 passed under Sections 143(3) and 144B of the Income Tax Act, 1961 as well as notices for demand and penalty for the assessment year 2018-19 are quashed and the matter is remanded back to the Respondent No. 2 for a fresh decision after giving an opportunity of hearing, in accordance with law.
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2022 (3) TMI 780
Validity of reopening of assessment u/s 147 - As argued AO has failed to supply the copy of the reasons recorded u/s 148(2) to the assessee during assessment proceedings - HELD THAT:- The case of the assessee finds support from the decision of the GKN Driveshafsts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] wherein as held that when a notice u/s 148 of the Act is issued and the assessee has filed its return of income and sought the reasons for issuance of notice u/s 148 of the Act, the AO is bound to furnish the copy of reasons within the reasonable time and assessee on receipt of the reasons is entitled to file objections to issuance of notice. The Hon ble Apex Court held that the AO is bound to dispose of the objections filed by the assessee by passing a speaking order. AO has not provided the reasons despite the assessee having filed return of income and having requested the AO to provide reasons which has deprived the assessee from filing the objections to the re-opening of assessment and against issuance of notice u/s 148 of the Act. The case of the assessee is also covered by the decision of CIT Vs Videsh Sanchar Nigam Ltd. [ 2011 (7) TMI 715 - BOMBAY HIGH COURT] as held that the reasons recorded for re-opening the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld. Similar ratio has been laid down in the case of CIT Vs National Organic Chemical Industries Ltd. by the Hon ble Bombay High Court by following the decision of Co-ordinate Bench in the case of CIT vs. Videsh Sanchar Nigam Ltd. (supra). Thus we set aside the order of ld CIT(A) and hold that the assessment framed u/s 143(3) is not valid and is accordingly quashed. The legal grounds raised by the assessee are allowed.
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2022 (3) TMI 779
Penalty u/s 271CA - short collection of TCS - HELD THAT:- As gone through the details of collection of the TCS @ 2% on the payment received by the assessee. The same can be verifiable from TRACE Data Base. It is observed that assessee had already filed the TCS return for amount more than the amount calculated by the AO in his order. The ld. CIT(A), NFAC, Delhi also did not find any short fall of TCS amount during the appellate proceedings before him. Therefore, the ld. CIT(A) NFAC, Delhi has directed the AO to verify the records and allow the credit of taxes paid by the assessee. Hence, taking into considerations the details of TCS collection @ 2% received by the assessee from TRACE Data Base, we find that the ld. CIT(A), NFAC, Delhi vide his order dated 20-07-2021 has rightly allowed the appeal of assessee for Statistical purposes. When the quantum of appeal has been allowed by the ld. CIT(A), NFAC, Delhi then there is no need to impose penalty by the JCIT TDS and subsequently confirmed by the ld. CIT(A), NFAC Delhi - Thus the appeal of the assessee is allowed.
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2022 (3) TMI 778
Capital gain on transfer of land - Asset jointly by 5 co-owners (all are brothers and sisters) - assessee was one of the co-owners of the property and had also signed the Sale Deed as a co-owner, the AO held that capital gain was proportionately chargeable u/s.2(47) - Was the assessee a co-owner or a consenting party only? - HELD THAT:- The relevant thing to be mentioned from that proceeding at this stage is that the name of the assessee is appearing in that order also as the owner transferring the property. A Para of the order on page 31 of the paper book records the submissions made by the five brothers and sisters including the assessee contending Since the land belonged to 1) Lalchand Sheshmal Firodiya and 2) Zumbarlal Hemraj Firodiya the applicants have admitted the distribution of land and recording of successors therein . It is absolutely clear from the submissions made by the assessee and other 4 brothers and sisters that the land in question originally belonging to his father had devolved upon the 5 brothers and sisters including the assessee as successors. In view of the foregoing discussion, it is clear that the argument made by the assessee about his having no interest in the property in question transferred, has no merit and is hereby rejected. This contention is, ergo, repelled. When the transfer of the property in question took place? - Necessarily and as a sequitur , it follows that the mandate of section 17 of the Registration Act requiring the registration as a pre-condition for transfer, after the 2001 amendment, applies to all the clauses of section 2(47) dealing with the immovable property. Execution of an unregistered sale deed is no more treated as `transfer unless the sale deed is registered in the same manner, as the position has become after the 2001 amendments qua the transaction of part performance of contract as per section 53A of the TPA covered under section 2(47)(v) of the Act. When the facts as prevailing in the extant case are viewed in the light of the above legal position, it becomes ostensible that the transfer of the property in question took place only on the execution of the registered sale deed in 2010 relevant to the assessment year under consideration and not in the year 2001 when the unregistered Agreement to sell was executed. Moreover, the ld. AR has not drawn my attention towards any material indicating that the capital gain on the transfer of the property in question was offered by the assessee or his father or anyone else at any point of time. This contention, ergo, fails. Effect of order of Tehsildar and Agricultural Lands Tribunal - The order of Tehsildar and Agricultural Lands Tribunal, Ahmednagar itself has been set-aside in further appeal, then, of course, the assessee will be obliged to pay tax on capital gain on the transfer of the property taking place by means of the registered Sale Deed on 07-12-2010 in the year under consideration. In the third scenario of the property in question getting vested in the State Government, again several consequences will follow as regards the timing and the amount of computation of capital gain. These aspects of the matter have remained unanswered. At this stage, it is relevant to mention that the argument about the order of the Tehsildar and Agricultural Lands Tribunal, Ahmednagar, dated 9.11.2013 setting aside the registered sale deed executed in the year 2010, was taken up before the Tribunal for the first time. No such plea was there before the AO or the ld. CIT(A) that the sale made through registered Sale Deed 07-12-2010 was set-aside by the Tehsildar and Agricultural Lands Tribunal, Ahmednagar, even though the impugned order came to be passed in the year 2016, much after the order of the Tehsildar and Agricultural Lands Tribunal, Ahmednagar. Considering these peculiar facts, this issue needs consideration at the end of the AO in the hue of the above discussion. Computation of capital gain Reference to the DVO - Section 50C(2) of the Act provides that where the assessee claims, inter alia, before the Assessing Officer that the value adopted etc. by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer. The word `may as used herein has been interpreted by the Hon ble High Courts as `shall , meaning thereby, that when the assessee makes a request to the AO for making a reference to the DVO, the AO is bound to do so and then adopt the value so determined in place of the stamp value as the full value of consideration in the computation of capital gains. Despite the specific request of the assessee, the AO did not make any such reference to the DVO and proceeded to compute capital gain on the basis of the stamp value only. It would be in the fitness of things if the impugned order is set-aside and the matter is restored to the file of AO for re-deciding the issue afresh as per law in terms of discussion made herein above. Needless to say, the assessee will be allowed a reasonable opportunity of hearing.
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2022 (3) TMI 777
Revision u/s 263 - characterization of receipts - assessee had received compensation under compulsory acquisition of land under RFCTLARR Act - Whether compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax? - HELD THAT:- As per section 96 of the RFCTLARR Act after considering the above said provision, if any compensation received under RFCTLARR Act, income tax shall not be levied on any award or agreement. We have also perused the land acquisition proceedings and the lands were acquired under RFCTLARR Act. Therefore, as per the CBDT Circular and as per section 96 of RFCTLARR Act, income tax shall not be levied. We are of the firm view that the compensation amount which was received by the assessee for an amount should not be suffered for capital gains tax. Therefore, we set aside the order passed by the Ld.Pr.CIT u/s 263 as erroneous. Hence, we allow the appeal of the assessee.
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2022 (3) TMI 776
Penalty levied u/s 271B - failure to get accounts audited and furnishing of a report of such audit under section 44AB - sufficient cause for default - HELD THAT:- As decided in FAITH INTERTRADE VERSUS ITO, WARD-3 (3) (2) AHMEDABAD [ 2022 (3) TMI 710 - ITAT AHMEDABAD] imposition of penalty under section 273B of the Act is not mandatory, rather it is discretionary, because if the assessee proves that there was a reasonable cause for the said failure, then the AO ought to have considered the same and then proceed with levying penalty. In the present case assessee has explained before the lower authorities that non-submission of audited accounts was due to non-finalisation of accounts, because all the books of accounts and other relevant materials were seized by the Investigation Wing of the department, and they were not made available to the assessee. The assessee has filed his return of income on the basis of provisional accounts, and such return was accepted by the department. These facts were not denied by the Revenue and attained finality. AO has simply invoked his discretionary power under section 271B without appreciating the reasons putforth by the assessee for the alleged failure on his part for non-submission of audited accounts - explanation offered by the assessee ought to have been accepted by the Revenue as being sufficient cause. - Decided in favour of assessee.
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2022 (3) TMI 775
Exemption u/s 54B - claim denied as property was not purchased in the name of assessee - whether exemption u/s 54B can be allowed when the new property is purchased in the name of someone other than the assessee? - variety of views - HELD THAT:- AO has relied on the judgment of Hon ble jurisdictional High Court in the case of Prakash Vs. ITO [ 2008 (9) TMI 234 - BOMBAY HIGH COURT] in which it has been held that when a new property is purchased in the name of son with clear intention to transfer the property to him and the son becomes the full owner of property for all the purposes, the assessee cannot claim the benefit of exemption u/s 54B. When discordant views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that other view of the non-jurisdictional High Court may sound more appealing on individual level vis-a-vis the view of the jurisdictional High Court. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion for or against - on that point. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon ble Supreme Court. In that view of the matter, I am bound to follow the view taken by the Hon ble jurisdictional High Court. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon ble Bombay High Court in favour of the assessee on this issue. I, therefore, hold that the authorities below were justified in making the assessee not eligible to exemption u/s 54B of the Act - Appeal dismissed.
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2022 (3) TMI 774
Unexplained cash credit u/s 68 - onus to prove - HELD THAT:- The primary onus that lay on the assessee to establish the identity and capacity of the concerned loan creditors as well as the genuineness of the relevant loan transactions was duly discharged by the assessee and in the absence of any evidence brought on record by the AO to prove to the contrary, the unsecured loans cannot be treated as unexplained cash credits under Section 68 of the Act and the addition made by the AO on this issue was unsustainable. In our opinion, the Assessing Officer was not justified to require the assessee to establish the source of source while examining the relevant cash credits representing the unsecured loans and the addition made by the Assessing Officer under Section 68 of the Act by treating the unsecured loan of ₹ 32,00,000/- as unexplained cash credits was rightly deleted by the learned CIT(A). In that view of the matter, we uphold the impugned order of learned CIT(A) giving relief to the assessee on this issue and dismiss Ground No.1 of the Revenue s appeal. Addition treating the capital introduced by the partners of the assessee-firm as unexplained cash credits under Section 68 - HELD THAT:- Respectfully following this decision of Hon ble jurisdictional High Court in the case of PCIT Vs. Vaishnodevi Refoils Solvex [ 2018 (1) TMI 861 - GUJARAT HIGH COURT] we uphold the impugned order of the learned CIT(A) deleting the addition made by the Assessing Officer by treating the capital introduced by the partners of the assessee-firm as unexplained cash credits under Section 68 of the Act. Ground No.2 of the Revenue s appeal is accordingly dismissed. Disallowance under Section 40A(3) - assessee has made certain payments exceeding ₹ 20,000/-, in a single entry in cash , on account of purchase of diesel - HELD THAT:- Nothing on record to establish that the payments in question against the purchase of diesel were made by the assessee in cash to the suppliers who ordinarily was carrying on his business in such village or town which on the date of payment was not served by any bank. As a matter of fact, all these payments aggregating to ₹ 4,72,176/- were made by the assessee against the purchase of diesel regularly made throughout the year, apparently from one party, and there is nothing on record to show that the said party always refused to accept the payment by crossed-cheque or crossed draft or that the said party was carrying on the business of sale of diesel in a village or town which was not served by the bank. We, therefore, set aside the impugned order of the learned CIT(A) giving relief to the assessee on this issue and restore the disallowance made by the Assessing Officer under Section 40A(3) of the Act. Ground No.3 of the Revenue s appeal is accordingly allowed.
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2022 (3) TMI 773
Penalty u/s 271(1)(c) - disallowance of penalty paid, disallowance of payment of sales tax and the disallowance pertaining to miscellaneous balance written of - whether penalty proceedings are initiated for concealment of income or furnishing of inaccurate particulars - HELD THAT:- In Reliance Petro Products Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] emphasized that, mere making of a claim of deduction which was not allowable by itself would not amount to furnishing inaccurate particulars of income. In fact, every legal disallowance under the provisions of the Act could not lead to the conclusion that, there was furnishing of inaccurate particulars of income on the part of the assessee. In present case it is seen from the order of the AO and CIT(A) that, there is no specific finding in so far as concealment of income and furnishing of incorrect particulars by the assessee in the true meaning of Sec. 271(1)(c) of the Act. On the other hand, in our opinion, debiting an amount of ₹ 10,01,990/- on account of Sundry balance written off in profit and loss account, which was claimed to be in the nature of discount allowed to the customer of the assessee, since the said amount was not recovered and pending for loss and which ultimately disallowed by the AO, cannot attract concealment of income and furnishing of inaccurate particulars of income . The ratio laid down by the Hon ble Supreme Court in the case of CIT vs. Reliance Petro products Ltd (supra) is squarely applicable in favor of the Assessee. - Decided in favour of assessee.
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2022 (3) TMI 772
Deduction u/s.80P(2)(a)(i) - Denial of deduction in respect of commission income received from Maharashtra State Electricity Distribution Company Limited (MSEDCL) and interest income earned on security deposit with MSEDCL - HELD THAT:-The activity of earning commission from collection of bills relating to MSEDCL has been held as eligible business activity and resultantly allowed granted deduction u/s.80P - DR fairly conceded the position but relied on the impugned orders on this score. In view of the fact that commission income on collection of bills from MSEDCL has been made eligible for deduction u/s.80P(2)(a) on the ground of the same being in the nature of business activity, we allow the assessee s claim in respect of similar commission income Deduction u/s.80P(2) on the interest income on security deposit which was parked with MSEDCL for carrying on the business of collection of MSEDCL bills - In view of the fact that the activity of collection of bills has been held by the Tribunal in Banganga Nagri Sah. Patsanstha Ltd. [ 2016 (3) TMI 1434 - ITAT PUNE] as a business activity, whose income is eligible for deduction u/s.80P(2), the instant interest income of ₹ 20,000/- on security deposit with MSEDCL for carrying on the business of bill collection, which is a part and parcel of the overall activity of such business, cannot be accorded a different character.Therefore, order to grant deduction on interest on security deposit with MSEDCL - Assessee appeal allowed.
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2022 (3) TMI 771
Disallowance of previous year expenses - crystallisation of expenditure - HELD THAT:- We are of the opinion that these prior period expenses crystallised in the assessment year under consideration and payment has been made at ₹ 28,18,226. This practice of accounting has been followed consistently from year to year by the assessee and there is no change in this practice in this assessment year also. The assessee has been making the provisions for payment of expenses at the end of each year which provision has been paid in the next assessment year. Sometimes there was short provision made by assessee and in view of short provision, when actual bills are received after crystallisation of expenditure, assessee makes the payment. This method is consistently followed by the assessee. Being so, we do not find infirmity in the method of accounting followed by the assessee and it cannot be disallowed on the reason of prior period expenses incurred by the assessee. Accordingly, we allow this ground taken by the assessee. Unexplained investment in building including interest on borrowings - assessee shown total cost of building in its books of account less as against the assessee's valuer's report - HELD THAT:- Valuation report submitted by the assessee is by the assessee's own valuer which cannot be the basis for addition without the AO referring the matter to the DVO for valuation. For this purpose, he relied on various case laws which are kept on record. In the present case, if we consider the difference between the books of account of the assessee and the valuation report including interest cost, difference is very huge at ₹ 1,09,71,118. The AO ought to have referred the matter to the DVO for valuation which he failed to do so. Being so, without referring the matter to the DVO, the AO cannot consider the difference between the entries made by the assessee and its registered valuer to make the addition. The valuation report relied on by the AO for making the addition is not the valuation report which is contemplated u/s. 142A of the Act. To make addition on account of difference in cost of construction, AO is duty bound to reject the books of accounts and refer the matter to the DVO as prescribed u/s. 142A of the Act, which the AO failed to do so. The registered valuer's report of the assessee cannot be the basis for making addition which has to be deleted. Being so, we are inclined to delete the addition made by the AO on this count. This ground is accordingly allowed.
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2022 (3) TMI 770
Revision u/s 263 - CIT invoking his second (2nd) revisional jurisdictional - Re-assessment /second assessment framed by AO - addition u/s 68 - whether there is any merit on the finding of the Second Ld. Pr. CIT that the second assessment order/re-assessment order can be termed as erroneous for lack of enquiry? - according to Second Ld. Pr. CIT, the AO in the second round has not enquired about the share capital premium collected by the assessee - HELD THAT:- In this assessment year before us i.e. AY 2012-13, the law in force was that if any sum is found credited in the books of an assessee in a financial year and, if the AO asks for the explanation of assessee in respect of the nature and source thereof, then the assessee is duty bound to explain the nature and source of the credit entry in the books and if the assessee fails to explain or if the AO is not satisfied, he may charge to income tax the sum so credited. So, the assessee is bound to explain before the AO the nature and source of share capital, i.e. the identity, creditworthiness and genuineness of the share capital. In this AY 2012-13, the assessee is bound to know about the share applicants who wish to invest their identity, whether they have the financial capacity (creditworthiness) and they are genuine investors in their company (assessee). In this AY, the assessee is not bound by law at the time of collection of share capital to ask the share-applicants from where it is getting the money to invest in the assessee s company. And we also note that share premium can be taxed if it exceeds the fair market value only from next AY i.e. AY 2013-14 and not in this A.Y 2012-13. According to us, from the aforesaid exercise carried out by the Second AO, it cannot be said that second AO did not enquire into the nature and source of the share capital collected by the assessee company. And moreover it is common knowledge that in this computer/digital ear, the AO on a click of the mouse, could have early verified the identity of the share applicant which is available in the website of Ministry of Corporate Affairs and the ITR Acknowledgments filed by them, will enable the AO to cross verify and collect details from the AO of the respective share applicants and independently from the Revenue's departmental data base. We note that all the share subscribing parties filed all the documents called for by the AO (PB-Page 111-368) and were also examined by the AO. Thus, we are of the considered opinion that the AO after verification of their PAN/CIN/ITR, has not drawn any adverse opinion or doubted the identity of the share applicants which view of AO is a possible view in the light of the documents referred to and we also by applying the presumption in section 114 of Indian Evidence Act 1872, we presume that the quasi-judicial act of the second AO have been regularly performed. Therefore, we are of the opinion that the identity of the thirteen (13) share subscribers cannot be doubted and so we approve the action of second AO to accept the same. We note that when the second AO while framing the reassessment order pursuant to the specific direction of the First Ld. Pr. CIT s order dated 31.03.2016 (first revisional order) has complied with the specific directions of the First Ld. Pr. CIT and based on the inquiry conducted and after perusal of the documents running more than 330 pages which reveals the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the share subscribers, the satisfaction of AO as envisaged in sec. 68 of the Act is a plausible view and the fact that the directors of the share subscribing companies appeared before AO pursuant to summons and produced all documents along with the audited financial statements and other documents referred supra, the assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. AO s view to accept the identity, creditworthiness and genuineness of the share capital and premium collected from the share subscribers was a plausible view and at any rate cannot be termed as an unsustainable view on law or facts Second AO has conducted enquiry as directed by the First Ld. Pr. CIT on the specific subject matter i.e. share capital and premium collected by the assessee-company. Therefore, the finding of Second Pr. CIT that the Second AO has not conducted enquiry is incorrect and is flowing from suspicion only - there will be no end to the assessment proceedings meaning no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safe-guards, restrictions conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. Be that as it may be, as discussed above, we find that the Second Ld. Pr. CIT without satisfying the condition precedent u/s 263 of the Act has invoked the revisional jurisdiction (second time), so all his actions are ab initio void. Ld. CIT(A) has made a bald statement that the AO s assessment order attracts Explanation 2(c) u/s. 263 of the Act. However, he failed to spell out in his impugned order how the action of AO while framing the assessment order is not in accordance to any order, direction or instruction issued by the Board under section 119 of the Act. So, the deeming fiction as envisaged in Explanation (2) u/s. 263 of the Act cannot be used to interfere with the order of AO. This action of Ld. Pr. CIT is bad for non-application of mind - Decided in favour of assessee.
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2022 (3) TMI 769
Reopening of assessment u/s 147 - income in respect of certain items has escaped assessment - eligibility of reasons to believe - HELD THAT:- Where the AO during scrutiny assessment, notices a claim of exemption made by assessee and having entertained prima facie doubts raises queries, asks assessee to satisfy him with respect to such a claim and thereafter does not make any addition in final order of assessment, he can be stated to have formed an opinion irrespective of as to whether or not in final order, he gives his reasons for not making addition reopening of such assessment be said to be based on change of opinion. We do not find any valid reason for reopening of assessment particularly when the original assessment was finalized on the basis of evidences produced by the assessee on the same claim made by him as per the dictate of the Revenue. Respectfully relying upon the ratio laid down in GUJARAT POWER CORPORATION LTD VERSUS ASSISTANT COMMISSIONER OF INCOME TAX [ 2012 (9) TMI 69 - GUJARAT HIGH COURT] the same is found to be based on mere change of opinion and, thus, bad in law and liable to be quashed. With the above reasons we, therefore, quash the entire proceeding which is found to be devoid of any merit. Hence, assessee's appeal is allowed.
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2022 (3) TMI 768
Addition considering the purchase cost paid over the spot rate in respect of deliveries of Palmolein Oil taken after the expiry of the delivery period of the contract - addition holding the transaction as non-genuine - whether payment on the basis of the purchase rate specified under the contract which is higher than rate prevailing on the date of delivery is genuine or not? - HELD THAT:- We find that in the subsequent year that is A.Y. 2011-12 no addition has been made on this count. Furthermore, in the A.Y. 2012-13 the assessment was finalized under Section 143(3) holding the business transaction of Palmolein Oil are genuine one and no addition has been made on account of trading transaction of Palmolein Oil. It is relevant to mention that in the A.Y. 2013-14 though in assessee's case the addition was made on the same issue of an amount of ₹ 39,89,762/- taking the base of A.Y. 2010-11 which under consideration before us the Ld. CIT(A) in that A.Y. 2013-14 by and under the order dated 25.01.2017 has accepted the said Palmolein Oil business as a genuine one and only confirmed an addition of ₹ 2,00,000/- on ad-hoc basis. We do not justify the observation made by the Ld. AO in holding the transaction ingenuine and further holding that the loss incurred by the appellant is not a genuine loss and thereby making addition considering the purchase cost paid over spot rate in respect of deliveries of Palmolein Oil. Therefore, the addition in our considered opinion is not in terms of the prescribe method of accounting as discussed hereinabove and hence, the same is hereby deleted. - Decided in favour of assessee.
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2022 (3) TMI 767
Reopening of assessment u/s 147 - income arising out of the sale of the land - Assessment in hands of assessee individual or HUF - proceedings on assessee's HUF by issue of notice u/s. 148 and had brought the same income arising out of the conversion of land in subsequent sale of tax substantially in the hands of the assessee - HELD THAT:- We notice that the land was family property until partition and the assessee got the share as part of the partition deed executed on 28/06/2012 and the issue here is whether the income arising out of the sale of the land should be assessed in the hands of the assessee in his individual capacity or in the hands of assessee's HUF. The proceedings initiated u/s. 148 assessing the same income in the hands of Assessee's HUF is in appeal before the CIT(A)-4. In the impugned order under appeal here, the CIT(A) has decided that the income should be assessed in the hands of the assessee's HUF merely based on the fact that the same income is also assessed in HUF and is subjudice. CIT(A) has not gone into the merits of the case to come to the conclusions that the income should be assessed in the hands of the HUF. We therefore remand the case back to CIT(A) to consider the materials on record and decide the issue accordingly after giving reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2022 (3) TMI 766
Validity of reopening of assessment u/s 147 - Notice issued in the name of the deceased person - HELD THAT:- It is a settled position of law neither re-opening notice can be issued in the name of the deceased person nor the same can be continued against the deceased. The factum of death of the assessee on 20.06.2011 was already in the knowledge of the AO. Under these circumstances is the revenue who is to take proper step while issuing notice u/s 147 of the Act instead it is finalized in the name of the deceased. In this regard, we have considered the judgment passed in the matter of Shri Rajesh G. Shah[ 2021 (7) TMI 1323 - ITAT AHMEDABAD] and in the case of Savita Kapila [ 2020 (7) TMI 441 - DELHI HIGH COURT] where it has been held that in the absence of a statutory provision the duty cannot be cast upon legal representative to intimate factum of death of assessee to department and thus, where AO issued a notice to the assessee u/s 148 of the Act after his death and in such a case it could not have been validly served upon the assessee the said notice being invalid is required to be quashed - Decided in favour of assessee.
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2022 (3) TMI 765
Revision u/s 263 - net profit/premium from transactions in the F O Segment - HELD THAT:- There was nothing on record which occasion any further verification or examination by the A.O. in terms of seeking and enquiring facts and figures with NSEL in respect of assessee's transactions so undertaken through the broker. The A.O. has done what all was expected from him and he has carried out necessary examination and verification as was expected from him in terms of discharge of his statutory functions and as a person of reasonable intellect and understanding, nothing more could have been expected in the facts and circumstances of the present case. AO was not required to call for information from NSEL nor there were any circumstances which were apparent on record which could have necessitated to verify the information, so submitted by the assessee with NSEL during the course of assessment proceedings and therefore, it cannot be held that proper enquiries which should have been made have not been conducted by the A.O. and the findings of the ld. PCIT in this regard are thus set-aside and the assessment order so passed by the A.O. cannot be held erroneous in so far as prejudicial to the interest of the Revenue on this account. Net results of transactions so undertaken by the assessee during the year under consideration, it is also clear that right from the stage of show-cause till passing of the impugned order, the ld. PCIT has maintained a status quo or rather a silence and has blindly gone by the initial figure so stated in the show-cause notice and no efforts have been made even to look at the reconciliation so sought to be made by the assessee. Therefore, even taking into consideration the fresh material/data received from NSEL, which represent a broad, un-reconciled raw data, the said data and the figure cannot be termed as tangible and determinative number by any stretch of imagination and in absence of any specific finding recorded by the ld. PCIT, the same cannot form the basis for holding the assessment order so passed as erroneous in so far as prejudicial to the interest of Revenue. We find that similar view has been taken by the Coordinate Delhi Bench in case of CIT Vs. Rajshyama Constructions Pvt. Ltd. [ 2010 (8) TMI 988 - ITAT DELHI] wherein the Coordinate Bench has held that in absence of specific material on record, the powers under section 263 have been wrongly exercised by the ld. CIT and only in cases where the ld. CIT is able to bring on record specific material which has not been verified by the Assessing officer, the order so passed by the Assessing officer can be held to be erroneous on an incorrect assumption of facts We find that there is no justifiable and legal basis for exercise of jurisdiction u/s. 263 by the ld. PCIT and the order so passed is hereby set-aside and the order of the Assessing officer passed u/s. 143(3) is sustained. - Decided in favour of assessee.
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2022 (3) TMI 764
Penalty u/s. 271B - delay in obtaining Tax Audit Report - assessee failure to comply with the provision of section 44AB - whether there was reasonable cause for the delay in filing the audit report by the assessee company? - HELD THAT:- We find some force in the submission of assessee that assessee being a Public sector company Act had to submit its audit report in Form 3CA in which report u/s. 44AB is required to be submitted for the said purpose. The Tax Audit report u/s. section 44AB of I.T. Act has to be provided with copy of statutory audit report alongwith audited P L Account and balance sheet. Tax Auditor in the case of assessee whose accounts are required to be audited on any other law will have to commence his work only on the basis of such audited accounts together with information required to be submitted in Form 3CD. Being a public sector unit, the assessee company after completion of statutory audit under Companies Act is required to obtain report by CAG. The assessee accounts for the year ended 31.03.13 were not finalized and audited before the specified dated i.e. 30th September 2013. The statutory audit was completed only on 23rd January 2014 and the reports from the CAG was obtained in March 2014, thereafter the tax audit report was undertaken only after April 2014 and the report u/s. 44AB was obtained on 17th September 2014. These facts were stated by the assessee before the AO as well as before Ld. CIT(A). We are of the opinion that there was reasonable cause for the assessee for not getting the accounts audited before the statutory due date. In spite of best effort of the assessee to get it accounts audited and obtained audit report before the specified date, it could not be so due to circumstances beyond its control. Therefore, we are inclined to hold that assessee has shown reasonable cause for its failure to comply with the requirement of section 44AB before the specified date. - Decided in favour of assessee.
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2022 (3) TMI 763
Revision u/s 263 - bogus liability towards purchases - payment in expenditure cash during the next year - HELD THAT:- We have gone through the ledger account of supplier and find that there is an opening balance, fresh purchases during the year, rebates and discounts, payments made during the year and the closing balance and therefore, where the liability continues to exist in the books of accounts and there are payments made during the year under consideration, the liability cannot be said to cease to exist during the year under consideration. It is not the case of the Revenue either that it is a case of remission of liability during the year under consideration. In any case, what the Ld. PCIT has alleged is that the liability towards Rana Wines L-1, Solan is a bogus liability which has been incurred and pertains to the financial year 2014-15 relevant to assessment year 2015-16. Therefore, the implications, if any, arising out of such liability where so claimed by the assessee, and which the AO is at liberty to examine as per law and where held to be bogus will be relevant for the assessment year 2015-16 and not for the impugned assessment year 2016-17 and on this account, the order so passed by the AO for the impugned assessment year 2016-17 therefore cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue Discharge of outstanding liability as on close of the financial year 2015-16 relevant to assessment year 2016-17 - We find that where the payment itself has not been made in the financial year relevant to impugned assessment year, basis of arriving at the finding by the Ld. PCIT that there is a contravention of provisions of section 40A(3) is not clear from the impugned order where the applicability of said provisions itself is in doubt. The implications, if any, in respect of discharge of liability in cash in the subsequent financial year 2016-17, a liability which has been incurred in current financial year will arise u/s. 40A(3A) and not under section 40A(3), and the AO will be at liberty to examine the same as per law for the assessment year 2017-18 and not for the impugned assessment year 2016-17. Similar is the situation relating to discharge of remaining outstanding liability by way of entering into an agreement to sell dated 9.05.2017 which again falls in financial year 2017-18 relevant to assessment year 2018-19 and the implications, if any will arise in the financial year 2017-18 and the AO is at liberty to examine as per law for the assessment year 2018-19 and not for the impugned assessment year 2016-17. Therefore, where the AO has not examined the implications relating to discharge of outstanding liability which has evidently happened in the subsequent financial years, the order so passed by the AO for the impugned assessment year 2016-17 cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. Outstanding liability in balance in the account of Rana Wines, Solan where there is no dispute which has been raised by the Ld. PCIT regarding the purchases made by the assessee from Rana Wines during the year under consideration having not been examined by the AO and account balances in respective books of accounts are also matching and no discrepancy has been highlighted, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of Revenue. Cash payment to Rana Wines where the implication arising u/s. 40A(3) has not been examined by the AO , we believe that the order so passed by the AO has to be held to be erroneous and prejudicial to the interest of the Revenue and therefore, to this limited extent, we upheld the order of the Ld. PCIT and the order of the AO has to be set aside for the limited purpose of examining as per law the implications u/s. 40A(3) in respect of cash payments of ₹ 9,20,000/- and explanation so submitted by the assessee in support of business exigency. Lastly, whether the assessee is required to keep cash in hand or deposit in the bank account, the same will depend upon the business exigency prevailing at the relevant point in time and so long as there is no discrepancy pointed out in the books of accounts where the cash in hand has been duly recorded and physical cash-in hand, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of Revenue.
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2022 (3) TMI 762
Assessment u/s 153A/153C - Proof of incriminating material found in search - HELD THAT:- Nowhere, the Ld. CIT (Appeals) has stated that the addition which has been made by the Assessing Officer are based on any seized documents mentioned in the satisfaction note recorded under Section 153C of the Act. Despite noting the fact that only those additions can be made for the unabated assessments which are based only on the incriminating material, as held by the Hon'ble Apex court in the case of CIT Vs. Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] and in the case of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and other decisions quoted by him, he has summarily rejected the contention of the assessee that they are beyond the scope of addition or assessment for the unabated assessment years. From the perusal of the satisfaction note as incorporated above, only two documents can be said to be relevant to assessment years 2010-11 and 2012-13 and not for assessment year 2009-10 or 2011-12. Even the documents pertaining to assessment year 2010-11, we find that it is annual report of M/s. Panchmukhi Management Services Pvt. Ltd. as on 31.03.2012, which was an audit report and the financial statement of the assessee company. This document cannot be treated as incriminating, or can be inferred as indicating any undisclosed income or anything which can be corroborated by any other incriminating material found in the course of search. Thus, audited annual report per se cannot be treated as incriminating material. the original share certificates dated 9.01.2010 which were transferred to the assessee company cannot be treated as incriminating, because, firstly, the Assessing Officer himself has not taken cognizance of this document while making the additions. In any case, the original share certificates in any manner can be reckoned as incriminating without any corroborating document or material found in the course of search that they are not genuine or indicative of undisclosed income. Thus, none of the documents as mentioned can remotely be considered as incriminating so as to warrant any addition within the scope of assessment under Section 153A/153C of the Act in these years where assessments were not abated and attained finality. Accordingly, we hold that none of the additions made by the Assessing Officer in assessment year 2010-11 to 2012-13 are sustainable in the absence of any incriminating or material found during the course of search or the reservations and satisfaction note. As Assessing Officer has made protective addition in the case of the assessee and the substantive additions made in different concerns has already been deleted by the Tribunal on merits additions made on protective basis, cannot be sustained otherwise also. - Decided against revenue.
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2022 (3) TMI 761
Revision u/s 263 by CIT - assessee was reopened assessment u/s 147 r.w.s 148 of the Act mainly to examine the issue of long term capital gain resulting from the sale consideration - HELD THAT:- In this case the AO has examined the issue of sale of shares and the resultant capital gain accruing there from during re-assessment proceedings by issuing various notices under section 142(1) as stated above and the assessee has duly replied and filed all the evidences. We note that assessee has even filed a detailed reply to the show cause notice dated 20.12.2017 as stated above and AO has accepted the claim of the assessee as genuine - we do not find any reason as to why the jurisdiction exercised by the Ld. PCIT under section 263 of the Act is valid as the AO, after examining the issue in detail, has taken one of the possible views on the matter. This is not a case of wrong appreciation of facts or wrong application of law by the AO. We find that the mere fact that AO has not elaborated the issue in the assessment order would not entitle the Ld. PCIT to exercise jurisdiction under section 263 of the Act and the case of the assessee is supported by the decision of Hon ble Bombay High Court in the case of CIT vs. Gabriel India Ltd.[ 1993 (4) TMI 55 - BOMBAY HIGH COURT] wherein the Hon ble Bombay High Court has held that the PCIT can not invoke the jurisdiction under section 263 of the Act merely on the ground that AO did not discuss the issue in the assessment order which indicated non application of mind as claim of the assessee required to be examined. - Decided in favour of assessee.
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Customs
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2022 (3) TMI 760
Maintainability of appeal before the High Court - appropriate forum - Claiming exemption from duty of customs on foreign going going vessel - Whether against the order passed by the CESTAT impugned before the High Court the appeal would be maintainable before the High Court under Section 130(1) of the Act or the appeal before this Court would be maintainable under Section 130E(b) of the Act? - HELD THAT:- Similar question had arisen before this Court in the case of Commissioner of Customs vs. Motorola (India) Ltd., [ 2019 (9) TMI 229 - SUPREME COURT ]. The question involved in the said case was, whether, the assessee violated the conditions of the exemption notification by not utilising the imported materials for manufacturing of the declared final product and was, therefore, liable for payment of duty, interest and penalty. The High Court held that the appeals before the High Court would not be maintainable but were tenable before this Court under Section 130E of the Act. While setting aside the order passed by the High Court, this Court observed and held that neither any question with respect to determination of rate of duty arises nor a question relating to valuation of the goods for the purposes of assessment arises and the appeals also do not involve determination of any question relating to the classification of goods. By observing so, this Court observed that the High Court was not justified in holding that the appeals were not maintainable under Section 130(1) of the Act but were tenable before the Supreme Court under Section 130E of the Act. In the facts and circumstances of the present case the High Court is right in observing that the principal question in the present case is not in relation to the rate of duty but determining whether vessel AE is a foreign going vessel or not, and if the vessel AE is a foreign going vessel, Section 87 of the Act will be applicable or not. Therefore, with respect to such an issue, against the order passed by the CESTAT, the appeal would be maintainable before the High Court under Section 130 of the Act. The present Special Leave Petition deserves to be dismissed and is accordingly dismissed.
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2022 (3) TMI 759
Service of SCN - Recovery of duty drawback - export proceeds pertaining to the consignment exported by several shipments have not been realised - HELD THAT:- Since the show cause notice and the notice for personal hearing has not been received by the petitioner either through electronic mode or to the registered address of the petitioner, and it has been uploaded in the web portal and the petitioner has already closed the business before the show cause notices are said to have been issued through on-line mode ie., web portal, this Court feels that there is some justification on the part of the petitioner to claim that the notices have not been effectively issued or served on the petitioner. The impugned order is set aside and the matter is remitted back to the respondent for reconsideration - While reconsidering the same, the respondent shall issue a fresh show cause notice to the petitioner in the address given in the present writ petition by giving a specific date for personal hearing also - petition allowed by way of remand.
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2022 (3) TMI 758
Levy of penalty u/s 112 (a) and section 114AA of Customs Act, 1962 - alleged preparation of fake TR-6 challans showing payment of customs duty which actually was not paid by the appellant - HELD THAT:- The appellant has admitted the guilty at the time of recording his statement - As there is corroboration in the statement of the appellant that the appellant has shared money foregone for non payment of customs duty with Sh. Varun Mahajan, in that circumstance, the appellant is not entitled to any leniency from this Tribunal as the appellant misappropriated the government money. There are no infirmity in the impugned order for imposing penalties and the same is upheld - appeal dismissed.
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Insolvency & Bankruptcy
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2022 (3) TMI 757
Levy of pendente lite and future interest and Penal Interest over the documented rate in respect of its Credit Facility together with interest, further interest, Liquidated Damages and other charges thereon at the contractual rates - imposing conditions for the permission to sale of Agricultural Land - hand over of physical possession of the Agricultural Land - permission to Applicant being the secured creditor, to sell/realize the Mortgaged Property - Regulations 2(ea), 2A, 21A, 37 of the Liquidation Regulations and Section 52/53 of the Code - HELD THAT:- In so far as the claim of the Appellant is concerned of ₹ 29,34,54,879.59/- it has been admitted by the Liquidator the said claim is the claim admitted in the Liquidation Process and no further adjudication was called for with regard to the said claim - In the present case, the admission of the claim is not sought to be challenged by State Bank of India. In so far as the payment of Liquidator s Fee, Adjudicating Authority has disposed of the application with the direction to make payment of Liquidator s Fee and ensure compliance of Regulations 2(ea), 2A, 21A, 37 of the Liquidation Regulations and Section 52/53 of the Code. The order passed by the Adjudicating Authority does not warrant any interference - Appeal dismissed.
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2022 (3) TMI 756
Cancellation of sale of plot - directing the possession of the said Plant to be handed over to the Resolution Professional - preferential transaction or not - HELD THAT:- Under Section 46 relevant period for avoidable transaction or undervalued transaction is period of one year preceding the Insolvency Commencement date. The transaction in question being of 05th August, 2019 is within the period as contemplated under Section 46 as noted above. Insolvency Commencement date is 19.09.2019 and it was less than one and half month before the said date that this transaction was made by the Corporate Debtor. The Adjudicating Authority noted the transaction audit report and submissions made by the Appellant. It was noted by the Adjudicating Authority that no objection granted by Yes Bank for sale of the property, was at least ₹ 17.86 crore. When the mortgagee Bank has issued conditional NOC for 17.86 crore transaction of the property, at the amount of 11 crore is undervalued transaction and we do not find any error in the decision of the Adjudicating Authority holding the transaction as undervalued transaction. However, handing over the possession by the Directors of the Corporate Debtor to the Appellant before even payment indicates the nature of transaction which transaction was preferential transaction as well as undervalued transaction. Transaction was a transaction to defeat the rights of the creditor of the Corporate Debtor - Direction in the Impugned Order is only to hand over the possession of the plant to the Resolution Professional which is consequential action on account of reversal of the transaction. The Order passed by the Adjudicating Authority thus cannot be said to be beyond Section 45(1). However, when transaction is treated to be void it loses all its legal effect and submissions of Learned Counsel for the Appellant that since application for declaring the transaction void being Application No. 1304 of 2020 pending no direction could have been issued by the Adjudicating Authority as has been issued in the Impugned Order cannot be accepted. Respondent has also brought on record relevant materials to indicate that both Mohd Nasira Begum and Mohd Kamil who claimed to have passed resolution for transferring the plants on 15th April, 2019 were ceased to be directors with effect from 12.09.2018 hence the entire proceedings beginning from decision to transfer of the property was not legally done and preferential transaction and undervalued transaction in favour of the Appellant was only with a intent to defeat the rights of the creditors and no error have been committed by the Adjudicating Authority in allowing the Application filed by the Resolution Professional under Section 43 and 45 of the Code - Appeal dismissed.
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2022 (3) TMI 755
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- In the lights of Judgement in the case of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ] wherein the Hon'ble Supreme Court held that in section 7 of the Petition when the debt and default is proved the Adjudicating Authority bound to admit the Petition. Unlike section 9 where the scope to look into, disputes which is necessary to be considered before admission of the Petition. In view of the above, the facts and present Petition reveals that the Corporate Debtor has admitted the debt and the same is due and payable. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.
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2022 (3) TMI 754
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute or not - HELD THAT:- Apparently on behalf of the respondent, it is proved on record that there was no Striker on the box of articles containing steam iron qua the price which was apparently in violation of Legal Metrological Act. Therefore, the respondent could not resell the article further. Even the dispute was raised by respondent vide email dated 23.10.2020. In order to prove the same, the respondent corporate debtor has placed on record email dated 23.10.2020 and Debit note in order to establish the fact that there is a pre-existing dispute between the parties. The corporate debtor has also filed a debit note. The applicant in its rejoinder has not denied the fact regarding Debit Note and infact admitted that the goods were re-supplied/replaced because of quality issues. This further establish the version of respondent. The corporate debtor succeeded in establishing that there was a pre-existing dispute between the parties regarding quality of goods supplied - the present application is rejected and dismissed.
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2022 (3) TMI 753
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Since the payment claimed in the petition by the Operational Creditor had already been received by the Operational Creditor, these proceedings could not have been continued by the Operational Creditor. The plea of the Liquidator of the Operational Creditor that payment has not been made cannot be believed. If the Liquidator had sought permission before pursuing these proceedings, this Adjudicating Authority would have considered this aspect at that stage itself. In reply to the notice sent by the Operational Creditor, the Corporate Debtor has opposed the demand of the Operational Creditor on two counts; (1) that the full payment has been made and as per the invoice issued; and (2) that some advance payment has also been made. The Corporate Debtor has filed the affidavit to this effect - In view of the fact that the payment as per the invoice has already been made and there is no liability outstanding, the petition does not deserve any consideration particularly because the Corporate Debtor has raised certain disputes in the reply affidavit which may be taken as per pre existing disputes. The Operational Creditor (Liquidator) of M/s. Global Infonet Distribution Pvt. Ltd. cannot claim anything more than the amount mentioned in the petition filed by its erstwhile Board of Directors. There are no merits in the petition - petition dismissed.
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2022 (3) TMI 752
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The corporate debtor has not filed any settlement agreement executed between the parties in respect of alleged mutual arrangements. The corporate debtor further has failed to demonstrate any pre-existing dispute between the parties regarding claim of the applicant. Time limitation - HELD THAT:- It is seen that there was a running account between the parties and the corporate debtor has not paid amounts in respect of individual invoices. In fact the corporate debtor has admitted its liability to pay the dues towards applicant vide reply to demand notice as well - In the facts it is seen that the applicant clearly comes within the definition of Operational Creditor as the Corporate Debtor itself has admitted the fact of receiving goods supplied by the applicant. On a bare perusal of Form-5 filed under Section 9 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. An application under Section 9 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence or existence of default. In respect of applications filed before 24.03.2020 what is material is that the default is for at least ₹ 1 Lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The corporate debtor has failed to show that there is no debt or default in existence so as to avoid the provisions of the Code - the corporate debtor has failed to demonstrate that any pre-existing dispute between the parties infact the corporate debtor has admitted its liability. Therefore, the present application deserves to be allowed. Application admitted - moratorium declared.
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Service Tax
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2022 (3) TMI 751
Entitlement of interest on refund claim - refund sought was of amount of pre-deposit - effect of amendment in Section 35FF of Finance Act - rate of interest - whether Section 35FF pre-amendment will be applicable to the present case or Section 35FF post-amendment? - HELD THAT:- The perusal of Section 35FF makes it clear that prior 2014, the assesse used to be entitled for interest upon the amount of refund of amount of pre-deposit if and only if, the refund was not used to sanction within a period of three months. However, post Finance Act, 2014, the amendment Section 35F makes assesse always entitled for interest at the rate of not less than fifty per cent and not more than thirty six per cent per annum on the amount deposited by the assesse/appellant under Section 35F. The proviso to amended Section 35FF makes it clear that the un-amended provision shall continue to apply to the amounts deposited under Section 35F prior to the commencement of Finance Act, 2014. In the present case, the appellant filed an appeal before this Tribunal against Order-in-Original dated 30th September, 2013 apparently the amount as required under Section 35F to be deposited while filing such appeal was deposited by the appellant vide Challan No.61692 dated 06.10.2015. This particular perusal makes it abundantly clear that the amount of pre-deposit under Section 35F of Central Excise Act, 1944 was made after the amendment introduced vide Finance Act, 2014. Hence, the case of the appellant goes out of the scope of proviso to the amended provision and it shall be amended Section 35FF and not the erstwhile Section 35FF which shall be applicable to the deposit in question. Rate of Interest - HELD THAT:- The amount in question is not an amount of duty but was an amount paid by way of deposit under Section 35F for availing the remedy of an appeal. The appeal has been allowed. Such an amount is bound to be refunded along with the appropriate consequential relief as that of interest - the reasonable rate of interest in the given facts and circumstances is the rate at twelve per cent. Hence, the request of the appellant is accepted with respect to rate of interest also. Appeal allowed.
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2022 (3) TMI 750
Refund of service tax - extension of period of limitation - appealable order or not - section 74 of the Finance Act, 1994 - mistake apparent on the record or not - HELD THAT:- The order dated 15.10.2020 was passed by the adjudicating authority after verifying the records by the Range Officer who calculated the claim of refund filed by the appellant and recommended for sanction of ₹ 22,81,472/- for refund and the same has been sanctioned by the adjudicating authority. The said order is an appealable order is required to be challenged before the Commissioner (Appeals) under section 84 of the Finance Act, 1994(if aggrieved). As the adjudicating authority has passed the order on the basis of report filed by the Range Officer, therefore, it cannot be said that there is mistake on record. The adjudicating authority is directed to comply the order dated 15.10.2020 within 30 days of this order - appeal allowed.
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Central Excise
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2022 (3) TMI 749
Validity of Show Cause notice - Non adjudication / delayed adjustication of SCN for 11 years - CENVAT Credit - inputs - Menthol/Menthol flakes - Mentholised Oil (DMO) - Deterpinated Menthol like inputs - invoices issued by the J K and North East based units by showing supply of raw materials without supply of goods - HELD THAT:- It is clear that in Section 11-A(11), the legislature has prescribed a time limit. The Authority(s) are duty bound to abide the same. The expression where it is possible to do so does not mean that the time prescribed can be extended perpetually. The time limit cannot be taken to be directory except in a case where the Authority has a reason to offer as an explanation for extending the said time limit - In the present case, no explanation has been offered in the written statement which can be held to be a plausible explanation for not adjudicating upon the Show Cause Notice within the time prescribed. No explanation has been offered in the written statement as to why the Show Cause Notice(s) issued in 2009/2010 could not be adjudicated prior to 2018. The present writ petitions are allowed.
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2022 (3) TMI 748
Refund on the CVD and SAD paid for regularisation of advance licence (import licence), which have been deposited on after 01.07.2017 (implementation of GST) - rejection of refund on the ground that the duty was paid by the appellant after pointing out by the competent authority for failure of their export obligation - amounts paid do not fall under eligible cenvat credit or not - the refund filed is fit for consideration in terms of Section 142(6) of CGST Act, 2017 or not - HELD THAT:- The payment of CVD and SAD subsequently during GST regime, for the imports made prior to 30.06.2017 is not disputed under the advance authorisation scheme. It is also not disputed that the appellant have paid the CVD and SAD in May, 2018 May, 2019, by way of regularisation on being so pointed out by the Revenue Authority. Further, it is found that the Court below have erred in observing in the impugned order, that without producing proper records of duty paid invoices etc. in manufacture of dutiable final product, refund cannot be given. Also, the refund of CVD and SAD in question is allowable, as credit is no longer available under the GST regime, which was however available under the erstwhile regime of Central Excise prior to 30.06.2017. The appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act - the jurisdictional Assistant Commissioner are directed to grant refunds to the appellants of the amount of SAD CVD as reflected in the show causes notices - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 747
Clandestine removal - shortages of stock - it is claimed that there is no error as physical verification of stock has not been done properly and the same is done only by eye estimation - HELD THAT:- There is no calculation sheet. Against the quantity mentioned against all the three items of stock of finished goods, it is not explained how the said quantity has been arrived at. Thus, evidently, it is a case of eye estimation. Further, it is found that there is only an apparent difference of about 8 MT in the three items, which is insignificant, not requiring any adverse inference. The show cause notice is wholly mis-conceived under the facts and circumstances - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (3) TMI 746
Input Tax Credit - evaporation/handling losses of the petroleum products - HELD THAT:- As per provisions of Act, the tax paid to the State by the oil companies on the goods sold, would be ITC available to the purchasing dealers. There would be no ITC for tax paid on the goods specified in Schedule E when used or disposed of in the circumstances mentioned against those goods. The circumstances mentioned in Schedule E against petroleum products and natural gas are that when used as fuel or exported out of the State. Entry 5 of schedule E is not dealing with the items mentioned at Entries 1 and 2. In other words, circumstances mentioned against Entry 5 are not applicable to petroleum products and natural gas. The vires of Explanation (v) to Section 2(1) (zg) of the Act was subject matter of challenge before the Division Bench of this Court in ALL HARYANA PETROLEUM DEALERS ASSOCIATION VERSUS STATE OF HARYANA AND OTHERS [ 2014 (11) TMI 966 - PUNJAB AND HARYANA HIGH COURT] . The vires of provisions were upheld by the Division Bench. The issue with regard to reversal of input tax credit on evaporation was not subject matter before the Division Bench. However, a peripheral argument was raised by the petitioner that there would be an ever increasing gap between input tax available and the credit availed by dealers. The Division Bench rejected the argument considering that Ministry of Petroleum allowed evaporation losses to the extent of 0.6% for motor spirit and 0.2% for HSD - The Division Bench had not considered the language of Section 8 of the Act and Entry 1 of schedule E. Section 8 specifically provides that input tax shall not include tax paid on goods mentioned in schedule E when used or disposed of in circumstances mentioned against such goods. Against such goods is of importance. Even from the reading of Entry 5 of Schedule E, it is clear that entry applies to goods other than those mentioned in Entries 1 and 2 of Schedule E. The question is answered in favour of the dealer i.e. assessee shall be entitled to ITC on evaporation of the petroleum products - The appeals filed by the State are accordingly dismissed.
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2022 (3) TMI 745
Service of original demand notice from the petitioner - failure on the part of the petitioner to produce the original of the demand notice along with the appeal memorandum - HELD THAT:- The original assessment order issued to the petitioner had admittedly returned to the sender with the endorsement not known . This indicates that petitioner was never served with either the original order or the original demand notice, initially. However, a certified copy of the assessment order was issued to the petitioner on 27.09.2018, based upon which the petitioner preferred the appeal. Though the learned Government Pleader submitted that the original demand notice was also attached along with the assessment order, there is nothing on record to show that petitioner was served with the original or certified copy of the demand notice. In the absence of proof of service of demand notice coupled with the fact that the petitioner had filed the appeal within time with the certified copy of the assessment order, it is held that neither the original of the demand notice nor the certified copy of the demand notice was served on the petitioner. In the absence of any proof of service of demand notice on the petitioner, he is entitled to be issued with the certified copy of the demand notice as applied for, in Ext.P5. Failure on the part of the petitioner to produce the original demand notice, along with the appeal memorandum cannot be treated as a defect which can be cured by the petitioner. Rejection of the appeal for failure of the petitioner to produce the original demand notice is, therefore, incorrect and against law - the 1 st respondent is directed to issue the certified copy of the demand notice attached with the assessment order No.FAR 1687/2017 dated 28.03.2018, within a period of ten days from the date of receipt of a copy of this judgment - petition allowed.
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Indian Laws
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2022 (3) TMI 744
Dishonor of cheque - insufficient funds - burden to prove - framing of charge or trial - section 91 of Cr.P.C. - HELD THAT:- It is not in dispute that the petitioner has not denied his signature on the cheque in question. The most important aspect of the matter as to whether complainant is under an obligation to produce documents at the behest of petitioner or not. From the aforesaid enunciation of law laid down by Hon'ble Apex Court in John K. Abraham vs. Simon C. Abraham [ 2014 (1) TMI 528 - SUPREME COURT] , it is crystal clear that the initial burden is on the complainant to discharge that he had paid the amount to petitioner accused and it cannot be said that petitioner who is facing trial under Section 138 of the NI Act is within his right to say that unless and until documents so wanted by him from respondent complainant are produced, petitioner accused would not cross-examine respondent-complainant or his witness(s). It is for the respondent to decide that in what way he would like to prosecute his case. Petitioner-accused cannot direct or compel respondent complainant to either lead the evidence or submit proof, as per his own choice or wishes. Since the trial Court has exercised its discretion and has not committed any error in rejecting the application filed by the petitioner-u/s. 91 of Cr.P.C., this Court does not find it to be a fit case warranting interference u/s. 482 of Cr.P.C. - Petition dismissed.
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