Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 22, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Exemption from GST or not - Hostel facility which includes lodging and Boarding service - the applicant has stated in their application that they will charge below ₹ 1000/-per student per day, but it has not been declared by the applicant that how many Student will stay in a room, if more than one students wall stay in a room then GST rate will be chargeable - Further, the applicant is providing service of serving of food to students in hostel. - the services supplied by the applicant is a Mixed Supply and highest rate of GST will be applicable amongst services provided by the applicant to students in hostel. - AAR
Income Tax
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Penalty u/s 271(1)(c) - deduction under Section 80P - Tribunal has recorded a finding of the fact that there is no evidence of concealment of income. Tribunal has concluded that the appellant had made a legitimate claim for exemption under section 80P(2)(a)(i) which was purely a legal in nature and even on rejection of such a claim, no penalty is leviable. - order of ITAT does not suffer from any legal infirmity. - HC
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Unexplained investment in fixed assets - assessee has inflated the value of machinery and office equipment - When the there is no actual investment of any kind by the assessee during the assessment year especially in absence of any receipt voucher, payment voucher, bills, vouchers payment proof, etc. provisions of section 69 are not applicable - the disallowance, if any could have been made by re-computing the depreciation on account of wrong figure of closing and opening balance of WDV but no addition u/s 69 could have been made. - AT
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Foreign Tax Credit (FTC) for default in filling Form 67 under Rule 128 - delay in compliance of a procedural provision - Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.67. - FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. - AT
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Income accrued in India - TDS u/s 195 - fees for included services (FTS) - USA DTAA - the PGCIL would not apply technology on its own. It would continue to depend on the assessee for provision of software and hardware maintenance and support services in the future. Thus, keeping in view of the facts and circumstances of the case, receipts from PGCIL do not qualify as 'fees for included services' under articles 12(4)(a) and 12(4)(b) of India - US DTAA. - AT
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Reopening of assessment u/s 147 - Addition u/s 68 - bogus LTCG - bogus share transaction - It is immaterial that order of the SEBI came in 2018 because the SEBI has analysed the entire trading of shares from year 2013 and found that not only the prices of the scrips of the said company were rigged but also were involved in fraudulent activities, which led to completely debarred its trading in the stock exchange. This order of SEBI clearly implicates, the entire transaction of purchase and sale of shares and goes to prove that the transaction was not genuine and corroborates the findings of the enquiry conducted by the Income Tax Department. - the appeal of the assessee dismissed. - AT
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Reopening of assessment u/s 147 - Addition u/s 68 - unexplained share premium - While recording the reasons for reopening the assessment, the AO did not even care to look into the assessment records. Had the AO seen the assessment record, then he would have found that during the year under consideration, the assessee had issued share capital including share premium to various parties and has also received sufficient unsecured loans from various parties and details of share application money and unsecured loans were already submitted during the course of assessment proceedings. - Notice issued u/s 148 quashed - AT
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Addition to towards interest expenses - borrowing money from related party (partnership firm) at higher rate of interest and lending the same at lower interest rate - CIT(A) upheld the additions restricting the interest expense only to the extent of income earned u/s 57 - Additions confirmed - AT
Customs
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Seeking grant of relief under the MEIS Scheme under the Foreign Trade Policy 2015-2020 - error while filing the bill of entry by the petitioner - The incentive under the Merchandise Exports from India (MEIS) is intended to be passed on to exports to eligible exporter, if they have otherwise satisfied the substantive requirements of the scheme under the Foreign Trade Policy. In this case, the petitioner has satisfied all other requirements - the benefit should not be denied for procedural error. - HC
Indian Laws
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Dishonor of Cheque - rebuttal of presumption - preponderance of probabilities - There is no evidence to establish that the appellant had informed the Bank about the loss of the cheque book containing blank cheque. In fact, In the statement under Section 313 Cr.PC. appellant had stated that this cheque book containing a blank cheque was lost. Appellant has no case that the signature on the cheque in question was not put by him - in the totality of facts of this case the appellant has not established a case for interference with the finding of the Courts below that the offence under Section 138 N. I. Act stands committed by the appellant. - SC
IBC
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Validity of approval of resolution plan of corporate debtor - the Resolution plan as approved by the CoC using its commercial wisdom and subsequent approval by the Adjudicating Authority vide the Impugned Order does not suffer from any legal infirmity. Moreover the new connection to the successful resolution applicant/corporate debtor should be given under WBERC Regulations as the CIRP has ended and a fresh power purchase agreement is necessary which will require fresh security deposit and payment of any other charges as required under WBERC Regulations, which will be in accordance with the modifications in approved resolution plan - AT
Service Tax
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Levy of service tax - GTA - In some of the cases the appellant transported the good by road without issuance of the consignment note, the said activity prior to June 2012 was not classifiable under category of services as no consignment note was issued and it is prime requirement to demand service tax under the category of good transport agency service. Further, the appellant has hired out vehicles to other GTA service providers, who have issued consignment notes to their clients. Such activity of the appellant was also exempt under notification no. 1/2009-ST dated 5.1.2009 for the period prior to 30.6.2012 and exempt under notification no. 21/2012-ST dated 20.6.2012 for the period post July 2012. - AT
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CENVAT Credit - demand alongwith interest and penalty - The perusal of extract from the orders of adjudicating authorities shows clear acknowledgement that the appellant has reversed the entire Cenvat Credit alongwith with the interest. - the findings confirming the demand of said amount are contrary to their own observations and thus are liable to be set aside. - AT
Central Excise
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Rejection of interest at 12% on delayed refund - deposit made during the period of investigation - the appellants are entitled to claim interest @ 12% per annum of deposit made during the investigation till its realization - AT
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Refund of unutilised CENVAT Credit - Once it is held that the appellant has rightly taken cenvat credit and the same is lying in their books un-utilised as on 30.06.2017, when the provisions of CGST Act (GST regime) was implemented w.e.f. 01.07.2017, and thus if the appellant has not taken the un-utilised cenvat credit to the GST regime by filing form TRAN-1, they are eligible to refund of the un-utilised credit in terms of the transitional provision under Section 142(2) and (6) of the CGST Act - AT
VAT
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Waiver of interest and penalty under Sections 36(1) and 72(2) of the Karnataka Value Added Tax Act, 2003 - respondent himself has accepted that he has understated his liability to tax on the sale of Nutralite during the year 2007-08 - The Tribunal having modified the rate of tax from 12.5% to 5.5% in terms of the order passed in Rectification Application, it cannot be gainsaid that there is no understatement of output tax liability or overstatement of entitlement to input tax credit by the appellant in the return filed. - Petition dismissed - HC
Case Laws:
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GST
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2022 (3) TMI 856
Seeking grant of default bail - inclusion of day of remand in the calculation of period of 60 days - Section 167(2) Cr.P.C. - HELD THAT:- The application having been moved on 28.11.2021, which was the 61st day was rightly allowed by the Ld. JMIC. All that needs to be noticed is that taking note the conflicting views on the question of the inclusion or exclusion of the day of remand for the purpose of calculating the period, Hon'ble Supreme Court in ENFORCEMENT DIRECTORATE, GOVERNMENT OF INDIA VERSUS KAPIL WADHAWAN ANR. ETC. [ 2021 (2) TMI 1283 - SUPREME COURT] referred the matter to a Larger Bench observing that it is necessary for a Bench of appropriate strength to settle the law taking note of the earlier precedents. Unless the issue is appropriately determined, the Courts across the country may take decision depending upon which judgment is brought to the Court's notice or on the Courts own understanding of the law, covering default bail under Section 167(2)(a) II of Cr.P.C. Application disposed off.
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2022 (3) TMI 855
Cancellation of registration of the petitioner - Order passed without providing any opportunity of hearing to the petitioner - violation of principles of natural justice - HELD THAT:- The allegation of the petitioner is correct since no reason has been given in the impugned order of cancellation and is non-speaking order and is not sustainable in law and accordingly the impugned order of cancellation of registration of the petitioner is set aside and all legal consequences will follow. So far as part of the impugned show-cause notice for cancellation of registration, where registration of the petitioner has been suspended this part of the impugned order will remain suspended since the allegation in the impugned show-cause notice is very vague and one line allegation without any basis and for the ends of justice a person against whom a show-cause notice has been issued, he should be at least provided in brief the basis of such allegation so that the person can meet the allegations in show-cause notice. Petition disposed off.
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2022 (3) TMI 854
Cancellation of registration of the petitioners - the impugned order was passed on a date about which no prior intimation of hearing was given to the petitioners - HELD THAT:- No reply to the show-cause-notice was filed, which itself shows total non-application of mind on the part of the respondents and in addition on the ground that the impugned order of cancellation is a non-speaking order and which is contrary to the law laid down by the Hon ble Supreme Court in the case of SN. MUKHERJEE VERSUS UNION OF INDIA [ 1990 (8) TMI 345 - SUPREME COURT] . List this matter on 3.3.2022 for further consideration.
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2022 (3) TMI 853
Rectification of mistake - typographical errors have occurred - HELD THAT:- Necessary corrections are effected. The corrections be carried out and a fresh copy of the order be issued and this order shall form part of the order dated 18th February, 2022.
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2022 (3) TMI 852
Detention of goods alongwith vehicle - appellant who is the wife of the deceased dealer has paid 100% of the disputed tax and further 10% of the disputed tax - HELD THAT:- The prima facie conclusion arrived at by the learned Single Judge was on account of the fact that as of now the GST Tribunal is not functional and had the avenue of appeal been available to the appellant, the appellant would have been required to pay 100% of the admitted tax and 10% of the disputed tax for her appeal to be entertained. The technical objection raised by the appellant has to be agitated before the learned Single Judge as the appellant has been given an opportunity to file an affidavit-in-opposition. All that is required to be seen is whether the interest of revenue has been reasonably safeguarded. In our considered view, the respondent having paid the 100% of the admitted tax and further 10% of the disputed tax, the interest of revenue has been safeguarded, for the present. Appeal dismissed.
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2022 (3) TMI 851
Works Contract - service recipient is Governmental Authority or not - explanation to clause (16) of section 2 of the IGST Act, 2017 - payments related to work order for Fire Fighting System installation at contracted area between applicant and Jaipur Smart City Limited - applicability of serial number 3 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017 - GST rate for the work undertaken by applicant for M/s Jaipur Smart City Limited - applicability of reverse charge mechanism in respect of road cutting charges paid by them to Jaipur Nagar Nigam (JNN) on behalf of M/s. Jaipur Smart City Limited in relation to such contract - rate of GST - road cutting charges by the Applicant from M/s. Jaipur Smart City Limited liable to GST or not. Whether the service recipient i.e. M/s. Jaipur Smart City Limited is a Governmental Authority as defined in item No. ix (of paragraph 4) of an explanation to Notification No 11/2017CT(R) dated 28.06.2017? - HELD THAT:- Jaipur Smart City Limited (JSCL) is a Special Purpose Vehicle (SPV) for development of Jaipur City - The Municipal Corporation, Jaipur is not Government but it is a Local Authority. Thus, shareholding of State Government is almost 50% only in the JSCL. Therefore, M/s JSCL is not satisfying the conditions of item No. ix (of paragraph 4) of an explanation to Notification No 11/2017-CT(R) dated 28.06.2017 in respect of 'Governmental Authority'. Applicability of Item number (vi) in Column (3) of serial number 3 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017 3/2019-Central Tax (Rate) dated 29.03.2019 - HELD THAT:- When M/s JSCL not qualified as Governmental authority then services provided to it by the applicant is also not considered as services provided to the governmental authority. Thus, Item number (vi) in Column (3) of serial number 3 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended time to time is not applicable on applicant in this case - services provided by the applicant will be covered under Item number (xii) in Column (3) of serial number 3 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended time to time and is liable to GST @ 18%. Applicability of GST under RCM in respect of road cutting charges paid by applicant to Jaipur Nagar Nigam (JNN) on behalf of M/s. Jaipur Smart City Limited in relation to such contract - HELD THAT:- The Executive Engineer, Jaipur Nagar Nigam (JNN) i.e. municipality vide demand note dated 26.03.2021 (as provided by the applicant) raised a demand to the applicant for road cutting charges in respect of Fire Fighting pipeline. Further, as per clause no. (viii) of point no. 1 of the general scope of work as mentioned under heading 5.3 of Section V - Procuring Entity's Requirements of RFP, any approval required from any line agency should be taken by the contractor in the name of entities. In the instant case road cutting charges are to be deposited by the applicant to the Jaipur Nagar Nigam (JNN) i.e. Local Authority and the same will be reimbursed by the JSCL on submission of running bill. Further, as per item No. 5 of the Notification No. 13/2017-CT(R) dated 28.06.2017, central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient when Services supplied by the Central Government, State Government, Union territory or local authority to a business entity. In the present case, services of permission/fees of road cutting is provided by the Local Authority i.e. Jaipur Nagar Nigam (municipality) to the business entity i.e. M/s Lakhlan Qureshi Construction Company (applicant) for the consideration of ₹ 3,85,10,775/-(i.e. more than Five thousand rupees). Hence, the applicant is liable to pay GST as a recipient for the charges paid or to be paid to the Jaipur Nagar Nigam under reverse charge mechanism. It is pertinent to mention here that activity of giving permission for road cutting charges is not mentioned in the list of works as provided under article 243 W of the constitution entrusted to a Municipality - Thus, clause (b) of sub-section (2) of section 7 of CGST Act, 2017 read with notification no. 14/2017 as amended by notification no. 16/2018 of central tax (rate) is not applicable in this case and the applicant is liable to pay GST as a recipient. Liability of GST on recovery of such road cutting charges by the Applicant from M/s. Jaipur Smart City Limited (JSCL) - HELD THAT:- Clause (c) of sub section (2) of Section 15 of the CGST Act, 2017 states that any incidental expenses charged by the supplier to the recipient and any other amount charged for anything done during the supply until the time of delivery of the goods or supply of the services shall be included in the value of the supply. Hence, any goods or services provided by the supplier, for which a consideration is charged from the recipient, shall be included in the transaction value and chargeable to tax. With regard to reimbursement of expenses incurred as a pure agent, Rule 33 of the CGST rules, 2017 provides that any expenditure incurred as a pure agent will be excluded from the value of supply, and hence, from the aggregate turnover as well. In the instant case, as M/s JSCL is not a governmental authority therefore, serial number 3 of Notification No. 12/2017 of central tax (rate) dated 28th June 2017 as amended by Notification No. 02/2018 of central tax (rate) dated 25th January 2018 is not applicable on applicant - the applicant does not satisfy the condition of pure agent and does not fall under the ambit of 'Pure Agent' as per Rule 33 of the CGST rules, 2017. As per clause (c) of Section 15(2) of CGST Act, 2017, recovery of such road cutting charges by the Applicant from M/s. Jaipur Smart City Limited will be included in the value of supply under GST. Thus, the applicant is liable to pay GST @18% on recovery of such road cutting charges.
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2022 (3) TMI 850
Exemption from GST or not - Hostel facility which includes lodging and Boarding service provided by MEF to the students of must having value of service upto ₹ 1000/- per day - naturally bundled services or not - applicability of exemption under entry no. 14 of the notification 12/2017 CTR Dt 28.06.2017 - HELD THAT:- Naturally bundled services are those services wherein one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service - If current nature of supply of services is tested based on above factors, it can be ascertained that the provision of hostel accommodation could be a principal supply but ancillary services like food cannot be said to arise naturally with the principal service of hostel accommodation and therefore are not bundled naturally with principal supply - here the said supply is not a Composite Supply, therefore, the facts of the case can be examined in respect of Mixed Supply. The services supplied by the applicant such as hostel accommodation, food etc. to the student of Rs. Less than 1000/- per day per student is not a Composite supply, hence, the services the applicant is supplying is Mixed Supply as per GST Act, 2017 and the applicable rate of tax is the highest rate applicable to the various services supplied by the applicant. The exemption to accommodation service is applicable in respect of a unit of accommodation where tariff is below ₹ 1000/- per day. Notification No. 11/2017-CT(Rate) as discussed provides applicable GST rate as per declared tariff of a unit of accommodation. Further, accommodation having declared tariff of a unit of accommodation of one thousand rupees and above but less than two thousand five hundred rupees per unit per day or equivalent, the GST rate will be charged 12%, further accommodation having declared tariff of a unit of accommodation of two thousand five hundred rupees and above but less than seven thousand five hundred rupees per unit per day or equivalent, the GST Rate will be charged 18%, further accommodation having declared tariff of a unit of accommodation of seven thousand five hundred rupees above per unit per day or equivalent, the GST Rate wall be charged 28% - the applicant has stated in their application that they will charge below ₹ 1000/-per student per day, but it has not been declared by the applicant that how many Student will stay in a room, if more than one students wall stay in a room then GST rate will be chargeable, since the applicant did not make clear that how many students wall stay in a room/unit, hence considering non-clarity of tariff of a unit of accommodation, the GST rate as per notification no. 11/2017-Central Tax (Rate), dated 28.06.2017 will be applicable to the applicant. Further, the applicant is providing service of serving of food to students in hostel. The said service is classifiable under HSN 9963 as provided under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and GST rate will be applicable as per the above notification - the services supplied by the applicant is a Mixed Supply and highest rate of GST will be applicable amongst services provided by the applicant to students in hostel. The applicant would not be eligible for exemption under entry no. 14 of the Notification No. 12/2017 Central Tax (Rate), dated 28.06.2017.
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Income Tax
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2022 (3) TMI 849
Reopening of assessment u/s 147 - Eligibility of reasons to believe - Proof of procedural irregularity - HELD THAT:- Notices were issued under Section 148 of the Act, pursuant to which, return was filed by the petitioner for the relevant assessment years, thereafter, reasons were sought for, reasons were given by the Revenue, those reasons have been objected. Those objections having been considered, now, rejection orders have been passed by the respondent-Revenue. Therefore, absolutely there has been no procedural irregularity available in these cases. Insofar as the reason for reopening is concerned, as has been stated above, the petitioner being the Indian Subsidiary Company of a foreign company called M/s.BTL Cyprus had earned income, according to the Revenue, and the said income has not been brought or rooted through the P L account i.e., the Profit and Loss Account of the relevant Financial Year and this has been unearthed subsequently only by the Revenue and prima facie , according to the Revenue, there has been a net freight of ₹ 29,50,53,532/- collected through the Indian Subsidiary company after allowing the expenditure, which according to the Revenue, is escaped assessment. Though it was vehemently contended by the learned counsel appearing for the petitioner that, these kind of transactions and the income derived by the assessee company had already been disclosed in the earlier years, whether that would preclude the Revenue from reopening the assessment for the present Assessment Years i.e., 2013-14 and 2015-16 is concerned, it has to be gone into only by the Assessing Authority, before whom certainly the assessee can make his defence by producing books of accounts, documents, reply, etc., These kind of minute details cannot be gone into by this Court by exercising its extraordinary jurisdiction under Article 226 of the Constitution. If at all any procedural irregularities or violation of the statute or if the Revenue acted upon against the principle laid down by the Hon'ble Supreme Court in dealing with cases for reopening under Section 147 of the Act, only in those circumstances, this Court can show its indulgence at the threshold, against the very reopening of the assessment itself under Section 147 of the Act. Here no such situation has arisen after having gone through the documents, which are placed before this Court, especially on the reasons for reopening. The procedural formalities have alreay been complied with in these cases as directed by the Hon'ble Supreme Court in GKN Driveshafts [ 2002 (11) TMI 7 - SUPREME COURT] case and therefore, on that ground also, no interference is called for against the Revenue on these impugned orders. Therefore, this Court feels that the impugned orders are to be sustained and the assessment process already commenced by invoking the Section 147 of the Act can go on. Appeal dismissed.
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2022 (3) TMI 848
Penalty u/s 271(1)(c) - deduction under Section 80P - Claim denied on the ground that the respondent/assessee is not a Cooperative Society registered under the U.P. Cooperative Societies Act,1912 - HELD THAT:- The appellant had come into existence for development and growth of agricultural sector. This finding of fact has not been disputed in the present appeals. Assessing authority,itself has recorded a finding that the respondent-assessee came into existence w.e.f. 31.03.2008, after amalgamation of the two Regional Rural Banks (RRB) i.e. Baroda Eastern U.P. Gramin Bank and Baroda Western Gramin Bank. It has not been disputed that by virtue of deeming provision under Section 22 of the Regional Rural Banks Act, 1976, the respondent/assessee is deemed cooperative society. As perused the impugned common order of the Tribunal arising from the assessment order and we do not find any legal infirmity in it. So far as the impugned common order of the Income Tax Appellate Tribunal arising out of the penalty order under Section 271(1) (c) of Income Tax Act, 1961 is concerned, we find that the Tribunal has recorded a finding of the fact that there is no evidence of concealment of income. Tribunal has concluded that the appellant had made a legitimate claim for exemption under section 80P(2)(a)(i) which was purely a legal in nature and even on rejection of such a claim, no penalty is leviable. The case of the appellant RRB is even on a better footing as all the five appeals for the corresponding assessment years have been allowed by us on merits therefore, in terms of our four separate orders of date We have perused the impugned common order of the Income Tax Appellate Tribunal arising from the penalty orders under Section 271 (1) (c) of the Act and we find that it also does not suffer from any legal infirmity. Matter is also concluded by the findings of the fact. No substantial questions of law
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2022 (3) TMI 847
Stay petition - Application rejected as petitioner should approach the Appellate Authority to file such an application for stay - Penalty u/s 271(1)(c) initiated - HELD THAT:- It is the claim of the petitioner that, it is a very low stake claim, wherein whether the petitioner has presentable case before the Appellate Authority has to be decided only by the Appellate Authority, for which appeal has been immediately filed, i.e., after receipt of the assessment order from the faceless assessment centre only on 23.12.2021 and in the meanwhile when application for stay was filed, for which the petitioner assessee is entitled to under Section 220(6) of the Act, the same should have been considered on merits, by using his discretion, of course by imposing certain conditions, however, the Assessing Authority, i.e., the respondent herein outrightly rejected the same by directing the petitioner to approach the Appellate Authority. If we look at the language used in Section 220(6) of the Act, it is the complete discretion of the Assessing Authority to deal with such application filed under the said section and it can be disposed of by the Assessing Authority by using his discretion, of course by imposing certain conditions depending upon the circumstances of the case. When that being so, the present order which is impugned herein, dated 07.02.2022, driving the petitioner to approach the Appellate Authority may not be good reason be construed as a reason that can be given by the Assessing Authority within the meaning of Section 220(6) of the Act. The impugned order is set aside and the matter is remitted back to the respondent, where the petitioner can make a fresh application also along with an earlier application, where if he needs to make any additional input or reason for considering his application for grant of stay and such application shall be considered and decided by the respondent Assessing Authority by using his discretion.
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2022 (3) TMI 846
Stay of demand - recovery proceedings initiated during pendency of appeal - HELD THAT:- As far as the latter is concerned, there is no opportunity for the petitioner to upload the stay petition after the commencement of the National Faceless Appeal Scheme. In similar matters this Court had, taking note of the prejudice being caused to the assessees, have directed the National Faceless Appeal Centre to provide a link to the assessees to enable them to upload stay petitions in pending appeals. This Court is of the opinion that petitioner should also be given a similar relief. Accordingly there will be a direction to respondents 3 to 5 to provide a link, to the petitioner to upload an application for stay, within a period of four weeks from the date of receipt of a copy of this judgment. Once a link is provided to the petitioner, the stay application as sought for must be uploaded within two weeks thereafter. If such directions are complied with, the Competent Appellate Authority shall consider and dispose of the stay application, as expeditiously as possible, at any rate within a period of six weeks from the date of uploading of the application for stay. Despite the uploading of stay application, the appellate authority will be at liberty to consider and pass appropriate orders on the appeal itself.
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2022 (3) TMI 845
Stay of demand - grievance raised in the writ petition that petitioner is unable to file an application for stay before the Appellate Authority, who alone, according to him is competent to grant stay of the order impugned in appeal - HELD THAT:- The requirement to have a link to move applications in pending appeals is a facet of the right of access to a court of law. Absence of such a link is contrary to the fundamental rights of every individual. It is essential that the Income Tax Department, especially the Faceless Appeal Centre make provisions for providing electronic link to the appellants to file necessary interim applications, so that litigants get proper access to a court of law for redressal of their grievances. The right of access to a court of law available to a litigant cannot be deprived by an absence of link to upload interim applications. We direct the 2 nd respondent to make available within a period of four weeks from the date of receipt of a copy of this judgment a link to upload the stay petitions to be filed by the petitioner for filing a stay petition in the pending appeal. If after making available such a link, the petitioner uploads any application for stay as contemplated under law, within a period of two weeks thereafter, the said application shall be considered and disposed of by the 2nd respondent, within an outer period of two months from the date of uploading of the stay petition. Till such time, all recovery proceedings pursuant to Ext.P1 shall be kept in abeyance.
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2022 (3) TMI 844
Capital gain computation - FMV determination - cost of acquisition incurred by his forefathers in obtaining the land in Inam - assessee requested for making a reference to the DVO u/s 50C for the purpose of determining fair market value as on 01.04.1981 and also as on the date of transfer - AO opined that the transfer took place on such date only - HELD THAT:- Assessee did not take up the issue of Inami land before the AO. It was for the first time that the assessee raised this issue before the CIT(A) contending that in the absence of any cost of acquisition incurred by his forefathers in obtaining the land in Inam, machinery provisions for computing the capital gains failed. In support of the said contention, the assessee placed before the ld. CIT(A) some documents asserting Inam Patrak containing the entry of impugned land which was in torn condition and not legible. Assessee did not take up the issue of Inami land before the AO. It was for the first time that the assessee raised this issue before the ld. CIT(A) contending that in the absence of any cost of acquisition incurred by his forefathers in obtaining the land in Inam, the machinery provisions for computing the capital gains failed. In support of the said contention, the assessee placed before the ld. appeals are allowed for statistical purposes. CIT(A) some documents asserting Inam Patrak containing the entry of impugned land which was in torn condition and not legible. Second view canvassed by the assessee that there was no cost of acquisition in view of such property being received as Inam, the ld. CIT(A) observed that payment of Nazarana to the Govt. of Maharashtra was a pre-condition to receive a marketable title and for transfer of such land, such payment of Nazarana would constitute the cost of acquisition. The ld. AR submitted that there was no such provision in the relevant Statute providing for payment of Nazarana as a pre-condition for receiving Inam property. A prayer was made that the ld. CIT(A) ought to have examined the assessee‟s claim of Inami land by directing the enquiry to the concerned officials. It would be in the fitness of things, if the impugned orders are set aside and the matter is restored to the file of AO. Order accordingly and direct the AO to decide the issue afresh after conducting proper enquiries about the assessee‟s claim of having received the land in question by his forefathers as Inam and further about the Nil cost of acquisition claim raised by the assessee - Appeals are allowed for statistical purposes.
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2022 (3) TMI 843
Assessment u/s 153C - Addition under the head Income from business and profession - HELD THAT:- Earlier Assessment Years were framed u/s 153C of the Act and the assessee had challenged the very assumption of jurisdiction u/s 153C of the Act which has been decided in favour of the assessee by the CIT(A)/ITAT/High Court. Since the assessment order itself was quashed, there was no occasion to consider the merits of the case. Therefore, it cannot be said that the assessee has accepted the view of the Assessing Officer. Earlier assessments were framed u/s 153C of the Act which ware quashed by the appellate authorities. Therefore, we find force in the contention of the ld. counsel for the assessee that there was no occasion to dwell into the merits of the case. The factual matrix clearly shows that the assessee has followed a well recognized method of accounting following a notified accounting standard u/s 145 of the Act. We, therefore, do not find any error or infirmity in the findings of the ld. CIT(A) mentioned elsewhere. Ground Nos. 2 and 3 are accordingly dismissed.
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2022 (3) TMI 842
Penalty u/s 271(1)(c) - Disallowance u/s 43B - HELD THAT:- Facts on record clearly reveal that all material relating to the interest component was furnished before the departmental authority. In fact, Commissioner (Appeals) has found the interest on OD account from the profit and loss account of the assessee. Thus, in our considered opinion, the explanation of the assessee that it is a bona fide claim of deduction, appears to be reasonable. It is to be noted that penalty u/s 271(1)(c) of the Act is not automatic. If assessee offers reasonable explanation, then, penalty cannot be imposed. In the facts of the present appeal, in our considered opinion, the deduction claimed by the assessee is not due to any mala fide intention but on a bona fide belief. In any case of the matter, as held by the Hon'ble Supreme Court in case of CIT vs. Reliance Petro Products [ 2010 (3) TMI 19 - SUPREME COURT] disallowance of a deduction claimed by the assessee by itself cannot lead to furnishing of any inaccurate particulars of income - Decided in favour of assessee.
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2022 (3) TMI 841
Stock discrepancy u/s 69 - suppressed sales - During the course of survey u/s 133A conducted on the premises of the assessee the survey team found discrepancy in stock - HELD THAT:- AO could not pin point any discrepancy in the books of accounts produced by the assessee during the assessment proceeding. It was also brought to the notice of the AO that inventory taken by the survey team was taken on estimation and was not correct. We note that the AO simply brushed aside the plea of the assessee that these stocks and sales as found during the survey were duly recorded in the books and income was determined and return of income was filed accordingly. AO has not rejected the books of accounts of the assessee and AO failed to point out any defect or deficiency in the same. In our opinion, the AO cannot make the additions without rejecting the books of accounts and without pointed out specific defects. The assessee has been claiming that correct amount of stocks and sales were recorded in the books which were produced before the AO and the AO has failed to point out as to how the books of account were not correct. CIT(A) has held that amount of undisclosed stock and sale were not accounted by the assessee without giving any findings as to how the books of account produced by the assessee were not correct. In our opinion, the addition of such types which are made during the course of survey on oath cannot be made unless there is a supporting material. In our opinion, the addition on estimated basis cannot be justified for reasons, the AO has not rejected the books of account. We are inclined to set aside the order of CIT(A) and direct the AO to delete the addition in respect of stock discrepancy and in respect of suppressed sales - Decided in favour of assessee.
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2022 (3) TMI 840
Rectification of mistake u/s 154 - Delayed Employees contribution to the Employee Provident Fund and Employee State Insurance Fund - addition u/s 2(24)(x) r/w s. 36(1)(va) - amount being deposited before the due date of filing the return of income u/s. 139 (1) - scope of amendment - HELD THAT:- In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon'ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT] and SMT. ARUNA LUTHRA. [ 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT] No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine [ 2021 (11) TMI 927 - ITAT JABALPUR] any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee. The impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. Decided in favour of assessee.
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2022 (3) TMI 839
Disallowance of subscription fee paid to club - Addition as permissible u/s. 143(1)(a)(iv) - HELD THAT:- As per Clause (iv) of Sec. 143(1)(a) AO can make adjustment towards expenditure indicated in the Audit Report, but not taken into account in computing the total income in the return. In this case, the Tax Auditor has quantified the expenses of personal in nature in his Audit Report issued in Form No. 3CD. AO has made adjustment on the basis of qualified report issued by the Tax Auditor - there is no merit in the arguments taken by the assessee, then adjustment made by the AO towards disallowance of subscription fee paid to club, is not permissible u/s. 143(1)(a)(iv) . Additions made towards car expenses and subscription fee paid to club, although assessee claims that in Form No. 3CD - HELD THAT:- Tax Auditor has reported expenses of personal in nature in respect of car expenses of Salem Branch instead of actual expenses being 10% of Salem Office car expenses we find that the assessee claims to have made disallowance being 10% of car expenses on Salem Branch, wherein, the Tax Auditor has reported ₹ 16,970/-. The difference between expenses reported by the assessee and the expenses disallowed by the Tax Auditor is at ₹ 4,316/- and the same has been added by the AO. The facts need to be verified with reference to statement of total income filed by the assessee and Tax Auditor Report issued by the Auditor. Therefore, we are of the considered view that this issue needs to go back to the file of the AO. Disallowance of club subscription and club expenses - HELD THAT:- We find that the assessee has made payments to various clubs in Chennai and other places, which are in the nature of personal expenditure incurred by the partners as members of various clubs. Therefore, we are of the considered view that expenditure incurred by the assessee towards payment to clubs, is in the nature of personal expenditure and unless, the assessee demonstrate that subscription fee paid to clubs is for development of business of the assessee deduction cannot be allowed. In this case, the claim of the assessee is that expenses incurred for subscription fee paid to clubs is for the purpose of business of the assessee. The AO has made adjustment without verifying the claim of the assessee that the expenses incurred for the purpose of business of the assessee. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in light of claim of the assessee that subscription fee paid to club and club expenses is for the purpose of business of the assessee - issue needs to be re-examined by the AO in light of claim of the assessee that subscription fee paid to club and club expenses is for the purpose of business of the assessee.
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2022 (3) TMI 838
Unexplained investment in fixed assets - assessee has inflated the value of machinery and office equipment - As per assessee there is no addition to the fixed assets and the AO does not have any evidence at his disposal regarding any receipt voucher, payment voucher, bills, vouchers payment proof, etc. for any actual investment made by the assessee and since the difference in the WDV at closing of the preceding year and at the beginning of the current year is due to some clerical error which was rectified, therefore, no addition u/s 69 can be made - HELD THAT:- When the there is no actual investment of any kind by the assessee during the assessment year especially in absence of any receipt voucher, payment voucher, bills, vouchers payment proof, etc. provisions of section 69 are not applicable and the error is an accounting/clerical error which occurred in the very first year. Therefore, we are of the considered opinion that the disallowance, if any could have been made by re-computing the depreciation on account of wrong figure of closing and opening balance of WDV but no addition u/s 69 could have been made. We, therefore, set-aside the order of the ld. CIT(A) and direct the AO to delete the addition made u/s 69. AO may re-compute the depreciation on account of difference in the opening and closing balance of the WDV of the fixed assets. The ground raised by the assessee is accordingly partly allowed.
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2022 (3) TMI 837
Late remittance of employees contribution to PF and ESI under the respective Acts - Employees share of contribution to ESI to the extent not paid on or before the due date as mentioned in Sec 36(1)(va) - payments made beyond the due date prescribed under respective statutes, but before the due date prescribed u/s 139(1) - Scope of amendment by Finance Act, 2021, to section 36[1][va] and 43B - HELD THAT:- As in Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - Also further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction - Decided in favour of assessee.
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2022 (3) TMI 836
Income deemed to accrue or arise in India - PE in India - whether or not the assessee has a Business Connection u/s 9(1)(i) and a Permanent Establishment (P.E.) under Article 5 of the India Singapore Double Taxation Avoidance Agreement - if the assessee is said to have Business Connection / P.E., then how much of the profit can be attributed to the said Business Connection / P.E. particularly when the transaction is at arm's length price - HELD THAT:- Transfer Pricing Officer accepted the value of international transactions as reported by the Indian A.E. in Form no.3CEB filed along with its return of income and made no adjustment to same. Thus, it is not disputed that the transaction between the assessee and its Indian A.E. was conducted at arm's length and the transfer pricing analysis of the same was also accepted by the Transfer Pricing Officer As facts and circumstances of the present case are similar to the assessment year 2015 16, which have also not been denied by the Revenue. Thus, respectfully following the decision of the Co ordinate Bench rendered in assessee s own case cited supra, we hold that when the Indian A.E. is remunerated at arm's length price no further profit attribution is required and the issue of existence of P.E. becomes wholly tax neutral. Accordingly, the addition made by the Assessing Officer is directed to be deleted. Assessee appeal allowed.
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2022 (3) TMI 835
Reopening of assessment u/s 147 - allowance of Corporate Social Responsibility expenses - contention of the ld. AR is that this issue was already considered by the AO in the original assessment and the AO cannot reopen the assessment on the same issues on change of opinion - HELD THAT:- We are of the opinion that in the present case, the AO wanted to review his own earlier order in the garb of reopening the assessment u/s. 147, which is nothing but change of opinion on the issue which was concluded by him by taking a decision in favour of the assessee in the original assessment. Accordingly, we are of the opinion that reopening of assessment in this case is bad in law. Accordingly, we quash the reassessment.. Nature of expenditure - Penalty expenses in illegal mining areas - HELD THAT:- In our opinion, the issue is squarely covered by the order of the Tribunal in the case of M/s. Veerabhadrappa Sangappa [ 2020 (12) TMI 1145 - ITAT BANGALORE ] wherein held that payment is compensatory in nature only as these funds are meant to be used for public purposes and the assessee could not have commenced its operations without paying the same, the same is allowable as revenue expenditure. We are therefore of the view that payment made as compensation is not hit by Explanation 1 to Section 37(1) and is an allowable expenditure Disallowance of CSR expenditure - HELD THAT:- Hon ble High Court of Karnataka in the case of CIT v. Infosys Technologies Ltd. [ 2013 (7) TMI 451 - KARNATAKA HIGH COURT ] held that, where assessee incurred expenditure on installation of traffic signals at various parts of city in order to secure free movement of its employees so that they reached office in time, amount so spent being a part of its corporate responsibility, was to be allowed as business expenditure as under section 37(1). Assessee appeal allowed.
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2022 (3) TMI 834
Foreign Tax Credit (FTC) for default in filling Form 67 under Rule 128 - delay in compliance of a procedural provision - denial of claim as Assessee failed to furnish Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act which is mandatory according to Rule 128(9) - As submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for non-compliance of any procedural provision - HELD THAT:- There is no dispute that the Assessee is entitled to claim FTC. On perusal of provisions of Rule 128 (8) (9), it is clear that, one of the requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.67. This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms.Brinda Kumar Krishna [ 2022 (2) TMI 752 - ITAT BANGALORE ] It s a trite law that DTAA overrides the provisions of the Act and the Rules, as held by various High Courts, which has also been approved by Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ]. We accordingly, hold that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee. Appeal of assessee stands allowed for statistical purposes.
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2022 (3) TMI 833
Income accrued in India - TDS u/s 195 - Default u/s 201(1) - fees for included services (FTS) - USA DTAA - make available clause - default u/s 201(1) on the basis of details on the Form-15CA/15CB about the remittance by taking view that testing related work has been carried out at GIA Laboratory at Hong Kong set up under the company GIA Hong Kong - HELD THAT:- CIT(A) held that there is no parting of information concerning industrial, commercial or scientific experience by GIA when it issues the grading certificate. GIA Inc USA has the experience of grading and report certificate and there is no imparting of its experience in favour of assessee. The assessee has only receives report of certification. This activity of issuing certificate cannot be said to be imparting of information by the person who possesses such information. On considering the definition of ' fee for included services' under Article 12, it was observed that there is no parting of rendering of technical services either of military, technical consultancy services or industrial commercial or scientific experience. The grading report are not make available for the reasons that assessee, whose utilising the services will not be able to make use of technical knowledge, by itself in its business without recourse to GIA INC USA in future. The technical knowledge, experience skill etc will not remain with the assessee after rendering the services has come to an end. We find that coordinate bench of Delhi Tribunal in a recent decision Delhi Tribunal in GE Energy Management Services Inc. [ 2021 (11) TMI 1033 - ITAT DELHI] while considering term make available and the Article 12 of India US DTAA held that when the assessee-foreign company entered into an agreement to provide offshore maintenance and support services to Power Grid Corporation of India Ltd. (PGCIL) - assessee's offshore maintenance and support services to PGCIL were not geared towards making available any technical knowledge, experience, skills, know-how, or processes to PGCIL. Further, the term of the agreement was for five years and services provided by the assessee were repetitive and ongoing. It means that PGCIL could not apply the technical or skills used by the assessee for rendering such service. Given the repetitive nature of the services, it would be factually incorrect to allege that the services make available any technical knowledge, expertise, skill, know-how or processes to PGCIL. Consequently, the PGCIL would not apply technology on its own. It would continue to depend on the assessee for provision of software and hardware maintenance and support services in the future. Thus, keeping in view of the facts and circumstances of the case, receipts from PGCIL do not qualify as 'fees for included services 'under articles 12(4)(a) and 12(4)(b) of India - US DTAA. In view of the aforesaid factual and legal discussion, we do not find any infirmity or illegality in the order passed by ld. CIT(A), which we affirm. No contrary facts or law was brought to our notice to take other view. In the result, the grounds of appeal raised by the revenue are dismissed.
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2022 (3) TMI 832
Revision u/s 263 - Addition u/s 68 - HELD THAT:- We find that the assessee has complied with the statutory notice u/sec 148 and 142(1) of the Act and the show cause notice. The submissions of the Ld. AR are realistic duly supported with the material information and judicial decisions. We Considering the overall facts, circumstances, ratio of the judicial decision and the details submitted in the course of hearing are of the view that the if any query is raised in the assessement proceedings and it was responded by the assessee, mere fact that it is not dealt within by the A.O. in the order cannot implied that there is no application of mind. Hence, the PCIT action cannot be acceptable as the order passed by the A.O. does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue. Accordingly we do not find any merits in the order and we set aside the order u/s 263 passed by the Pr.CIT and allow the grounds of appeal of in favour of the assessee.
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2022 (3) TMI 831
Addition u/s 68 - HELD THAT:- In view of the decisions in the case of NDR Promotors Pvt. Ltd. 2019 (1) TMI 1089 - DELHI HIGH COURT and the decision in the case of NRA Iron and Steel (P) Ltd 2019 (3) TMI 323 - SUPREME COURT we are of the considered opinion that the action of the learned Assessing Officer was legal and non-production of the persons summoned had rightly led to the inference that the assessee had routed their own money in the books of accounts through the conduit of investor companies. On this premise, we agree with the authorities below and uphold the addition made under section 68 of the Act. Grounds No. 1 to 3 of the assessee s appeal are accordingly dismissed. Cash payment of portion of the labour charges, loading and unloading expenses and missionary repair and maintenance charges - HELD THAT:- According to AO such payments were made in cash and bills were not properly vouched and therefore such expenses remained unverifiable. Precisely for this reason, CIT(A) also confirmed the same. No reasons are forthcoming before us to take a different view. We, therefore, do not find any reason to interfere with the findings of the Ld. CIT(A). Disallowance of 1/8th portion of the expenditure met further car expenses, conveyance, Festival expenses, telephone expense, travelling expense and sales promotion expenses - HELD THAT:- Assessing Officer recorded that the log books of car and complete details of telephone calls were not produced by the assessee and according to the assessee is not feasible to produce the same because the vehicles are almost under the direct control of the management. Ld. CIT(A) recorded that the explanation offered by the assessee was only superficial and log books are maintained mandated really in any concern of whatever the size. On this aspect also, no submissions are forthcoming from the side of the assessee to take a different view. We therefore, do not propose to interfere with the findings of Ld. CIT(A) in the impugned order. Disallowance of a part of the expense under the head repair and maintenance on the ground that the bills in respect of the amounts paid in cash were not properly vouched - HELD THAT:- CIT(A) recorded that the assessee sought to take shelter under the fact that certain vendors do not maintain printed bills and expenses are internally vouched. According to the Ld. CIT(A) in the absence of any non-Page availability of the expense disallowance of a portion of the same is justifiable. In the absence of any material or reason before us to take a contrary view. We decline to interfere with the same. Grounds No. 7 and 8 are accordingly dismissed.
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2022 (3) TMI 830
LTCG - whether assessee`s land is agricultural land or not? - Distance from the the municipal limits - Whether agricultural land sold is not a capital asset within the meaning of section 2(14) of the Act, and hence no Capital Gains is chargeable to tax? - FMV determination - adopting the cost of acquisition as on 1/4/1981 - Fair Market Value (FMV) as on 01- 04-1981 to be taken as cost of acquisition - HELD THAT:- We note that there is no dispute regarding sale consideration agreed/received by the assessee. Only issue of disagreement between the assessing officer and the assessee is the FMV as on 01-04-1981 to be taken as cost .of acquisition. As in the case of Akash Deep Farms Pvt. Ltd [ 2016 (9) TMI 918 - ITAT AHMEDABAD ] for the AY.2009-10, on identical and similar facts, whereby the issue relating to agricultural land sold was not treated a capital asset, within the meaning of section 2(14) of the Income Tax Act. The disputed issue whether the distance for identifying geographical location of the agricultural land is to be taken by road or by aerial and whether the municipal limits enhanced by the State Government is to be considered as starting point or it has to be taken from notification issued by the Central Government dated 06.01.1994 etc., have been discussed and adjudicated. The Coordinate Bench held that notification issued on 06.01.1994 by the Central Government is to be considered and therefore the Coordinate Bench has decided the issue in favour of the assessee. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding precedent of the Coordinate Bench in case of Akash Deep Farms P. Ltd. (supra), we delete the addition made by the Assessing Officer on account of Long Term Capital Gain (LTCG). - Decided in favour of assessee.
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2022 (3) TMI 829
Reopening of assessment u/s 147 - Addition u/s 68 - bogus LTCG - bogus share transaction - HELD THAT:- Capital markets regulator SEBI imposed a total penalty of ₹ 40 lakh on five entities and three individuals for indulging in fraudulent trading activities in the scrip of Esteem Bio Organic Food Processing Ltd. An amount of ₹ 5 lakh each has been imposed on them. The entities and individuals are collectively referred to as noticees. An investigation was conducted by the regulator in the shares of Esteem Bio Organic Food Processing during the February 7, 2013 and July 31, 2015 period. As found that a set of connected entities were pushing up the price of the scrip through unusual trades in such a manner so as to make a positive contribution to the Last Traded Price (LTP) and establishing New High Price (NHP). The observations and finding of fact arrived by the SEBI clearly proves that the scrips of M/s Esteem Bio Organic Food Processing Ltd. where manipulated in stock exchange and fraudulent scheme was deployed by the said company right from year January 2013 during the period which the assessee had entered into the transaction. This fact itself nails the finding of the AO which has discussed in detail and also by the ld. CIT(A). It is immaterial that order of the SEBI came in 2018 because the SEBI has analysed the entire trading of shares from year 2013 and found that not only the prices of the scrips of the said company were rigged but also were involved in fraudulent activities, which led to completely debarred its trading in the stock exchange. This order of SEBI clearly implicates, the entire transaction of purchase and sale of shares and goes to prove that the transaction was not genuine and corroborates the findings of the enquiry conducted by the Income Tax Department. All these enquiries conclusively proved that the trades have been manipulated and the gains or the losses made by the beneficiaries cannot be said to be genuine. We hold that the transactions in the present appeal are yet another example of the constant use of the deception of stock market transaction to bring unaccounted money into banking channels. This device of stock transactions of unworthy stocks with no profits continues to plague the legitimate economy of our country. As seen from the facts narrated above, the transactions herein clearly do not inspire confidence as being genuine and are shrouded in mystery, as to why the so-called transactions lead to exorbitant returns which are made tax free. The Hon ble Calcutta High Court in the case of CIT Vs Korlav Trading Company Ltd. [ 1998 (2) TMI 104 - CALCUTTA HIGH COURT] and CIT Vs Precision finance P. Ltd. [ 1993 (6) TMI 17 - CALCUTTA HIGH COURT] had observed and held that mere filing of confirmation and transaction through the banking channel is not enough to prove the genuineness. The facts have been examined holistically with reference to enquiries and the entire operation of the stocks, method of investment, regularity of the investments, enquiries conducted by SEBI, evidences produced by the assessee to support the claim. While we examine the enormous evidences, we find that the only evidence submitted by the assessee was that the amounts have been received by cheque and hence the genunity of the transactions have proved beyond doubt. On going through the entire facts and circumstances of the case, it can be concluded based on the following snap shot that transactions entered by the assessee are not genuine. A tangible and reliable information has been available with the AO to initiate proceedings u/s 148 of the Act. Proper reasons have been recorded before issue of the notice. The reasons recorded are related to the information received 4. The information received and the reasons recorded pertain to escapement of income. Assessing Officer had reasons to believe based on the information received which have been duly recorded. Assessing Officer has right jurisdiction to issue the notice and the same has been duly served as per the requirements of the Income Tax Act. There has been live nexus between the information received, reasons to believe and the reasons recorded. What is required for issue of notices, the prima facie reasons to believe as per the ratio laid down by the Hon ble Supreme Court. The Hon ble Apex Court has also held that formation of belief by the Assessing Officer is within the realm of subjective satisfaction. In the instant case, the approval given u/s 151(1) cannot be faulted in accordance with the judgment of Hon ble High Court (HP) [ 2017 (1) TMI 517 - HIMACHAL PRADESH HIGH COURT] wherein it was held that the Court is satisfied that by recording in his own writing the words: Yes, I am satisfied , the mandate of Section 151(1) of the Act as far as the approval of the Addl. CIT was concerned, stood fulfilled.There has been an independent application of mind that the Assessing Officer which deciphered from the reasons recorded by the Assessing Officer. The price of shares has been risen from ₹ 26.50 to ₹ 392.00 (average) any span of 13 months.The company had no profit/ meager profit to demand such price.The assessee is not a regular trader investing in the stock market transactions. In the entire period of 5 years, there was only highest spurt for the smallest period wherein the sale took place in the entire period between 2010 to 2015 as depicted in the graph above showing typical bell shape.The shares were purchased of market from private party. No iota of due diligence viz. the advisor, the analysis of fundamentals, the profits, the assets undertaken by the assessee. The order of the SEBI dated13.03.2019 and 22.12.2020 proving the manipulation in trading of the scrips. The undeniable proof of involvement of the broker ISF Securities found by the SEBI. Order dated 23.12.2020 of Metropolitan Stock Exchange enquiry indicting the involvement of operation in the case of M/s Esteem Bio Organic Food Processing Ltd. Levy of penalty by SEBI in fraudulent trading activities in the scrip of Esteem Bio Organic Food Processing Ltd. Hence, we find no merit on the arguments of ld. AR on the issue of reopening of the case u/s 148 of the I.T. Act as well as on merits of the issue. In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee dismissed.
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2022 (3) TMI 828
Reopening of assessment u/s 147 - Addition u/s 68 - unexplained share premium - Whether assessee has established the identity and existence of the entities from whom huge share premium received by it? - HELD THAT:- There is no mention of any name of the entry provider and link of accommodation entry taken by the assessee. In fact, a perusal of the assessment order itself shows that there are 99 share applicants and there is no whisper of the name of the share applicants in the list of entry providers. This clearly shows that neither there was application of mind before issuing notice under section 148 of the Act nor at the time of recording reasons for reopening the assessment. Again in the reasons, modus operandi of the entry providers have been mentioned but nowhere the Assessing Officer has mentioned as to how the assessee company has actually managed the so called accommodation entry providers. Moreover, since the assessment of the assessee was completed under section 143(3) of the Act, the AO had complete material evidence on his assessment record from which he could have found out who are the accommodation entry providers to the assessee. Other than the report of the INV Wing, there is not even a reference to any document on the basis of which the AO was satisfied that the assessee company has taken accommodation entry. As mentioned elsewhere, the names of the 99 share applicants, as mentioned in the assessment order, do not find any place in the list of accommodation entry providers. While recording the reasons for reopening the assessment, the AO did not even care to look into the assessment records. Had the AO seen the assessment record, then he would have found that during the year under consideration, the assessee had issued share capital including share premium to various parties and has also received sufficient unsecured loans from various parties and details of share application money and unsecured loans were already submitted during the course of assessment proceedings. In our considered view, the case was reopened only on the directions of the DIT, INV II, New Delhi and no reason to believe was formed for reopening of the assessment. W e hold that assumption of jurisdiction by issuing notice under section 148 of the act is bad in law which makes the notice under section 148 liable to be quashed thereby annulling the assessment order framed under section 147 of the Act. Cross objections of the assessee are allowed.
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2022 (3) TMI 827
Addition towards interest expenses - borrowing money from related party (partnership firm) at higher rate of interest and lending the same at lower interest rate - CIT(A) upheld the additions restricting the interest expense only to the extent of income earned u/s 57 - HELD THAT:- Assessee is claiming interest paid as deduction from interest received on the ground that interest expenses were incurred wholly and exclusively for the purpose of earning interest income. We fail to understand this transaction of the assessee. The assessee is a practicing Chartered Accountant and is not engage in money laundering business. There is no dispute that the assessee has borrowed the money from his firm for the purposes of his profession. The assessee in his wisdom borrowed money at a higher rate of interest and lended the same at a lower rate of interest. AO should have disallowed the entire interest claimed by the assessee but we cannot improve the assessment order nor I can improve the order of the CIT(A). In my considered opinion borrowing money at a higher rate of interest from a related party and lending the same at lower rate of interest to an unrelated party defies all commercial prudence expected from a Chartered Accountant. Surrounding circumstances cannot be ignored. Appeal filed by the assessee is dismissed.
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Customs
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2022 (3) TMI 826
Seeking grant of relief under the MEIS Scheme under the Foreign Trade Policy 2015-2020 - error while filing the bill of entry by the petitioner - petitioner wrongfully stated no for yes for availing the benefits - HELD THAT:- On perusal of No Objection Certificate , dated 07.06.2021 issued by the third respondent and the recommendation made therein. The third respondent has clarified that the petitioner is entitled for MEIS scheme and that there was a mistake while filing the shipping bills. The third respondent has categorically stated that the petitioner s case may be considered favourably. The incentive under the Merchandise Exports from India (MEIS) is intended to be passed on to exports to eligible exporter, if they have otherwise satisfied the substantive requirements of the scheme under the Foreign Trade Policy. In this case, the petitioner has satisfied all other requirements - the benefit should not be denied for procedural error. Petition allowed.
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2022 (3) TMI 825
Levy of Redemption Fine and Penalty - Valuation of imported goods - mobile accessories - recovery of undeclared goods such as Shoes (counterfeit), LED lights, Adapters, Power banks, Batteries, Cosmetics - allegation is also that goods were imported infringing the rights of Intellectual Property Right holders and also in violation of Drugs and Cosmetics Act, 1940 and Bureau of Indian Standards - HELD THAT:- The goods have already been exported. In para-3 of the OIO, the adjudicating authority has stated that the importer had no knowledge of the presence of undeclared items in the container. He has proceeded to impose penalty observing that even in the absence of mens rea, the penal provisions under Section 112 of the Customs Act, 1962 can be invoked. The Hon ble Apex Court in the case of Siemens India Ltd. [ 1999 (8) TMI 84 - SUPREME COURT ] has held that the redemption fine cannot be imposed when the goods are exported - thus, the redemption fine imposed in the present case is unwarranted and the same is set aside. Penalty - HELD THAT:- Apart from imposing redemption fine, the adjudicating authority has imposed a penalty of ₹ 4,00,000/- under Section 112 (a) (i) (ii) of Customs Act, 1962. The undeclared goods have come to light after screening of the container by the Department. Taking these facts into consideration, the penalty can be reduced to ₹ 50,000/-. Appeal allowed in part.
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Corporate Laws
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2022 (3) TMI 824
Validity of Termination Notice issued by National Highways Authority of India - HELD THAT:- In the Application, direction was sought to IL FS as well as NHAI not to terminate the Concession Agreement between NHAI and Fagne Songadh Expressway Limited, which have been noticed in the first paragraph of the order. However, in the interim passed on 23rd October, 2019, no such direction was issued as prayed for, that is, not to terminate the Concession Agreement between NHAI and Fagne Songadh Expressway Limited. What was observed by this Tribunal was that liberty was given to the Appellant to bring the facts to the notice of the Board of Directors of the IL FS and Committee if constituted that it has already filed its Resolution Plan, which is viable and feasible and for the said purpose, it was desirable to continue with the Concession Agreement. Interim direction was If the matter is brought to the notice of the Board of Directors, it will consider the same in accordance with law and the order dated 8th April, 2019 passed by this Appellate Tribunal. In this Application, we are not required to adjudicate the factual dispute between the parties or return any finding as to whether Termination Notice was issued on sufficient ground or not. The remedy of the Applicant lies elsewhere. The Applicant is entitled to seek remedy against actions of the NHAI as per the Concession Agreement dated 22nd March, 2005. We thus are not inclined to entertain the challenge to Notice dated 21st December, 2021 on merits in the present proceedings. It is, however, relevant to notice that as per the affidavit filed on behalf of Union of India and directions issued in this Appeal by this Tribunal from time to time, it is clear that Resolution Process of IL FS Group Company is at the final stage and as submitted by learned Counsel for the Applicant, it is likely to be completed before 31st March, 2021. Application dismissed.
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2022 (3) TMI 823
Jurisdiction - Seeking review and modification of the order - affiliation with the Divine Trust or not - mismanagement of affairs of the 1st Respondent Company or not - whether this Tribunal has jurisdiction to entertain an application for review? - 154 of the National Company Law Tribunal Rules, 2016 and Section 420(2) of the Companies Act, 2016 - HELD THAT:- As per Rule 154 of NCLT Rules, 2016, the Tribunal can only rectify the clerical or arithmetical mistakes or error arising from accidental slip or omission. As per Section 420(2) of the Companies Act, 2013 the Tribunal can rectify any mistake apparent from the record, amend any order passed by it. In the present application the applicants sought to review the order passed by this Tribunal. In view of Rule 154 of the NCLT Rules, 2016 and Section 420(2) of the Companies Act, 2013, the Tribunal can exercise this power for correction of a mistake and not to substitute a view which was made while deciding a matter. However, we could not find any error apparent on the face of record, warranting any correction in the order. Thus, it is the well laid down proposition of law that in the absence of any power of Review or Recall vested with the Adjudicating Authority , an order/judgment passed by it cannot be either reviewed or recalled. Therefore, it is crystal clear that the order passed by the Tribunal in Company Petition between the parties inter se has become conclusive , final and binding . Review application dismissed.
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2022 (3) TMI 822
Approval of the Scheme of Amalgamation - Section 230 to 232 of Companies Act, 2013 read with the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the Members and Creditors of all Companies to the proposed Scheme and no sustainable objections having been raised by the Office of the Regional Director, Income Tax Department or any other interested party, there does not appear to be any impediment in granting sanction to the Scheme. In sequel to the facts and circumstances, sanction is hereby granted to the Scheme of Amalgamation proposed by the Applicant Companies under Section 230 to 232 of the Companies Act, 2013 - application allowed.
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Insolvency & Bankruptcy
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2022 (3) TMI 821
Validity of approval of resolution plan of corporate debtor - it is alleged that the said order has not considered the claims of the operational creditors adequately and only around 0.16% of the admitted claims of the operational creditors have been taken care of in the approved resolution plan - whether the allocation towards settlement of the claim of the operational creditor DVC has been in accordance with legal provisions of the IBC, and the resolution plan is viable and feasible? - whether Appellant s rights that disputes relating to PPA should be decided under WBERC Regulations have been infringed in adjudication of the successful resolution plan under IBC? HELD THAT:- The amount to be paid to the operational creditors satisfies the condition imposed by Section 30(2)(b) of IBC and hence the successful resolution plan satisfies the provisions of IBC. Furthermore, this payment is in accordance with the commercial wisdom of the COC - it is clear that the commercial wisdom of the CoC in arriving at a business decision has been given primacy and finality and is not open to judicial review unless the decision carries any infirmity under law. In the present case, there is any dispute to be resolved during the moratorium period. The pre-CIRP claim of DVC has been dealt with as per provisions of IBC in the successful resolution plan and and since a fresh connection has to be provided to the corporate debtor after the completion of CIRP, we have surmised that it shall be given under the WBERC Regulations. Thus there is no dissonance in the present case vis- -vis the Embassy Property Developments Judgment. Thus, the liabilities of DVC that relate to past dues prior to the Effective Date have been extinguished under the approved Resolution Plan and DVC is prohibited from raising any further demand on this account. The clause (d) in Para 6 Section VI of the Resolution Plan directs DVC to restore the power connection immediately after the Effective Date and not withhold/disconnect power supply on the ground of pending old dues whose claim has been submitted to Resolution Professional during CIRP and which have been taken care of in the resolution plan and clause (f) directs DVC to commit supply of power to the plant of CD immediately after the Effective Date - Also as the successful resolution applicant has to apply for fresh connection, payment of security deposit and any other charges that may be admissible under WBERC Regulations will have to be paid by the successful resolution applicant. The Resolution Plan which has taken care of the debts of the Operational Creditors in accordance with provisions of section 30(2)(b) shall ipso facto be taken as fair and equitable to the Operational Creditors since the distribution of total operational debt amount approved in the Successful Resolution Plan is in accordance with this provision of IBC - the treatment of past dues of the Appellant/DVC in the approved Resolution Plan is in accordance with the legal provisions of IBC and by virtue of a finality and primacy accorded to the business decision of the CoC as per its commercial wisdom cannot be considered in judicial review. Since NCLT does not hold equity based jurisdiction and any distribution which is in accordance with section 30(2)(b) of the IBC is considered fair and equitable, the Appellant s claim of adjudicating past dues under the Electricity Act of WBREC Regulations cannot be upheld. Thus, the Resolution plan as approved by the CoC using its commercial wisdom and subsequent approval by the Adjudicating Authority vide the Impugned Order does not suffer from any legal infirmity. Moreover the new connection to the successful resolution applicant/corporate debtor should be given under WBERC Regulations as the CIRP has ended and a fresh power purchase agreement is necessary which will require fresh security deposit and payment of any other charges as required under WBERC Regulations, which will be in accordance with the modifications in approved resolution plan - appeal disposed off.
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2022 (3) TMI 820
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - post-dated cheque bounced - HELD THAT:- The applicant first time recalled the entire loan amount vide Loan Recall Notice dated 06.05.2015 and also initiated Arbitration Proceeding against the Corporate Debtor resulting in Arbitral Award dated 26.02.2016. Therefore, the date of default committed by Corporate Debtor would be the date of loan recall notice i.e. 06.05.2015. The applicant in order to justify the point of limitation in its Part-IV has submitted that the debt is duly acknowledged by the corporate debtor in terms of Section 18 of the Limitation Act and further since the corporate debtor has continued the non-payment of further EMIs then the default is continuing in terms of Section 22 of the Limitation Act. The applicant also submitted that since the last cheque for installment was bounced on 17.01.2018, a fresh cause of action shall be started from 17.01.2018. In the present matter in hand, there is nothing on the record that there was any acknowledgement in writing given by the respondent quo the admission of debt and promise to make the said payment. Therefore, the benefit of Section 18 of Limitation Act cannot be extended to applicant because of the reason that the cheque which has been presented was postdated cheque and were kept by the applicant long back, perhaps at the time of sanctioning of the loan. It is clear that the in the present matter the date of default for filing of petition under Section 7 of the Code would be the date of recalling of entire loan amount i.e. 06.05.2015, The applicant also initiated Arbitral Proceeding for recovery of its loan amount and the Arbitral Award was passed on 26.02.2016. The present application has been filed in the year 2021 that is much later than 3 years from the date default committed by the Corporate Debtor. Additionally, it is seen from the Record of Default filed before Information Utility that the applicant itself has mentioned the date of default as 30.09.2015, which also makes the present application time barred - The post-dated cheque bounced could not be treated as acknowledgment and would not enhance the period of limitation, which had already started running from 06.05.2015. Accordingly, the limitation has to be counted from 06.05.2015. Moreover, the arbitral award was passed on 26.02.2016. Even if the period of limitation is to be counted from that day, it is time barred as the present petition was filed on 16.01.2021. Therefore, the present application is hopelessly time barred. The present application is hereby rejected being barred by limitation.
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2022 (3) TMI 819
Maintainability of application - initiation of CIRP - failure on the part of Personal Guarantor of the Corporate Debtor - constitutional validity of Section 95 of I B Code - HELD THAT:- The conjoint reading of the provisions shows that whenever an application under Section 94 or 95 is filed, the first stage is to appoint a Resolution Professional, who after enquiry is required to submit a report under Section 99 of IBC. It is further seen that the question of admission or rejection of the application can only arise, when the report is submitted by the Resolution Professional under Section 99 of IBC. And after submission of the report, the matter will be taken up under Section 100 of the IBC - Here admittedly the matter is pending for appointment of Resolution Professional under Section 97 of the Code and not on the point of the hearing under Section 100 of the IBC. The CIRP against principal borrower has already been initiated in an application filed by one M/s. Swastik Pipe Limited under Section 9 of the IBC, therefore, default in payment is admitted. Further it is observed that a demand notice has already been sent and the respondent had appeared, therefore, there was no occasion for issuance of notice. Further it is noticed that the applicant has also proposed the name of Resolution Professional at Page 41 Part-IV of the application; therefore, the applicant has fulfilled all the criteria, as laid down Under Section 95(4), hence, the matter is proceeded in accordance with law. Application allowed.
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2022 (3) TMI 818
Dissolution of the Petitioner Company - Section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 and applicable rules of the National Company Law Tribunal Rules, 2016 - HELD THAT:- In the present case, it can be seen that the Company is incorporated to carry on the business of manufacturing of watches and is a subsidiary company of M/s. HMT Ltd. The company had taken loan from Government of India towards meeting its working capital requirements and also for acquiring fixed assets. Since the losses were piling up and losses were much more than the paid up capital, the Government of India decided to close down the company. Accordingly the Government of India in Ministry of Heavy Industries and Public Enterprises, Department of Heavy Industries issued an order No. 105011/6/2014-PE-X dated 13.01.2016. The liquidator has also prepared the list of stakeholders after due verification of claims The Liquidator has completed the final distribution of assets and has also closed the bank account. The voluntary liquidator has also prepared and submitted the final report to the IBBI on 13.08.2020 via e-mail and RoC on 19.08.2020. The Application is duly supported by the affidavit of the Voluntary Liquidator. The applicant Company is hereby dissolved in terms of Section 59(8) of the Insolvency Bankruptcy Code, 2016 with effect from the date of the present order - Application allowed.
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2022 (3) TMI 817
Maintainability of application - initiation of CIRP - Corporate Debtor failed ot make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Applicant filed present Application under section 7 of IBC, 2016 and served the copy of this application through speed post at its registered address as reflected on the MCA website, which is duly delivered to the Corporate Debtor. The affidavit of service is filed - The Corporate Debtor has neither filed any reply nor appeared before the bench and the corporate debtor was proceeded ex-parte on 21.02.2022. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - the default of the corporate debtor is subsisting continuing till date. Hence, the application was filed within the period and is not barred by limitation. The present application is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the financial debt, beyond doubt - the present application is admitted, in terms of section 7(5) of IBC, 2016 - moratorium declared.
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2022 (3) TMI 816
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - threshold monetary limit for admitting the application - HELD THAT:- The corporate debtor has already admitted its liability to pay ₹ 3,10,789/- to the applicant even after alleged adjustments of the Scrap batteries. As far as the objection regarding non-receiving of Demand Notice is concern, the applicant has already proved that the due service of the Demand Notice can be legally presumed as the notice was returned with a remark SHIFTED - 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 - since the corporate debtor already issued a cheque in order to clear its liability and also admitted its liability to pay ₹ 3,10,789 which is more than ₹ 1 lac, the claim of applicant deserves to be allowed. Application admitted - moratorium declared.
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2022 (3) TMI 815
Seeking distribution of unsold assets of the Corporate Debtor amongst the stakeholders in proportion of their claim - regulation 38(1) of the Insolvency and Bankruptcy Board of India [Liquidation Process] Regulations, 2016 - HELD THAT:- The financial creditor/stakeholders have submitted their consent to the proposed distribution of assets amongst them in proportion of their claim and have agreed to get the shares/assets transferred at their own cost and convenience after the issuance of asset distribution certificate/offline delivery instruction slip by the Liquidator. There is no impediment to the proposed scheme of distribution and it is ordered accordingly - Petition disposed off.
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2022 (3) TMI 814
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:- This is a fit case to close the CIRP in the case of New Town Grand Realtors, L.L.P (Corporate Debtor) as ordered in CP(IB) 466/KB/2019 vide order dated 31.10.2019 passed by this Adjudicating Authority. It is ordered that the CIRP in respect of the Corporate Debtor shall stand closed from the date of this order and the IRP stands relieved - the Operational Creditor at whose instance, the CIRP of the Corporate Debtor was initiated shall pay a sum of ₹ 1,85,150/- towards the CIRP costs and expenses and ₹ 1,00,000/- towards fees of the IRP. CIRP process initiated against the Corporate Debtor New Town Grand Realtors LLP is closed - application dismissed.
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2022 (3) TMI 813
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:- As per Section 5(8) of the Code, amount raised from a real estate allottee is included in the definition of 'financial debt'. Further, as per Sec. 7(1) proviso an application for initiation of CIRP against the Corporate Debtor can be brought jointly by not less than 100 or not less than 10 percent of the total number of creditors in the same class, whichever is less - There is nothing on record to show that Financial Creditor in the case before us represent 10% of the total number of creditors in a class. There is nothing on record to show the total number of allottees in the housing project 'Morpheus Greens . It is a mandate of the law that Financial Creditor has to satisfy by filing an additional affidavit regarding the maintainability of the Application. Financial Creditor has not done so. The application is not maintainable under the Code - Application dismissed.
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2022 (3) TMI 812
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:- It is pertinent to note that the invoices enclosed along with the application are of the year 2018. It appears that out of the total five invoices raised by the Applicant/Operational Creditor, no dispute has been raised by the Respondent and no documents have been enclosed by the Respondent either by way of e-mail or by way of any other documents to satisfy this Tribunal that there has been pre-existing dispute between the parties. Furthermore, only defence stated by the Respondent in this application is the pre-existing dispute with regard to the defects in the supply of goods made by the Applicant/Operational Creditor. No documents have been filed to satisfy that the same has been enclosed either with counter or with any other documents. The Operational Creditor has proved existence of debt and default and prayed for initiation of CIRP against the Corporate Debtor. Under the said circumstances, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.
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2022 (3) TMI 811
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 - whether this application filed on 28.06.2021 claiming the default amount of ₹ 5,22,852.25/- as on 05.08.2020 is maintainable or not? - HELD THAT:- In the Part IV of the application, it is stated that the defaults were occurred as on 14.07.2017 and 31.08.2017. If these dates are taken as the last invoice dates this application was filed on 28.06.2021 which is beyond three years from that dates is barred by limitation as the three-year period expired long back. Moreover, in view of the Notification No. 1205(E) dated 24.03.2020 issued by the Ministry of Corporate Affairs specifying Rupees One Crore as the minimum amount of default and that this application has been filed on 18.06.2021 claiming the due amount of ₹ 5,22,852.25/-, on that count also this application is not maintainable. The amount had fallen in default as on 14.07.2017 and 31.08.2017 and the demand notice served only on 06.12.2019. There was a huge delay in sending the demand notice to the Corporate Debtor and the Operational Creditor did not mention any valid reason for that delay, and this application has been filed claiming the due amount of ₹ 5,22,852.25/- which is below ₹ 1 Crore fixed vide Notification No. 1205(E) dated 24.03.2020 issued by the Ministry of Corporate Affairs. Hence, this application for initiation of CIRP against the Corporate Debtor cannot be entertained. Application dismissed.
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2022 (3) TMI 810
Initiation of Contempt of Court proceedings against the Alleged Contemnors - willful disobedience/breach of orders - direction to Contemnors to cease and desist from carrying any construction activity on the subject land - HELD THAT:- In order to establish that there is contempt by the respondents of the order of this tribunal. Following ingredients have to be fulfilled namely;--Firstly, whether there is any restraint order against any of the parties; Secondly, whether Respondents are aware of the order; Thirdly, whether the respondents are able to comply with the order; Lastly, whether there is disobedience of the order by the respondent. Admittedly, there is no allegation with regard to any change in shareholding of the Applicant having been effected by the Respondents/alleged Contemnors. Therefore, no case is made out with respect to disobedience in relation to this part of the order. Now, coming to the second part of the order, it is seen the Respondent No. 1 is a company engaged in the real estate business. In defence of the allegation, it has been submitted that there no ownership rights have been created by the Respondents/alleged Contemnors in favour any third party and only a development agency has been engaged to continue with the housing project of the Respondent No. 1 Company - In the instant case the Applicant has not been able to establish with cogent evidence that ownership of the said project of Respondent No. 1 has been transferred in favour any third party. No case about contempt of this Tribunal's orders dated 15.9.2017 and 15.1.2019 has been made - the present contempt petition is dismissed as being devoid of merits.
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2022 (3) TMI 796
Maintainability of application - initiation of CIRP - failure on the part of Personal Guarantors to Corporate Debtors - service of demand notice or not - it is alleged that the petitioner failed to serve the demand notice under Form B on the Respondent - HELD THAT:- Order 5 CPC provides for issuance and service of summons and Rule 24 specifically prescribes a procedure for service of summons to the defendant who is in jail. Therefore, we ought to distinguish between issuance of demand notice and service of summons on the defendants who is in jail. This Bench is of the prima facie opinion that intention of legislature for issuance/ service of Form B notice has to be read and it is seen that the Petitioner in strict compliance of Rule 7 r/w Rule 3 (h) has served Form B notice upon the Respondent at his address and the same was received by his son Mr. Kathik Wadhawan. This is a good service in terms of Rule 3 (h) of Personal Guarantor Rules, which requires that Form B notice shall be served upon the guarantor by Post/ Speed Post/ Courier or electronic form and where it cannot be served by any other mode it shall be affixed to outer door or some other conspicuous part of the house in which the addressee ordinary resides or carry out business. Section 95(5) requires the Creditor to provide copy of the application under sub-section (1) to the Debtor. This section needs to be read with Rule 3(1)(g) reproduced above. It is evident from reading the Section alongwith the Rule that what Creditor has to serve is copy of the application made under sub-section (1) to the Debtor. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form C and that the Creditor will serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been submitted - The procedure thus prescribed will give the Personal Guarantor notice of the application already filed before the Adjudicating Authority. Section 95(5) requires Creditor to provided copy of the application made under sub-section (1) to the Debtor. Thus, serving advance copy is not contemplated. This Bench concludes that the Code does not prescribe personal service but in fact contemplates that when there is inability to serve of any notice, it can be overcome by affixing notice on the outer door. In strict interpretation of the Statute, this Bench concludes that the Form B notice served upon the address of the Respondent is a valid service of a demand notice which is a prerequisite for filing a Petition u/s. 95. The Petition u/s 95 was served upon the Respondent in jail. Hence, the objection raised by the Respondent is untenable and set aside. Application allowed.
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FEMA
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2022 (3) TMI 809
Offence under FEMA - enquiry contemplated under Section 16(3) of the Foreign Exchange Management Act, 1999 on the basis of complaint by an Authorized officer as provided for under the said sub-section - As argued show-cause notices are not in compliance with the procedure prescribed under Rule 4 of 2000 Rules - HELD THAT:- We are of the view that no indulgence is warranted in the matter of issuance of impugned show-cause notice dated 08.04.2021 and the notice for personal hearing dated 28.06.2021. Adjudicating Authority is yet to hold an enquiry and thereafter take a decision to initiate proceedings for imposition of penalty under Section 13 of the FEMA. Thereafter, the petitioner has a remedy of filing appeals viz. (1) under Section 17 to the Special Director (Appeals) against the orders of the Adjudicating Authorities, being an Assistant Director of Enforcement or a Deputy Director of Enforcement; (2) under Section 19 to the Appellate Tribunal against the order made by an Adjudicating Authority other than those referred to in sub-section (1) (2) of Section 17, or the Special Director (Appeals); and (3) under Section 35 to the High Court against the order of Appellate Tribunal. Though the petitioners complain of not being able to file reply on merits against the impugned show-cause notice, nevertheless there is no reason forthcoming as to why the petitioners have not attended the office of prescribed Authority as indicated in the impugned notice for inspection of documents attached with the complaint. Be that as it may, while responding to the notice dated 28.06.2021 for personal hearing, petitioners are always free to seek the opportunity for inspection of documents and file reply. Petitioners may raise all questions on facts and in law available to them in the context of the enquiry under Rule 4 of 2000 Rules. The Adjudicating Authority shall be well advised to consider the reply during the course of proceedings. Four weeks' time, as prayed for, is granted to inspect the documents, if so advised, and file reply. Adjudicating Authority shall complete proceedings within eight weeks thereafter keeping in mind the time bound completion of proceedings as ordered bearing in mind the provisions of sub-section 6 of Section 16 of FEMA.
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PMLA
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2022 (3) TMI 808
Money Laundering - proceeds of crime - petitioner could not produce purchase/sale orders in respect of the transactions - effect of the amendment in question in sub-section (1) of Section 45 of the Act - twin conditions of section 45 of the PMLA Act satisfied or not - HELD THAT:- The twin conditions of section 45 of the PMLA Act still remain in the Statute Book, in that eventuality also the observations of the Supreme Court do not get obliterated. The Schedules attached to the PMLA Act still continue. The insertion of the words under this Act by deleting offence punishable for a term of imprisonment of more than three years under Part A of the Schedule only makes an ostensible change. The offence of money laundering as stipulated under Section 3 of the PMLA Act stems out of the offences prescribed in the Schedules. The defects which the Supreme Court in Nikesh Tarachand Shah (supra) [ 2017 (11) TMI 1336 - SUPREME COURT ] had pointed out while invalidating the existing law are not substantially removed by the amendment. The Supreme Court has asserted that, the twin conditions prescribed in Section 45 of the PMLA Act would have no nexus whatsoever with a bail application which concerns itself with the offence of money laundering, for if Section 45 of the PMLA Act is to apply, the Court does not apply its mind to whether the person prosecuted is guilty of the offence of money laundering, but instead applies its mind to whether such person is guilty of the scheduled or predicate offence. The Supreme Court has held that that merely reading down the two conditions would not get rid of the vice of manifest arbitrariness and discrimination . Such observations facilitate the Courts to realize and interpret the legal effect of the twin conditions attached to Section 45 of the PMLA Act - the Supreme Court has directed all the concerned courts to decide the matter on merits without application of the twin conditions contained in Section 45 of the PMLA Act as they are declared unconstitutional. The twin conditions still continue. Unquestionably, the Amendment Act of 2018, which introduces the expression under this Act to Section 45 of the PMLA Act, in no uncertain terms can obliterate or dilute the directions issued by the highest court of land. After going through the facts of the present case, it is not in dispute that proceeds of crime amounting to ₹ 20,00,000/- (Rupees Twenty Lakh) originating from bank accounts held with Bank of India, G.B. Road, Gaya have merged in the bank account no.75105078737 of M/s Sanjog Steels Pvt. Ltd. Jaipur (petitioner s firm). During investigation, it was also found that firms, namely, M/s Radha Trading Company, Delhi, M/s Shree Ram Overseas, M/s Shree Ganesh Overseas, M/s Sandeep Traders, M/s Rajesh Trading Company, M/s Sunil Trading Company and M/s Azad Singh and Manoj Kumar are fake and fictitious firms and have not been operating from the addresses as mentioned in their bank accounts or in the sales invoices. It also revealed that they do not exist at given address - the transactions, through these firms, are involved in money laundering in terms of Section 23 of the PMLA. The entire community is aggrieved if the economic offenders, who ruin the economy of the State are not brought to book. A murder may be committed in the hit of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. The prayer for anticipatory bail of the petitioner is hereby rejected.
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2022 (3) TMI 807
Smuggling - illegal excavation and theft of coal was taking place in the leasehold areas of Eastern Coalfield Ltd. - HELD THAT:- From a bare reading of the various provisions along with the scheme of the PMLA, it is clear that sections of CrPC would apply only if the field is not covered, in any manner, by the provisions of the special enactment by way of the PMLA. The CrPC by way of Section 4 Section 5 itself provides that in case a special law exists, such law will apply over and above the CrPC. Section 65 read with Section 71 of the PMLA further provides that while certain provisions of the CrPC may apply in case there exists no provision in the PMLA, in case of any inconsistency, contradiction or confusion arises, the provisions of the PMLA will prevail and override the provisions of the CrPC. It is otherwise also settled law that special law prevails over general law. The PMLA being a special criminal enactment providing for a separate investigative procedure and power, it is imperative that due meaning and regard is given to the provisions of the PMLA in its totality and the said provisions are allowed to operate in their full force on their own. The Hon'ble Supreme Court in ASHOK MUNILAL JAIN AND ANR. VERSUS ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT [ 2017 (3) TMI 1642 - SUPREME COURT] was faced with the situation wherein there existed no provision in the PMLA which would even remotely be relatable to the power exercised by the courts in remanding arrested persons to custody, and therefore, held that Section 167 of the CrPC would apply to arrests made under the PMLA. Applicability of Section 160 of the CrPC to investigations under the PMLA, specifically with regard to the protection granted to a woman, and not with regard to the territorial limitation - HELD THAT:- Considering that Section 50 of the PMLA specifically refers to any person which would include a woman, the special provision in Section 160 CrPC available to a woman would not apply in view of the overriding provision in Section 71 of the PMLA. To apply proviso to Section 160 CrPC concerning a woman to a summons issued under Section 50 of the PMLA would amount to curtailing the powers of the authorized officer under the PMLA, which extends to all persons and has not been statutory limited either on the basis of territory or on the basis of the gender of the person. With regard to the allegation of mala fide it would be apposite to note that the same is to be established to a specific assertion on the basis of proven facts and not on the basis of conjectures and surmises. The burden of establishing mala fide is very heavy on the person who alleges it and further often requires relevant persons against whom such allegations are made to be made parties to the petition so as to enable them to respond to such allegations. With regard to the reliance of the Petitioners on the the case of DIRECTORATE OF ENFORCEMENT AND ORS. VERSUS STATE OF WEST BENGAL AND ORS. [ 2021 (12) TMI 1311 - DELHI HIGH COURT] , it is stated that the facts of the said case are clearly distinguishable from the present case as the notices under the said case were not issued under the PMLA and were rather issued under Section 160 of the CrPC and, therefore, clearly bound by the territorial limitations of the CrPC. The said interim order does not further the case of the Petitioners on any ground. The challenge of the Petitioners to the impugned notices/summons fails. The petition is hereby dismissed.
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Service Tax
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2022 (3) TMI 806
Refund of pre-deposit - overlapping period in the show-cause notice and the demand for the overlapping period as well - rejection of refund on the ground of time limitation - payment made prior to the filing of the first appeal - validity of retention of extra amount by Revenue - HELD THAT:- The Order-in-Appeal dt. 27/02/2017 wherein the demand was directed to be restricted to 2008-09 alone has become final with both the Revenue as well as the appellant accepting the same and hence, the same would be binding on both. When the demand is restricted to 2008-09, the predeposit, if any, cannot be calculated against the original demand including overlapping period and hence, 7.5% should be worked out of the demand calculated, being ₹ 4,06,391/- alone. Secondly, when the adjudicating authority accepts the claim of the appellant and allowed a partial refund, different reason or logic cannot be adopted for rejecting the other part of the same predeposit, that is to say, there cannot be two yardsticks for the same issue. Further, the payment here is undoubtedly made prior to the filing of the first appeal and hence, it satisfies the purpose of predeposit as having met by the appellant. Retention of extra amount by Revenue - HELD THAT:- Since in the first place, the collection of tax itself can happen with the authority of law and hence for retaining any extra penny also, the same should be authorised by law. Both rejection and retention are without authority of law and hence the impugned order is set aside - Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 805
Refund of the unutilized cenvat credit - rejection of refund on the ground that input services were received prior to obtaining the service tax registration from the Department - refund denied also on the ground that the FIRC is received by their Bangalore office and therefore does not match with the address of the appellant at Chennai. Rejection of refund claim holding that some of the input services have been received prior to obtaining service tax registration from the department - HELD THAT:- The Hon ble jurisdictional High Court in the case of Scionspire Consulting Services (India) Pvt. Ltd. [ 2017 (4) TMI 943 - MADRAS HIGH COURT ] had considered the very same issue and held that the credit cannot be denied for the reason that the services have been availed in an unregistered premises. The Tribunal in the case of M/S. VAMSHADHARA PAPER MILLS LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE [ 2019 (5) TMI 252 - CESTAT CHENNAI ] and M/S RAJENDER KUMAR ASSOCIATESS VERSUS COMMISSIONER OF SERVICE TAX, DELHI-II [ 2020 (11) TMI 621 - CESTAT NEW DELHI ] held that denial of credit cannot be justified on this ground - the rejection of refund claims on this ground cannot be justified. Refund rejected on the ground that FIRC statement bears the address of their Bangalore Head office and also that invoices bear the address of the Bangalore Head office - HELD THAT:- The banker has issued the FIRC copy with the address at Bangalore as per their records. A single bank account cannot be registered with multiple addresses and therefore the requirement for furnishing FIRC has been complied - the credit is eligible - the rejection of the refund claim cannot be justified. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 804
Classification of services - taxable under port services or otherwise i.e service of water transportation or not? - barge activity carried out by the Appellant for transportation of goods from port to Mother Vessel through barges and barging/ lighterage charges recovered from customers - period from November 2006 to May 2009 - HELD THAT:- Under the Port Service , service provided by a Port, other port or any person authorised by such port is taxable. The Appellant liable to pay tax under above entry only if they had been authorized by the Port to render services in relation to vessels or goods. In the present case department failed to produce any evidence by which it can be prooved that the Appellant were authorized by the port for providing services at port. There is no authorization by the Port to the appellant to render the said services - the lease agreement dtd. 03.04.2006 made between Appellant and Director of Port Inland Water Transport, Government of Karnataka and observed that the said lease agreement is for use of Port Land for stacking and import /export of Iron Ore / Manganese Ore and other Bulk Cargoes at Belekeri Port. In the present matter, it is also noted that other than the barging charges, Appellant also collected charges from Customers for handling of the cargo and loading and unloading of cargo etc. and Appellant had paid the Service tax on the amount charged towards cargo handling activity. The Appellant have not paid the service tax on barging activity during the period November 2006 to May 2009. They also not charged any service tax to customers on receipts related to barging service. The new entry viz Transport of Coastal Goods and Goods Transport through National Water ways and Inland Water Ways was introduced from Finance Act 2009. Time limitation - Penalty - HELD THAT:- In the facts of the present that firstly the issue involved is of pure interpretation of legal provisions therefore, it cannot be said that the Appellant had any mala fide intentions and have suppressed any fact with intention to evade payment of service tax. It is also on record that the Appellant have represented the matter before Audit team and also before department during the investigation of case. This clearly shows that there is no suppression or willful misstatement on the part of the Appellant. The Appellant in the present matter also provided all the details /documents/ records related to the disputed activity before department. In this circumstances charge of suppression or wilful misstatement do not survive against the Appellant. Thus extended period of limitation is also not invokable in the present matter and no penalty is payable. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 803
Levy of service tax - supply of tangible goods for use service - GTA - levy of penalty - reverse charge mechanism - period April 2011 to March 2016 - HELD THAT:- As the basis of issuance of show cause notice is the contract between appellant and JMC India Ltd., Mumbai and after examining the said contract with M/s. JMC, the alleged demand under the category of supply of tangible goods for use has been dropped by the adjudicating authority and said finding of the adjudicating authority has not been challenged by the Department and no other contract is the basis of issuance of show cause notice, in that circumstances, the demand against the appellant is not sustainable. Admittedly, wherein the goods transportation activity has been carried out and consignment note has been issued by the appellant, the appellant is not liable to pay service tax but the service recipient is liable to pay service tax under the reverse charge mechanism and it is recorded by the adjudicating authority in the impugned order that service recipient has discharged service liability thereof. Therefore, the said allegation is not sustainable. In some of the cases the appellant transported the good by road without issuance of the consignment note, the said activity prior to June 2012 was not classifiable under category of services as no consignment note was issued and it is prime requirement to demand service tax under the category of good transport agency service. Further, the appellant has hired out vehicles to other GTA service providers, who have issued consignment notes to their clients. Such activity of the appellant was also exempt under notification no. 1/2009-ST dated 5.1.2009 for the period prior to 30.6.2012 and exempt under notification no. 21/2012-ST dated 20.6.2012 for the period post July 2012. The appellant has transferred the right to use vehicle to its client and such activity was not covered under supply of tangible goods service prior to June 2012 as the possession and control was also given to the person who had the right to use the goods and such activity amounts to deemed sales covered in negative list from July 2012. But the appellant has discharged the service tax liability from the period 2015-16 in such cases. The appeal is allowed - decided in favor of appellant.
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2022 (3) TMI 802
CENVAT Credit - demand alongwith interest and penalty - appellant was providing taxable as well as the exempted service but was not maintaining a separate account nor was paying the amount as determined under sub-rule 3 A of Rule 6 of Cenvat Credit Rules, 2004 - October, 2008 to April, 2011 - contravention of Notification No.1/2006-ST dated 1.3.2006 as amended vide Notification No. 34 dated 25.4.2011 - HELD THAT:- The bare perusal of Section 67 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994 makes it clear that the demand confirmed is out of the scope of the SCN. Law is settled that the SCN is the basis of the litigation arising with respect to the proposal contained therein and the adjudicating authorities have to remain within the four bounds of the said SCN. The perusal of extract from the orders of adjudicating authorities shows clear acknowledgement that the appellant has reversed the entire Cenvat Credit alongwith with the interest. The findings confirming the demand of said amount are contrary to their own observations and thus are liable to be set aside. These finding are sufficient in addition to hold that the confirmation of demand of Cenvat Credit of ₹ 5,93,384/- is not only beyond the scope of SCN but is also contrary to the findings of the adjudicating authorities. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (3) TMI 801
Rejection of interest at 12% on delayed refund - appellant failed to place on record any statutory provisions in support of the claims - whether the appellant are entitled to claim interest @ 12% of the deposit made during the period of investigation till its realization? - HELD THAT:- The said issue was allowed in favour of the appellants, inadvertently the rate of interest could not be quoted in the said order. The issue of rate of interest has been decided in the earlier round of litigation, therefore, the appellants are entitled to claim the interest @ 12% from the date of deposit on its realization. As the deposit were made by the appellants under protest, the decisions relied on by the ld.AR are not applicable to the facts of the case in hand. The issue in this case is whether the appellant is entitled to claim interest @12% on delayed refund till its realization has been examined by this Tribunal in the case of M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD ] wherein this Tribunal has held that the rate of interest varies from 6% to 18% in the aforesaid Notifications issued under sections 11AA, 11BB, 11DD and 11AB of the Excise Act, the grant of interest @12% per annum seems to be appropriate. Thus, the appellants are entitled to claim interest @ 12% per annum of deposit made during the investigation till its realization - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 800
Refund of unutilised CENVAT Credit - whether cenvat credit rightly availed and the same is lying in their books un-utilised or not? - applicability of Rule 6(1), (2) and (3) of Cenvat Credit Rules - HELD THAT:- Admittedly appellant have manufactured dutiable finished goods, which have been cleared without payment of duty under exemption Notification No. 12/2012-CE to Mega Power Project awarded to a developer Larson Toubro through tariff based competitive bidding. Accordingly, in view of Rule 6(6)(vii), the provision of sub-rule (1), (2), (3) and (4) of Rule 6 are not applicable in the case of the appellant. Hence, appellant have rightly taken cenvat credit. Once it is held that the appellant has rightly taken cenvat credit and the same is lying in their books un-utilised as on 30.06.2017, when the provisions of CGST Act (GST regime) was implemented w.e.f. 01.07.2017, and thus if the appellant has not taken the un-utilised cenvat credit to the GST regime by filing form TRAN-1, they are eligible to refund of the un-utilised credit in terms of the transitional provision under Section 142(2) and (6) of the CGST Act - Admittedly, in the facts of the present case, appellant has not taken the benefit of transactional provision for transfer of un-utilised cenvat credit to the GST regime. The appellant is entitled to refund of the un utilised cenvat credit - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (3) TMI 799
Waiver of interest and penalty under Sections 36(1) and 72(2) of the Karnataka Value Added Tax Act, 2003 - respondent himself has accepted that he has understated his liability to tax on the sale of Nutralite during the year 2007-08 - HELD THAT:- Firstly, the reassessment order passed by the prescribed authority, wherein tax at the rate of 12.5% with interest under Sections 36(1) and 72(2) of the Act relating to the sale of Nutralite was the subject matter of the appeal before the first appellate authority. The said appeal for the tax period in question came to be dismissed upholding the levy of tax at 12.5% on the sale of Nutralite Table Margarine upholding the levy of interest and penalty - the reassessment order passed allowing the input tax credit of 4% on the purchase of Table Margarine made by it from M/s Pioneer Marketing confirmed by the first appellate authority, has been upheld. Having regard to these aspects, the Tribunal observed that there was no understatement of output tax liability and overstatement of entitlement to input tax credit by the assessee in the return filed and accordingly, set aside the levy of penalty and interest. Secondly, it is significant to note that the original order has been modified by the Tribunal in Sales Tax Rectification Application No.2/2016 vide order dated 26.4.2018 modifying the rate of tax on Margarine at 5.5% instead of 12.5% placing reliance on the decision of this Court in M/s Pioneer Marketing, supra. For the tax periods in question i.e., from April 2007 to March 2008, the reassessment order was passed considering the commodity Nutralite Margarine as unscheduled goods falling under Section 4(1)(b) of the Act - for the reasons best known to the revenue, the order passed in M/S. SKANDA DISTRIBUTORS VERSUS STATE OF KARNATAKA [ 2018 (4) TMI 1916 - KARNATAKA APPELLATE TRIBUNAL] is challenged in the present proceedings but the question of law raised is with respect to levy of interest and penalty. No opinion expressed on the rate of tax modified by the Tribunal at 5.5% whether is justifiable when the III Schedule during the relevant period attracts the rate of 4% - The Tribunal having modified the rate of tax from 12.5% to 5.5% in terms of the order passed in Rectification Application following the decision of this Court in M/s Pioneer Marketing, [ 2016 (5) TMI 183 - KARNATAKA HIGH COURT] , it cannot be gainsaid that there is no understatement of output tax liability or overstatement of entitlement to input tax credit by the appellant in the return filed. The petition is wholly misconstrued and is bereft of merits - Sales Tax Revision Petition stands dismissed.
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2022 (3) TMI 798
Maintainability of petition - availability of alternative remedy of appeal - validity of revised assessment order - It is the grievance of the appellant that the said assessment order was passed without appreciating the objections and the documents filed by them - violation of principles of natural justice - section 51 of the TNVAT Act - HELD THAT:- Upon verification of record, the learned Additional Government Pleader appearing for the respondent fairly submitted that the respondent received the objections along with the relevant documents. The respondent also in his affidavit filed before this court, categorically admitted that before passing the revision order, the appellant filed its reply along with the documents relating to 26 AS, monthwise purchase and sales, contract receipt details (ledger a/c), software development payment details (labour charges payment) and thereafter, passed the revision order on 19.07.2021. However, in the revised assessment order dated 19.07.2021, there was no reference about the objections / reply filed by the appellant along with the documentary evidence, which amounts to non-consideration of the same by the assessing officer. This court, in order to provide an opportunity to the appellant and to meet the ends of justice, sets aside the orders impugned in the writ appeal as well as the writ petition. Consequently, the matter is remanded to the respondent for fresh consideration - Petition allowed by way of remand.
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Indian Laws
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2022 (3) TMI 797
Dishonor of Cheque - rebuttal of presumption - preponderance of probabilities - probable defence - HELD THAT:- It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the N.I. Act provides that Court shall presume that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of probable defence has grown. It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist. In the reply notice the appellant has not set up any case that the respondent did not have the financial capacity to advance the loan. In fact even we notice that there is no reference to the loss of the cheque book or signed cheque leaf. No complaint was given of the loss of the cheque book or the signed cheque leaf either to the police or to the bank - It is relevant to notice that DW5 has further deposed that when the appellant received the notice he asked him about the cheque book and then he told him about the incident of the loss of cheque book. Still, at the time when the reply notice was sent, the case is not set up about the loss of cheque book and about the cheque relied upon by the respondent being one which is brought into existence using the lost signed cheque leaf. There is no evidence to establish that the appellant had informed the Bank about the loss of the cheque book containing blank cheque. In fact, In the statement under Section 313 Cr.PC. appellant had stated that this cheque book containing a blank cheque was lost. Appellant has no case that the signature on the cheque in question was not put by him - in the totality of facts of this case the appellant has not established a case for interference with the finding of the Courts below that the offence under Section 138 N. I. Act stands committed by the appellant. The conviction is upheld, and the sentence of imprisonment of one year shall stand vacated. However, the appellant shall stand sentenced to fine of ₹ 5,000/- which he will deposit within a period of one month from today in the Trial Court - appeal allowed in part.
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