TMI Tax Updates - e-Newsletter
March 30, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. ON GOING REAL ESTATE PROJECT WILL COME UNDER ‘RERA’

   By: DR.MARIAPPAN GOVINDARAJAN

2. GSTR 3B─Late filing─Reversal of ITC & Levying interest on Gross Tax Liability

   By: OmPrakash jain

News

1. CGST West Delhi officials arrest man for input tax credit fraud of around ₹ 9 crore

2. Four Point Plan chalked out by the department of Commerce to deal with Blockage of Suez Canal

Notifications

Customs

1. 17/2021 - dated 26-3-2021 - ADD

Seeks to impose anti-dumping duty on imports of 2-Ethyl hexanol originating in or exported from European Union, Indonesia, Korea RP, Malaysia, Taiwan and United States of America for a period of 5 years

2. 16/2021 - dated 26-3-2021 - ADD

Seeks to rescinds the Notification No. 10/2016-Customs (ADD), dated the 29th March, 2016

3. 15/2021 - dated 26-3-2021 - ADD

Amendment in Notification No. 11/2016-Customs (ADD), dated the 29th March, 2016

GST - States

4. S.O. 86 - dated 26-3-2021 - Bihar SGST

Amendment in Notification No. S.O. 110, dated the 06th May, 2020

5. 81/2020– State Tax - dated 25-3-2021 - Delhi SGST

Seeks to bring in force section 7 of Delhi Goods and Services Tax (Amendment) Act, 2019

6. 11/2019– State Tax (Rate) - dated 25-3-2021 - Delhi SGST

Specifies retail outlets established in the departure area of an international airport, beyond the immigrationcounters, making tax free supply of goods to an outgoing international tourist, as class of persons who shall be entitled to claim refund

Income Tax

7. 19/2021 - dated 26-3-2021 - IT

Income-tax (6th Amendment) Rules, 2021 - Amends Rule 2C, Rule 5C, Rule 5F, Rule 11AA, Rule 17A and inserts New Rule 5CA and Rule 18AAAAA

Highlights / Catch Notes

GST

• Applicant Challenges GST Rate Change from 12% to 18% Citing Mistake; Section 102 of CGST Act Invoked.

  Case-Laws - AAAR : Rectification of Mistake - Applicant submits that the lower authority (AAR) had held that their activity would qualify as supply of goods attracting 12% whereas in the impugned order dated 27.9.2020, their activity has been classified as attracting 18% - A mistake apparent from the record is one to point out and for which no elaborate argument is required. It must be a glaring, obvious or self-evident mistake. - Section 102 of the CGST Act cannot be pressed into play in order to make a revision in a matter on which there could be two plausible interpretations - AAAR
  Visit to Get Source

  ---

• Petitioner Challenges Reversal of Differential Tax Due to Transition from VAT to GST Effective July 1, 2017.

  Case-Laws - HC : Validity of non reversal of differential tax amount arising out of change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 1st July, 2017 - Petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. - HC
  Visit to Get Source

  ---

Income Tax

• Court Dismisses Contempt Action Against IRS Due to Lack of Pleadings and Opportunity to Present Case.

  Case-Laws - HC : Contempt action against the IRS for not following the directions issued by the Court - With regard to the effective date of such circular, which is stated to be 17.06.2019. We find that these issues neither directly nor indirectly arose for consideration in the contempt petition. There appears to be no pleadings to the said effect. - Consequently, the Revenue had no opportunity to put forth their stand. Thus, we are fully convinced that no such direction could have been issued by the learned Contempt Court after having held that there is no merit in the contempt petition. - HC
  Visit to Get Source

  ---

• TDS u/s 195 Not Applicable for License Fee Payments; Income Not Taxable in India.

  Case-Laws - AT : TDS u/s 195 - payment towards license fees pursuant to the distribution agreement - in our considered view, the documents submitted before us clearly shows that the income of the payee is not taxable in India and assessee has already filed the relevant information u/s 201(1) of the Act which shows that the assessee cannot be regarded as ‘assessee in default’. - AT
  Visit to Get Source

  ---

• Additions in Section 153A Assessments Require Proven Nexus with Seized Diary and Corroborative Evidence.

  Case-Laws - AT : Assessment u/s 153A - corroboration by way of independent evidence - the addition can be made on the basis of the seized diary only if proper nexus is established and same is corroborated with relevant material. If the Ld. A.O is not able to establish any such nexus between the notings in the seized diary and the actual transaction having taken place then no addition deserves to be made and if found otherwise Ld. A.O can make addition as permissible under the law. - AT
  Visit to Get Source

  ---

• Assessing Officer's addition of unexplained cash unjustified; presumed acceptance of reported cash position for 2016-17.

  Case-Laws - AT : Undisclosed income - uring the course of search cash sum was found - If the Ld. A.O was not satisfied with the cash in hand shown by the assessee and individuals as on 31.3.2016 he should have taken necessary action during Assessment Year 2016-17 but in absence there of it has to be presumed that the Ld. A.O has accepted the position of cash in hand as on 31.3.2016 shown by the assessee firm and its partners and wife of the partner which stood. - A.O was not justified in making the addition towards cash as explained - AT
  Visit to Get Source

  ---

• Assessee Wins Deduction Claim for Interest Income from Co-operative Bank u/s 80P(2)(d) of Income Tax Act.

  Case-Laws - AT : Deduction claimed u/sec. 80P(2)(d) - In the instant case, the Assessee has earned interest income from Krishna District Co-operative Central Bank (KDCCB) and it is not the case of the Revenue Department that KDCCB is not a co-operative society. Therefore on the aforesaid consideration and analyzations, the decision of the ld. CIT(A) qua issue in hand is set aside and the AO is directed to allow the deduction claimed u/sec. 80P(2)(d) of the Act by the Assessee . - AT
  Visit to Get Source

  ---

• Court Allows 200% Deduction for In-House R&D Expenditure u/s 35(2AB) of Income Tax Act &D.

  Case-Laws - AT : Weighted deduction u/s.35(2AB) - capital and revenue expenditure incurred on in-house R & D facility - It is not in dispute that the Assessee in the present case obtained approval in Form No.3CM as required by Rule 6 (5A) of the Rules. The deduction u/s.35(2AB) ought to have been allowed as weighted deduction at 200% of the expenditure as claimed by the Assessee and ought not to have been restricted to 100% of the expenditure incurred on scientific research. - AT
  Visit to Get Source

  ---

• Assessee Wins TDS Credit Dispute: Ruling Allows Credit Despite Mistaken Deposit Under Deceased Husband's PAN.

  Case-Laws - AT : Denial of the credit of TDS - assessee has offer the income to tax which was received as commission income - the TDS on the said income even if deposited in the PAN of the deceased husband of the assessee due to inadvertence or mistake, it would not lead to denial of the claim of credit to the assessee, who has offered the said income to tax. - AT
  Visit to Get Source

  ---

• Revenue's Appeal Dismissed: AO's Remand Report Supports Assessee, Revenue Not an Aggrieved Party, Appeal Not Maintainable.

  Case-Laws - AT : Maintainability of appeal - AO himself had filed remand report before CIT(A) - Revenue cannot be held to be an aggrieved party once the Assessing Officer himself finds assessee's explanation to be genuine. We thus hold in view of Assessing Officer's remand report that the Revenue's instant appeal deserves to be declined even on the ground of maintainability itself. - AT
  Visit to Get Source

  ---

• Appeals Filed 43 Days Late Condoned Due to Lack of Culpable Negligence or Malafide Intent by the Assessee.

  Case-Laws - AT : Delay in filing the present appeals by 43 days - there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay more so considering the fact that it has applied for settlement of present dispute and payment of appropriate taxes. - Delay condoned - AT
  Visit to Get Source

  ---

• CIT(A) Upholds Rejection of Assessee's Books for Stock Discrepancies; AO's Additions Deleted Due to Lack of Evidence.

  Case-Laws - AT : Rejection of books of accounts - difference in the opening stock as well as the closing stock - the assessee has shown excess opening stock - The AO did not care to consider that whether the assessee is having the above stock as actual stock with the assessee and if so what is the source of investment for the above stock. The Assessing Officer has not even examined the source of stock nor was such stock found during the course of survey - No purchase vouchers or details were also found during the course of survey - CIT(A) rightly deleted the additions - AT
  Visit to Get Source

  ---

Customs

• Tribunal Confirms Penalty Under Customs Act Section 112(a) for Favoritism to IEC Holder; Evidence Reassessment Validates Decision.

  Case-Laws - HC : Levy of penalty u/s 112(a) of Customs Act, 1962 - Favouritism shown to the IEC holder - The Tribunal has re-appreciated the evidence and agreed with the finding of the Adjudicating Authority, which was confirmed by the first appellate authority. Therefore, we do not agree with the submissions made on behalf of the appellant that the order is a perfunctory order and it did not consider the evidence placed before it. - HC
  Visit to Get Source

  ---

• Customs Clearance: Appellant Demonstrated Due Diligence but Proceedings Flawed Due to Noncompliance with Time Limits.

  Case-Laws - AT : Revocation of Customs Broker License - In para 14.4, the adjudicating authority has noted that the appellant verified the IEC and GST registration from the official website of DGFT and GSTIN and also the PAN and Aadhar details. From such facts, it is clear that the appellant has done the duty of verification as required by an ordinary prudent person while handling customs clearance work. - Further, the proceedings are vitiated by noncompliance of time limit prescribed in the Regulation - AT
  Visit to Get Source

  ---

• Revenue Authorities Fail to Prove Gold is Smuggled; Decision Based on Unacceptable Assumptions and Presumptions.

  Case-Laws - AT : Smuggling - Gold - The onus lies on the Revenue to prove that the goods in question are of smuggled in nature, which the Revenue has failed to discharge their onus with proper evidence. In the impugned order, it is held on the basis of assumption & presumption that the gold is of smuggled in nature which cannot be appreciated. - AT
  Visit to Get Source

  ---

• Court Overturns Confiscation of Gold and Car; Appellant Proves Lawful Ownership and Source, Penalty Set Aside.

  Case-Laws - AT : Smuggling - Gold - Seizure of gold - period of limitation - The appellant has able passed their onus of ownership acquisition of the gold in question. As the appellant has able to prove the source of acquisition of the gold in question, the same cannot be confiscated - absolute confiscation of the gold is set aside and the car in question and imposing penalty on the appellant. - AT
  Visit to Get Source

  ---

Indian Laws

• Electoral Bond Scheme, 2018: Donor Anonymity Maintained Unless Court or Criminal Case Demands Disclosure. Non-KYC Applications Rejected.

  Case-Laws - SC : Sale of Electoral Bonds under the Electoral Bond Scheme, 2018 - Scheme allows the donors of political parties to maintain anonymity - Though the information furnished by the buyer shall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purposes, it is subject to one exception namely when demanded by a competent court or upon registration of criminal case by any law enforcement agency. A nonKYC compliant application or an application not meeting the requirements of the scheme shall be rejected. - The apprehension that foreign corporate houses may buy the bonds and attempt to influence the electoral process in the country, is also misconceived. - SC
  Visit to Get Source

  ---

• Cheque Dishonor Case Settled: Offense Compounded, Parties Compromise with Additional Payment and Legal Services Fee.

  Case-Laws - HC : Dishonor of cheque - compounding of offences - The parties have agreed to end the proceedings by way of compromise and the opposite party no.2 has already received the entire amount of cheque as well as cost/ interest of ₹ 10,000/- , this Court deems it appropriate to compound the offence on the basis of compromise deed dated 19.2.2021 entered into between the parties. - the revisionist is directed to pay a cost of 15% of the cheque amount to the High Court Legal Services Committee, High Court - HC
  Visit to Get Source

  ---

IBC

• Revenue Department's Late Sales Tax Claim Post-Resolution Plan Challenges CIRP Timelines, Raises Concerns Over Delayed Submissions.

  Case-Laws - AT : CIRP - Fresh claim of Sales Tax Dues after submission of Resolution plan for approval - Time limitation - Appellant / Revenue department has argued that the initiation of CIRP and the public notice inviting claims were not in his knowledge - Any interruption in the CIR Process at this stage by including a delayed claim/s would have meant setting the clock back and sending matter back to COC & RP. It cannot be ruled out that if the claim of the Operational Creditor State Tax Department, Government of Maharashtra was accepted at such a late stage, there could have been other such applicants too, who would have demanded accommodation on the same ground allowing late submission of their claims once this window would have opened. It would be trite to emphasise the fact that this would have meant complete disruption of the CIRP and the timelines stipulated therein.- AT
  Visit to Get Source

  ---

PMLA

• Debit-Freezes Invalid Without Proper Justification Under PMLA Sections 5 or 17, Order from November 6, 2020 Challenged.

  Case-Laws - HC : Validity of imposition of “debit-freeze” of the bank accounts - PMLA - The sine qua non for exercise of the powers under either section 5 or section 17 of the Act is the formation of an opinion, by a competent officer, that the conditions set out in these sections are found to exist. In the absence of such a finding, the exercise of power under these Sections would be without basis and cannot survive in the absence of these requirements. There are no such reasons recorded in the order dated 6.11.2020. - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (3) TMI 1145
  Rectification of Mistake - error apparent on the face of record - Applicant submits that the lower authority (AAR) had held that their activity would qualify as supply of goods attracting 12% whereas in the impugned order dated 27.9.2020, their activity has been classified as attracting 18% - Applicant submits that it is erroneously concluded from the submission of the appellant that it is impossible to satisfy the 25% criteria under Entry 3A of the subject notification; that this is factually incorrect and misconstruction of the submissions made by the Appellant. HELD THAT:- Section 102 of the CGST Act provides that the Appellate Authority may amend any order passed by it under Section 101 so as to rectify any error apparent on the face of the record. What constitutes an error apparent on the face of the record has been laid down by the Supreme Court in the case of ASSISTANT COMMISSIONER, INCOME TAX, RAJKOT VERSUS SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT ] . The Apex Court held that a patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. In this case, the question on which an advance ruling was sought was whether the supply is a supply of goods or supply of service or a composite supply. Additionally, a ruling was also sought on the rate of tax applicable for the nature of supply. The lower Authority had held that the supply in this case was a composite supply where the principle supply was a supply of goods and the rate of tax applicable is 12%. Before us, this finding by the lower Authority was assailed and it was the argument of the Appellant that the supply is a supply of service and they were eligible for the exemption given to pure services rendered to the municipal authority. This argument did not find favour with us and on a complete examination of the case which included taking into consideration the terms of the Agreement with the Thane Municipal Corporation as well as the citations relied upon by the Appellant, we have concluded that the supply of the Appellant is a composite supply with supply of service being the principle supply. The principle supply was classified under 999112 where the applicable rate of tax is 18%. The ruling given by the lower Authority was modified accordingly. The supply is a composite supply with the principal supply being a supply of service. Since the determination of the rate of tax was also a subject matter in appeal before us, we have examined the applicant s eligibility to exemption as pure services under entry 3 of Notf No 12/2017 CT(R), and also their alternate claim for exemption under entry 3A of the said exemption notification. Having found that they are not eligible for either entry under the exemption notification, we have proceeded to pass an order on the applicable rate of tax for the said service which we held to be 18%. Therefore, there is no error in the impugned order which requires to be rectified. A mistake apparent from the record is one to point out and for which no elaborate argument is required. It must be a glaring, obvious or self-evident mistake. A mistake which is not gatherable from the record as it stands and requires for being shown to be a mistake, matter or evidence extraneous to record is not a mistake apparent from the record. In a nutshell we hold that the provisions of Section 102 of the CGST Act cannot be pressed into play in order to make a revision in a matter on which there could be two plausible interpretations. - a decision on a debatable point of law or facts is not a mistake apparent from the record and the debatable issue cannot be the subject of an order of rectification. There is absolutely no question of any error apparent from the face of record in the impugned appeal order, as is being made out by the Applicant. ROM application dismissed.

  ---

• 2021 (3) TMI 1140
  Vires of Rule 86A of the CGST Rules/WBGST Rules and Section 16(2)(c) of the CGST Act/WBGST Act - blocking of the electronic credit ledger - HELD THAT:- The summons that have been issued on October 19, 2020 by the State GST is, prima facie, in violation of Section 6(2)(b) of the WBGST Act. It is directed that the stay of the above summons and any proceedings thereunder. As the vires of Rule 86A of the CGST Rules/WBGST Rules and Section 16(2)(c) of the CGST Act/WBGST Act is under challenge, affidavits are required to be exchanged in this matter. Accordingly, affidavits-in-opposition be filed within four weeks; reply thereto, may be filed within two weeks thereafter - the order shall not preclude the Central GST authorities to proceed in accordance with law and to continue with any proceedings that have been initiated by them. The matter is directed to appear after completion of exchange of affidavits in this matter.

  ---

• 2021 (3) TMI 1139
  Valuation - interest on delayed payment of tax to be charged on gross liability or net liability - section 50 of the CGST Act - issuance of DRC 01 under Section 50 of the CGST Act, 2017, legal or not - HELD THAT:- Going by amendment proposed in Finance Bill, Section 50 of the CGST Act, 2017 vide clause 103 of the Finance Bill, 2021, the interest under Section 50 of the CGST Act, 2017 can only be levied on the net tax liability and not on the gross tax liability. In such circumstances, the demand raised by the respondent is not in accordance with law. Whether issuance of DRC 01 under Section 50 of the CGST Act, 2017 is legal and proper? - HELD THAT:- The plain reading of Rule 142(1)(a) of the Central Goods and Service Tax Rules, 2017 indicates that Form GST DRC 01 can be served by the proper officer along with the notice issued under Section 52 or Section 73 or Section 74 or Section 76 or Section 122 or Section 123 or Section 124 or Section 125 or Section 127 or Section 129 or Section 130 and that too, electronically as a summary of notice - there are no reference of any notice under Section 50 so far as Rule 142(1)(a) of the CGST Rules is concerned. In such circumstances, DRC 01 could not have been issued for the purpose of recovery of the amount towards interest on delayed payment of tax. If the amount towards interest on delayed payment of tax is to be recovered, then what is the Form in which the notice is to be issued? - HELD THAT:- The aforesaid provisions make it abundantly clear that notwithstanding anything contained in section 73 or Section 74, if there is any amount of interest payable on tax and which had remained unpaid, the same has to be recovered under the provisions of Section 79 - Rule 142 makes it clear that the order referred in sub rule (5) shall be treated as the notice for recovery. Thus, it can be concluded that the notice should have been issued in Form GST DRC 07. The Notice should specify the amount of tax, interest and penalty payable by the person chargeable with tax - the Form GST DRC 01 could be said to have been issued without any authority of law. The impugned order issued in GST DRC 01 is hereby ordered to be quashed and set aside - Application allowed.

  ---

• 2021 (3) TMI 1136
  Permission to withdraw Writ Petitions with liberty to avail alternative remedy available in law - Vires of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The Writ Petitions are disposed of on withdrawal with liberty as prayed for.

  ---

• 2021 (3) TMI 1131
  Validity of non reversal of differential tax amount arising out of change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 1st July, 2017 - difficulty faced by the contractors due to change in the regime regarding works contract under GST - HELD THAT:- The Government has now come out with a revised guidelines in this respect in supersession of the guidelines issued vide Finance Department letter dated 7th December, 2017. He has filed Additional Counter Affidavit of O.P.- authority in similar cases annexing the revised guidelines relating to works contract under GST issued by the Government of Odisha, Finance Department vide Office memorandum No. FIN-CTI-TAX-0045-2017/38535/F Dated 10th December, 2018. Petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10th December, 2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 26th March, 2021 - petition disposed off.

  ---

• 2021 (3) TMI 1128
  Vires of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - rejection of Input Tax Credit (ITC) on account of mismatch between ITC claimed in Form GSTR-3B vis- -vis ITC reflecting in Form GSTR -2A on the GST portal - HELD THAT:- Section 16 provides for Eligibility and Conditions for taking ITC. Entitlement for ITC is subject to certain conditions and Section 16(2)(c) provides that subject to Sections 41 and 43A of the Act, the amount claimed as ITC is actually paid to the Government. Admittedly, aforesaid condition precedent for taking ITC has not been fulfilled. Petition dismissed.

  ---

• Income Tax

• 2021 (3) TMI 1133
  Computation of deduction u/s 10A - Interest expenditure incurred by the assessee are excluded form export turnover should also be excluded form total turnover - Whether Tribunal was right in holding that the assessee is eligible for deduction under section 10A as the assessee had not set up a new business buy only transferred its place of business of an existing business to a new place located in STPI area? - Tribunal held that the brought forward business loss and unabsorbed depreciation are to be set off only after grant of deduction under section 10A - HELD THAT:- Above questions of law are covered by the decision of this Court in M/S. SRA SYSTEMS LTD.[ 2021 (3) TMI 977 - MADRAS HIGH COURT] - Decided in favour of the assessee

  ---

• 2021 (3) TMI 1130
  Deduction u/s 80IA - Treatment to carbon credit receipt - revenue or capital receipts - income from generation of electricity and the carbon credit earned by the assessee are totally separate and the source of the income is also separate - HELD THAT:- As relying on S.P. SPINNING MILLS PVT .[ 2021 (1) TMI 1081 - MADRAS HIGH COURT ] i f the receipt from the sale of carbon credit is a capital receipt, then it will go out of the purview of the gross total income as defined under Section 80B(5) of the Act, which expression is found in Section 80IA of the Act. Thus, if the receipts by sale of carbon credit will not fall within the definition of total income, the same cannot be included under Section 80IA of the Act. Therefore, even if the assessee has made such a claim, that cannot be a reason for the Tribunal to non-suit the assessee. Section 115BBG of the Act was introduced by Finance Act, 2017 with effect from 01.04.2018, prior to which, there was no such provision and Mr.V.S.Jayakumar, learned counsel for the assessee would submit that the assessees were under utter confusion as to under which provision of the Act, they should make a claim for deduction and having left with no other option, had been making the claim under Section 80IA of the Act and merely because the assessee due to uncertainty in the legal position, had made a claim under Section 80IA of the Act that cannot be a reason to deny a benefit granted in favour of the assessee. The submission, made by Mr.V.S.Jayakumar, learned counsel for the appellant, in this regard, is well found and accepted. - Decided in favour of assessee.

  ---

• 2021 (3) TMI 1127
  Contempt action against the IRS for not following the directions issued by the Court - Prosecution for offence punishable under Section 276C - undisclosed deposit in a foreign bank account - appellant filed a petition under Section 279(1) of the I.T.Act for compounding the offence - HELD THAT:- We have to necessarily hold that the directions issued by the learned Contempt Court after holding that there is no merit in the contempt petition is beyond the jurisdiction of the Court while considering the contempt petition. Therefore, we have no other option except to interfere and set aside such direction. Effect and applicability of the circular issued by the CBDT dated 14.06.2019, which came into effect from 17.06.2019. Admittedly, this circular was not in vogue when the respondent filed his first application under Section 279(2) of the I.T.Act. The Writ Court while testing the correctness of the order dated 15.01.2014, was examining the correctness of the same qua the circular/guidelines which were in vogue when the order was passed, which is the circular dated 16.05.2008. In fact, the learned Contempt Court, in the impugned order, notes that neither the respondent, nor the Revenue had brought to the notice of of the Writ Court about the fresh circular dated 14.06.2019, when the writ petition was heard in August, 2019 (filed in 2014). With regard to the effective date of such circular, which is stated to be 17.06.2019. We find that these issues neither directly nor indirectly arose for consideration in the contempt petition. There appears to be no pleadings to the said effect. Consequently, the Revenue had no opportunity to put forth their stand. Thus, we are fully convinced that no such direction could have been issued by the learned Contempt Court after having held that there is no merit in the contempt petition. We are to necessarily set aside the direction issued by the Court in paragraphs 37 to 40 of the impugned order and all the observations, which were made by the Court in paragraphs 32 to 36, which have led to issuance of the impugned directions. Having held so, we need to take note of the submissions of the learned Senior Counsel for the respondent that the respondent should not be left without a remedy because his contempt petition was dismissed as being devoid of merit and now we have come to a conclusion that the direction could not have been issued by the Contempt Court, which was beyond the scope of the contempt petition. Bearing this in mind, we are inclined to give liberty to the respondent to file a fresh petition for compounding in which, he may canvass all issues available to him on law as well as on facts and orders and directions which according to them are in their favour as well as the decisions which he chooses to rely upon. This writ appeal is allowed and the directions issued in paragraphs 37 to 40 are set aside and the observations made in paragraphs 32 to 36 leading to the directions are vacated. Liberty is granted to the respondent to file a fresh petition under Section 279 of the I.T.Act before the first appellant within a period of 30 days from the date of receipt of a copy of this judgment and the same shall be considered in accordance with law within a reasonable time not later than 90 days from the date on which the petition is presented in full form.

  ---

• 2021 (3) TMI 1125
  Bogus purchases - CIT(A) deleted the disallowance - HELD THAT:- The finding on facts is not rebutted by the Revenue by placing cogent evidence. The Assessing Officer has not doubted the book results. Moreover, the Assessing Officer has not given any adverse finding regarding the issues for which the case was selected for scrutiny. Further, the Assessing Officer has not disturbed the sale. There is no whisper about out of book sales made by the assessee. We, therefore, do not see any reason to interfere in the finding of the Ld.CIT(A). The grounds raised by the Revenue are hence, rejected.

  ---

• 2021 (3) TMI 1124
  Assessment u/s 153A - Addition u/s 14A - CIT(A) has deleted the addition applying the ratio in the case of Kabul Chawal [ 2015 (9) TMI 80 - DELHI HIGH COURT] that no addition could be made under 153A proceedings under absence of any incriminating material, in case of completed assessments - HELD THAT:- As far as first condition is concerned, in the instant case addition under section 14A of the Act has been made and evidently there is no reference of any incriminating material in the assessment order, with regard to the addition under section 14A of the Act. Thus, there is no dispute that there was no incriminating material found during the course of the search relevant to the assessment year under consideration. Regarding the second condition, according to the Assessing Officer notice under section 148 of the Act for commencing reassessment proceeding was issued on 23/10/2013 and notice under section 153A was issued on 10/03/2015 and therefore assessment was pending in instant assessment year. However, the Ld. CIT(A) held that no proceedings were pending as on the date of the search and, therefore, notice under section 148 issued after the date of the search was avoid ab initio. As perused the Panchnama of search operation in the case of the locker in the joint name of the entity merged with the assessee and it is evident from said Panchanama that the search was conducted on 30/01/2013. Since the notice under section 148 was issued on 23/10/2013, which is after the date of the search, it is evident that as on the date of the search no assessment/ reassessment proceedings were pending in the instant assessment year. AO has wrongly considered the pendency of the assessment proceeding on the date of the issue of the notice under section 153A. In absence of no incriminating material found during the course of the search and no assessment/reassessment proceedings pending as on the date of the search, the ratio in the case of decision of the Hon ble Delhi High Court in the case of Kabul Chawal (supra) is squarely applicable on the facts of the case and accordingly, no addition could have been made in the instant assessment year. The addition made by the Assessing Officer has rightly been deleted by the Learned CIT(A), and we uphold the same.- Decided against revenue.

  ---

• 2021 (3) TMI 1122
  Penalty proceedings u/s 271(1)(c) - assessee has incurred loss on sale of shares which was held as stock-in-trade - assessee treated the same as part of business whereas AO treated the same as speculative loss by invoking explanation to section 73 - HELD THAT:- As decided in AURIC INVESTMENT AND SECURITIES LTD. [ 2007 (7) TMI 276 - DELHI HIGH COURT] it is well-settled that assessment proceedings and penalty proceedings are distinct and independent of each other. No doubt, the findings in the assessment proceedings would have significance in the penalty proceedings also but they are not decisive or determinative.With respect to the fact that the assessee had accepted the view taken by the Assessing Officer that V the loss due to trading in shares was in the nature of a speculative loss, the assessee contended that in the penalty proceedings, it can take up the plea that the claim made in the return was bona fide. The assessee had a bonafide belief that the loss suffered by it is business loss. The change of nature of loss from business loss to speculative loss was not enough to impose penalty on the assessee. Therefore, we are inclined to delete the penalty imposed in this case. Accordingly, grounds raised by the assessee are allowed.

  ---

• 2021 (3) TMI 1121
  TDS u/s 195 - Assessee made payments to Celltick Israel towards license fees pursuant to the distribution agreement entered between them - assessee while making payment to Celltick Israel deducted withholding tax for the period April 2013 to August 2013. The assessee made further payments without deducting TDS for the reason that the income of the payee is not taxable in India as the transaction of the payee comes under article 7 of the Indo Israel Treaty - whether the amendments made in Section 40(a)(i) is applicable retrospective or not? - HELD THAT:- The payee has already furnished certificate from a chartered accountant, return of income and computation of income under section 139. Further we also noticed that the income of the payee is not chargeable to tax in India as per the decision of the coordinate bench. Even though as submitted by learned DR that the matter of payee is pending before High Court. In our view, as far as the current position available on record that the income of the payee is not chargeable to tax in India. It is clear that the 2nd proviso to section 40(a)(ia) and section 40(a)(i) are evenly worded and Pari materia to each other. Both the provisions were introduced by the legislature in order to remove the anomaly and curative in nature. In the case of section 40(a)(ia) the Hon ble Bombay High Court in the case of Perfect Circle India Pvt. Ltd. [ 2019 (1) TMI 1532 - BOMBAY HIGH COURT ] and in the case of Ansal Land Mark Township (P) Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT ] have already held that these provisions are applicable retrospectively with effect from 01.04.2005. Since the amendment was carried out in order to remove the anomalies in the sections similar to section 40(a)(ia) and in our considered view, the amendment in section 40(a)(i) is also made in order to remove the anomaly and it is no doubt curative in nature. Therefore, considering the findings of the Hon ble High Courts, in our view the amendment to the section 40(a)(i) is also applicable retrospectively. Considering our observation in the above paragraphs, in our considered view, the documents submitted before us clearly shows that the income of the payee is not taxable in India and assessee has already filed the relevant information u/s 201(1) of the Act which shows that the assessee cannot be regarded as assessee in default . Therefore, we set aside the order passed by the AO under section 143(3) of the Act. Considering the above discussion, the additional ground raised by the assessee is allowed.

  ---

• 2021 (3) TMI 1118
  Penalty u/s 271(1)(c) - estimation of income on bogus purchases made by the assessee - HELD THAT:- As per the law, the provisions of section271 (1) (c) of the Act would be applicable only where the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. However, the estimation of higher rate of profits by the AO cannot be termed as either concealment or furnishing of inaccurate particulars of income. As decided in M/S. NORTON ELECTRONICS SYSTEMS PVT. LTD [ 2014 (2) TMI 606 - ALLAHABAD HIGH COURT] and M/S VISION RESEARCH AND MANAGEMENT PVT. LTD. [ 2014 (11) TMI 1228 - ITAT LUCKNOW] when addition is made on estimate basis, no penalty is sustainable. There is no active concealment of income on the part of the assessee and additions made on estimation by the AO do not called for initiation of penalty. Thus, in our view, the penalty levied by AO and confirmed by Ld. CIT(A) is hereby deleted - Appeal filed by the assessee stands allowed.

  ---

• 2021 (3) TMI 1113
  Rectification of mistake - Assessment u/s 153A - whether no incriminating material was found as these assessments stood completed u/s. 143(3)/143(1) and were not pending on the date of search? - HELD THAT:- It is a settled proposition as laid down in the case of CIT V/s Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] that additions for the concluded and non abated assessment can be made only if there is a incriminating material found during the course of search for those years. Before us Ld. Counsel for the assessee has demonstrated through the documents placed in the paper book that Assessment Year 2003-04 to Assessment Year 2006-07 with respect to all the assessee(s) mentioned in the instant Miscellaneous Application are concluded and non abated assessments as they have either to be assessed u/s 143(3) of the Act or the time limit for issuance of notice u/s 143(2) of the Act had expired and there was no incriminating material found during the course of search with respect to Assessment Year 2003-04 to Assessment Year 2006-07 and therefore the additions made by the Ld. A.O for all these years in respect of the assessee(s) mentioned in the instant Miscellaneous Application deserves to be deleted. Looking to the peculiarity of the facts and in the interest of justice, it will be fair for both the parties, if this issue is set aside to the file of Ld. A.O for limited purpose of examining the veracity of the submissions made by the Ld. Counsel for the assessee. We accordingly order so and direct the Ld. A.O that after giving necessary and reasonable opportunity of being heard to the assessee(s), should examine, firstly as to whether any incriminating material was found during the course of search for Assessment Year 2003-04 to Assessment Year 2006-07 having any nexus with the additions made and secondly whether the Assessment Year 2003-04 to Assessment Year 2006-07 were falling under the category of concluded and non abated assessments. In case the Ld. A.O finds that Assessment Year 2003-04 to Assessment Year 2006-07 were concluded and non abated assessments and there was no incriminating material found during the course of search pertaining to these Assessment Years, in view of settled judicial precedents should not make any addition for the assessee(s) mentioned herein above and in the alternate can take necessary action as per the provisions of law. In the result first common issue raised by above captioned assessee(s) present before us, as to whether No addition ought to have been made in respect those years where no incriminating material was found as these assessments stood completed u/s 143(3)/143(1) and were not pending on the date of search is hereby allowed for statistical purposes. Absence of corroboration by way of independent evidence, no addition ought to have been made in respect of rough notings in the diary found in search - We find that as regards diary found relating to AY 2004-05 from the possession of the assessee Arun Sahlot, the assessee has been explaining since inception that jottings in the impugned dairy had nothing to do with actual financial transactions and it merely contained various business proposals , reminders, appointments, planning, business targets, projections etc. He filed an affidavit too before AO on oath solemnly stating that he has not made any such payments as presumed and alleged by the AO. Assessee also issued letters u/s. 131 of the Act to call the respective parties to verify the facts but the same was not done. In the statement recorded u/s. 132(4) of the Act also assessee nowhere accepted to have made any such payments alleged to have been recorded in the seized diary and he only averred that the diary contains merely work list. Despite categorical denial of any such payments by the assessee, Arun Sahlot, he was neither examined as author of the diary nor was he cross-examined as deponent of the affidavit. We take note of this very significant and important fact oozing out from AO order that the AO claims to have identified so -called recipients of the alleged payments contained in the diary by collecting their addresses and even phone numbers as narrated in his assessment order at Page 55 and 61-65 but he has neither examined any of them nor even tried to take pain to corroborate, much less corroborated, the same by way of independent evidence. Even one employee, Asim Ansari, was simultaneously searched and was simultaneously assessed by same AO and addition on account of three alleged payments to him were made in the hands of assessee - AO has also identified Asim Ansari to be the same person who was assessed by him simultaneously. But even in case of Asim Ansari also, neither he was examined by AO nor any corresponding income in the hands of the Asim Ansari, as alleged recipient, was ever made. We are of the considered view that the issue raised in Ground No.5 in the case of Arun Sahlot for Assessment Year 2004-05 needs to be set aside to the file of Ld. A.O for afresh examination. On perusal it seems that the additions are based merely on rough jottings and rough diary but still in the interest of justice and fair play we are of the view that the issue needs to be examined afresh by Ld. A.O after providing reasonable opportunity of being heard to the assessee and the Ld. A.O is also directed that in view of the settled judicial precedents and discussions herein above the addition can be made on the basis of the seized diary only if proper nexus is established and same is corroborated with relevant material. If the Ld. A.O is not able to establish any such nexus between the notings in the seized diary and the actual transaction having taken place then no addition deserves to be made and if found otherwise Ld. A.O can make addition as permissible under the law.

  ---

• 2021 (3) TMI 1112
  Undisclosed income - as during the course of search cash sum was found and assessee failed to explain its source and accepted to offer it as additional income - HELD THAT:- As we find that the assessee had made retraction before the completion of assessment proceedings with documentary evidence and relevant explanation and therefore the onus to prove the burden shifted on to the revenue. The assessee during the assessment proceedings also submitted the details of cash in hand as on 31.3.2016 in the hands of the firm M/s Daya Properties Finance, its partners and wife of the partner. Income Tax Returns of the firm M/s Daya Properties Finance and other individuals for Assessment Year 2016-17 were very much before the Ld. A.O. They have been scrutinized during the assessment proceedings and the assessment was completed u/s 143(3) of the Act and no addition have been made. If the Ld. A.O was not satisfied with the cash in hand shown by the assessee and individuals as on 31.3.2016 he should have taken necessary action during Assessment Year 2016-17 but in absence there of it has to be presumed that the Ld. A.O has accepted the position of cash in hand as on 31.3.2016 shown by the assessee firm and its partners and wife of the partner which stood. So as on 1.4.2016 assessee had cash in hand in its business concern and other individuals referred above at Rs. 16,50,360/- which is sufficient enough to cover up the shortfall in surrender of income of Rs. 15,02,020/- found during the course of search as on 30.8.2016. Since the assessee had explained the source of cash to the extent of Rs. 15,02,020/- as on the date of search, it had rightly reduced the surrender of income from Rs. 37,02,020/- to Rs. 22,00,000/-. We therefore are of the view that the Ld. A.O was not justified in making the addition of Rs. 15,02,020/-. We accordingly set aside the finding of Ld. CIT(A) and allow Ground No. 1 to 4 raised by the assessee.

  ---

• 2021 (3) TMI 1109
  Undisclosed income - Discrepancies between the income reported by the assessee and as noticed by the AO in Form No.26-AS - HELD THAT:- CIT (A) has reproduced the submissions of the assessee as held that the assessee has not submitted any further information besides what has been submitted before the AO and that the appeal with regard to the claim of conversion charges were not submitted and no fresh evidence or information was submitted by the assessee inspite of several opportunities. All the details have been given by the assessee. The invoices and also the ledger a/c of the parties are submitted before us and the certificate is also given that these documents have been filed before the AO and the CIT (A) except for the information from M/s. Alembic Pharmaceuticals Ltd and M/s. Ajanta Pharma Ltd before the CIT (A). We find that the CIT (A) has failed to consider the same nor has she called for a remand report from the AO for the evidence filed by the assessee. In view of the same, we deem it fit and proper to remand the Grounds 2 to 6 to the file of the AO for verification and reconsideration in accordance with law. Therefore, Grounds 2 to 6 are allowed for statistical purposes. Assessee had submitted detailed submissions before the CIT (A) but without verifying the same, the CIT (A) has confirmed the order of the AO. The assessee has pleaded that the income from trading unit alone may be disallowed u/s 80IC but the CIT (A) has confirmed the assessment order on the ground that the assessee has not submitted any proof that the expenses are not excessive and also held that the assessee is in trading business and not manufacturing business. We find that in the paper book filed before the Tribunal in pages 49 to 55 are the account details of the H.O Traders. CIT (A) has not considered this evidence also nor called for a remand report also. Therefore, we deem it fit and proper to remand this issue also to the file of the AO for denovo consideration in accordance with law. Assessee s appeal is treated as allowed for statistical purposes.

  ---

• 2021 (3) TMI 1108
  Condonation of delay of 606 days in filing of the appeal against revision u/s 263 - HELD THAT:- Assessee has claimed that on misconception and/or non-guidance of earlier counsel, the Assessee did not file appeal against the order passed by the Pr.CIT u/sec. 263 of the Act, however, on guidance of the present counsel, the Assessee immediately filed the instant appeal. The reasons stated by the Assessee do not inspire any confidence and seems to be an afterthought concocted story cultivated upon the observations of the ld. CIT(A) in the appellate order against the assessment framed u/sec. 143(3) r.w.s. 263 of the Act and therefore, in order to fill up the gap and/or to get adjudicate the issue which has been left by the ld. CIT(A), filed the instant appeal before us with a delay of 606 days. In our considered opinion, act of the Assessee was not diligent in availing the remedy of appeal. The delay in filing the appeal is occurred due to Assessee s in-activeness hence in our considered opinion, in any sense, the averments made, the reasons stated and demonstrated by the Assessee failed to qualify the test of sufficient cause and also do not show any acceptable cause much less sufficient cause to exercise Court s discretion in its favour. Hence considering the peculiar facts and circumstances collectively, we are not inclined to admit the appeal by condoning the delay of 606 days in filing of the appeal, consequently the application for condonation of delay stands dismissed. Revision u/s 263 - Disallowance of deduction claimed u/sec. 80P(2)(d) - HELD THAT:- No hesitation to follow the decision of Hon ble Karnataka High Court rendered in the case of Pr.CIT Vs. Totagars Co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] wherein clearly held that the issue whether a Co-operative Bank is considered to be a Co-operative Society is no longer res integra. The Co- operative Bank which is a species of the genus would necessarily be covered by the word Co-operative Society . Even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-Operative Society bank as the meaning of Co- Operative Society. Therefore, a Co-operative Society Bank would be included in the words Co-operative Societies . Admittedly, the interest which the Assessee respondent had earned was from a Co-operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I.T. Act, the said amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Section 80P(2)(d) exempt the income by way of interest or dividend derived by the co-operative society from its investment with any other co-operative society which includes Co-operative bank which would be included in the words Co-operative Societies as held by the Hon ble Karnataka high Court in Totgars s case [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] . In the instant case, the Assessee has earned interest income from Krishna District Co-operative Central Bank (KDCCB) and it is not the case of the Revenue Department that KDCCB is not a co-operative society. Therefore on the aforesaid consideration and analyzations, the decision of the ld. CIT(A) qua issue in hand is set aside and the AO is directed to allow the deduction claimed u/sec. 80P(2)(d) of the Act by the Assessee .

  ---

• 2021 (3) TMI 1107
  Weighted deduction u/s.35(2AB) - capital and revenue expenditure incurred on in-house R D facility - HELD THAT:- As M/S. MAHINDRA ELECTRIC MOBILITY LTD. VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 4 (1) (2) , BANGALORE. [ 2019 (1) TMI 20 - ITAT BANGALORE] no difficulty about the quantum of deduction u/s.35(2AB) of the Act, because the AO allowed 100% of the expenditure as deduction u/s.35(2AB)(1)(i) as expenditure on scientific research. Deduction u/s.35(1)(i) and Sec.35(2AB) are similar except that the deduction u/s.35(2AB) is allowed as weighted deduction at 200% of the expenditure while deduction u/s.35(1)(i) is allowed only at 100%. The conditions for allowing deduction u/s.35(1)(i) and under Sec.35(2AB) are identical with the only difference being that the Assessee claiming deduction u/s.35(2AB) should be engaged in manufacture of certain articles or things. It is not in dispute that the Assessee is engaged in business to which Sec.35(2AB) applied. The other condition required to be fulfilled for claiming deduction u/s.35(2AB) is that the research and development facility should be approved by the prescribed authority. The prescribed authority is the Secretary, Department of Scientific Industrial Research, Govt. Of India (DSIR). It is not in dispute that the Assessee in the present case obtained approval in Form No.3CM as required by Rule 6 (5A) of the Rules. The deduction u/s.35(2AB) ought to have been allowed as weighted deduction at 200% of the expenditure as claimed by the Assessee and ought not to have been restricted to 100% of the expenditure incurred on scientific research. We hold and direct accordingly and allow the appeal of the Assessee.

  ---

• 2021 (3) TMI 1106
  Exemption u/s 11 - objects of the assessee seems to be charitable, but the activities carried out by the assessee are commercial in nature - Claim of deprecation on assets used by assessee trust - HELD THAT:-As in assessee s own case [ 2018 (7) TMI 1478 - ITAT DELHI ] Assessing Officer (AO) had ruled that the assessee was disentitled to the exemptions. The CIT(A) and the ITAT, however, reversed the decision and relied upon the decision of this Court in India Trade Promotion Organization vs. DGIT [ 2015 (1) TMI 928 - DELHI HIGH COURT ]. See assessee own case [ 2019 (2) TMI 1917 - DELHI HIGH COURT ] Double benefit claimed by the assessee i.e. towards depreciation reported in respect of the assets acquired out of previous exempt income - On this too the Tribunal relied upon a binding decision of the Supreme Court in CIT vs. Rajasthan Gujarat Charitable Foundation [ 2017 (12) TMI 1067 - SUPREME COURT ] - Revenue appeal dismissed.

  ---

• 2021 (3) TMI 1105
  Rectification u/s 154 - Denial of the credit of TDS on the income declared and assessed in the hands of the assessee - HELD THAT:- There is no dispute that the assessee has offer the income to tax which was received as commission income from M/s Unitech Wireless (East) Pvt. Ltd. The contract income was subjected to TDS and is assessed in the hands of the assessee as a proprietrix of M/s Gupta Electric Works then the TDS on the said income even if deposited in the PAN of the deceased husband of the assessee due to inadvertence or mistake, it would not lead to denial of the claim of credit to the assessee, who has offered the said income to tax. Rule 37BA of Income Tax rules, 1962 also provides the credit of tax deducted at source and paid to the Central Government, if the income on which tax is deducted at source and paid to the Government is offered to tax by the assessee and the deposit is made in the name of other person. There is no dispute that the assessee has offer the income to tax which was received as commission income from M/s Unitech Wireless (East) Pvt. Ltd. The contract income was subjected to TDS and is assessed in the hands of the assessee as a proprietrix of M/s Gupta Electric Works then the TDS on the said income even if deposited in the PAN of the deceased husband of the assessee due to inadvertence or mistake, it would not lead to denial of the claim of credit to the assessee, who has offered the said income to tax. Rule 37BA of Income Tax rules, 1962 also provides the credit of tax deducted at source and paid to the Central Government, if the income on which tax is deducted at source and paid to the Government is offered to tax by the assessee and the deposit is made in the name of other person. Denial of TDS credit to the assessee is not justified. The impugned orders of the Assessing Officer passed u/s 154 as well as Ld. CIT (A) are set aside and the claim of the assessee for TDS credit is allowed. Appeal of the assessee is allowed.

  ---

• 2021 (3) TMI 1104
  Penalty u/s 271(1)(c) - whether the penalty proceedings is initiated for furnishing of inaccurate particulars of income or concealment of income and therefore, the impugned penalty order passed deserves to be cancelled? - HELD THAT:- As penalty notice does not specify whether the penalty was proposed for concealment of particulars of income or for furnishing inaccurate particulars of such income in terms of provisions of Section 271(1)(c). The Hon ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. Hon ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. The aforesaid principle has been reiterated in the in the case of CIT vs. SSA S Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] In the present case, too, in notice dated 05.12.2011 and on 08.12.2014 issued under section 274 read with section 271 of the Act, initiated penalty against the appellant for alleged concealment of income or furnishing of inaccurate particulars of such income , that is to say, the specific default was not specified by the assessing officer in the notice issued. Since the notice u/s 274 has not been specified as to whether penalty is proposed for alleged concealment of income OR furnishing of inaccurate particulars of such income , the penalty levied is hereby obliterated. Appeals of the assessee are allowed.

  ---

• 2021 (3) TMI 1103
  Reopening of assessment u/s 147 - Notice to be served within the limitation period or specified period - addition u/s 68 - HELD THAT:- The notice u/s. 148 of the I.T. Act was dispatched on 31.03.2018 in the address given by the assessee in the PAN portal. Since the notice was returned unserved, the same was served through affixture. The learned Standing Counsel has produced the assessment records to prove that the notice u/s. 148 of the I.T. Act was dispatched on 31.03.2018 itself. In this context, the judicial pronouncement relied on by the CIT(A) clearly states that it is not necessary that notice needs to be served within the limitation period, but only need to be dispatched within the specified period. Therefore, the technical grounds raised by the assessee are dismissed. Addition u/s 68 - Assessee was not given any benefit of telescoping with regard to the withdrawals made by him. The assessee has also contended that he is deriving income from screen printing activities and the same were deposited in Kotak Mahindra Bank. It was stated by the assessee that the notice u/s. 142(1) was served on the assessee in the fag end of limitation period for completion of assessment, hence, was not in a position to furnish the necessary proof/evidences. Admittedly, in this case, the assessment has been completed on a best judgment basis. Therefore, assessee should be provided with one more opportunity to explain the source of cash deposit. The assessee shall produce the necessary evidences/documents to prove the source of cash deposits. The assessee shall co-operate with the department and shall not seek unnecessary adjournment. The A.O. is directed to afford a reasonable opportunity of hearing to the assessee and pass an order in accordance with law. It is ordered accordingly. Appeal filed by the assessee is allowed.

  ---

• 2021 (3) TMI 1102
  Maintainability of appeal - Assessing officer himself had filed remand report dated 19.09.2018 before the CIT(A) regarding commission payment(s) - CIT DR vehemently contended during the course of hearing that the CIT(A) s order has erred in law and on facts in granting relief to the assessee despite the fact that the Maharashtra State Electricity distribution company had deposed in department s favour that there was no involvement of any commission component in the entire bidding process - Whether CIT(A) is correct in allowing the appeal of assessee by completely ignoring the fact that a Government authority viz. the Chief Engineer, Maharashtra State Electricity Distribution Company has clearly spelled out the process of e-tender, design, specification of a public utility product and confirmed that no third party was involved in any of the services as mentioned in the relied upon agreement? - HELD THAT:- We find no merit in Revenue s foregoing argument. It has already come on record that the Assessing Officer has himself verified the impugned commission activity/payment in the remand report. Case law (2020) 426 ITR 119 (Kar) PCIT vs. DM Purnesh [ 2020 (9) TMI 731 - KARNATAKA HIGH COURT] and Smt. B. Jayalakshmi vs. ACIT [ 2018 (8) TMI 208 - MADRAS HIGH COURT] holds that the Revenue cannot be held to be an aggrieved party once the Assessing Officer himself finds assessee s explanation to be genuine. We thus hold in view of Assessing Officer s remand report that the Revenue s instant appeal deserves to be declined even on the ground of maintainability itself. Revenue s appeal is dismissed.

  ---

• 2021 (3) TMI 1101
  Disallowance of interest expenses u/s.36(1)(iii) - interest bearing funds were utilized for non-business purposes, i.e. investment in mutual funds - HELD THAT:- Hon ble Bombay High Court in the case of CIT v. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] has held in the context of section 36(1)(iii) of the Act that if there is interest-free funds available to an assessee sufficient to meet its investment and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available . The above ratio laid down by the Hon ble Jurisdictional High Court is to be examined in the instant case. Therefore, we set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO to examine the applicability of the ratio laid down in Reliance Utilities Power Ltd.(supra). We direct the assessee to file the relevant documents/evidence before the AO. Appeal is allowed for statistical purposes.

  ---

• 2021 (3) TMI 1100
  Disallowance u/s 14A r.w.r. 8D - assessee had made suo motu disallowance on proportionate basis by taking proportion of personnel and administrative expenses which can held to be relatable for earning of the exempt income - HELD THAT:- Admittedly, no interest expenditure is attributable for earning of exempt income. The only dispute is with regard to indirect expenditure under Rule 8D (2)(iii). Once the investment has been made in the earlier years and only if the dividend amount has been credited, then the only rational basis at the most could be the proportion of salary and administrative expenses. AO thereafter having regard to the accounts maintained by the assessee and the nature of expenses incurred was required to record his satisfaction that expenditure claimed by the assessee for earning of exempt income is incorrect or the expense disallowed by the assessee is not reasonable. It is only after recording of such satisfaction that Assessing Officer can proceed to make a disallowance under the prescribed method of Rule 8D and this is the mandate of Section 14A(2). In this case, the Assessing Officer has mechanically applied Rule 8D by stating that the expenditure incurred by the assessee towards exempt income, whether direct or indirect has to be disallowed in view of method provided under Rule 8D. There is no specific satisfaction of Assessing Officer as to how the claim made by the assessee is not tenable having regard to the nature of account maintained by the assessee and the nature of expenditure debited in the P L account, especially when the dividend has come from old investments and not fresh investment. Exactly on the same reasoning, this Tribunal in assessee s own case for all the earlier years right from Assessment Years 2005-06 to 2011-12 has deleted the disallowance made under Rule 8D(2)(iii). Thus, respectfully following the precedent in assessee s own case for the earlier years, we do not find any reason to sustain the disallowance which has been made by the Assessing Officer by mechanically applying Rule 8D. Accordingly, the appeal of the assessee is allowed.

  ---

• 2021 (3) TMI 1099
  Delay in filing the present appeals by 43 days - sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time - HELD THAT:- In the instant case, it has been stated by the assessee that due to the fact that the Principal of the school was busy in election duty, so cannot able contact to its C.A. for filing appeals but after election duty, he filed the appeals. Sawar is village where the school exists and it takes time to contact CA. In case of Collector, Land Acquisition vs MST Katiji [ 1987 (2) TMI 61 - SUPREME COURT] has held that the expression Sufficient Cause employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay more so considering the fact that it has applied for settlement of present dispute and payment of appropriate taxes. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal and as held by the Hon ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. In exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeals as we are satisfied that there was sufficient cause for not presenting the appeals within the prescribed time and the appeals are hereby admitted for adjudication on merits.

  ---

• 2021 (3) TMI 1098
  Accrual of income - Addition made on account of accrued interest on NPA - HELD THAT:- We note that while deciding the said issue the Co-ordinate Bench of this Tribunal placed reliance in assessee s own case for A.Y. 2011-12 and opined, since there was no order contrary to the finding of this Tribunal held the chargeability of accrued interest on NPA is bad under law. Further, we note that the order passed by this Tribunal for A.Y. 2011-12 wherein by placing reliance on the order of this Tribunal passed in various other assessees on identical issue come to such conclusion that accrued interest on NPA is not an income. We hold that the accrued interest on NPA is not chargeable to tax u/s. 43D r.w. Rule 6EA and we do not find any reason to interfere with the order of CIT(A) and accordingly it is justified. Thus, the grounds raised by the Revenue are dismissed.

  ---

• 2021 (3) TMI 1097
  Estimating income shown u/s 44AD as supported by return filed under VAT - estimate of the CIT(A) being without any material, ignoring the correct position of the case i.e. neither books of accounts are kept nor auditing was done and returns were even farzi for taking loan from bank - addition is sustained by the ld. CIT(A) based on the findings of the ld. CIT(A) in assessee s own case for assessment year 2010-11 [ 2018 (9) TMI 1759 - ITAT DELHI] wherein the profit @ 5% on the turnover was estimated - HELD THAT:- In para No. 8 the co-ordinate bench held that assessee should be given an opportunity to substantiate evidence to the satisfaction of the AO regarding the turnover and expenses with respect to the profit and loss account and the balance sheet as it as stated that those were farzi version of accounts. Considering the totality of the facts of the case the matter was restored back to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case directing the assessee to produce the books of accounts and audit report failing which the Assessing Officer shall pass an appropriate order as per law. In the present case the addition is also based on the order of the CIT (Appeals) for assessment year 2010-11. This order has now been restored back to the ld. AO for that year. When additions are confirmed on the basis of the order of ld. CIT(A) for earlier years which has already been sent back to the ld. AO for fresh decision, there is no reason that why this year should also not be restored back to the file of the ld. AO for fresh assessment. SO, we also set aside this appeal with similar direction to the file of the Assessing Officer. Rejection of books of accounts - Addition of 5% of gross sales - HELD THAT:- In the return of income the assessee has filled up the figures only with some of the items, therefore, it is apparent that no books of accounts were maintained. During the assessment proceedings, the Assessing Officer did not dispute the turnover or the expenses as well as the cash on hand and amount of debtors. The only addition was with respect to the discrepancy in the opening stock. In assessment year 2010-11 AO rejected the books of accounts and made the addition whereas in the impugned year he has not disturbed the trading results of the assessee which has turnover of only Rs. 9,45,132/-. The Assessing Officer has merely added the difference in the opening stock as well as the closing stock. The stock of the assessee as on 1.04.2009 was Rs. 2,01,23,560/-. The stock as on 31.03.2009 was shown at only Rs. 4,10,130/-. Therefore, the assessee has shown excess opening stock of Rs. 1,97,13,430/-. The Assessing Officer also did not care to consider that whether the assessee is having the above stock as actual stock with the assessee and if so what is the source of investment for the above stock. The Assessing Officer has not even examined the source of stock nor was such stock found during the course of survey on 17.09.2013 and 29.09.2013. No purchase vouchers or details were also found during the course of survey. In view of this, we do not find any infirmity in the order of the ld. CIT (Appeals) and thus, the solitary ground of appeal of the ld. Assessing Officer is dismissed.

  ---

• 2021 (3) TMI 1095
  Disallowance of interest paid to M/s GNIDA - AO disallowed the penal interest paid by the assessee on account of default in payment of installments to GNOIDA because Interest was not allowable as it was not on borrowed fund, As per the agreement there was no requirement to pay interest and No interest payment was allowable on acquiring a capital asset i.e. the lease rights of the land - CIT-A deleted the addition only on the ground that since the interest payment is not for violation of law or for the commission of an act purpose of which is an offence as contemplated in explanation 1 of Section 37(1) - HELD THAT:- CIT (A) has not adjudicated on the ground nos. 9 to 12 in the appeal filed before him for which the revenue filed appeal before us. The main contention of the revenue is that the addition needs to be examined broadly in the light of allowability of the interest in acquiring the lease rights on the land but not narrowly on the issue, whether such interest is penal in nature or not. Since, the ld. CIT (A) has not adjudicated on the core of the issue, we hold that the interest of justice would be well served by remanding the matter to the file of the ld. CIT (A) to adjudicate on the grounds unadjudicated. Appeal of the revenue allowed for statistical purpose.

  ---

• 2021 (3) TMI 1094
  Applicability of Section 69A with regard to the cash deposits found in the bank statement of the assessee - whether the assessee has discharged his onus of explaining this deposit satisfactorily? - HELD THAT:- As gone through the statement of Sh. Mohinder Singh recorded by the revenue on 17.09.2013 wherein he has confirmed of payment of Rs. 58,00,000/- on execution of sale agreement and receipt of the same amount after cancellation of the said sale agreement. It is an undisputed fact that Sh. Mohinder Singh unequivocally stated that the money earned by him and belongs to him. In that case, it can be said that the assessee has discharged the onus casted upon him. Even after recording the statement wherein Sh. Mohinder Singh owned up the amounts as being from his own sources, the revenue ought to have examined as to the taxability of the amounts in the hands of Sh. Mohinder Singh. Regarding the amounts received from Sh. Bhrama Nand, Sh. Surjeet Singh and Sh. Leela Ram, the matter is being referred to the file of the AO to examine the matter afresh duly following principles of natural justice and giving the details of the enquiries conducted by the revenue so that the assessee gets an opportunity to furnish their replies. Appeal of the assessee is partly allowed.

  ---

• Customs

• 2021 (3) TMI 1138
  Levy of penalty u/s 112(a) of Customs Act, 1962 - retraction of statements of the co-accused particularly when at the time of remand the Hon ble Magistrate had specifically noted that the statements were recorded under threat and coercion - retraction of statements of the co-accused without independent corroboration - scope of SCN upon certain call records which were not relied upon in the show cause notice issued to the appellant under Section 124 of the Customs Act, 1962 - reliance upon call records given by the mobile service provider without the mandatory certificate that is required to be issued under Section 138C of the Customs Act, 1962. HELD THAT:- If an order passed by an appellate Tribunal is a perfunctory order, if the Tribunal fails to consider the evidence being the final fact finding authority, if it has not discussed or analysed the moot point before it, then such order would call for interference. The first appellate authority agreed with the Adjudicating Authority that the contention of the appellant that he was not permitted to cross examine the witnesses was not tenable. Thereafter, the Commissioner (Appeals) had considered the contention that the statements of the other witnesses were retracted. While dealing with the said issue, it has noted that there are extensive corroborative evidences, which clearly point towards the appellant. Favouritism shown to the IEC holder - HELD THAT:- The Revenue did not prefer any appeal against the said finding. Thus, the Adjudicating Authority has discussed the factual position and arrived at a conclusion and imposed penalty. The findings recorded by the Adjudicating Authority especially with regard to the modus operandi were reconsidered by the first appellate authority and the findings were confirmed, but partial relief was granted to the appellant by deleting the penalty under Section 114AA of the Act. The concurrent finding of facts were tested by its correctness by the Tribunal. The Tribunal has re-appreciated the evidence and agreed with the finding of the Adjudicating Authority, which was confirmed by the first appellate authority. Therefore, we do not agree with the submissions made on behalf of the appellant that the order is a perfunctory order and it did not consider the evidence placed before it. Therefore, the decisions relied on by the learned counsel would not render any assistance to the case of the appellant - this appeal does not raise any question of law, much less substantial question of law for consideration, as the entire matter is fully on facts and the order passed by the Tribunal would not require any interference in exercise of the power under Section 130G of the Customs Act. Appeal dismissed.

  ---

• 2021 (3) TMI 1119
  Revocation of Customs Broker License - Forfeiture of Security deposit - levy of penalty - proper verification by the Customs Broker or not - compliance with the Regulation 10(a) of CBLR, 2018 or not - delay of 24 days in issuing the Show Cause Notice under CBLR, 2018 - Violation of Regulation 17(1) of CBLR, 2018. Violation of Regulation 10(a) of CBLR, 2018 - HELD THAT:- The adjudicating authority has held that they have violated Regulation 10(a) of CBLR, 2018 for which the penalty as well as forfeiture of security deposit has been done - In para 14.4, the adjudicating authority has noted that the appellant verified the IEC and GST registration from the official website of DGFT and GSTIN and also the PAN and Aadhar details. From such facts, it is clear that the appellant has done the duty of verification as required by an ordinary prudent person while handling customs clearance work. Time Limitation - Compliance with Regulation 17(1) of CBLR, 2018 or not - HELD THAT:- As per this Regulation, the Show Cause Notice under CBLR 2018 should be issued within 90 days from the date of receipt of the offence report - In the present case, there is no separate offence report. The Show Cause Notice under section 124 was issued to the appellant on 27.2.2019. The said Show Cause Notice can be considered as an offence report since the department was fully aware with the details of the offence on such date of issuance of Show Cause Notice. When computed from 27.2.2019, Show Cause Notice under CBLR 2018 ought to have been issued within 90 days whereas the department has issued the Show Cause Notice under CBLR only on 21.6.2019. This is well beyond the period prescribed under Regulation 17(1) of CBLR, 2018. The proceedings are vitiated by noncompliance of time limit prescribed in the Regulation - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (3) TMI 1114
  Smuggling - Gold - failure to discharge the burden under Section 123 of the Customs Act, 1962 - notified goods - prohibited goods or not - discharge of onus of proof - assumption and presumption - whether the impugned gold seized by Punjab police and later on handed over to Customs Officers, the provisions of Section 123 of the Customs Act, 1962 are applicable or not? - HELD THAT:- Admittedly, in the case in hand, the gold initially seized by Punjab police in 2007 and thereafter, it was handed over to Customs authorities by Punjab police itself. In these circumstances, burden lies on the Revenue to prove that the goods in question are of smuggled in nature, which the Revenue failed to do so. In these circumstances, as the Revenue failed to discharge their onus, therefore, the impugned order and seizure of the goods by the authorities below is bad in law. The onus lies on the Revenue to prove that the goods in question are of smuggled in nature, which the Revenue has failed to discharge their onus with proper evidence. In the impugned order, it is held on the basis of assumption presumption that the gold is of smuggled in nature which cannot be appreciated. Further, the gold in question is not prohibited goods in terms of Section 2(33) of the Act, in these circumstances, the absolute confiscation of the gold is against the legal provisions as held by this Tribunal in the case of YAKUB IBRAHIM YUSUF VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2010 (10) TMI 650 - CESTAT, MUMBAI] . Appeal allowed - decided in favor of appellant.

  ---

• 2021 (3) TMI 1111
  Smuggling - Gold - Seizure of gold - period of limitation and issuance of prior notice under Section 155(2) of Customs Act - burden of proof - admissible evidence or not - HELD THAT:- The statement given on the date of incident at the time of recovery of the impugned gold, the statement was recorded under Section 108 of the Customs Act, 1962 which is exculpatory. Further, the statement of Smt. Usha Devi, wife of the appellant was also recorded under Section 108 of the Customs Act, 1962 who claims to be the owner of the gold in question. In support of her statement, she has produced various corroborative evidences, but all these were discarded by the Revenue without giving in credence to them which is not correct. Further, the statements of the persons recorded under Section 108 of the Customs Act, 1962 heavily relied upon by the Revenue have stated that the 400 grams of the gold seized on 06.07.2015 from the vehicle of the appellant does not belong to them, which clearly shows that the impugned gold is otherwise belongs to the appellant. The case is of seizure of 394.570 grams of gold seized on 06.07.2015 from the appellant s car bearing registration No. PB-02-AP-3575 and the appellant said that the said gold does not belong to him. Further, the wife of the appellant claims the ownership of the same and the statements stated herein above, have corroborated with evidence by way of certificate issued by the bank that on 26.05.2015, she has operated the locker to take out the gold. Further, railway tickets booked on 06.07.2015 at 11:08 AM for 07.07.2015 for the departure from Amritsar to New Delhi but no credence has been given to these evidences produced by Smt. Usha Devi in her statement and the Revenue has not tried to investigate the matter for verification of the above documents. In these circumstances, benefit of doubt goes in favour of the appellant as the appellant has given the evidence that the impugned gold belongs to Smt. Usha Devi, which has been given to her by her father who has died on 04.11.2012 and the same was kept in bank locker. The appellant has able passed their onus of ownership acquisition of the gold in question. As the appellant has able to prove the source of acquisition of the gold in question, the same cannot be confiscated - absolute confiscation of the gold is set aside and the car in question and imposing penalty on the appellant. Appeal allowed.

  ---

• 2021 (3) TMI 1110
  Directions about the decision on issue of jurisdiction have not still been complied with in the Order under challenge - issuance of G-Card in the name of Shri Lalit Gupta or not - HELD THAT:- The allegations of the appellant against Shri Lalit Gupta who though was the Manager of appellant for operating their work at Delhi Customs but was never authorised to be the G-card holder by appellant, cannot be ascertained unless and until requisite documents are called by the adjudicating authority below to be scrutinised in respect thereof - The findings of the Commissioner (Appeals) also need to be scrutinised as to whether the said internal mechanism was enabling M/s. Wijeta Impex and Logistics to have knowledge about filed shipping bills and to sign the acknowledgements thereof. Both the findings are relevant for the proper adjudication of the impugned appeal specially when the appellant as CHA is aggrieved of misconduct of Shri Lalit Gupta. Matter remanded back for fresh decision on merits specifically on issue of jurisdiction as was directed vide the order of first remand passed by this Tribunal - appeal allowed by way of remand.

  ---

• Corporate Laws

• 2021 (3) TMI 1142
  Enlargement on Bail - Intermediate business on the basis of bill of lading is permissible - bail sought on the old age of accused and also that he has medical ailments - HELD THAT:- The sum and substance of the outcome of the investigation conducted in the matter and the facts mentioned in the complaint for prosecution are that concerned Companies were engaged in fraudulent merchantine trade and caused wrongful loss to the Public Sector Bank to the tune of Rs. 7820 Crores approximately applying different modus operandi including siphoning of Bank funds through merchantine trade; falsification of financial statement of the Companies involved in the matter by not showing true and fair views. So far as the order granting interim protection passed in favour of Sunil Verma, Anoop Kumar Wadhera as well as Vikram Kothari is concerned, if the prohibition contained under Section 212(6) of the Companies Act is declared unconstitutional and struck-down from the Statute, then in that situation also merits of the present matter will not change. Thus, on the the basis of interim protection granted to co-accused by the Apex Court, the applicant cannot be enlarged on bail. Further, keeping in view the modus operandi adopted by the Companies concerned for obtaining the Letter of Credit and the amount of NPA, applicant can also not be enlarged on bail on the ground that his daughter is suffering from Cancer. Considering the entire facts and circumstances of the case, submissions of learned counsel for the parties and keeping in view the nature of offence, evidence, complicity of accused and without expressing any opinion on the merits of the case, the Court is of the view that there is no substance in the submissions made by the learned counsel appearing for the applicant - Application dismissed.

  ---

• 2021 (3) TMI 1126
  Oppression and mismanagement - non-repayment of unsecured loan to the Appellant - utilisation of rights shares - HELD THAT:- It is a fact that the Appellant has not filed any document regarding Tally Data and the statement etc. before the learned NCLT. In view of non-providing the documents before the learned NCLT, the learned NCLT had no opportunity to look into the documents and deal with the aspects. It appears that the Appellant for the first time filed these documents along with I.A. No. 237 of 2021 before the Tribunal. Since the Appellant alleging that the amounts have been credited into the Respondent No. 1 Company and later on withdrawn by the Respondents. Sitting in the Appellate Jurisdiction, we cannot decide the merits since the matter is sub judice and seized of by the learned NCLT. We are also of the view that the petition was filed under Sections 241 242 of the Companies Act, 2013 alleging certain acts of oppression and mismanagement into the affairs of the Company. Following the Principle of Natural Justice, we would afford an opportunity a liberty to the Appellant to address the issues before the learned NCLT with regard to the bank statement of the Respondent No. 1 Company for the reasons that the Appellant disputed the payments made by the other Directors. The Appellant may file these documents by way of Additional Documents before the learned NCLT after serving a copy of the same upon the Respondent well in advance. Matter remanded back to the learned NCLT who will decide the Company Petition on merits along with Additional Documents as may be filed by the Appellants. If the Appellant failed to file these documents before the leaned NCLT, learned NCLT may proceed with the records available with it.

  ---

• Insolvency & Bankruptcy

• 2021 (3) TMI 1143
  Approval of Resolution Plan - powers and jurisdiction of the Adjudicating Authority while dealing with the resolution plan approved by the Committee of Creditors - simultaneous voting over two resolution plans in the Committee of Creditors - contingent liability of additional amount of land acquisition compensation - transfer of the concessionaire s rights and obligations under the Concession Agreement with YEIDA, to the SPVs proposed to be incorporated - treatment of dissenting financial creditor like ICICI Bank Limited in the resolution plan, as being not in accord with Section 30(2)(b) of the Code read with Regulation 38(1)(b) of the CIRP Regulations - direction to make provision towards the dues of unclaimed fixed deposit holders also - constitution of a committee to take forward the disinvestment process of Jaypee Healthcare Limited - cancellation of certain agreements/sub-leases - fair treatment to the minority shareholders - dissenting financial creditor or an aggrieved person - extinguishment of security interest of lenders - Interim Monitoring Committee for implementation of the resolution plan. Contours of the jurisdiction of Adjudicating Authority in dealing with a resolution plan - HELD THAT:- The Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is welldefined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions abovereferred. The jurisdiction of the Appellate Authority is also circumscribed by the limited grounds of appeal provided in Section 61 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the CoC. Within its limited jurisdiction, if the Adjudicating Authority or the Appellate Authority, as the case may be, would find any shortcoming in the resolution plan vis- -vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by Code and exposited by this Court. Simultaneous voting over two resolution plans by CoC - HELD THAT:- It is noteworthy that there has not been any prohibition in the scheme of IBC and CIRP Regulations that CoC could not simultaneously consider and vote upon more than one resolution plan at the same time for electing one of the available options. It has rightly been contended on behalf of IRP that in terms of sub-section (3) of Section 30 of the Code, he was obliged to place both the plans before CoC when they were found conforming to the conditions referred to in sub-section (2) of Section 30; and thereafter, it was for the CoC to consider the plans and to vote upon the same. Of course, the CoC could have approved only one resolution plan; and that has precisely been done in the present case. There does not appear any flaw or fault in the process adopted in the present case as regards voting over the resolution plans by the CoC. Matters related with the land providing agency YEIDA - HELD THAT:- The stipulations in the resolution plan, as regards dealings with YEIDA and with the terms of Concession Agreement, have rightly not been approved and the stipulations in question, when not being consented to by YEIDA, are required to be disapproved. Further, in the cumulative effect of the stipulations which have not been approved, the only correct course for the Adjudicating Authority was to send the plan back to the Committee of Creditors for reconsideration. Treatment of the debt of dissenting financial creditor ICICI Bank Limited - HELD THAT:- Though the Adjudicating Authority has not erred in disapproving the treatment of dissenting financial creditor like ICICI Bank in the resolution plan but, has erred in modifying the terms of the resolution plan and in not sending the matter back to the Committee of Creditors for reconsideration while extending an opportunity to the resolution applicant to make the necessary modifications - there are no reason to enter into the other area of suggestions and disputes concerning the particular parcels of land being offered by the resolution applicant to the objector bank. Matters related with fixed deposit holders - HELD THAT:- It has not been the case of anyone that in the process in question, any of the requirements of Sections 13, 15 and 18 had not been complied with. It has also not been anybody s case that any claim made by any fixed deposit holder within the stipulated time was not taken into account by IRP - there are no justification for the directions contained in paragraph 125 of the order passed by NCLT. Those directions are required to be annulled. Objections of the financial creditor of subsidiary of the corporate debtor - HELD THAT:- There are no reason to say anything further on this score and would leave the parties to work out a viable solution in the best interest of all the stakeholders; and for that purpose, the parties concerned, if necessary, may seek appropriate orders from NCLT, as regards mode and modalities of the process to be carried out. Grievance of agreement holders - HELD THAT:- Looking to the nature of dealings and the propositions advanced by agreement holders, the observations made by the Adjudicating Authority, in addendum to Clause 21 of reliefs and concessions in the resolution plan but, without encroaching upon the commercial wisdom of CoC, only work towards viability of the plan while extending a fair treatment to the agreement holders, by keeping their right to seek remedy in a competent forum intact. The resolution applicant, NBCC, also does not appear to be having any qualms about it - in the overall scheme of the resolution plan, the stipulation in question cannot be said to be unfair; and the observations of the Adjudicating Authority in paragraphs 132 and 133 of the impugned order dated 03.03.2020 remain just and proper. No further orders are required in this regard. Grievance of minority shareholders - HELD THAT:- Reference to Section 230 of the Companies Act, 2013, which deals with power to compromise or make arrangements with creditors and members is entirely inapt in the context of the present case because no such proceedings for compromise or arrangements are in contemplation. On the contrary, in the present case, the proceedings of CIRP under the Code have reached an advanced stage with approval of resolution plan by the CoC and the Adjudicating Authority - it cannot be said that the resolution plan does not adequately deal with the interests of minority shareholders. The grievances as suggested by these shareholders cannot be recognised as legal grievances; and do not provide them any cause of action to maintain their objections. The objections by the minority shareholders stand rejected. Matters related with dissatisfied homebuyers of JIL - HELD THAT:- The homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person; the question of violation of the provisions of the Real Estate (Regulation and Development) Act, 2016 does not arise; the resolution plan in question is not violative of the mandatory requirements of the CIRP Regulations; and when the resolution plan comprehensively deals with all the assets and liabilities of the corporate debtor, no housing project could be segregated merely for the reason that the same has been completed or is nearing completion. INR 750 crores and accounting between JAL and JIL - HELD THAT:- We are unable to find any logic in the submission of this nature against JAL by its homebuyers having been made in these proceedings. It goes without saying that the dealing between JAL and its homebuyers is not the subject matter of the present proceedings. Similarly, the submission by some of the dissatisfied homebuyers of JIL, that NBCC is aiming at profiteering by getting hold of this money but without making corresponding provision in the resolution plan for the appropriate use of this money for the benefit of homebuyers, also remains baseless and redundant in view of what has already been discussed hereinbefore. Another block of submissions on behalf of some of the homebuyers of JIL, like seeking directions against NBCC that it shall not withdraw and should expedite construction as also seeking audit over the quality of construction, have gone far too beyond the real issues requiring determination in the present litigation. In regard to these and other submissions of similar nature, we would only leave the parties to take recourse to appropriate remedies in accordance with law, in case of any legal grievance existing or arising in future. Security interest of the lenders of JAL and effect of judgment dated 26.02.2020 - HELD THAT:- It cannot be denied that the claim of ICICI Bank pertaining to the said mortgage over 100 acres of land was not reckoned in the CIRP of JIL and without any specific provision in that regard, the resolution applicant merely suggested by way of the Clause 23 of Schedule 3 as if such mortgage shall stand annulled and the land shall vest in the corporate debtor free from any encumbrances. To say the least, the said Clause 23 does not appear to be standing in conformity with any principal of law for discharge of a security interest, particularly of a third party who is not included in the insolvency resolution process of a corporate debtor. We would hasten to make it clear that the capacity of ICICI Bank in relation to the said mortgage of 100 acres of land of Tappal Property 1 is entirely different than its status as the dissenting financial creditor of JIL, to the extent JIL directly owed a financial debt to it - neither the said Clause 23 of Schedule 3 of the resolution plan relating to reliefs and concessions could be approved nor the order of the Adjudicating Authority in this regard. Other issues requiring clarification/directions - HELD THAT:- When the resolution plan with all its reliefs and concessions was approved by CoC and the plan was otherwise being approved by the Adjudicating Authority (albeit with modifications), the aforesaid observations in regard to Clause 7 of reliefs and concessions cannot be said to be of apt dealing with the relief sought. Be that as it may, having regard to the purport and purpose of the said Clause 7 and its approval by CoC, we find no reason as to why the same may not be approved. Hence, the impugned order of the Adjudicating Authority dated 03.03.2020 shall be read as modified and in approval of the said Clause 7 of reliefs and concessions . Modified mechanism for implementation by the Appellate Authority 357 - HELD THAT:- The Code lays down detailed procedure for corporate insolvency resolution process and such a proposition, for constitution of any Interim Monitoring Committee during the pendency of appeal before the Appellate Authority (NCLAT) is neither envisaged by law nor appears justified. It is apparent on a bare perusal of sub-section (3) of Section 61 of the Code that any challenge to the order approving a resolution plan under Section 31 could be maintained only on the grounds specified therein. Obviously, while dealing with such appeals, the Appellate Authority is required to remain within the confines of the boundaries delineated by the Code rather than seeking to provide for a mechanism, for implementation of the plan. Application disposed off.

  ---

• 2021 (3) TMI 1123
  CIRP - Fresh claim of Sales Tax Dues after submission of Resolution plan for approval - Time limitation - Appellant / Revenue department has argued that the initiation of CIRP and the public notice inviting claims were not in his knowledge - Successful applicant sought permission to start working in accordance with the approved Resolution Plan to save the Corporate Debtor from further deterioration, which is presently a going concern - HELD THAT:- In the present case the Operational Creditor - State Tax Department, Government of Maharashtra submitted its claim on 20.12.2019, more than about one year and one month after the invitation of claims through public notice on 2.11.2018. The extended time period for submission of claims with proof is ninety days from the date of initiation of the insolvency resolution process. This period also expired on 31.01.2019. It is undisputed that the RP had filed the Resolution Plan as approved by the Committee of Creditors to the Adjudicating Authority, much before the said claim was preferred before the RP, and the Adjudicating Authority was actively considering the Resolution Plan for necessary approval. After rejection of claim of Appellant by RP, its appeal was filed before the Adjudicating Authority on 21.02.2020 under Section 60(5) of the IBC. Thus, it is clear that much water had flown under the bridge from the date of issue of public notice (on 02.11.2018) and the extended time period of ninety days as provided under Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and the Resolution Plan as approved by the COC was submitted to the Adjudicating Authority for necessary approval under Section 30. Any interruption in the CIR Process at this stage by including a delayed claim/s would have meant setting the clock back and sending matter back to COC RP. It cannot be ruled out that if the claim of the Operational Creditor State Tax Department, Government of Maharashtra was accepted at such a late stage, there could have been other such applicants too, who would have demanded accommodation on the same ground allowing late submission of their claims once this window would have opened. It would be trite to emphasise the fact that this would have meant complete disruption of the CIRP and the timelines stipulated therein. Adjudicating Authority has dealt with the issue of approval of the resolution plan submitted by the Resolution Professional and, inter alia, rejecting the claim of the Appellant in accordance with the requirements of the statute, and in keeping with the overall objective and scheme of the IBC - Appeal dismissed.

  ---

• 2021 (3) TMI 1120
  Maintainability of application - initiation of CIRP - amounts paid by the first Respondent on behalf of the Corporate Debtor to the Lender Bank for compliance of the terms of the OTS - Financial Debt or not - Whether the first Respondent being a Purchaser under an Agreement to Sell, executed pursuant to an OTS can claim to be a Financial Creditor as defined under Section 5(7) of the Code? - HELD THAT:- There are no illegality or infirmity in the observation made by the Learned Adjudicating Authority that issuance of Notice prior to Section 7 Application is not mandatory as per the provisions of the Code as noted by the Hon ble Supreme Court in Innoventive Industries Ltd. Vs. ICICI Bank and Anr. [ 2017 (9) TMI 58 - SUPREME COURT ] . Further, the first Respondent has got issued a legal Notice in October, 2018 prior to filing of the Section 7 Application and the same has not been denied by the Appellant herein - It is evident that though money has been paid under an Agreement to Sell, it is seen that the same was paid by the first Respondent to the Lender Bank only on behalf of the Corporate Debtor and furthermore in the event of the failure on the part of the Corporate Debtor to adhere to the terms of the Agreement, the said consideration amount was to be repaid by the Corporate Debtor alongwith interest in the event the transaction did not materialize. It is seen from the record that a Right to Payment accrued to the first Respondent in terms of Clause 11 of the Agreement. The consideration for the purchase of the Scheduled Property structure together with the plant and machinery standing thereon shall move to the Lender from the first Respondent, at the instance of the Corporate Debtor . Hence, it is seen from the clauses that the Agreement to Sell emanates from the One Time Settlement entered into between the Corporate Debtor and the Lender Bank and it is only in lieu of the consideration paid by the first Respondent to the Lender Bank on behalf of the Corporate Debtor , that the Agreement of Sale for the subject property was executed. Therefore, the contention of the Learned Counsel appearing for the Appellant that the money was not utilized by the Corporate Debtor , but paid to the Lender and as the utilization of money by the Corporate Debtor is a sine qua non and therefore, the debt does not fall within the definition of Transaction as defined under Section 3(33) or under Financial Debt as defined under Section 5(8)(f), is untenable. The debt in question is a Financial Debt . It was also pleaded that the specific intention of the first Respondent was to take over the land with the structures and the plant and machinery so as to commence the business for which purpose the land was initially allotted by TSIIC. Hence, it can be safely construed that the first Respondent cannot be said to be having only a security interest over the assets of the Corporate Debtor . Appeal dismissed.

  ---

• 2021 (3) TMI 1096
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has not advanced any cogent reason as to why the CIR Process shall not be triggered against it. The Operational Creditor has succeeded in establishing the default on the part of Corporate Debtor in making payment of the operational debt. The Petition filed under Section 9 fulfills all the requirements of the law. Therefore, we admit the petition in terms of Section 9(5) of the IBC. Accordingly, the CIRP is initiated and moratorium is declared in terms of provisions of Section 14 of the Code. Application allowed.

  ---

• PMLA

• 2021 (3) TMI 1132
  Validity of imposition of debit-freeze of the bank accounts - Attachment of property in money laundering - conspiracy to create false and forged documents - cheating the Government of India by transferring of Rs. 569 crores in foreign exchange outside India to Singapore, Hongkong and China - search and seizure - HELD THAT:- The scheme of the Act provides for an initial attachment of the proceeds of the crime in the possession of any person for an initial period of 180 days by the Director or any other Officer not below the rank of Deputy Director Authorised by the Director, for the purposes of Section 5 of the Act. This attachment can be made only when the said officer records, in writing, his reason to believe that such a person is in possession of any proceeds of crime and that such proceeds of crime are likely to be concealed or transferred or debited in any manner which may result in frustration of any proceedings relating to confiscation of such proceedings of the crime. After such provisional attachment is made, the said order of attachment, along with the material in possession of the said officer, shall be forwarded to the adjudicating authority in a sealed envelope for further proceedings. The sine qua non for exercise of the powers under either section 5 or section 17 of the Act is the formation of an opinion, by a competent officer, that the conditions set out in these sections are found to exist. In the absence of such a finding, the exercise of power under these Sections would be without basis and cannot survive in the absence of these requirements. There are no such reasons recorded in the order dated 6.11.2020. The Hon ble Supreme Court in OPTO Circuit India Limited vs. Axis Bank and others, [2021 (2) TMI 117 - SUPREME COURT] , had considered a similar situation. In this case, the concerned authority, without any findings either under Section 5 of the Act or under Section 17 of the Act, had directed a debit-freeze/stop operation of the accounts of the petitioner therein. The Hon ble Supreme Court after considering the provisions of the Act had held that while the provisions of the Act empower the appropriate authority to attach or seize the proceeds of the crime, the due process set out in the Act would have to be followed and the minimum requirement for such due process is the formation of an opinion, that he has reason to believe , set down in writing. The Hon ble Supreme court had also held that this formation of opinion, at the very least should be available in the file of the authority. In the present case also no finding, recorded in writing, either under Section 5 or Section 17 of the Act, has been placed before this Court, nor has any material been placed to show that such a finding is available in the files of the Enforcement Directorate. The action of the 3rd respondent in the present case in issuing similar orders of debit-freeze/ stop operations, cannot be sustained - the said order of the 3rd respondent directing the 4th respondent to freeze the accounts of the petitioners is not valid and has to be set aside - Petition allowed.

  ---

• Service Tax

• 2021 (3) TMI 1117
  Refund in cash - Proper authority to decide the issue - Section 142 (6) (a) of CGST Act 2017 - HELD THAT:- Admittedly, the issue is refund claimed under Section 142 (6) (a) of CGST Act, but I cannot go into that since CESTAT is not authorised to decide issues under CGST Act, 2017, as per appellant s request. The only possible order is to set aside the impugned order and remand the matter back to the file of the adjudicating authority, who shall pass a final order, in accordance with law, after affording reasonable opportunity to the appellant leaving all contentions open. Appeal allowed by way of refund.

  ---

• Central Excise

• 2021 (3) TMI 1116
  CENVAT Credit - input services - Erection, Commissioning and installation (crane Services) - Event Management Services - Management, Maintenance and Repair service - Auctioneer Service - Outdoor Catering service. Erection, Commissioning and installation (crane Services) - denial on the ground that the Credit availment does not relate to Erection, Commissioning and Installation of any specific capital goods - February 2013 December 2015 - HELD THAT:- The appellants have availed the impugned services and use it in relation to manufacture and the appellant has been able to establish sufficient nexus with the manufacturing activity as far as cranes services are concerned which the Department has misunderstood as erection, commissioning and installation service - this service of hiring of crane has been held to be Input Service in a manufacturing unit in various decisions like M/S ULTRATECH CEMENT LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, NAGPUR [ 2018 (2) TMI 6 - CESTAT MUMBAI] - credit allowed. Event Management Services - denial on the ground of no nexus with output service or manufacture - February 2013 December 2015 - HELD THAT:- These services have been used for conducting the inaugural ceremony of the newly set up manufacturing unit where the management team travel to the factory premises and it also involved advertisement, designing, promotional video and pandal services wherein not only the employees of the company but its customers also attended and this service has also been held to be Input Service - Credit allowed. Management, Maintenance and Repair services - denial on the ground that Since diesel is a consumable, credit on the same cannot be allowed - February 2013 December 2015 and January 2016 June 2017 - HELD THAT:- This pertains to the management, maintenance and repair of DG sets which is required for generation of electricity for carrying out the manufacturing activity and once the hiring of DG sets has been allowed by the Department then it is necessary to allow the credit of service tax paid on running expenses and maintenance charges as diesel is an input which is essential for the functioning of the DG sets hence this service also falls within the definition of Input Service - Credit allowed. Auctioneer Service - denial on the ground that such services are availed for auction of scrap which is not final product of appellant - February 2013 December 2015 and January 2016 June 2017 - HELD THAT:- This service was availed for auctioning the scrap generated in the process of manufacture which is necessary and the Division Bench of the Chennai Tribunal in the case of M/S SUNDARAM CLAYTON LTD. VERSUS CCE, CHENNAI - II [ 2016 (6) TMI 161 - CESTAT CHENNAI] has held that auction service is also integral part of the manufacturing activity since, clearance of the dumped goods having no utility is necessary to be removed in order to store raw materials or finished goods . Hence, this service is an Input Service - credit allowed. Outdoor Catering service - denial on the ground that such service is excluded from the definition of input service - February 2013 December 2015 and January 2016 June 2017 - HELD THAT:- The appellants says that they have engaged contractors who provide food for the guest and the dealers but this outdoor catering service has been subsequently excluded from the definition of Input Service w.e.f 01.04.2011 and the Larger Bench decision of the Tribunal in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III. [ 2018 (4) TMI 149 - CESTAT BANGALORE] wherein it has been exclusively held that CENVAT credit of outdoor catering service in view of the amended definition of Input Service w.e.f. 01.04.2011 is not available and by following the decision of the Larger Bench, it is held that the appellant is not entitled to CENVAT credit on Outdoor Catering Service - credit not allowed. Appeal allowed in part.

  ---

• 2021 (3) TMI 1115
  CENVAT Credit - input services - Outward Transportation Service for clearance of Excisable Goods by the appellant - HELD THAT:- From the invoice it can be seen that freight amount of Rs. 45,000 was charged by the appellant to their customers separately, the said amount of the freight was also not included in the assessable value - This fact is further fortified from the bifurcation of the Sale value given in the contract of TAMIL NADU LIVESTOCK DEVELOPMENT AGENCY - From the contract also it is clear that the freight is not included in the assessable value however, the same was separately charged to the customers. This is a very important aspect to decide the admissibility of the credit. It is clear that though the freight was included in the total invoice value however the same was not included in the assessable value of the excisable goods sold by the appellant. Therefore, the ratio of the judgments in the case of M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD] and M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] is not directly applicable in the facts of the present case, where it was held that the Cenvat credit was allowed on one of the important facts that the freight element was included in the assessable value and excise duty was paid there upon. It was also fact in those cases that the assessee had not charged the freight separately to the customers. Time Limitation - HELD THAT:- There is no dispute that the appellant is availing the Cenvat credit and declaring in their monthly returns. The issue involved is also of interpretation of Cenvat Credit Rules and on this issue there are number of cases were made out by the department. In these circumstances it cannot be said that the appellant had a mala fide intention to evade the excise duty by taking the wrong credit - there are no suppression of fact or misstatement on the part of the appellant. Therefore, the demand for the extended period, if any, in this case will not sustain. Penalty - HELD THAT:- The appellant had no intention to evade duty, the appellant is also not liable for penalty under rule 15(2) of Cenvat Credit Rule 2004 read with section 11 AC of the Central Excise Act 1944. Accordingly, the entire penalty involved in the present case is set aside. The demand for the extended period is set aside remaining demand may be re-quantified by the adjudicating authority and recovered the same from the appellant in accordance with law - Appeal allowed in part by way of remand.

  ---

• CST, VAT & Sales Tax

• 2021 (3) TMI 1141
  Setting aside the tax liability created under Section 12 of the U.P. Tax on Entry of Goods Act - non-realization of tax by the manufacturer from the purchaser - HELD THAT:- The effect of Section 12 of the Act is only to provide for a mode of pre-payment of tax liability by the purchasing dealer. It does not in any way shift the impost of tax from purchasing dealer to the manufacturer. Also, the provisions of Section 12(3) of the Act come into play only in the event of the manufacturer having collected from the purchasing dealer, the amount of entry tax due and having still failed to deposit the same for and on behalf of the purchasing dealer. That provision does not create any charge of tax on the manufacturing dealer who may have sold the goods and handed over their delivery to the purchasing dealer on the representation made by the latter that he was not intending to sell the goods outside the local area where the delivery of the goods had been obtained by him or in the course of interstate trade. The fact that the purchasing dealer may have acted contrary to the representation made to the manufacturer may expose such purchasing dealer to further consequences without creating any charge or liability of tax on the manufacturer. There is no error in the order passed by the Tribunal. Accordingly, the question of law as framed above is answered in the affirmative i.e. in favour of the assessee and against the revenue - Petition dismissed.

  ---

• 2021 (3) TMI 1129
  Levy of Sales Tax - Export sale - Whether the export sale will also be a sale which does not attract the levy of tax under Section 3(4) of the Act? - HELD THAT:- This writ petition has been answered against the assessee in the decision of the Hon ble Division Bench of this Court in the case of TUBE INVESTMENTS OF INDIA LTD. (FORMERLY KNOWN AS M/S. TI DIAMOND CHAIN LTD.) VERSUS THE STATE OF TAMIL NADU, REPRESENTED BY THE COMMERCIAL TAX OFFICER [ 2010 (10) TMI 938 - MADRAS HIGH COURT ] where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax. The questions are accordingly answered in favour of the petitioners/assessee. Petition dismissed.

  ---

• Indian Laws

• 2021 (3) TMI 1144
  Sale of Electoral Bonds under the Electoral Bond Scheme, 2018 - Scheme allows the donors of political parties to maintain anonymity - seeking direction to all national and regional political parties to mandatorily disclose complete details about their income, expenditure, donations and funding as well as full details of the donors - HELD THAT:- It is not correct to say that the RBI was opposed to the Scheme in principle. RBI s objection was to the issue of bonds in scrip form rather than in demat form. What RBI wanted to achieve was, in their own words, the twin advantage of (i) providing anonymity to the contributor; and (ii) ensuring that consideration for transfers is through banking channels and not cash or other means. In fact RBI called Electoral Bonds as an enduring reform, consistent with the Government s digitization push . Therefore, the concerns expressed by RBI, to the form and not to the substance, cannot really advance the case of the petitioners. Despite the fact that the Scheme provides anonymity, the Scheme is intended to ensure that everything happens only through banking channels. While the identity of the purchaser of the bond is withheld, it is ensured that unidentified/ unidentifiable persons cannot purchase the bonds and give it to the political parties. Under clause 7 of the Scheme, buyers have to apply in the prescribed form, either physically or online disclosing the particulars specified therein. Though the information furnished by the buyer shall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purposes, it is subject to one exception namely when demanded by a competent court or upon registration of criminal case by any law enforcement agency. A nonKYC compliant application or an application not meeting the requirements of the scheme shall be rejected. Under Section 129(1), such financial statements should give a true and fair view of the state of affairs of the company and comply with the accounting standards notified under Section 133. These financial statements are to be placed at every Annual General Meeting of the company. Under Section 137, a copy of the financial statement, along with all the documents duly adopted at the Annual General Meeting shall be filed with the Registrar of Companies - The financial statements of companies registered under the Companies Act, 2013 which are filed with the Registrar of Companies, are accessible online on the website of the Ministry of Corporate Affairs for anyone. They can also be obtained in physical form from the Registrar of Companies upon payment of prescribed fee. Since the Scheme mandates political parties to file audited statement of accounts and also since the Companies Act requires financial statements of registered companies to be filed with the Registrar of Companies, the purchase as well as encashment of the bonds, happening only through banking channels, is always reflected in documents that eventually come to the public domain. All that is required is a little more effort to cull out such information from both sides (purchaser of bond and political party) and do some match the following . Therefore, it is not as though the operations under the Scheme are behind iron curtains incapable of being pierced. The apprehension that foreign corporate houses may buy the bonds and attempt to influence the electoral process in the country, is also misconceived. Under Clause 3 of the Scheme, the Bonds may be purchased only by a person, who is a citizen of India or incorporated or established in India - in the light of the fact that the Scheme was introduced on 2.1.2018; that the bonds are released at periodical intervals in January, April, July and October of every year; that they had been so released in the years 2018, 2019 and 2020 without any impediment; and that certain safeguards have already been provided by this Court in its interim order dated 12.4.2019, we do not see any justification for the grant of stay at this stage. Application dismissed.

  ---

• 2021 (3) TMI 1137
  Dishonor of cheque - insufficiency of funds - compounding of offences or not - Section 138 of NI Act - HELD THAT:- The Hon ble Supreme Court in the case of KM. IBRAHIM VERSUS KP. MOHAMMED ANR. [ 2009 (12) TMI 903 - SUPREME COURT] has held as under It is true that the application under Section 147 of the Negotiable Instruments Act was made by the parties after the proceedings had been concluded before the Appellate Forum. However, Section 147 of the aforesaid Act does not bar the parties from compounding an offence under Section 138 even at the appellate stage of the proceedings. The parties have agreed to end the proceedings by way of compromise and the opposite party no.2 has already received the entire amount of cheque as well as cost/ interest of Rs. 10,000/- , this Court deems it appropriate to compound the offence on the basis of compromise deed dated 19.2.2021 entered into between the parties. However, in terms of the guidelines framed by the Hon ble Supreme Court as the revisionist has not appeared before the Court and has not taken effective steps to compound the offence at initial stages, in terms of guidelines framed by the Hon ble Supreme Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] , the revisionist is directed to pay a cost of 15% of the cheque amount to the High Court Legal Services Committee, High Court, Allahabad within a period of four weeks from today. Revision allowed.

  ---

• 2021 (3) TMI 1135
  Dishonor of cheque - rebuttal of the evidence of the complainant as regards payment, not produced - blank cheque given as security, in absence of adequate evidence, relevant or not - section 138 of NI Act - HELD THAT:- In the instant case, the accused petitioner admittedly has issued the cheque with his signature voluntarily but has failed to rebut the presumption that the cheque was not issued in discharge of debt or liability by producing requisite evidence. The Hon ble Apex Court in HITEN P. DALAL VERSUS BRATINDRANATH BANERJEE [ 2001 (7) TMI 1172 - SUPREME COURT ] , it has been held that mere plausible explanation given by an accused is not enough to rebut the presumption and accused has to disprove the prosecution case by giving cogent evidence that he has no debt or liability to issue the cheque. As a corollary of findings, it can be held that the accused petitioner failed to rebut the presumption under Section 139 of the NI Act and the learned Courts below has rightly appreciated the entire aspect of the matter and there being no any perversity in the findings, no interference is called for. Considering the aspect that the accused is an old aged person and also undertook to pay the amount, while maintaining the conviction, the sentence is converted to a fine of Rs. 9,50,000/- in default, SI for 6 months - petitioner is directed to deposit the amount before the learned trial Court within a period of 2 (two) months from today, failing which he will serve the sentence. The revision petition stands disposed of.

  ---

• 2021 (3) TMI 1134
  Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - failure to rebut the presumption - HELD THAT:- The complainant has proved his case by letting in cogent evidence. Whereas, the accused has failed to rebut the presumption u/s.139 of N.I.Act to prove his case. Though the accused had examined his brother as D.W.1, nothing is elicited. Further, the evidence of D.W.1 had infact fortified the fact that the accused had also constructed a house. It is a case of the complainant that the accused had borrowed money towards loan while he was constructing house and that in order to discharge his liability, he had issued a cheque. The the trial Court as well as the Appellate Court finding that the accused has not rebutted the presumption found him guilty for the offence under Section 138 of Negotiable Instruments Act and had rightly convicted him. The appeal of the accused was dismissed. However the revision of the complainant was allowed and while confirming the conviction the sentence was modified to six months simple imprisonment and the compensation was modified to Rs. 5,00,000/-. This Court finds no infirmity or illegality in the judgments passed by the Courts below. Criminal Revision cases stand dismissed.

  ---