Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 9, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Withholding of Refund claim - department to go in appeal against the order in favor of assessee - Clearly, it is not open for the respondents to ignore the orders passed by the Appellate Authority merely on the ground that it has decided to appeal those orders. It would be debilitating to the rule of law, if the respondents are permitted to withhold implementation of the orders passed by the authority in this manner. - HC
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Refund of GST - Rejection primarily on the ground that the refund claim is beyond the period of two years - The Assistant Commissioner directed to consider the case of the Petitioner afresh, both on the ground of limitation and on merit. - HC
Income Tax
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Income deemed to accrue or arise in India - PE in India - taxability of receipts from the offshore supply of escalators and elevators- India-China DTAA - the income earned by the assessee from the offshore supply of escalators and elevators to DMRCL and MMRCL is not taxable in India. - AT
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Incorrect set off of brought forward business loss and unabsorbed depreciation - The working of the Ld. AO contains the mistakes as they are not in consonance with the provision of section 72(2) of the Act. The correct method for adjustment of brought forward losses, which the Ld. Assessing Officer ought to have adopted, was to first set off the brought forward assessed business loss for A.Ys. 2009-10 and 2010-11 against the positive business income for the year under consideration and whatever remained should have been allowed to be carried forward for set off in subsequent years. - AT
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Unexplained money u/s. 69A and levied tax u/s. 115BBE - the assessee has filed cash book explaining date wise receipts from various parties and deposited into bank account. AO is completely erred in making additions towards cash deposits into bank account as unexplained money u/s. 69A of the Act and levied tax u/s. 115BBE when the assessee has explained source for said cash deposits. - AT
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Reopening of assessment u/s 147 - Audit objection - change of opinion - Reason to believe - if the audit objection on factual issue and, where, the audit party has quantified escapement, then, definitely, it does not constitute information for reopening of assessment. - AT
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Deduction u/s 10(10AA) - leave encashment on retirement - Since as per the documents, Malviya National Institute of Technology, Jaipur (Raj) is a Govt. Institution, therefore, the assessee being an employee of Malviya National Institute of Technology, Jaipur (Raj) is entitled for full exemption of earned leave encashment on retirement. - AT
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Nature of surrendered income - business income or otherwise - It is for the Revenue to prove that there were some other sources noticed. We cannot expect the assessee to prove the negative. In the peculiar facts of the present case as available on record we find that the surrender was from the normal business income of the assessee. - AT
Customs
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Benefit of Exemption - aircraft - Actual user Conditions - To be used for providing non-scheduled (passenger) service (aircraft used for private purposes) - Notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in Explanation to Condition 104 of the Notification in question. - HC
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Refund of customs duty - it is clear that the refund claim is not filed within the time prescribed for the same. Commissioner (Appeals) is therefore held to have rightly upheld the claim as being barred by time. - AT
PMLA
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Money Laundering - issuance of production warrant - In the instant case, it is found from the pleadings and the relief sought for by the petitioner that the petitioner has been trying to obstruct the process of the Court. This is not the only instance. The petitioner repeatedly filed series of applications to resist the Enforcement Directorate from executing production warrant issued against him - revision petition dismissed - HC
Central Excise
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Levy of penalty u/s 26 of CER - supply of invoices without supply of capital goods - The investigation was conducted five years after the goods were supplied. Once the goods were supplied by the appellant, they are beyond its control. Inconsistency in the invoices ledger of the transporter also does not carry the case of the Revenue any further because transportation was the responsibility of the buyer and not of the appellant. - AT
VAT
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Detention of goods - Under valuation - It is well settled proposition of law that undervaluation of seized goods in transit cannot be a ground to confiscate the goods and the vehicle. There cannot be any mechanical detention of a consignment in transit on the basis that the goods being transported are undervalued. - HC
Case Laws:
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GST
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2023 (3) TMI 328
Cancellation of GST registration of petitioner - According to the petitioner, it had, by an inadvertent error, entered 01.02.2018 as the date from which cancellation of registration was sought, instead of 01.02.2019 - HELD THAT:- The petitioner has explained that the allegation that M/s Om Enterprises is non-existent is erroneous. There is an apparent error in this regard as well because the correct GSTN number of M/s Om Enterprises is 07AABFO2970Q1ZR and not 07AABFO3970Q1ZR. Mr Kumar, learned counsel for the petitioner, also drew our attention to a print out from the website of the GST department, which reflects the status of M/s Om Enterprises as active. Prima facie, there are no merit in the contention of the respondent that there are any grounds to doubt the petitioner s statement that its request for cancellation of GST Registration with effect from 01.02.2018 was an apparent error. It is apparent that the petitioner had meant to seek cancellation of the registration with effect from 01.02.2019 and had filed returns till January 2019. The respondents are directed to consider the petitioner s application dated 11.02.2019 afresh by considering the date from which the registration was requested to be cancelled as 01.02.2019 instead of 01.02.2018 - petition allowed.
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2023 (3) TMI 327
Withholding of Refund claim - department to go in appeal against the order in favor of assessee - It is the petitioner s case that on account of an inverted duty structure, he could not fully utilise his input tax credit - HELD THAT:- Admittedly, the appeals have not been filed by the respondents as yet. The time for preferring the appeal has also expired. However, the learned counsel for the respondent submits that the appeals would still be in time as in terms of the circular dated 03.12.2019, the time for the Department to prefer an appeal has been extended till three months after the date on which the Tribunal is constituted. It is not necessary for this Court to examine the question whether appeals if and when preferred would be within time. Suffice it to state that the respondent has not secured any order which would, in any manner, stay the operation of the appellate orders passed by the Appellate Authority - Clearly, it is not open for the respondents to ignore the orders passed by the Appellate Authority merely on the ground that it has decided to appeal those orders. It would be debilitating to the rule of law, if the respondents are permitted to withhold implementation of the orders passed by the authority in this manner. Petition allowed.
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2023 (3) TMI 326
Constitutional validity of Section 140(3)(iv) of the Central Goods and Services Tax Act, 2017 - non application of mind - petitioner had submitted a declaration in its return that there is Nil inventory but the respondents have not given due consideration to the said fact and has passed the impugned order-in-original - HELD THAT:- Admittedly, there is a statutory appellate remedy available to the petitioner as per Section 107 of the Goods and Services Tax Act as against the impugned order in original dated 21.12.2022. The principles of natural justice has not been violated by the respondents as seen from the impugned order in original dated 21.12.2022. The respondents may have committed an error in coming to the conclusion in the impugned order-in-original. The contentions raised by the petitioner in this writ petition will not amount to violation of principles of natural justice. Since the petitioner has approached this Court under Article 226 of the Constitution of India by filing this writ petition without exercising the statutory appellate remedy available to them under Section 107 of the Goods and Services Tax Act, the present writ petition is not maintainable. This writ petition is disposed of by directing the petitioner to approach the statutory appellate authority if aggrieved by the impugned order-in-original dated 21.12.2022 passed by the second respondent.
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2023 (3) TMI 325
Refund of GST - Rejection primarily on the ground that the refund claim is beyond the period of two years as prescribed under section 54 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- The impugned order is set aside and matter of refund claim of the Petitioner restored to file of the Assistant Commissioner, who will examine the case of the Petitioner on the basis of the order passed by the Hon ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 and the subsequent orders passed in Suo Motu Petition. The Assistant Commissioner will consider the case of the Petitioner afresh, both on the ground of limitation and on merit. The requisite decision be taken within the period of six weeks from today. The writ petition is disposed off.
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Income Tax
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2023 (3) TMI 324
Revision u/s 263 - scope of the issues for which limited scrutiny has to be undertaken - CIT power to travel beyond the scope of the issues which form part of the limited scrutiny in the original Assessment Order - HELD THAT:- What persuades this Court to reach this conclusion is the requirement in law that if the AO has to go beyond the scope of the issues for which limited scrutiny has to be undertaken by him, he has to seek prior permission of the superior officer in terms of the CBDT Instruction No.7/14 dated 26th September, 2014 and Instruction No.20/15 dated 19th December, 2015. Consequently, it was not open to the Pr. CIT while exercising suo motu revisional power u/s 263 of the Act to find fault with the assessment order of the AO on the ground of its being erroneous on an issue not covered by the limited scrutiny when the AO could not have possibly examined such issue. To reiterate, in the present case, the limited scrutiny was in respect of excess disallowance under Section 40A(3) of the Act whereas the SCN under Section 263 was regarding the FIFO method of valuation of closing stock adopted by the Assessee. These were, as rightly noted by the ITAT, unconnected issues and the assessment order could not have been held to be erroneous and prejudicial to the interest of Revenue when the AO could not have travelled beyond the issues forming subject matter of the limited scrutiny. The Court is unable to find any error having been committed by the ITAT in coming to the above conclusion. No substantial question of law arises.
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2023 (3) TMI 323
Addition for not charging of interest on loans and advances given to Directors and Subsidiaries - whether ITAT was right in law in applying the ratio of this Hon'ble Court in the case of CIT Vs. Abhishek Industries [ 2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT] when no diversion of interest bearing funds had been made to Shri A.S.Bhatia? - HELD THAT:- Interest liability of the assessee towards the bank on the borrowing which was taken by the assessee had no bearing because the assessee had sufficient funds of its own which the assessee could have advanced and it was for the AO to establish a nexus between the borrowing and advancing to prove that expenditure was for non-business purposes. With respect to the loan given to the Directors, the assessee had claimed deduction of interest which was allowed by the Hon'ble Supreme Court. With this observation, the Hon'ble Supreme Court allowed the appeal and the judgment of the High Court in Commissioner of Income Tax-I, Ludhiana vs. M/s. Abhishek Industries Limited, Ludhiana [ 2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT] was over-ruled. As regards amount given to the sister concern, the issue in the present case does not need to be examined as even in the present case, the issue with respect to money given to the sister concern-Punjab Biotechnology Plant Ltd. has already attained finality in Hero Cycles 's case [ 2015 (11) TMI 1314 - SUPREME COURT] With respect to loan given to Shri A.S. Bhatia, the issue has been considered by the Hon'ble Supreme Court in Hero Cycles 's case [ 2015 (11) TMI 1314 - SUPREME COURT] as loan of Rs.34 lacs was given to the Directors when the credit balance was Rs.15 crores and this amount did not effect the business transaction carried out by the company after taking loan from the bank. The question of liability has already been answered in favour of the assessee by the Supreme Court in Hero Cycles's case (supra) wherein the judgment passed in Abhishek Industries (supra) has been overrurled. The judgment of Hero Cycles's case (supra) has, thereafter, been followed by this Court in Principal Commission of Income Tax vs. Holy Faith International (P) Ltd, [ 2017 (8) TMI 185 - PUNJAB AND HARYANA HIGH COURT] decided benefit of interest was allowed under Section 36(1)(iii) - Decided in favour of assessee.
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2023 (3) TMI 322
Profit undisclosed by the assessee - ITAT deleted the addition - revenue is in appeal against the order of Tribunal on the premise that the appellate authorities have erred in permitting the raising of additional evidence without affording an opportunity to the Assessing Officer and in violation of Rule 46A of the Income Tax Rules - HELD THAT:- We find from the concurrent findings of the first appellate authority and also the Tribunal that the documents assumed to be additional evidence were produced even before the AO As a matter of fact, the same was produced even during survey. Thus, the question of invoking Rule 46A of the Income Tax Rules does not even arise, in view of the fact that the alleged material, which was assumed to be the additional evidence, was always available before the AO. No reason to interfere with the order impugned herein, for no question of law arises for consideration.
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2023 (3) TMI 321
Reopening of assessment u/s 147 - Validity of order passed u/s 148A(d) - in the order passed u/s 148A(d), the only contention of the Petitioner that was noted was that the Petitioner had not been supplied with the sale deed along with the show cause notice - HELD THAT:- AO has no objection if the order passed under Section 148A(d) of the Act as well as the notice issued u/s 148 of the Act are set aside. He assures and undertakes to this Court that the sale deed as well as the other relevant information/material shall be furnished to the Petitioner within two weeks. Keeping in view the aforesaid, the present writ petition is allowed and the impugned order passed under Section 148A(d) of the Act as well as the notice issued u/s 148 of the Act, are set aside. Respondents are directed to supply the relevant information/material to the Petitioner including a copy of the sale deed within two weeks. The Assessing Officer is directed to decide the matter afresh and pass a reasoned order u/s 148A(d) of the Act within four weeks thereafter.
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2023 (3) TMI 320
Validity of Assessment order passed u/s 153A - inappropriate approval u/s 153D granted by then Addl. CIT(A) - HELD THAT:- ITAT Delhi Bench order [ 2023 (2) TMI 697 - ITAT DELHI] for AY 2010-11 in the case of ACIT vs M/s Tirupati Buildings Offices Pvt. Ltd., there was a noting for five assessees whose approval was granted by the same Addl. CIT u/s 153D of the Act which has included the name of the assessee as clearly discernable that the approval u/s. 153D of the Act was sought by the DCIT/Assessing Officer on 28.03.2013 from ACIT which was granted on the same date i.e.28.03.2013 by the ACIT to the Assessing Officer and said approval has been held by the Tribunal in the case of Subhash Dabas [ 2022 (3) TMI 643 - ITAT DELHI] and [ 2021 (11) TMI 1140 - ITAT DELHI] , as has been given without application of mind and thus the same is invalid bad in law and liable to be quashed and Tribunal has quashed the same. Thus, this issue is squarely stand covered in favour of the assessee by the decision of the ITAT above. The ITAT after examining the approval which included inter alia the name of the assessee as well has concluded that the same has been given without application of mind, thus, the same is invalid bad in law and liable to be quashed. It is not the case that the above decision has been set-aside by the Hon ble jurisdictional High Court. Hence, we quash the assessment order passed u/s 153A - Appeal of assessee allowed.
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2023 (3) TMI 319
Income deemed to accrue or arise in India - PE in India - taxability of receipts from the offshore supply of escalators and elevators- India-China DTAA - assessee is a non-resident company incorporated in China and is engaged in the business of supply of elevators and escalators, which includes design and manufacturing - HELD THAT:- As in the case of CIF, the property in goods passes on to the buyer at the port of shipment. Though the Cost, Insurance, and Freight, etc., are met by the seller but the property in the goods gets transferred to the buyer at the port of shipment. The buyer incurs all risks of loss of or damage to the goods from the port of shipment. Therefore, the title in property in the goods shipped by the assessee in the foreign port was transferred at the port of shipment itself. In Ishikawajma-Harima Heavy Industries Ltd. [ 2007 (1) TMI 91 - SUPREME COURT] held that only such part of the income, as is attributable to the operations carried out in India can be taxed in India. It was further held that since all parts of the transactions in question, i.e. the transfer of property in goods as well as the payment, were carried out outside the Indian soil, the transaction cannot be taxed in India. Since, in the present case, the assessee did not carry out any operations in India in respect of its scope of work, therefore, we are of the considered opinion that the income earned by the assessee from the offshore supply of escalators and elevators to DMRCL and MMRCL is not taxable in India. Accordingly, we direct the Assessing Officer to delete the addition made in the hands of the assessee. As a result, ground No. 1 raised in assessee's appeal is allowed.
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2023 (3) TMI 318
Assessment u/s 153A - Addition on account of unexplained credit - search u/s 132 was conducted at the residential premises of the assessee where certain paper/documents belongs to the assessee were found and seized - HELD THAT:- As it is evident that the above additions were made by the A.O. are not emanating from any incriminating material found during the search. But the additions were made on the basis of the documents produced during the assessment proceedings. The Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] held that in the absence of any incriminating material, no addition can be made in the assessment order passed u/s 153A/143(3) of the Act - Decided in favour of assessee.
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2023 (3) TMI 317
Revision u/s 263 - Correct head of income - compensation received by the assessee is required to be assessed - Income from Other Sources OR Income from Capital Gains as per Section 2(14) - PCIT held that the income from Capital Gain can only be arisen if there is transfer of capital asset in the case of the assessee, there is neither capital asset in assessee's hand as far as booking of the Villa is concerned nor transferred of the said asset. Therefore the provisions of Section 45 of the Act will not be applicable in assessee's case - HELD THAT:- During the assessment proceedings, the ld. AO. vide his notice u/s.142(1) called for various details which were submitted by the assessee. A.O. passed the assessment order after taking into consideration the submissions of the assessee and by verifying the documentary evidences produced before him. As seen from record as against the Revenue Audit Objection raised by the Department, the Assessing Officer himself replied to the Revenue Audit Objection by relying upon decision of the Mumbai Tribunal in Ashwin S. Bhalekar case on identical facts namely compensation received by the assessee was treated as Long Term Capital Gain. Thus the Ld. A.O. requested the Audit Party to withdraw/drop the Revenue Audit Objection As relying on cases Smt. Abha Bansal [ 2021 (5) TMI 1001 - ITAT DELHI] and Indu Fine Lands (P.) Ltd. [ 2014 (8) TMI 862 - ITAT HYDERABAD] we have no hesitation in holding that the assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue. It is been held by the Co-ordinate Benches of the Tribunal that compensation received by the assessee from the proposed building by way of allotment is actually extinguishment of a right in relation to capital asset, in view of the provisions of section 2(47)(vi) of the Act. This clearly falls within the definition of transfer and hence provisions of section 45 is applicable. Therefore the Revision proceedings initiated by the Ld. CIT (IT TP) is liable to be quashed. Thus, the grounds raised by the assessee are hereby allowed.
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2023 (3) TMI 316
Exemption u/s 54 - AO held that an amount not deposited in capital gain account before the due date of filing return u/s 139(1) as ineligible for exemption u/s 54 - retrospectivity of amendment brought by the Finance (No. 2) Act, 2014 in sub-section (1) of section 54 w.e.f. 1st April, 2015 - HELD THAT:- CIT(A) misdirected himself in forming his view that the amendment brought by the Finance (No. 2) Act, 2014 in sub-section (1) of section 54 w.e.f. 1st April, 2015 is retrospective being clarificatory in nature and that the amendment restricts the benefit of exemption u/s 54 to purchase of one house property. CBDT Circular No. 1 of 2015 dated 21.01.2015 explains that the amendment applies in relation to assessment year 2015-16 and subsequent years. Consequently, the amendment will not apply to the case of the assessee which pertains to AY 2012-13. It may be stated that the Ld. AO did not record any finding on the claim of adjustment of stamp duty of Rs. 2,94,000/- in computing long term capital gain made by the assessee. The claim has not been entertained by the Ld. CIT(A) for want of evidence of payment. AR has also not addressed us in this regard. As it is, now the claim has become only academic in nature. Accordingly, we decide all the additional grounds taken by the assessee before the Tribunal in favour of the assessee. Addition u/s 68 - assessee did not offer proper explanation as to the nature and source of the cash deposits and added the same to the income of the assessee - assessee in reply stated that during the year total amount was deposited by her husband in her bank accounts - HELD THAT:- CIT(A) disbelieved the explanation of the assessee merely for want of confirmation of deposits from the husband of the assessee without appreciating the circumstances under which the assessee was placed wherein she could not force her husband to confirm the deposits made by him in her bank accounts. The assessee has brought on record date-wise cash deposited in her bank accounts during the period from 01.04.2012 to 31.03.2015 as also the details of amounts received by the assessee as stridhan from 01.04.2012 to 31.03.2015. It is an admitted position that PAN of the creditor husband was given to the Ld. AO who could easily ascertain the creditworthiness of the assessee which was not done. CIT(A) has not stated that he examined the ITRs of the husband but drew adverse inference that he was a man of no means which is contrary to the facts available in the records. Where the assessee gave the name and address of the creditor and furnished PAN No., merely issue of notice to the creditor and not pursuing the matter further by the Revenue, held in RISSA CORPORATION PVT. LIMITED [ 1986 (3) TMI 3 - SUPREME COURT] that the assessee had discharged the burden of proving the nature and source of credit entries that lay on the assessee. We therefore, hold that the impugned addition under section 68 made by the AO and confirmed by the Ld. CIT(A) does not rest on sound legal footing. We delete the same. Appeal of the assessee is allowed.
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2023 (3) TMI 315
Incorrect set off of brought forward business loss and unabsorbed depreciation - contention of assessee is that the said set off should have been provided as per provisions of section 72(2) - HELD THAT:- The working of the Ld. Assessing Officer contains the mistakes as they are not in consonance with the provision of section 72(2) of the Act. The correct method for adjustment of brought forward losses, which the Ld. Assessing Officer ought to have adopted, was to first set off the brought forward assessed business loss for A.Ys. 2009-10 and 2010-11 against the positive business income for the year under consideration and whatever remained should have been allowed to be carried forward for set off in subsequent years. As far as the unabsorbed depreciation is concerned, since the total brought forward business loss could not be said against the business income for the year under consideration, the unabsorbed depreciation is eligible for set off against the income under other heads, which in this case, are capital gain and income from other sources. Since AO has not adopted the correct method and not complied with the provisions of section 72(2) and Ld. CIT (Appeals) has also not considered the contention made by the assessee regarding the correct method of setting off of business loss and unabsorbed depreciation, we are of the view that the finding of the Ld. CIT (Appeals) on this issue needs to be reversed and the same is set aside and the grounds No. 2(a) to 2(b) of the appeal raised by the assessee are allowed. AO is directed to give effect of the brought forward business loss and unabsorbed depreciation as per the computation of income filed by the assessee with the only difference with regard to brought forward loss for A.Y. 2009-10, which has been assessed - as against the business income for A.Y. 2011-12 the assessee is eligible for set off of assessed business loss and set off of balance amount of unabsorbed business loss for A.Y. 2010-11 which will thus leave balance of unabsorbed business loss to be carried forward for A.Y. 2011-11 - As regards the unabsorbed depreciation is concerned, the claim made by the assessee is correct and the Ld. AO is directed to accept the same. Not allowing deduction u/s 115JB of the Act towards unabsorbed depreciation - We find force in the contention of assessee and find that the assessee has rightly claimed deduction of unabsorbed depreciation for the purpose of calculating MAT. Thus Ground No. 3 raised by the assessee is allowed.
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2023 (3) TMI 314
Unexplained money u/s. 69A and levied tax u/s. 115BBE - Unexplained cash deposits - HELD THAT:- As per the explanation of the assessee source for cash deposits is out of realization of sundry advances shown in the balance sheet as on 31.03.2016. We have gone through various evidences filed by the assessee including ITR filed for earlier three years and financial statements of the assessee and we find that the assessee has declared substantial income for earlier years and also maintained books of accounts. The assessee has shown sundry debtors in his books of accounts and said return have been filed before demonetization. From the above explanation of the assessee it is very clear that source for cash deposits is out of realization of sundry debtors appears to be genuine and bonafide. In fact, the assessee has filed cash book explaining date wise receipts from various parties and deposited into bank account. AO is completely erred in making additions towards cash deposits into bank account as unexplained money u/s. 69A of the Act and levied tax u/s. 115BBE when the assessee has explained source for said cash deposits. CIT(A), without considering relevant facts simply sustained additions made by the AO. Thus, we direct the AO to delete additions made towards cash deposits u/s. 69A of the Act. Appeal filed by the assessee is allowed.
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2023 (3) TMI 313
Reopening of assessment u/s 147 - change of opinion - Reason to believe - HELD THAT:- There was no fresh material available with the AO for harbouring a doubt that income had escaped assessment, the reopening of assessment was purely based on change of opinion. Considering in the case of CIT v. Kelvinator India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT] as well as in the case of TANMAC India [ 2017 (1) TMI 122 - MADRAS HIGH COURT] the assessment order passed u/s 143(3) r.w.s. 147 is liable to be quashed. CIT(A) has also, by following various judgements annulled the assessment framed u/s 147 of the Act and thus, we find no reason to interfere with the order passed by the CIT(A). Accordingly, the ground raised by the Revenue is dismissed. TDS u/s 194C - Non deduction of tds - Audit objection - HELD THAT:- We find that the audit objection on a point of law may constitute fresh information for reopening of assessment. However, if the audit objection on factual issue and, where, the audit party has quantified escapement, then, definitely, it does not constitute information for reopening of assessment. In this case, if we go by audit note issued by the audit party, it points out disallowance of 40(a)(ia) of the Act for non-deduction of TDS, in our opinion, the said observations of the audit party is on a factual matrix and no legal position is involved. Therefore, the argument of the ld. DR in light of certain judicial precedents are not tenable.
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2023 (3) TMI 312
Deduction u/s 10(10AA) - leave encashment on retirement - Rejection of claim holding that the employer of the assessee is a Non-Govt. Organisation - HELD THAT:- We find from the records that the assessee had been working in Malviya National Institute of Technology, Jaipur (Raj) and as per Govt. Order/ Gazette Notification of Govt. of India issued on 6th June 2007 (PB 10-12) and Office order dated 11-10-2022 (PB 21A), it is demonstrated that Malviya National Institute of Technology, Jaipur (Raj) is a Govt. Organisation. Nothing rebuttal has been filed by the Revenue Authority and even no fault has been pointed out by the Revenue Authority in the said Gazette Notification and Office Order relied upon by assessee. Therefore, we have no option except to rely upon un-rebutted public documents in the shape of Gazette Notification and Office Order for reaching the conclusion that Malviya National Institute of Technology, Jaipur (Raj) is a Govt. Organisation. CIT(A) while rejecting the claim of the assessee has solely relied upon the decision of Kamal Kumar Kalia vs Union of India ( 2019 (11) TMI 1143 - DELHI HIGH COURT] which is altogether different from the facts of the present case - It was an undisputed fact that the petitioner in that case was employee of public sector undertaking and Natonalised Bank. Thus, it was held by the Hon ble Court that public sector undertaking and nationalized banks cannot be treated as Govt. Employee. However, the facts in the present case of the assessee are altogether different. Assessee has placed on record the Govt. Gazette Notification and Office Order to demonstrate that Malviya National Institute of Technology, Jaipur (Raj) is a Govt. Organisation. Thus findings of the ld. CIT(A) are based on incorrect assumption of facts. Since as per the documents, Malviya National Institute of Technology, Jaipur (Raj) is a Govt. Institution, therefore, the assessee being an employee of Malviya National Institute of Technology, Jaipur (Raj) is entitled for full exemption of earned leave encashment on retirement.The appeal of the assessee is allowed.
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2023 (3) TMI 311
Revision u/s 263 - Unexplained deposit of cash during the financial year - HELD THAT:- Explanation were furnished in the context of specific notices issued by the AO calling for the explanation in support of cash deposit and the AO has examined the said explanations and has further carried out verification from the banks and after examining earlier years tax returns, has accepted the same in support of cash availability at the beginning of the year and deposit therefrom during the demonization period. We therefore find that the matter relating to source of cash deposits during the demonization period has been duly examined by the AO and he has taken all requisite steps calling for explanation from the assessee, issuing further notices where the earlier explanation was not acceptable and calling for further information and after carrying out independent examination from past year tax returns available on department's IT Portal and calling from the information from the bank has accepted the said explanation so furnished by the assessee. Amounts received by the assessee, pursuant to comprise and settlement as per various Courts orders , PCIT has accepted the fact that these Court orders are on record and the compensation amount as so stated therein and the parties to the compensation are thus not disputed. However, for the reason that the exact date of receipt of compensation is not discernable, the explanation of the assessee has been negated. We find that the date of the Court's order are clearly discernable from the records and one of the such order is dated 24/12/2015 and it can reasonably be presumed that the amount has been received by the assessee within a reasonable period pursuant to such Court order during the financial year 2015-16 in absence of any evidence that such Court order has not been honoured and complied with by the other party and which is not the case of the Revenue either. Regarding other receipts on maturity of insurance policies, sale of land etc, the factum of these transactions and necessary evidence on record has not been disputed by the ld. PCIT - Only reason why the ld. PCIT has not accepted the explanation of the assessee is that it is against human probability that the assessee would be keeping huge cash-in-hand for such long period of time and no evidence has been furnished. In this regard, we believe that the human probability has to be seen in context of surrounding circumstances of the assessee prevalent at the relevant point in time and a reasonable inference has to be drawn. In context of present assessee, after the death of her husband, the assessee was undergoing a difficult phase in her personal life and it must have took her time to gain understanding of business and financial dealings of her late husband, thereafter she took steps to recover money advanced to various parties by her husband, the cases were filed before the Courts and compromise/settlement reached and pursuant thereto, she has recovered the amount advanced by her late husband. Further, the trauma and pain in her life got further aggravated on account of divorce proceedings of her daughter. In the said background, if we see the assessee's explanation, we find that she has sufficiently explained and demonstrated the availability of cash which she kept in her possession instead of depositing the same with bank or any other relative/third party and thus, she has discharges the initial onus placed on her. Thus we are of the considered view that the matter has been duly examined by the AO and the assessment order so passed by him cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. Decided in favour of assessee.
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2023 (3) TMI 310
Revision u/s 263 - addition on lumpsum basis to the returned income - HELD THAT:- PCIT in a very casual and negligent manner has passed the order and copy pasted the finding of some other assessee in the instant case. In our opinion, great power comes with extraordinary responsibility and should be exercised mindfully and cautiously. However, in the instant case, the same appears to be not at all exercised in the manner in which it should have been exercised. Even on merit also, we find that by the time the AO passed the assessment order u/s.143(3) had passed the judgment against the seller namely Ms. Kalavati Rajendran who had sold the property to the assessee and has held that the title of Ms. Sukul Yashoda is valid and the claim of Ms. Kalavati about the title and ownership of the impugned property was declared as void. Since the title of the seller and in consequent of the assessee are held to be bad in law, therefore, the question of making the addition on the basis of such a defective and illegal title cannot be sustained. Since the AO in the instant case has passed the order on the basis of the receipts and payments statement, bank statement, sale deed copies etc., therefore, in absence of any specific reasoning given by the PCIT as to how the order has become erroneous and prejudicial to the interest of the Revenue and since he has cancelled an order passed u/s. 143(3) dated 18.4.2017 whereas the order passed u/s.143(3) in the instant case is 11.12.2017, therefore, it is a complete non-application of mind by the PCIT for which we set aside the order of the learned PCIT passed u/s. 263. The grounds raised by the assessee are therefore, allowed.
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2023 (3) TMI 309
Disallowance of Cartage Stores and Spares expenses - for want of relevant supporting vouchers - Though the AO has made @ 15%, CIT(A) restricted the same @ 10% - HELD THAT:- In our considered opinion, the order of the CIT(A) in this regard is reasonable and does not need any interference on our part. Addition on account of Long Term Capital Gain has not been adjudicated by the CIT(A) though ground in this raised before him - Hence, in the interest of justice, we remand this issue to the of the CIT(A). CIT(A) is directed to pass an speaking order as per law.
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2023 (3) TMI 308
Delayed deposit of employee s contribution to PF ESI - Addition u/s 36(1)(va) - HELD THAT:- Assessee fairly submitted that the decision of Hon ble Supreme Court in the case Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that employee contribution to PF ESI paid beyond due date and specified under the relevant Act then the same has to be added back to the income of the assessee. On the other hand, ld. DR has not any objection to such prayer made by the ld. AR. We after careful consideration of the submission made by the parties and following the decision rendered by the Hon ble Supreme Court (supra), the issue raised by the assessee are covered. Therefore, ground raised by the assessee i.e. ground no. 1 to 3 are dismissed. Disallowance u/s 37(1) - fees on account of penalty under service tax, interest on account of service tax and late fees under goods and service tax - HELD THAT:- CIT(A) already granted relief to the assessee in respect of interest on account of service tax and late fees under goods and service tax by following the decision of Hon ble Supreme Court. However, the sum of Rs. 40,000/- which is on account of penalty under service tax is not covered by the decision of the Hon ble Supreme Court. Therefore, CIT(A) rightly upheld the addition on account of penalty made by the ld. DCIT, CPC. We find that addition made by the authorities below by disallowing the claim of the assessee towards payment made on account of penalty under service tax is in the form of penal in nature and it was levied for violation of law, therefore, the said penalty is not admissible as an expenditure as per Explanation 1 to Section 37(1) of the Act. Consequently, we viewed that the addition made by the authorities below on account of penalty is sustained and ground raised by the assessee is dismissed.
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2023 (3) TMI 307
Revision u/s 263 by CIT - deposit of cash during the demonetization period - mis-match in the postings - HELD THAT:- We would only refer to page wherein the PCIT states that the pattern of small cash deposits against the retention of such a huge cash in hand thus exposes the brazen manipulation of cash - We find such rash observation as unfortunate scandalous attempt to arouse alarm and suspicion. This manner of writing an order can not be approved. The authorities should desist from resorting to making scandalous assertions de-hors facts - assessee's explanation that considering the peculiar factual circumstances where during this specific period, Country saw huge lines of people standing outside banks. The environment of standing with huge cash deemed to be unsafe by the assessee. Thus assessee had exercised safety and caution and deposited smaller amounts on different dates is a valid explanation considering the then prevailing realities and cannot be outrightly discarded as an erroneous explanation accepted by the AO. We find that this consistent explanation remains ignored by the PCIT. Accordingly, on a consideration of the factual matrix of the present case, we find that the impugned order being arbitrary and whimsical on facts deserves to be quashed. It is not a case wherein the AO can be said to have passed the order without carrying out necessary enquiries. We have seen on record that the explanation offered by the assessee has been faulted with by the AO initially. The assessee has been required to re-file the same with proper comparative details addressing the reasons for the deposits made on different dates. The explanation is on record and has not been shown to be incorrect and infact the ground realities requiring the assessee to deposit the amounts on the specific dates has remained unrebutted on record. Historical factual position also remains unrebutted on record. Hence on a consideration of the entire facts and circumstances of the present case, we find that the impugned order deserves to be quashed. We do not deem it necessary to address the decisions relied upon by the issues are very fact specific. No decisions need to be cited for the well settled legal position that merely because an order is cryptic, that fact itself cannot lead to the conclusion that the AO has failed to apply his mind. The tax authorities may consider training the Departmental officers to write the orders in the manner deemed fit. Possibly specifically to address these issues the CBDT Board has mandated that the raising of queries and receipt of information must flow through the ITBA portal. The well settled position that it is the material available on record which would show whether the AO can be said to have applied his mind in the facts of a peculiar case or not needs no specific citation. In the facts of the present case, we find due application of mind of the AO is fully established. Accordingly, decisions relied upon by the ld. AR, we find do not require any specific discussion. We still deem it necessary to address the decision in the case of Ashwani Marwah [ 2022 (3) TMI 466 - ITAT CHANDIGARH] relied upon by the ld. CITDR - on going through the said decision that the conclusion arrived at therein is very fact specific and does not have any play on the facts of the present case. The assessee took the position that the issue taken into consideration by the ld. PCIT was beyond the scope of the limited scrutiny as the selection for the specific case under CASS was only to examine sundry creditors and sales turnover mis-match PCIT amongst other issues had examined the ledger and vouchers payable and the assessment order was set aside. The Co-ordinate Bench on the other issues in regard to mis-match of figures etc. pointed out held that it was explained and there was no mis-match. The lack of enquiry on labour and wages payable were glaring areas highlighted by the PCIT and these have been upheld by the ITAT. Appeal of the assessee is allowed.
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2023 (3) TMI 306
Revision u/s 263 - Income surrendered in survey proceedings - taxation during the survey action as additional income apart from the income disclosed which meant that the same was related to the additional business income of the assessee - As per CIT AO had failed to acknowledge the fact that the surrender represented the undisclosed income of the assessee which would have never come to light, had there been no survey u/s 133A - HELD THAT:- AO duly made enquiries from the assessee as to the nature and the source of the aforesaid surrendered income and has also show caused the assessee as to why the same should not be charged at a higher rate of tax as per provisions of Section 115BBE of the Act. The ld. AO after considering the submissions and explanations of the assessee accepted the contention of the assessee that the surrendered income was out of the business income of the assessee. The perusal of the impugned order of the ld. PCIT would show that the ld. PCIT has not pointed out as to why the explanation offered by the assessee to the AO was not satisfactory and further what more enquiries are required to be conducted in this case, which the AO had failed to conduct. The ld. PCIT has simply based his opinion and order on the Audit Objections/Report as pointed out even in the Audit Report that since the same was undisclosed income of the assessee which was surrendered by the assessee during the survey action and therefore, the same was to be assessed under the provisions of Section 68 to 69D of the Act. The above reasoning of the survey party is not in accordance with the relevant provisions of the Act. Therefore, we do not find any justification on the part of the ld. PCIT in invoking the Revisionary jurisdiction in this case. See GANDHI RAM PROPRIETOR GANDHI GENERAL STORE, VILL VERSUS THE PRINCIPAL COMMISSIONER OF INCOME TAX PATIALA. [ 2022 (8) TMI 377 - ITAT CHANDIGARH] Thus the revision order passed by the ld. PCIT u/s 263 of the Act, in our view has been passed by wrongfully exercising the jurisdiction u/s 263 of the Act and the same is, therefore, held as bad in law and is accordingly, quashed. - Decided in favour of assessee.
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2023 (3) TMI 305
Revision u/s 263 by CIT - Surrender of excess stock and business related receipts and any other discrepancy in this business etc. hence, the surrendered income was clearly under the head business income - application of provisions of section 115BBE on the Income offered during survey which was replied in detail and after considering that reply, the AO has taken a possible view and, therefore, the order of Ld. PCIT for setting aside the already completed assessment u/s 143(3) - HELD THAT:- We are of the view that in the peculiar facts of the present case in order to address the grievance of the assessee posed against the impugned order what primarily needs to be seen is whether the order passed by the AO can be said to be erroneous and prejudicial to the interests of the Revenue. For considering the same, it need be evidenced from the record whether the order has been passed without considering the relevant facts and provisions. It need be seen from the record of the AO whether any queries have been raised by the AO on the issues and whether on facts considering the replies of the assessee, the view formed by the AO can be said to be a plausible view or not. It is only after considering the same, the Revisionary Authority can come to the conclusion whether the order passed was a carelessly passed order by the AO thus constituting an error by sheer lack of enquiry or absence of relevant enquiry by the AO which causes not only an error but also a prejudice to the interests of the Revenue. It is only after such an enquiry is made that the Revisionary Authority can be held to be justified in setting aside the order. On a consideration of the entire factual matrix of the present case, we find ourselves unable to subscribe to the view taken by the Revisionary Authority. We have taken into consideration the arguments advanced on behalf of the assessee that the amount surrendered in the course of the survey on 04.08.2016 was honored by the assessee which is not an issue in the present proceedings. We find that on the levy of higher rate of tax in terms of amendment of Section 115 BBE which received the Hon'ble President s assent on 15.12.2016, the AO in the course of the assessment proceedings considering the queries raised and the replies received on the ITBA Portal itself, it is evident that before the passing of the order dated 21.12.2019 the AO was very much conscious of the nature and counts on which the surrender stood made in the Survey. It is evident from the record that he was very much conscious of the fact that the case was selected for compulsory scrutiny for this specific purpose. We have seen that he has also enquired into the nature of income of the assessee. The surrender letter of the assessee placed before the AO is available before us as it has also been relied upon before the Revisionary Authority. On perusal of the same it is evident that notwithstanding possibly the confused response of the assessee as noticed in the impugned order on the applicability of Section 115 BBE provisions. The fact remains that even after the survey having been conducted, the record has been seen by the Tax Authorities wherein we find that despite this there is not even a whisper of any allegation on record of any other source of income of the assessee. It is for the Revenue to prove that there were some other sources noticed. We cannot expect the assessee to prove the negative. In the peculiar facts of the present case as available on record we find that the surrender was from the normal business income of the assessee. In the facts of the present case, the ledger entries and the treatment of the surrender made in the books of account of the assessee has not only been considered by the AO it has also been made available to the Revisionary Authority and has also been placed before us. On a consideration thereof, we find that in the facts of the present case the action of the Revisionary Authority in re-looking at the very same facts and position of law solely to bring a higher rate of tax to the kitty of the Revenue cannot be countenanced in the Revisionary proceedings. It would tantamount to being legally unsustainable. The powers cannot be exercised merely because on the same set of facts, the view found by the ld. PCIT is at variance with the AO. Unless and until the view taken by the AO is shown to be an incorrect view, the said action cannot be supported. In the facts of the present case, we find ourselves unable to hold that the assessment order has been passed without a proper enquiry. We have seen that the AO was duly conscious of the issues which he was required to consider. Replies have been taken on record. They are seen to be having a legal support. We find that the appeals of the assessee have to be allowed. We further support our conclusion relying upon the decision of the Apex Court in the case of Parshuram Potteries [ 1976 (11) TMI 1 - SUPREME COURT ] Accordingly, the respective orders passed by the ld. PCIT are quashed and appeals of the assessee are allowed.
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Customs
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2023 (3) TMI 304
Benefit of Exemption - aircraft - Usage Conditions - Non-compliance with the requirement that the aircraft is required to be used for providing non-scheduled (passenger) service (aircraft used for private purposes) - allegation against the respondent was that it had not complied with the undertaking furnished in terms of the Condition 104 of the Notification No.21/2002-Cus. dated 01.03.2002 as amended by the Custom Notification No.61/2007-Cus. (CUS dated 03.05.2007), In terms of the Condition No.104. Whether in the facts and circumstances of the case the Hon ble Tribunal is right in holding that the Customs Authority cannot examine whether the appellants have fulfilled the condition of exemption notification? - HELD THAT:- The same is covered in favour of the Revenue and against the assessee by a recent decision of this Court in EAST INDIA HOTELS LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND CENTRAL GST, NEW DELHI [ 2023 (2) TMI 47 - DELHI HIGH COURT] . The question whether an undertaking, as furnished in terms of Condition 104 of the Notification in question is complied with or not is required to be considered by the Custom Authorities. The Custom Authorities are not bound by the decision of the DGCA. Whether the respondent had complied with Condition 104 of the Notification and had used the aircraft for providing non-scheduled (passenger) services? - HELD THAT:- The said question is also covered by the decision in EAST INDIA HOTELS LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND CENTRAL GST, NEW DELHI [ 2023 (2) TMI 47 - DELHI HIGH COURT] . It is not disputed that the respondent has provided the said services for remuneration. Notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in Explanation to Condition 104 of the Notification in question. No substantial questions of law arise in the present appeal - Appeal disposed off.
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2023 (3) TMI 303
Refund of customs duty - time limitation - Detention of imported goods declared as Calcium Grease - Section 27 of the Customs Act, 1962 - HELD THAT:- In the present case, admittedly, the duty was paid at the time of filing the Bill of Entry. However, the appellant became entitled to claim the refund of said customs duty by virtue of the Order-in-Original dated 18.03.2016, vide which imported goods of the appellant were ordered to be absolutely confiscated - In view of the discussion about Section 27 and the admission about the order dated 18.03.2016, it becomes apparently clear that the relevant date for the statutory period of one year to reckon, in the present case, is 18.03.2016. The refund claim of 14.11.2017 is therefore is the one as was filed after one year and nine months of the said relevant date. Hence, it is clear that the refund claim is not filed within the time prescribed for the same. Commissioner (Appeals) is therefore held to have rightly upheld the claim as being barred by time. As per the appellant himself till date there is no final assessment in the present case. Consequent to entire discussion, there are no reason to differ from the findings arrived at by the adjudicating authority below. Appeal dismissed.
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Corporate Laws
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2023 (3) TMI 302
Dissolution of the company - discharge of dues of OL, as the Liquidator - HELD THAT:- It has been stated that since the funds available in the account of the Company (In Liqn.) were insufficient, therefore, the unsecured creditors had been paid on pro-rata basis and after the deduction of the liquidation expenses of Rs.12,98,918.58/-, the fund position of the Company (In Liqn.) as on date is NIL. It is stated that the OL has no further assets, either moveable or immoveable, from which any money may be realized for the Company (In Liqn.) and, therefore, no useful purpose would be served by keeping this matter pending. The liquidation proceedings deserve to be brought to an end. Consequently, the Company (In Liqn.) is dissolved.
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PMLA
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2023 (3) TMI 301
Money Laundering - issuance of production warrant - Jurisdiction of the Trial Court and also the authority of the Head Investigation Unit (HIU), Enforcement Directorate to investigate into the matter - HELD THAT:- Petitioner s case is that the Enforcement Directorate orally assured the Hon ble Bench at Delhi High Court that they would not execute production warrant issued against the petitioner by the Trial Court on 19th December, 2022. Such assurance was not recorded in any of the orders passed by the Hon ble Judges at Delhi High Court in different proceedings. The learned Advocate for the petitioner relies on a report published by Live Law in support of his contention. Though it is needless to say that this Court cannot take judicial notice on publication of certain news in an Online News Portal, it is pertinent to mention that the said report states that the ED gave an oral assurance to Delhi High Court that it would not execute the production warrant against the petitioner till 9th January, 2023. There is absolutely no record that after 9th January, the opposite party renewed such oral assurance before any judicial forum. In the instant case, the petitioner was sent to District Hospital, Asansol on 2nd March, 2023 when he complained of his illness. It is submitted by the learned Deputy Solicitor General on instruction that the petitioner has been discharged from the hospital. Therefore, it is presumed that there is no acute reason to hold that the petitioner is unfit by reason of his sickness from being removed to Delhi. Since Section 482 can only be invoked to give effect to any order under this Code, or to prevent abuse of the process of the Code or otherwise to secure the ends of justice. In the instant case, it is found from the pleadings and the relief sought for by the petitioner that the petitioner has been trying to obstruct the process of the Court. This is not the only instance. The petitioner repeatedly filed series of applications to resist the Enforcement Directorate from executing production warrant issued against him - Since there is no order of stay of execution of production warrant dated 19/20th December, 2022 by any judicial forum, and the impugned order is absolutely interlocutory in nature, there are no merit in the instant revision. The revisional application being not maintainable, fails.
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Service Tax
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2023 (3) TMI 300
Short payment of service tax - real estate development - transactions for development, purchase and transfer emanated from the Memorandum of Understanding concluded with RBEHWS - activities should be construed as service as contemplated under Section 65B[44] of the Finance Act or not - mis-declaration in filing ST-3 returns or not - HELD THAT:- The first respondent has not examined the petitioner s transactions with RBEHWS, with the land owners who have offered their respective lands for joint development and with the purchasers who have purchased plots in the lands owned by the petitioner. This Court must opine that, if it cannot be disputed that mere transfer of title in immovable properties either by way of sale or gift or in any other manner would not amount to a taxable service, for a complete adjudication of the petitioner s liability, not just to pay appropriate service tax but also interest and penalty, the first respondent should have examined the aforesaid transactions separately and decided the petitioner s liability; if for any reason, the petitioner s bouquet of transactions is to be considered as inseparable and a composite transaction, and hence subject to service tax, there must be justifiable reasoning for the same. On a perusal of the first respondent s reasoning, this Court would only conclude that these aspects have not been considered, and if these aspects are not considered and liability fastened, the first respondent would have to usurped jurisdiction even insofar as those transactions which are only transactions for transfer of title. Hence the petitioner must succeed on this score and the proceedings restored to the first respondent for reconsideration - Petition allowed in part.
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2023 (3) TMI 299
Rejection of application filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner has primarily challenged the impugned order on the ground of violation of principles of natural justice and on the ground that the impugned order is a cryptic and non-speaking order - HELD THAT:- In the case on hand, the petitioner, during the course of investigation, has, by its letter dated 03.09.2018, even though has admitted its tax liability for the assessment years 2014-15 to 2016-17 amounting to a sum of Rs.1,59,69,579/-, the same has not been accepted by the respondents. The petitioner has also not paid the entire amount of Rs.1,59,69,579/-. If the contention of the petitioner has to be accepted by this Court, then, in all cases, where, a person discloses even a meagre amount as service tax liability though he is liable to pay huge amount, they will also be brought under the purview of the Scheme and that would not have never been the intention of the legislature. Therefore, it is very clear that the amount of service tax liability has to be quantified in agreement with the respondents to enable the petitioner to come under the purview of the Scheme - Having not quantified in accordance with the Scheme, the question of accepting the petitioner's letter dated 03.09.2018 for the purpose of the Scheme will not arise and that is the reason as to why the impugned order dated 27.02.2020 has been passed rejecting the petitioner's application. A Division Bench of this Court in the case of VITALRAO JAYAPRAKASH VERSUS THE DESIGNATED COMMITTEE UNDER THE SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019, THE COMMISSIONER, THE SENIOR INTELLIGENCE OFFICER, THE COMMISSIONER, CHENNAI NORTH COMMISSIONERATE, CHENNAI [ 2022 (3) TMI 454 - MADRAS HIGH COURT] , had an occasion to decide the issue as to when the Scheme can be applied. In paragraph no.12 of the said judgment, it has been made clear that unless and until the tax liability is quantified, the question of availing the benefits of the Scheme will not arise. In the instant case, excepting for the petitioner's letter dated 03.09.2018 intimating the respondents about its service tax liability for the subject assessment years, there is no quantification done by the respondents and they have also not accepted the petitioner's statement, as per its letter dated 03.09.2018. Furthermore, the petitioner has not sought to avail the benefits under the subject Scheme in the said letter on or before 30.06.2019 and therefore, the first respondent has rightly rejected the petitioner's application on the ground that the petitioner is not eligible to come under the Scheme. Having not requested for personal hearing, the claim of the petitioner that no opportunity of hearing was granted to him before rejecting his request to fall under the Scheme will not arise at this stage. The impugned rejection order being a system generated one based on the particulars furnished by the petitioner that too when the petitioner has not requested for any personal hearing and that too when an earlier request has been rejected on 13.01.2020, this Court does not find any infirmity in the impugned order warranting interference. This writ petition is devoid of merits and accordingly, the same stands dismissed.
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2023 (3) TMI 298
Non-payment of Service Tax - Site Formation Service - Cargo Handling Service - Commercial or Industrial Construction Service provided to various clients - period from July 2008 to December 2008. Non-reliance of documents in support to propose tax liability - principles of audi alteram partem violated (natural justice) - HELD THAT:- There is no dispute that a Show Cause Notice is the foundation on which the Revenue would build its case and hence, it is quintessential that a Show Cause Notice should reflect all such supporting evidences in support of each proposal for demand of respective duty / tax - there is no dispute even by the representative of the Revenue that nowhere in the Show Cause Notice is it mentioned as to the relied upon documents nor is there any averment about supplying such relied upon documents to the noticee. Further, it is also clear from a perusal of the Show Cause Notice that it has been alleged that the appellant provided the services mentioned thereunder, that they did not pay the Service Tax on those services and that the verification carried out by the audit party warranted the invocation of extended period for demanding the tax due. Thus, it is very clear from the Show Cause Notice that there is not even a single assertion proposing to levy and collect Service Tax on the basis of any specific document / evidence. From the discussions in the impugned Order-in-Original, it is found that it was the appellant who furnished most of the documents voluntarily, though no mention about any of the documents finds place in the Show Cause Notice. It is these very documents that were sent for verification to the jurisdictional Service Tax authority and hence, it would be incumbent upon the lower authority to have provided such report obtained from the jurisdictional Service Tax authority before fastening the appellant with tax liability - the liability was fastened on the appellant without following the principles of audi alteram partem and clearly, the consequential demands raised cannot sustain. Site Formation Services for which the appellant has relied on exemption Notification No. 17/2005-S.T. dated 07.06.2005 - HELD THAT:- The exemption has been granted for site formation and clearance, excavation and earth moving and demolition and such other similar activities referred to in sub-clause (zzza) of clause (105) of Section 65 of the Finance Act, provided to any person by any other person in the course of construction of roads, airports, railways, etc., which Notification was interpreted by the co-ordinate Chandigarh Bench of the CESTAT in the case of M/s. Ludhiana Builders [ 2019 (10) TMI 1327 - CESTAT CHANDIGARH ] wherein the Learned Bench has held that Notification No. 17/2005-S.T., dated 7-6-2005 does not say that if it is not a public road then it is liable to be taxed. Therefore, we hold that the appellant is engaged in the construction of road and the same is exempt as per the Notification No. 17/2005-S.T., dated 7-6-2005, therefore, no service tax is payable by the appellant - Thus, the appellant is well within its right to claim bona fides as to the non-payment of Service Tax. Demand pertaining to Cargo Handling Services - HELD THAT:- If the Adjudicating Authority had any doubts that the appellant did undertake any other activity other than transportation inviting tax liability, then the same should have been put across to the appellant for rebuttal / explanation thereby providing an opportunity to the appellant to meet the allegations levelled against it. Contrary to this, the Adjudicating Authority refers the matter to the jurisdictional tax authority, obtains a report and proceeds to confirm the demand based solely on such report obtained behind the back of the appellant. Moreover, the name of the party as mentioned at Annexure-II to the Show Cause Notice refers to ICL and HCC whereas in the Order-in-Original, the lower authority has referred to ICL and ACC, which was perhaps based on the unrebutted report obtained by the lower authority - it is found that there are serious inconsistencies, that the conclusion arrived at by the Adjudicating Authority appears to be in a haste and without proper application of mind and also that the principles of natural justice have not been followed. Construction services rendered to M/s. Petron Civil Engineering (P) Ltd., against which it was claimed by the appellant that the principal contractor had paid the Service Tax, which fact has been brushed aside by the lower authority by relying upon the Master Circular No. Circular No. 96/7/2007-S.T. dated 23.08.2007 - HELD THAT:- There are substance in the contentions of the Learned Advocate for the appellant that the said Circular can operate only prospectively, as clarified by the Hon ble Supreme Court in the case of M/s. Suchitra Components Ltd. [ 2007 (1) TMI 4 - SUPREME COURT] wherein the Hon ble Court held that when the circular is against, the assessee, they have right to claim enforcement of the same prospectively. Denial of CENVAT Credit on capital goods which has been denied on the ground that the noticee did not turn up with documents for verification by the jurisdictional Service Tax authority - HELD THAT:- It is the settled position of law that no CENVAT Credit shall be allowed on capital goods used exclusively in the manufacture of exempted goods or in providing exempted services; but from a perusal of the Show Cause Notice or the impugned Order-in-Original, nowhere it is seen that the lower authority has placed reliance on any evidence to support that the appellant was indeed engaged in the manufacture of exempted goods or was providing exempted services. Even on merits, the demands proposed in the Show Cause Notice, which thereafter have been confirmed in the impugned Order-in-Original, are without any basis or without any documentary evidence and that there is serious violation to the principles of natural justice and hence, no part of the demand can be sustained. Appeal allowed.
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2023 (3) TMI 297
Levy of Service tax - Tour Operator Services - running of ropeways from base stations to temples and transportation on road between base station of the temples - HELD THAT:- The appellant placed reliance upon the decision rendered in the case of the appellant in M/S. / USHA BRECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DEHRADUN [ 2018 (11) TMI 1756 - CESTAT NEW DELHI] for the period from September 2004 to March 2014 to contend that the demand confirmed by the Commissioner (Appeals) should be set aside - it was held in the case that in the present case, appellants basically provides mere transportation facility which is open to pilgrims/tourists persons even villagers to go uphills and therefore, in our view, same cannot be classified and charged to service tax under the category of tour operator service. The facts of the present case are identical to the facts of the aforesaid decision of the Tribunal rendered in the case of the appellant - In view of the aforesaid decision, it has to be held that the activity undertaken by the appellant cannot be subjected to service tax under the category of tour operators . Appeal allowed.
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2023 (3) TMI 296
CENVAT Credit - improper documents as prescribed under Rule 9(1) of CCR - credit taken on the basis of running account bills prepared by the staff of the appellant (service receiver) containing measurement of work and amount to be paid to the Contractor (service provider) - It appeared, these bills do not contain the mandatory information required for availing Cenvat credit in terms of Rule 9(1) of CCR - period April 2015 to March 2017 - HELD THAT:- It is not in dispute that the appellant PSU have prepared the running bills as per the norms prescribed by the State Government. It is not disputed that such running bills are not genuine, or payment to the service provider/contractor have not been made as per the running bills, after adjustment of various if any like Income Tax at source, Vat at source, security deposit, etc. It is further found that this is a case of failure to exercise jurisdiction by the court below in verifying the genuineness of the transaction and allowing the credit accordingly, wherein in Rule 9(2) of CCR read with proviso it has been prescribed that-where a document does not contain all the particulars but contains substantial particulars, inter alia details of service tax payable, description of service etc. The assessing officer on being satisfied that the goods on services covered by the said documents have been received and accounted for in the books of account of the receiver, he may allow the Cenvat credit - there is no such contrary finding in the orders of the court below as regards non receipt of service or the Cenvat credit taken being sham or fake. The Cenvat credit in under dispute is allowable to the appellant-assessee - Appeal allowed.
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Central Excise
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2023 (3) TMI 295
Maintainability of appeal - appeal of the petitioner rejected merely on the ground of non-deposit of mandatory pre-deposit of 7.5% of the duty and penalty - HELD THAT:- Admittedly, petitioner is an unregistered dealer. His appeal has been dismissed on the ground of non-payment of mandatory pre-deposit. It does not appear that there was intent on the part of the petitioner to avoid payment of pre-deposit @7.5% as provided under the amended section 35F of Central Excise Act, 1944. Respondents have also adverted to the facility provided under the RBI Instruction for making such pre-deposit by unregistered dealer / registered non-assessees. In those circumstances, interest of justice would be met if the matter is remanded to the Appellate Authority. Petitioner is required to make predeposit within a period of four weeks from today. Impugned order set aside - petition allowed by way of remand.
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2023 (3) TMI 294
Levy of penalty u/s 26 of CER - supply of invoices without supply of capital goods - whether, based on the evidence available on record, it can be said that the appellant had not supplied the capital goods to M/s Crest Steel Power Pvt. Limited in 2012 and only supplied invoices - HELD THAT:- It is undisputed that no investigation whatsoever was conducted at the end of the appellant. The appellant was not even asked if it had supplied the goods or not. If documents indicated that the goods have been sent and the ledgers of M/s Crest Steel Power Pvt. Limited indicated that it has engaged the transporter, the mere fact that at the time of verification, the goods could not be found, by itself, does not prove that the appellant did not supply the goods. The goods were not found during panchnama but the goods could have been removed by M/s Crest Steel Power Pvt. Limited, after they were purchased. The investigation was conducted five years after the goods were supplied. Once the goods were supplied by the appellant, they are beyond its control. Inconsistency in the invoices ledger of the transporter also does not carry the case of the Revenue any further because transportation was the responsibility of the buyer and not of the appellant. There is no evidence that the appellant returned any cash to M/s Crest Steel Power Pvt. Limited in any form and by any means. If the appellant has not supplied the goods, it should not have received any payment. If there was any fraud and the appellant was only issued invoices and received payment by cheque, naturally M/s Crest Steel Power Pvt. Limited would want the money to be returned. Neither is there any evidence nor is there any allegation to this effect. Thus, based on the evidence available on record, the imposition of penalty under Rule 26 of the Central Excise Rules, 2002 upon the appellant cannot be sustained - appeal allowed.
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2023 (3) TMI 293
CENVAT Credit - tubes and flaps - assessee was domestically clearing such tyres along with tubes and flaps by paying central excise duty on the value of the entire set packing, i.e. tyres, tubes and flaps - export of these items also took place - HELD THAT:- The decision of this Tribunal in BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., JAIPUR-I [ 2007 (6) TMI 85 - CESTAT, NEW DELHI] as well as of the High Court of Rajasthan in the case of M/S BALKRISHNA INDUSTRIES LTD. VERSUS UNION OF INDIA, ASSISTANT COMMISSIONER, CENTRAL EXCISE DIVISION, BHIWADI [ 2022 (2) TMI 558 - RAJASTHAN HIGH COURT] the assessee itself holding that CENVAT credit on duty paid tubes and flaps as accessories of manufactured tyres is admissible, is binding on us. Therefore, the issue having been held in favour of the assessee, the present appeal by the revenue needs to be dismissed and the order passed by the Adjudicating Authority is consequently upheld. Appeal dismissed.
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2023 (3) TMI 292
Wrong invocation of extended period of limitation while issuing the show cause notice - appellant had been manufacturing and clearing Magnesium Sulphate, however, without payment of central excise duty despite that the said product was falling under Chapter heading No. 28332100, neither any duty was paid nor the clearance was declared with the department - HELD THAT:- Since the time of issuance of the show cause notice, the department has observed that there is not merely a failure of paymet of duty by the appellant while clearing the manufactured Magnesium Sulphate but there has no declaration about the said manufacture and the clearance thereof. The clearances have not been shown by the assessee in the monthly ER-1 returns. The adjudicating authority below has recorded the findings about invoking the extended the period in para 6.4 of the order under challenge with the specific mention that the product in question was not declared by the appellant in his statutory returns. It is noted that the Learned counsel's arguments are that there is no evidence produced by the Department highlighting the alleged suppression of facts. In this context, it may be pertinent to point out that with the introduction of Self Removal Procedure, the Central Excise administration moved to a trust based tax administration for collection of the said indirect tax. Self assessment of goods and filing of returns are some of the initiatives wherein the Assessee assesses the goods himself and determines the duty and clears the goods - the appellant had failed to declare these goods in his returns and had failed to pay the duty. Therefore, the suppression charges alleged by the Department stand proved. The plea of exemption under notification dated 17.03.2012 cannot be an act of bona fide belief, as the product manufactured by the appellant is not mentioned therein. Had there been no scrutiny of appellant s record by the department, the fact of non-declaration by the appellant would not have came to notice. The show cause notice is held to have rightly invoked the extended period of limitation - Appeal dismissed.
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CST, VAT & Sales Tax
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2023 (3) TMI 291
Detention of goods - Under valuation - M.R.P. can be deciding factor at this stage to under value the goods by the respondents or not - action on the part of the respondents is violative of the Article 14 and 16 of the constitution of India? HELD THAT:- The petition deserves to be allowed. Though on a perusal of contents of the impugned notice, a copy of which has been kept on record, it is revealed that the same had been issued on the grounds that the documents appeared to be suspicious and needed verification; that the goods needed physical verification and appeared to be undervalued; that VAT number was not mentioned/wrongly mentioned on the documents and that the required information had not been generated at any Information Collection Centre (ICC) in the State of Punjab but on perusal of the written statement, it is crystal clear that except the allegation that the maximum retail price (MRP) printed on the boxes containing fire works was more than the price mentioned in the invoices from which it appeared that the goods were undervalued, no other objection had been taken by the respondents to justify detention of the vehicle as well as the seizure of the goods. It is well settled proposition of law that undervaluation of seized goods in transit cannot be a ground to confiscate the goods and the vehicle. There cannot be any mechanical detention of a consignment in transit on the basis that the goods being transported are undervalued. Reliance can be placed upon K.P. Sugandh Ltd. v. State of Chhattisgarh [ 2020 (3) TMI 890 - CHHATTISGARH HIGH COURT ] wherein the detention of vehicle and seizure of goods merely on the ground that there was undervaluation was not held to be sustainable by holding that it was for the department to initiate appropriate separate proceedings with regard to the alleged undervaluation and that itself could not furnish a ground for detention of vehicle. Thus, it is held that the detention of the truck and seizure of the goods carried therein, by respondent No.2 was illegal. The goods and the truck have, however, already been ordered to be provisionally released in pursuance of order passed by this Court on 07.08.2006. They are ordered to be released - petition allowed.
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