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TMI Tax Updates - e-Newsletter
April 1, 2021
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Withholding of refund u/s 241A - Non-finalization of tax demand - the AO and Principal Commissioner also, in exercise of powers under Section 241A, are concerned largely with the question of grant of refund likely to adversely affect revenue i.e that the tax, if ultimately found due, being not recoverable; though the AO and Principal Commissioner have in the impugned order given detailed reasons, but in our view were not required to, as the same is likely to prejudice the assessment underway. - Petition dismissed - HC
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TDS u/s 194C OR 194J - Short deduction of tds - payment of Special Services - The assessee is facing genuine hardship as on the one hand it is bound to maintain complete secrecy of payments as is mandated by State Government as the nature of expenses is claimed to be for supply of pre-printed examination paper, while on the other hand, the provisions of the 1961 Act requires the deduction of income-tax at source under Chapter XVII-B if the payment falls under the said provisions. The assessee has not obtained any certificate from the AO for non deduction of TDS on these payments as is mandated under the provisions of Section 197 of the 1961 Act. - one more opportunity need to be granted to the assessee - AT
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Jurisdiction of Assessing Officer u/s 120 - Transfer of case u/s 124 - Assessee had a legitimate expectation from the DCIT, Circle-3, Gurgaon, that the objection raised against the jurisdiction assumed by DCIT, Circle-3, Gurgaon will first be decided by the DCIT, Circle -3, Gurgaon, before he would proceed to make assessment. When the jurisdiction exercised by DCIT, Circle-3, Gurgaon, is not free from doubt; the jurisdiction of Ld. CIT(Appeals)-1, Gurgaon, who passed the impugned appellate order against which assessee has filed the present appeal, is also not free from doubt; because jurisdiction of CIT(Appeals) is related to jurisdiction of the Assessing Officer. - AT
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Revision u/s 263 - addition u/s 56(2)(viib) - Section 56(2)(viib) of the Act s only applicable to residents and not to Non Residents. - In the instant case also Ld. A.O had considered various submissions of the assessee and taken a possible view. Therefore merely because Ld. PCIT did not agree to the opinion/information of the Ld. A.O who has conducted sufficient enquiry regarding the issue raised in this show cause notice issued by Ld. PCIT, provisions of Section 263 of the Act cannot be invoked in order to substitute his own information. - AT
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Disallowance made on account of BMC expenses - As stated that the BMC raised the bill in the name of original landlord even though the original landlord sold the property or entered into development agreement. As per the agreement, the buyer is liable to pay all the BMC charges for the property purchased. This explanation was practically accepted by the ld AO in the remand proceedings by not making any adverse comments on the evidences submitted by the assessee. - CIT(A) rightly allowed the expenses - AT
Customs
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Smuggling - Gold Bar - The cumulative effect of the observations is that the initial burden cast on the appellant in terms of Section 123 ibid has not been discharged and therefore Revenue's action is justified. Strangely, the non-filing of appeal against rejection of absolute confiscation by Commissioner (Appeals) is questionable especially when an order authorising appeal against Order-in-Original granting redemption was made. - AT
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Condonation of delay in filing appeal - The consultant of the appellant has obtained a copy of the Order in Original on 16.12.2019. The appeal then has to be filed within 60 days from 16.12.2019. The appellant has filed the appeal before Commissioner (Appeals) on 9.3.2020 which is beyond 60 days period. The Commissioner (Appeals) can condone delay of 90 days. The delay in this case would be less than 30 days. So when computed from 16.12.2019, the appeal has been filed within the time limit condonable by Commissioner (Appeals). - Matter restored back - AT
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Valuation of imported goods - Laptops - rejection of declared value - value rejected merely based on NIDB data - The appellant had expressed inability to file a detailed reply because the documents, on the basis of which the declared value indicated in the 14 bills of entry was rejected, was not provided. - Matter restored back - AT
IBC
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Condonation of delay - Period of limitation under IBC - exclusion of period after the initiation of proceedings under the SARFAESI Act - The use of words ‘as far as may be’, occurring in Section 238A of the IBC tones down the rigour of the words ‘shall’ in the aforesaid Section which is normally considered as mandatory. The expression ‘as far as may be’ is indicative of the fact that all or any of the provisions of the Limitation Act may not apply to proceedings before the Adjudicating Authority (NCLT) or the Appellate authority (NCLAT) if they are patently inconsistent with some provisions of the IBC. At the same time, the words ‘as far as may be’ cannot be construed as a total exclusion of the requirements of the basic principles of Section 14 of the Limitation Act, but permits a wider, more liberal, contextual and purposive interpretation by necessary modification, which is in harmony with the principles of the said Section. - SC
Service Tax
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Scope of SCN - Refund of unutilized CENVAT credit of service tax - When the show-cause notice dt. 28/03/2014 was issued when the appellant filed the refund claim and the grounds raised in the show-cause notice was lack of nexus, claim is time barred and lack of documentation or discrepancies in documents; whereas when the Order-in-Original dt. 16/01/2018 was passed, the original authority travelled beyond the show-cause notice and came to a finding that the sales, marketing and administrative services are classified as BAS provided in India and hence Rule 6A not fulfilled and the appellant is acting as an intermediary. - Thus, the impugned order is bad in law as it has travelled beyond the show-cause notice and also on merit - AT
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CENVAT Credit - Cargo Handling Services - duty paying invoices - supplementary invoices - the allegations of adjudicating authority that the appellant have violated the provisions of Rule 4A(1) of CENVAT Credit Rules, 2004 and Rule 3 of the Point of Taxation Rules, is also erroneous because the said Rules are applicable to service provider and not to service recipient. - AT
VAT
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Suo motu revisional power - Levy of sales tax on turnover - As rightly contended by the learned counsel for the petitioner, the facts dealt with in the said decision were peculiar and the first respondent was not justified in issuing show cause to exercise his suo motu power solely based on the said decision, which dealt with on different factual position - The Revenue was clearly barred from directing the original assessment order to be restored on grounds, which were not contained in the original assessment order. - HC
Case Laws:
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Income Tax
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2021 (3) TMI 1212
Disallowance u/s 14A - correctness of such claim of the Respondent in respect of such expenditure in relation to income which does not form part of the total income under this Act - license fee paid to the Department of telecommunication by the assessee - whether exemption under section 10A of the Act should not be computed after excluding telecommunication expenses and foreign currency expenditure from the export turnover - HELD THAT:- In view of the decision rendered in HCL COMNET SYSTEMS SERVICES LTD. [ 2021 (3) TMI 1182 - DELHI HIGH COURT] These questions of law as suggested by the revenue cannot be entertained. In brief, the questions of law as suggested by the revenue stand covered by various judgments of either this Court or the Supreme Court.
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2021 (3) TMI 1211
Claim of deduction u/s 80P(2)(a)(i) denied - assessee was also dealing with associate / nominal members - HELD THAT:- The Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd [ 2021 (1) TMI 488 - SUPREME COURT] had held that the expression members is not defined under the Income-tax Act. Hence, it is necessary to construe the expression members in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. Also providing credit facilities to associate or nominal members would be entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act unless they are not considered as members of co-operative under the respective State Act. A.O. has merely denied the benefit of deduction u/s 80P(2)(a)(i) for the reason that the assessee was also dealing with associate / nominal members, which is against the dictum laid down by the Hon ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. Ors. (supra). The Hon ble Apex Court has settled many issues. The instant case needs to be examined by the A.O. in light of the principles enunciated by the Hon ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. Ors. (supra). Accordingly, the CIT(A) order on this issue is set aside and the same is restored to the files of the A.O. for Re -examination Rejection of claim of deduction u/s 80P(2)(a)(i) of the I.T.Act with regard to interest income earned from fixed deposit kept with Co-operative Banks - Whether the Income Tax Authorities has erred in holding that the interest earned by the assessee from deposit made with Co-operative Banks is chargeable to tax u/s 56? - HELD THAT:- On identical facts the co-ordinate bench of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO [ 2019 (1) TMI 282 - ITAT BANGALORE] had restored the matter to the A.O. for de novo consideration. We restore the issue of claim of interest income received from other co-operative banks to the files of the A.O. for de novo consideration. The A.O. shall follow the directions of the Tribunal contained (supra)
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2021 (3) TMI 1210
Eligibility of Deduction u/s 80P - CIT(A) held that the interest income earned by the appellant from investment of surplus funds with co-operative banks is not eligible for deduction u/s 80P(2)(d) or 80P(2)(a)(i) - assessee is a co-operative credit society and doing banking business ; it collects deposits from members from various schemes ; its major source of income as evident from the profit and loss account is on account of interest on loan given to members and interest on deposits with banks - HELD THAT:- In CIT v. Kalpadi Co-operative Township Ltd. [ 2016 (9) TMI 952 - MADRAS HIGH COURT ] the Hon ble Madras High Court held that a Cooperative Credit Society providing credit facilities to its members alone and not to general public large nor it did receive moneys by way of deposits on general public, would not be treated as Co-operative Bank ; it would be entitled to deduction u/s 80P. As per Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2021 (1) TMI 488 - SUPREME COURT ] limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public . To sum up: In Totagars Co-operative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT ] the Hon ble Karnataka High Court has held that for purpose of section 80P(2)(d) a Co-operative Bank should be considered as a Co-operative Society. In Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT ] the Hon ble Supreme Court has held that Section 80P of the IT Act, being benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be liberally and reasonably, and if there is any ambiguity, in favour of the assessee.
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2021 (3) TMI 1209
Deduction u/s 80HHC on DEPB in full as claimed by the assessee in his return of income - HELD THAT:- As both the parties have to be looked into the context of the law laid down by various decisions passed by the Hon ble High Courts as well as the Supreme Court in cases of Avani Exports [ 2015 (4) TMI 193 - SUPREME COURT] and Carpet India [ 2019 (9) TMI 738 - SUPREME COURT] . Hence, we are remanding back both the issues to the file of the Assessing Officer for fresh adjudication in light of the provisions of law settled by the judicial forums including Hon ble Apex Court. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Hence, Ground Nos. 2 and 3 of the assessee s appeal are partly allowed for statistical purpose. Disallowance on account of interest - HELD THAT:- It is pertinent to note that from the paper books pointed out by the Ld. AR during the hearing, it can be seen that these advances were not from the interest bearing borrowed funds. Thus, the advances were exclusively for the purposes of business of the assessee and the Assessing Officer has not taken cognizance of the same. Further while disallowing the claim of the assessee, the Assessing Officer failed to establish the nexus between the amount not given and the advances. Thus, the CIT(A) was not correct in confirming this addition. Allowability of deduction u/s 80HHC by the Assessing Officer only after reducing the amount of deduction u/s 80IB from the amount of business profit - HELD THAT:-We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Hon ble Delhi High Court in case of Great Eastern Exports Ltd. [ 2010 (11) TMI 91 - DELHI HIGH COURT] held that the deduction allowed u/s 80-IA had to be reduced from the profits for computing deduction u/s 80HHC. The same principle will be applicable in the present case, hence, Ground No. 8 is dismissed. Depreciation @ 50% on machinery purchased under TUF Scheme - HELD THAT:- As assessee is in the business of manufacturing and export of handloom goods, floor coverings and made ups which are covered under the TUF scheme, though the Assessing Officer has not denied these facts. The assesse in fact, has demonstrated before us by giving details which was produced before the Assessing Officer as well, as to how each machinery is covered under which clause of TUF Scheme. Thus, the CIT(A) has rightly held that after comparing the bills, the description of the machines and the relevant entry in schedules to TUF Scheme, it is clear that item no. 1 to 30 and 36 are covered under TUF Scheme and the same are eligible for depreciation accordingly @ 50%, whereas, item no. 31 to 35 totaling for value of ₹ 97,000/- only are not covered under any clause of the schedules of TUF Scheme, therefore, the machinery worth ₹ 97,000/- are eligible for depreciation at the normal rate of 25% and accordingly directed the Assessing Officer. Therefore, there is no need to interfere with the findings of the CIT(A). Difference in the value of stock as per stock statement submitted to the Bank and as declared in the trading results of the assessee - HELD THAT:- As the books of accounts of the assessee were never rejected by the assessee during the year. Further, from the perusal of the details filed by the assessee, it can been seen that the assessee received/ purchased goods worth ₹ 4,66,94,618/- before 01.03.2004. The said purchase is evident from the bills and vouchers. All these documents/evidences were before the Assessing Officer. Thus, the CIT(A) rightly deleted this addition with justifiable reasoning. Therefore, there is no need to interfere with the finding of the CIT(A). Hence, Ground No. 2 of the Revenue s appeal is dismissed. Disallowing foreign traveling expenses - DR submitted that the assessee other than the partners of the firm or the supporting bills could not produced any other evidence to establish that these expenses have been wholly and exclusively for the business purposes - HELD THAT:- From the perusal of the order of the CIT(A) as well as the Assessment Order, it can be seen that the evidences/documents were produced by the Assessee during the assessment proceedings to establish the claim of the assessee that the foreign travel was exclusively for the business purpose only. Hence, there is no need to interfere the findings of the CIT(A). Addition on account of building repair and maintenance expenses - HELD THAT:- AO has not disputed the expenditure incurred on repair and maintenance but held the same as capital expenditure. The assessee s factory is on rented premises and there is no new structure created by the assessee. These facts were also not disputed by the Assessing Officer. Hence, there is no need to interfere with the finding of the CIT(A). Ground No. 5 of the Revenue s appeal is dismissed. Disallowing export promotion expenses - HELD THAT:- It is pertinent to note that the AO has allowed the export promotion expenses to the extent of 9/10th of the expenses claimed by the assessee. AO never disputed that there is export promotion expenses. In fact, there is no observation by the AO that certain portion of these expenses were utilized for personal use.The disallowance is only on the basis of presumption and assumptions.Therefore, the CIT(A) rightly deleted this addition.
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2021 (3) TMI 1208
Validity of notice u/s.143(2) at this belated stage - notice beyond the statutory period of six months from the end of the financial year in view of the revised return dt.16.11.2015 - HELD THAT:- There is no dispute between the parties about the assessee having filed the original return on 4.7.2014 followed by Section 143(2) notice, revised return dt.16.11.2015 and the subsequent section 143(2) notice dt.18.11.2016; respectively, in seriatum. Mr. Pandey fails to dispute that the Assessing Officer notice u/s. 143(2) dt.18.11.2016 turns out to be beyond the statutory period of six months from the end of the financial year in view of the revised return dt.16.11.2015. This period of six months has to be counted from 31.03.2016 therefore. We go by this analogy and find that this latter section 143(2) notice dt.18.11.2016 is not a valid notice since issued beyond the said period of six months. Whether the Assessing Officer must issue afresh section 143(2) notice; going by the assessee or by the earlier notice issued before the assessee's revised return dt.16.11.2015 shall continue to hold the field, we find that the same is no more res integra as per learned co-ordinate bench s decision [ 2017 (6) TMI 1344 - ITAT CHENNAI ] is no more res integra. Learned co-ordinate bench has held in other words that such an issuance of fresh section 143(2) notice is a condition precedent going by the honourable apex court land mark decision in Hotel Blue Moon case [ 2010 (2) TMI 1 - SUPREME COURT ] We adopt the very reasoning mutatis mutandis to accept the assessee's additional substantive grounds 20 to 25. The impugned assessment stands annulled therefore. Ordered accordingly. All other rival pleadings in assessee's and Revenue s cross appeals on merit are rendered infructuous as the necessary corollary.
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2021 (3) TMI 1207
Withholding of refund u/s 241A - Non-finalization of tax demand - Period of limitation for sending intimation of withholding of refund - ITR being processed under Section 141(1) - notice under Section 143(2) of scrutiny assessment - HELD THAT:- Section 241A however does not prescribe the time limit within which order thereunder is to be made. The question which thus arises is, whether the order under Section 241A of the Act issued on 15th July, 2020, was within time, inasmuch as if it is beyond time, direction for refund will have to be issued and need to go into challenge to validity thereof will not arise. - In the facts of the present case, the order under Section 241A thus had to be before 31st March, 2020 and the order dated 15th July, 2020 is beyond that date. For the writ Court to quash the order under Section 241A of the Act on the ground that no tax is due and thus question of refund likely to adversely affect the revenue does not arise, this Court has to conclusively hold that the petitioner has no tax liability in India. Once it is so held, there will be nothing left to be determined in the assessment underway pursuant to notice under Section 143(2) of the Act. A determination of tax liability in a challenge to an order under Section 241A would set at naught the entire statutory scheme of assessment and appeals, ultimately to this Court, opening the doors to every assessee to whom a notice under Section 143(2) of the Act is issued, to approach this Court contending that the ITR filed and being processed under Section 143(1) of the Act admits / permits of no scrutiny and should be accepted. This Court would then be appropriating to itself the entire statutory mechanism of assessment, First Appeals and Appeals to Income Tax Appellate Tribunal and thereafter to this Court. Rather, the AO and Principal Commissioner also, in exercise of powers under Section 241A, are concerned largely with the question of grant of refund likely to adversely affect revenue i.e that the tax, if ultimately found due, being not recoverable; though the AO and Principal Commissioner have in the impugned order given detailed reasons, but in our view were not required to, as the same is likely to prejudice the assessment underway. We thus clarify that the same will have no bearing in the final assessment. Petition dismissed.
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2021 (3) TMI 1199
TDS u/s 194C OR 194J - Short deduction of tds - payment of Special Services - assessee in default u/s 201(1A) - assessee has claimed that these are payments of confidential/secret nature and the details of payees and other details cannot be disclosed and no income tax was deducted at source while making payments under this head as otherwise confidentiality would have been breached if the PAN and other details such as of payees etc are uploaded into the system while filing TDS returns - HELD THAT:- Only bald assertion made that the amount was spent for supply of pre-printed examination papers while there are no evidence on record before us to hold that these payments were made for the aforesaid purposes. Even affidavit from Secretary, Lok Seva Aayog, U.P.(UP Public Service Commission) averring the nature of expenses incurred has not been filed. It is equally true that the assessee has got allocation from UP State Government for expenditure for secret services. The assessee has to maintain secrecy and confidentiality of these payments and hence it is claimed that no income-tax was deducted at source as otherwise it will breach the confidentiality once PAN of the payee is uploaded while filing TDS returns. The assessee is facing genuine hardship as on the one hand it is bound to maintain complete secrecy of payments as is mandated by State Government as the nature of expenses is claimed to be for supply of pre-printed examination paper, while on the other hand, the provisions of the 1961 Act requires the deduction of income-tax at source under Chapter XVII-B if the payment falls under the said provisions. The assessee has not obtained any certificate from the AO for non deduction of TDS on these payments as is mandated under the provisions of Section 197 of the 1961 Act. Provisions of Section 119 empowers CBDT to grant exemption from rigours of provisions of the 1961 Act to redress genuine hardship of the taxpayers. The assessee has also filed additional evidences before tribunal(pb/page 8-11) by way of allocation of budget of the assessee by State Government which also contains allocation for Secret Services Expenses, these evidences are vital to resolve the issue but the same requires verification by the authorities below. It is equally well settled that the duty of all taxing authorities to assist taxpayers so that they get reliefs which they are entitled to. Reference is drawn to Circular issued by the Central Board of Direct Taxes Circular No: 14 (XL-35) dated April 11, 1955. We are of the considered view, that one more opportunity need to be granted to the assessee and the issue is restored to the file of the AO for fresh adjudication. We clarify that all the contentions are kept open. The AO shall give proper and adequate opportunity to the assessee in accordance with principles of natural justice in accordance with law. Default in deduction of income tax at source on payments made towards Rent and other charges - Assessee is claiming that these are payments towards house tax and water tax- HELD THAT:- As observed that apart from house tax and water tax payments, there were further payments as discovered by AO during proceedings conducted for submission of remand report to ld. CIT(A) during the appellate proceedings, which facts is stated by AO in its remand report that payments to the parties covered under the head Rent and other charges were also made from other heads of expenditure, on which no income tax was deducted at source. Complete details of the payee, nature of payment, rent agreement details, premises hired details etc. are neither specified by AO in its remand report nor by ld. CIT(A) in its appellate order. Thus, complete facts are not emerging from the orders passed by the authorities below as the orders passed are cryptic in nature and we are of the considered view that the matter need to be restored to the file of the AO for fresh adjudication of the issue on merits in accordance with law. The evidences filed by assessee in its support shall be admitted by AO and adjudicated on merits in accordance with law. The AO is directed to pass speaking and reasoned order. Invocation of provisions of Section 206AA - HELD THAT:- Since, we have already restored the issue back to the file of the AO for denovo adjudication of the issues concerning deduction of income-tax at source on payments made towards Suspense Service Expenses as well on Rent and other charges as above, since this issue is interlinked with the above issues, it will be appropriate that this issue is also restored back to the file of the AO for denovo adjudication on merits in accordance with law.
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2021 (3) TMI 1198
Disallowance of loss in share trading activity - Genuineness of loss claimed by the assessee - HELD THAT:- We notice from the record that in the first round of appeal, Co-ordinate Bench [ 2019 (6) TMI 1592 - ITAT MUMBAI] had noted that as seen from the written submission before the CIT(A) also the assessee was referring to various documents placed before AO in proving the genuineness of the transactions. Neither the AO nor the CIT(A) examined or referred to these documents. Be that as it may, the fact remains that neither the AO nor CIT(A) examined these documents in its correct perspective, but carried away mere by the observations of SEBI and JPC in the group cases. With the above observation, the case was remitted back to AO. But in the second round also, we notice that AO has given notices to assessee and called for information once again. AO observe that assessee has not substantiated the genuineness of the transaction and accordingly, he sustained the disallowance of loss. The Co-ordinate Bench has clearly observed that all the relevant information was submitted by the assessee, AO should have referred those information which was already available on record. If there is any short coming or any documents, which is not proper, AO should have discussed in his order before sustaining the disallowance. He has not discussed any merits of the case based on the information submitted by the assessee in the original assessment proceedings. AO simply completed the proceedings blaming the assessee without taking cognizance of the earlier direction from ITAT. Even the Ld. CIT(A) dismissed the appeal filed by the assessee blaming the non-appearance of the assessee and its submission. The Ld. CIT(A) also not verified the genuineness of the documents filed by the assessee in the original assessment proceedings.we are inclined to accept the submission of Ld. AR. Accordingly, the grounds raised by the assessee are allowed.
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2021 (3) TMI 1197
Revision u/s 263 - AO estimated the income at 8% on the cash deposits without examining source of each cash deposit - HELD THAT:- AO has verified the source of cash deposits and taken a conscious decision that the source of deposits made in the bank account was related to the turnover. The cash deposits made in the savings bank was duly verified by the AO. As discussed earlier, this case was selected for limited scrutiny for verification of deposits made in the savings bank account and the case was not converted into full scrutiny. AO is not permitted to travel beyond the scope of the case for which it was selected, unless the case is being converted into full scrutiny with the approval of Chief Commissioner of Income Tax or Commissioner of Income Tax as the case may be, as per the instructions given by the Board to the field functionaries. Calling for the details of movable and immovable properties, unexplained investments and any other information not related to limited scrutiny amounts to travelling beyond the scope of scrutiny for which the case was selected. AO acted within the scope of limited scrutiny and assessed the income, after verification of the details. The Ld.Pr.CIT intends to substitute his view in place of decision taken by the AO, which is not permissible in the guise of revision u/s 263. No other evidence was collected by the department to show that the assessee has understated the income. As argued by the Ld.AR, inadequate enquiry is not the reason for taking up the case for revision u/s 263 as decided by the Tribunal in the case of M/s Naveena Rice Industries [ 2018 (7) TMI 2170 - ITAT VISAKHAPATNAM] relied upon by the assessee. Though the Ld.DR tried to distinguish the case of the assessee with the Naveena Rice Industries, we find that the observation of the Tribunal is squarely applicable to the assessee s case also. In the cited case, this Tribunal held that though lack of enquiry is the reason or for taking up the case for revision, inadequate enquiry cannot be held to be erroneous and prejudicial to the interest of the revenue. We hold that there is no error which is prejudicial to the interest of the revenue in the order passed by the AO u/s 143(3) dated 16.08.2016. Hence, we set aside the order of the Ld.Pr.CIT and allow the appeal of the assessee.
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2021 (3) TMI 1196
Jurisdiction of Assessing Officer u/s 120 - Transfer of case u/s 124 - jurisdiction of DCIT, Circle-3, Gurgaon and ACIT, Circle-13(1), New Delhi - HELD THAT:- The assumption of jurisdiction by DCIT, Circle-3, Gurgaon in AY 2012-13 is not free from doubt in the light of the undisputed fact that jurisdiction in other years was exercised by ACIT, Circle-13(1), New Delhi. Moreover, from perusal of the Paper Book filed by the assessee, it is obvious that the assessee had filed details before the Ld. CIT(A) on merits of the additions made by the Assessing Officer, alongwith supporting evidence. It is also clear that the Ld. CIT(A) had obtained Remand Report from the Assessing Officer and further that the assessee had submitted Rejoinder to the Remand Report of the AO. In view of the foregoing, it is obvious that the Ld. CIT(A) was in error in making observation at para 3.8 of his impugned appellate order dated 15.12.2016 that the appellant had not filed any written submissions on the issue of disallowances/ additions made by the AO. Assessee had a legitimate expectation from the DCIT, Circle-3, Gurgaon, that the objection raised against the jurisdiction assumed by DCIT, Circle-3, Gurgaon will first be decided by the DCIT, Circle -3, Gurgaon, before he would proceed to make assessment. When the jurisdiction exercised by DCIT, Circle-3, Gurgaon, is not free from doubt; the jurisdiction of Ld. CIT(Appeals)-1, Gurgaon, who passed the impugned appellate order against which assessee has filed the present appeal, is also not free from doubt; because jurisdiction of CIT(Appeals) is related to jurisdiction of the Assessing Officer. CIT(A) was in error in disregarding the submissions made by the assessee on mertis of the additions made in the assessment order; and in wrongly observing that the assessee had not filed any written submissions on the issue of disallowances / additions made by the Assessing Officer. In view of the foregoing, we are setting aside all the disputes raised in the present appeal before us, to the file of the Assessing Officer with the direction to pass fresh assessment order as per law. We direct the Assessing Officer to first decide the dispute raised by the assessee regarding the jurisdiction assumed by the DCIT, Circle-3, Gurgaon
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2021 (3) TMI 1194
Assessment u/s 153A - Addition on account of admission of additional income u/s 132(4) - addition made by the Ld. A.O based on the statement given u/s 132(4) of the Act and subsequently deleted by the first appellate authority - HELD THAT:- As during the course of assessment proceedings Ld. A.O did not refer the case to the Departmental Valuation Officer nor made any efforts to arrive on the variation in the book figures and value estimated at the project site and resorted to make the addition purely on the basis of statement. Ld. A.O also failed to take note of the fact that in the case of M/s S.V. Infra Developers till the time of search there was not a single bunglow that was completed for sale therefore no sale or any possession of house is handed over to any customer. The volume of the material at site was also too small which cannot justify the undisclosed income of ₹ 5 crores. Ld. CIT(A) after appreciating the above stated facts concluded that the addition made was purely on the basis of the statement given u/s 132(4) of the Act and deserves to be deleted. Since the impugned addition is purely made on the basis of statement u/s 132(4) of the Act without establishing any nexus with incriminating material found during the course of search, the finding of Ld. CIT(A) deleting the addition in the case of Shri Nitin Agrawal and M/s S.V. Infra Developers needs no interference and the same is confirmed. Unexplained cash - panchnama cash was found from the residence of the assessee and from the office premises - CIT-A deleted the addition - HELD THAT:- Shri Nitin Agrawal is one of the key person controlling the various business. The department has taken the basis of statement of Shri Nitin Agrawal for making various additions which interalia included surrender on behalf of various business concerns so this is an undisputed fact that though there are different entities running under the business group but they all are inter connected and controlled by some common persons of which one is Shri Nitin Agrawal. In the reconciliation statement cash balance as per the books is stated at ₹ 87,82,341/-. Revenue has not confronted this fact. The assessee has stated that the cash in hand found during the course of search from his residence was part of the cash in hand of the group. There is no contrary finding by Ld. A.O to the figures narrated in the reconciliation statement about the cash balance in books of business concern named therein. Under these given facts where the cash in hand available in books is much more than the cash found during the course of search and the same has been rightly explained in the reconciliation statement, we find no justification in the addition made by Ld. A.O for unexplained cash and Ld. CIT(A) has rightly deleted the addition and the finding is thus confirmed. Unexplained jewellery - jewellery was found/ seized at the residence and locker of the assessee as per the panchnama drawn during the course of search action - HELD THAT:- From findings of Ld. CIT(A) we observe that he has rightly considered the wealth tax return submitted by the assessee during year 1991-92 and 1992-93 and also considered the Instruction No.1916 of CBDT dated 11.5.1994 and after referring to settled judicial precedents has confirmed the addition partly. Since the revenue authorities has failed to bring any other material contrary to the finding given by Ld. CIT(A) and considering the fact that the assessee has filed wealth tax and assessed as well as considering the limit of jewellery of 500 grms for female and 100 grams for male member provided in CBDT Instruction No.1916 dated 11.5.1994, we find no reason to interfere in the finding of Ld. CIT(A) duly supported by judicial precedence deleting the addition - Ground No.3 of the Revenue s appeal dismissed. Unexplained advance to Shri Lilwani family - HELD THAT:- As there was sufficient cash in hand with the assessee and its group concerns, secondly Ld. A.O has not provided opportunity of cross examination of the assessee with Shri Dinesh Lilwani before relying on the statement of Shri Dinesh Lilwani, thirdly Ld. A.O over looked the statements of Shri P. Raju and Shri Nitin Agrawal and gave only credit to the statement of Shri Dinesh Lilwani and fourthly the Ld.A.O failed to consider the fact that the case of the appellant for advance of loan to Shri Dinesh Lilwani is still pending in the court.Under these given facts, in our considered view Ld. A.O was not justified in making addition for unexplained advances. Branded watches seized in search - HELD THAT:- A.O has not taken any step to bring on record the valuation of the watches found during the course of search which thus makes the addition merely on the estimated basis and same therefore have been rightly deleted by Ld. CIT(A) relying on settled judicial precedents. Addition on account of foreign travel expenses - various documents were found about the foreign travel carried out by the assessee and his wife - HELD THAT:- As the assessee who is into the business of construction has conducted various foreign visits and expenses of the same were also debited in the books of accounts. Ld. A.O estimated the undisclosed expenditure at ₹ 2 lakh. We are however of the view that Ld. CIT(A) being fair to both the parties has rightly considered the issue and partly deleted the addition at ₹ 1 lakh which thus do not call for any interference.
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2021 (3) TMI 1193
Revision u/s 263 - addition u/s 56(2)(viib) - transaction of excess premium received from Non Resident companies - HELD THAT:- In the show cause notice issued, Ld. PCIT has only referred to the provisions of Section 56(2) stating that the excess amount received from two non resident companies on allotment of shares should be treated as income of the assessee u/s 56(2)(viib) of the I.T. Act: So the finding of Ld. PCIT is only to the effect that Ld. A.O should have examined the transaction of excess premium received from Non Resident companies which needs to be brought to tax u/s 56(2)(viib) - this finding of Ld. PCIT is factually incorrect and is not sustainable in law since the provisions of Section 56(2)(viib) of the Act are not applicable to the consideration received from Non Residents for issuing of shares. DR was fair enough to accept this fact that Section 56(2)(viib) of the Act s only applicable to residents and not to Non Residents. Therefore since the very basis of issue of show cause notice u/s 263 of the Act is factually incorrect and the provisions of Section 56(2)(viib) of the Act has been wrongly interpreted by Ld. PCIT by directing the Ld. A.O to tax an amount under a section namely 56(2)(viib) for the consideration received for issue of equity shares which is not applicable to the Non Residents, the proceedings u/s 263 of the Act deserves to be quashed. Whether the Ld. A.O has made sufficient enquiry with regard to the alleged transaction of allotment of equity shares to resident and non resident companies? - There was a specific enquiry from the Ld. A.O to which the specific reply along with supporting documents were submitted by the assessee during the course of scrutiny assessment proceedings itself. It can be safely concluded that the Ld. A.O had raised queries which were complied by the assessee. Considering these facts in totality, it can be safely concluded that the Assessing Officer made complete enquiry regarding share capital and share premium received from Non resident companies and also called for a report from Ld. TPO on the arms length price of this international transaction. It is a settled position of law that the powers under section 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i. e., the assessment order should be erroneous and prejudicial to the interests of the Revenue. By erroneous is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of the hon'ble High Court of Bombay in the case of CIT v. Nirav Modi [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] In the instant case also Ld. A.O had considered various submissions of the assessee and taken a possible view. Therefore merely because Ld. PCIT did not agree to the opinion/information of the Ld. A.O who has conducted sufficient enquiry regarding the issue raised in this show cause notice issued by Ld. PCIT, provisions of Section 263 of the Act cannot be invoked in order to substitute his own information. It has been held in several decisions (few of them have been relied by the Ld. Counsel also) that if the Ld. A.O has made enquiry to his satisfaction and it is not a case of no enquiry then Ld. PCIT cannot assume the jurisdiction u/s 263 of the Act to again investigate or approach in a particular manner. - Decided in favour of assessee.
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2021 (3) TMI 1192
Disallowance u/s 40(a)(ia) - Non deduction of TDS - HELD THAT:- As the assessee had not deducted tax at source on the service tax component by following the CBDT Circular No. 4/2008 dated 28.4.2008 in that regard. We find that the ld CITA had rightly appreciated the same and directed the ld AO to delete the disallowance made u/s 40(a)(ia) of the Act for this sum. Sub-contractor (labour charges), we find that the assessee had during the remand proceedings explained that he had deducted tax at source in respect of expenditure to the tune of ₹ 1,12,32,333/-. With regard to the remaining sum of ₹ 11,290/-, it was proved by the assessee before the ld AO that he was not required to deduct tax at source. We find that the ld CITA had rightly appreciated these facts and the same was also confirmed by the ld AO in the remand report. Accordingly the ld CITA rightly directed the ld AO to delete the disallowance u/s 40(a)(ia) of the Act to the tune of ₹ 48,16,981/-. Legal and Professional fees, we find that the assessee had explained that out of disallowance of ₹ 1,16,715/- made by the ld AO, expenditure to the tune of ₹ 41,715/- was not liable for deduction of tax at source for which necessary documentary evidences were duly furnished before the ld AO in remand proceedings and assessee accepted for confirmation of disallowance of remaining ₹ 75,000/-.Accordingly, we find that the ld CITA had rightly deleted the disallowance in the sum of ₹ 41,715/- and rightly sustained the disallowance for ₹ 75,000/- u/s 40(a)(ia) of the Act. Testing and Surveying Charges (labour contract charges), we find that the ld AO observed that the assessee had not deducted tax at source on payment made to Kuber Trading Co. to the tune of ₹ 10,00,000/- in respect of interior work. We find that the ld AO in the remand proceedings verified the fact that assessee had purchased material from Kuber Trading Co. for ₹ 14,36,045/- plus MVAT of ₹ 57,442/- thereon, which is not liable for deduction of tax at source u/s 194C of the Act. It was proved before the ld AO that only a sum of ₹ 1,17,476/-was debited to interior work labour charges for which due TDS compliance was made by the assessee. We find that this was duly appreciated by the ld CITA by rightly directing the ld AO to delete the disallowance of ₹ 10,00,000/- u/s 40(a)(ia) of the Act. Consultancy Charges, we find that the ld AO had observed that tax was not deducted at source on payment of ₹ 9,69,573/- out of total expenditure of ₹ 29,64,463/-. We find that in the remand proceedings, the assessee proved that tax was duly deducted at source on the total expenditure of ₹ 23,97,633/-. In respect of ₹ 5,66,800/-, it was explained that tax is not deductible at source for ₹ 5,61,800/-, being the payment made to National Institute of Oceanography (Government Company) and similarly, tax is not deductible at source for ₹ 5000/- being payment made to PR Consultancy. It was further explained that remaining sum of ₹ 4,02,773/- was out of the purchase of material from Kuber Trading Co. of ₹ 14,93,487/- supra. We find that the ld CITA on perusal of the remand report had rightly sustained the disallowance u/s 40(a)(ia) of the Act to the tune of ₹ 5,61,800/- being the amount paid to National Institute of Oceanography for want of submission of certificate for non deduction of TDS. Hence we do not find any infirmity in the said order of the ld CITA in respect of this issue. All the aforesaid items were practically accepted by the ld AO in the remand proceedings by not making any adverse comments on the evidences submitted by the assessee. Hence when the ld CITA grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon ble Madras High Court in the case of B Jayalakshmi vs ACIT [ 2018 (8) TMI 208 - MADRAS HIGH COURT] - Gound No. 1 raised by the revenue is dismissed. Disallowance made on account of BMC expenses - verification of the ledger account of those expenses and bills submitted by the assessee, some of the bills were not in the name of the assessee nor in any of its project name - HELD THAT:- We find that the assessee had explained that he has various projects for which he had paid the charges to Bombay Municipal Corporation (BMC) by account payee cheques. Copy of receipts for the payment and relevant pages of the bank statements reflecting the payments made together with the copy of ledger accounts were duly furnished by the assessee in the remand proceedings. As stated that the BMC raised the bill in the name of original landlord even though the original landlord sold the property or entered into development agreement. As per the agreement, the buyer is liable to pay all the BMC charges for the property purchased. This explanation was practically accepted by the ld AO in the remand proceedings by not making any adverse comments on the evidences submitted by the assessee. Hence when the ld CIT-A grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon ble Madras High Court in the case of B Jayalakshmi vs ACIT [ 2018 (8) TMI 208 - MADRAS HIGH COURT] - Accordingly, the Ground No. 2 raised by the revenue is dismissed. Disallowance on account of SRA Project expenses - HELD THAT:- We find that the assessee submitted evidences to prove the fact these expenses are included in the closing stock of work in progress and therefore addition made by the ld AO would result in double addition. We find that the ld CITA had given a categorical finding that the SRA project expenses are duly substantiated and supported by proper documents which was not controverted by the ld DR before us. We find that the ld CIT-A had duly appreciated the fact that this disallowance made by the ld AO would only result in double addition, on which we find no infirmity and accordingly order of the ld CITA is not interfered with. Hence the Ground No. 3 raised by the revenue is dismissed. Levy of penalty u/s 271(1)(c ) - HELD THAT:- Once the quantum additions are deleted, then the penalty on those additions would have no legs to stand, which has been rightly deleted by the ld CIT-A. Accordingly, the appeal of the revenue challenging the deletion of penalty is hereby dismissed. Penalty u/s 271(1)(c) on Disallowance of genuine expenditure incurred for the purpose of business u/s 40(a)(ia) - HELD THAT:- We find that the ld AO had made an addition towards personal expenses of ₹ 50,000/- on an estimated basis. It is well settled that there cannot be any levy of penalty on an estimated addition. Moreover, from the perusal of the quantum assessment order, we find that the ld AO had chosen not to initiate any penalty proceedings u/s 271(1)(c ) of the Act in respect of this addition, whereas while passing the penalty order, he has directly levied the penalty. On this ground also, the penalty levied deserves to be deleted and is hereby deleted. Shifting of head of income i.e from income from house property shown by the assessee to income from business by not allowing 30% flat deduction for repairs among others - We find that the ld CIT-A had gone by the premise that the levy of penalty is automatic since the quantum addition is confirmed and had attained finality. We find that the assessee in the instant case had duly disclosed the rental income under the head income from house property in the return of income, which was sought to be shifted by the revenue under the head income from business . Hence there cannot be any concealment of income or furnishing of inaccurate particulars of income that could be attributed on the assessee. We hold that there was absolutely no concealment of income or furnishing of inaccurate particulars of income by the assessee in the return of income as every detail thereon could be deciphered easily from the return itself. Reliance in this regard is placed on the decision of the Hon ble Supreme Court in the case of Pricewaterhouse Coopers [ 2012 (9) TMI 775 - SUPREME COURT] - no hesitation in directing the ld AO to delete the penalty levied u/s 271(1)(c ) of the Act in respect of this addition. Addition of Cash Payment to the retiring partner - addition based on loose papers - HELD THAT:- As the name of the brokers and the details of the property in respect of which brokerage paid was nowhere mentioned on the said impounded loose paper. We find that the ld. CIT(A) had categorically observed that the said impounded paper does not have any acceptable narration and do not bear the certificate of the assessee or any authorised person and they are merely in the nature of dumb documents having no evidentiary value and hence, cannot be taken as the sole basis for making the addition in the hands of the assessee. He has also recorded a finding that the ld. AO had neither in the assessment proceedings nor in the remand proceedings corroborated noting in the loose paper by bringing some cogent material on record and conclusively prove that the noting in the impounded paper reveal the unaccounted transaction of the assessee. We also find on perusal of the remand report of the ld. AO that the ld. AO had indeed accepted to the contentions of the assessee and that is the reason he had not drawn any adverse inference on the explanation furnished by the assessee in the remand proceedings. Hence, it could be safely concluded that the ld. AO had indeed accepted to the contentions of the assessee in the remand report. Moreover, when the ld CIT(A) grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon ble Madras High Court in the case of B Jayalakshmi vs ACIT [ 2018 (8) TMI 208 - MADRAS HIGH COURT] . Accordingly, the ground No.4 raised by the Revenue is dismissed. Addition made on account of differential net profit - HELD THAT:- From the perusal of the aforesaid remand report, it could be safely concluded that the ld. AO had not drawn any adverse inference against the explanations given by the assessee in the remand proceedings. Hence, it could be safely concluded that the ld. AO had indeed accepted to the contentions of the assessee in the remand report. Moreover, when the ld CIT-A grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. B Jayalakshmi vs ACIT [ 2018 (8) TMI 208 - MADRAS HIGH COURT] . Accordingly, the ground No.5 raised by the Revenue is dismissed.
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2021 (3) TMI 1191
Exemption u/s 11 - cancellation of registration under section 12AA(3)/(4) - effective date of cancellation of registration - Authority to cancel the registration under section 12AA(3)/(4) - Whether power of cancellation of registration vests in the authority who has the jurisdiction to grant registration? - Principal Commissioner of Income-Tax-17 cancelling the registration of the Appellant - HELD THAT:- Commissioner had the duty, much more than the power, to cancel the registration under section 12A upon the fact of admitted violation of section 13(1) coming to his notice, and that such cancellation had to effective from the date on which the disability for exemption under section 11 is attracted (which is not ascertained on the facts of this case), the date of this fact coming to the notice of the Commissioner (i.e.11th March 2015), from the date on which the first show-cause notice was issued (i.e. 13th March 2015), or,at the minimum, from the date on which hearing in this regard was concluded and the order thereon was reserved (i.e. 20th March 2015). We see no reasons to take any other view of the matter than the view so taken by the coordinate bench in the case of Navajbai Ratan Tata Trust vs PCIT[ 2021 (3) TMI 1146 - ITAT MUMBAI] . These observations will apply mutatis mutandis in the present case as well. Respectfully following the same, we hold that the impugned order cancelling registration granted to the assessee trust will have effect from the date on which hearing, on the first show cause notice requiring the assessee to show cause as to why registration under section 12A not be cancelled, and the assessee formally acquiesced to the said notice 10.03.2015, i.e on 20th March 2015.
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2021 (3) TMI 1189
Unexplained deposits in bank accounts - HELD THAT:- The addition was sustained by the ld. CIT(A) for the reason that compliance was not made during the original assessment proceedings and at remand stage. This cannot be a ground of making addition for the reasons that the Assessing Officer had made the addition on the ground that the deposits in bank accounts are not explained. Without a copy of the bank account, the Assessing Officer cannot come to a conclusion that the deposits made in a bank account are unexplained. All details including copies of bank accounts were furnished by the assessee. The evidence given by the assessee is not disputed by the revenue. The addition was confirmed in a summary manner, without reference to the facts. In view of the above discussion and finding of the Assessing Officer in the remand report extracted above, the addition in question, is hereby deleted. Disallowance of commission and development charges - HELD THAT:- When the land is converted into plots by laying roads, building drains, developing common areas etc., as per the norms of the Urban Development Authority, and when plots are sold only after such development expenditure is bound to be incurred. It cannot be said that dry land of 10.69 acres can be sub-divided into house plots after development and sold as house plots without incurring any expenditure. The evidence in the form of development agreement dt. 15/06/2003, and payments made through account payee cheques and the fact of the development of the land into plots is sufficient evidence to prove the incurring of expenditure. Except for disbelieving the claim of the assessee, there is no adverse material collected by the assessing authorities. Confirmation letters from Shivaji Estates Constructions by Smt. Dantuluri Gita Kumari, wherein she had stated that the amount in question was offered to tax in her Income Tax Return and confirmation letters from one Mr. U. Prabhakar Rao, on the commission of ₹ 47,400/-, received/receivable by him, support of the contentions of the assessee. Thus, we uphold the contention of the assessee and allow the claim of the assessee of having been incurred development expenditure - Decided in favour of assessee.
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2021 (3) TMI 1182
Disallowance u/s 14A - correctness of claim of the Respondent in respect of such expenditure in relation to income which does not form part of the total income under this Act - HELD THAT:- Issues as covered by the judgement of the coordinate Bench of this Court rendered in Joint Investments (P.) Ltd. vs. Commissioner of Income-tax [ 2015 (3) TMI 155 - DELHI HIGH COURT ] Nature of expenditure - license fee paid to the Department of telecommunication by the assessee - revenue or capital expenditure - HELD THAT:- This issue covered by the judgement of the coordinate Bench of this Court in Commissioner of Income-tax vs. Bharti Hexacom Ltd., [ 2013 (12) TMI 1115 - DELHI HIGH COURT ] Exemption under section 10A - whether to be computed after excluding telecommunication expenses and foreign currency expenditure from the export turnover? - HELD THAT:- Issue covered by the judgement of the Supreme Court rendered in Commissioner of Income-tax, Central - III vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT ] Disallowance of unrealized foreign exchange loss on account of reinstatement of assets and liabilities - whether this is a notional loss and not allowable to be set off against the taxable income in view of the CBDT s instruction no. 3 of 2010 dated 23.03.2010? - HELD THAT:- the power invested in this Court under Section 260A of the Act is to adjudicate upon the substantial question(s) of law. The revenue, having not laid an edifice concerning the purported non-fulfilment of any of the conditions, stipulated by the Supreme Court in Woodward Governor India P. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT ] cannot, for the first time, without even taking a ground in the instant appeal, argue before us that the loss which accrued to the assessee on account of the foreign currency fluctuation cannot be claimed by it as a business loss.
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Customs
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2021 (3) TMI 1205
Reduction in quantum of redemption fine and penalty - Smuggling - Gold Bar - Revenue entertained a doubt that the appellant had improperly imported gold into India - HELD THAT:- It is interesting to note that there is no explanation on the cut pieces of 100 gms foreign marked gold bar with the marking Cambi, Suisse 100 gm Gold 999.9 ending with last five digits of Sl.No. 09053 that was retrieved from Ryobi brand 6 Orbittal Buffer car cleaning machine. There is also no rebuttal on maintaining a secret chamber and a hot furnace inside nor has he disputed the availability of dismantled power tools of buffer car cleaning machine, etc. More interestingly, the appellant has nowhere claimed, rather has not even admitted that he is an authorised/license holder/goldsmith to carry out the job of melting gold pieces and convert to gold items of his so called customers. After having mentioned that the gold pieces were given by his customers, he has nowhere even offered to furnish the details of such customers to whom the seized gold including the one cut piece with marking Cambi, Suisee 100 gm Gold 999.9 belonged. The cumulative effect of the observations is that the initial burden cast on the appellant in terms of Section 123 ibid has not been discharged and therefore Revenue's action is justified. Strangely, the non-filing of appeal against rejection of absolute confiscation by Commissioner (Appeals) is questionable especially when an order authorising appeal against Order-in-Original granting redemption was made. Further, the Revenue has happily accepted the Commissioner (Appeals) order whereby the substantial reduction is ordered, both in terms of redemption fine as well as penalty, hence Commissioner (Appeals) order has to be upheld. Appeal dismissed.
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2021 (3) TMI 1204
Reduction in quantum of penalty - Smuggling - Gold - defence of appellants is the retraction statement of these appellants wherein they have inter alia mentioned that the Officers searched their Workshop in Ayanavaram when they were doing their job with regard to melting of the Gold Pieces converting to Gold Rings which was given by the customers - HELD THAT:- The retraction statement itself hints that they were aware/conscious of what job they were carrying on; the very fact that they were involved in melting gold of the alleged huge quantity cumulatively points to the modus operandi in converting smuggled gold bar into crude gold. In the case of their employer also, Shri Alaudeen has nowhere furnished or even offered to furnish any registration for having engaged in the job of the nature they were involved in, nor has he come forward to furnish the details of their so-called customers, including such customer who wanted the melting of foreign marked gold bars. If they were aware of the identity of their customers, then there was no need for the first appellant herein to go to the brokers in N.S.C. Bose Road to sell off the melted gold, which fact has neither been denied nor rebutted in their retraction. The melting activity was carried on by all three of them jointly to hide the identity of the foreign marked gold bars, make them appear as crude gold and sell them locally, which clearly attracts the penal provision of Section 112 of the Customs Act, 1962 - Appeal dismissed.
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2021 (3) TMI 1203
Condonation of delay in filing appeal - appeal has been filed after lapse of 113 days from the date of communication of the order - rejection of appeal on the ground of time limitation - restriction provided under first proviso to sub-clause (a) of clause (1) to Section 129A of the Customs Act, 1962 - Smuggling - Cigarettes - Saffron - absolute confiscation - penalty - HELD THAT:- As per the above proviso, no appeal would lie before the Tribunal in respect of any order passed by Commissioner (Appeals) if such order relates to any goods imported or exported as baggage. In the present case, apart from confiscating the goods in the baggage, there is also an issue of smuggling of gold. Further, the order passed by the Commissioner (Appeals) does not touch the merits of the case and is confined to the time-bar aspect in filing the appeal. So it would fall under sub-clause (b) of clause (1) of Section 129A of the Customs Act, 1962. The appellant has denied receipt of the Order in Original by registered post and has affirmed this by affidavit. When a letter is sent by registered post a presumption is to be drawn that it has been received by the addressee. However, such presumption is a rebuttable presumption. A negative fact can be established only by affidavit. When the appellant has affirmed the negative by filing an affidavit, the burden shifts on the department to establish as to why they served the registered letter to Shri S. Mujahian. Department has establish details that the person who signed the acknowledgment card is known to the appellant or that they have served the letter on the person who is duly authorized by the appellant. The department has failed to establish these facts. The only conclusion that can be arrived therefore is that the order is served on some person other than the appellant - When the registered post is received by some person unknown to the appellant it cannot be said that the order is served or communicated to the appellant. The consultant of the appellant has obtained a copy of the Order in Original on 16.12.2019. The appeal then has to be filed within 60 days from 16.12.2019. The appellant has filed the appeal before Commissioner (Appeals) on 9.3.2020 which is beyond 60 days period. The Commissioner (Appeals) can condone delay of 90 days. The delay in this case would be less than 30 days. So when computed from 16.12.2019, the appeal has been filed within the time limit condonable by Commissioner (Appeals). The rejection of appeal on the ground of time-bar cannot sustain and requires to be set aside - the appeal is remanded to the Commissioner (Appeals) who shall consider the application for delay - Appeal allowed.
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2021 (3) TMI 1190
Valuation of imported goods - Laptops - rejection of declared value - value rejected merely based on NIDB data - HELD THAT:- It clearly transpires that not only is the order passed by the adjudicating authority a very cryptic order but even otherwise opportunity was not provided to the appellant to file a detailed reply. The appellant had expressed inability to file a detailed reply because the documents, on the basis of which the declared value indicated in the 14 bills of entry was rejected, was not provided. It is, therefore, a fit care case which should be recommended to the adjudicating authority for passing a fresh order. The relevant documents shall be provided to the appellant within three weeks from today. The appellant shall file a reply within three weeks thereafter and the adjudicating authority shall pass a reasoned order within three weeks thereafter - Appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2021 (3) TMI 1200
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - NPA - Financial Creditors or not - existence of debt and dispute or not - Time Limitation - HELD THAT:- It is admitted that the Corporate Debtor failed to make any payment and only 20th May, 2016 the Respondent No. 1 issued a recall notice for an outstanding dues of ₹ 26,61,47,046/- - It is admitted that on 20.02.2019 the Respondent No. 1 computed the total dues of the Corporate Debtor which came to ₹ 42,33,36,044/- and informed the Corporate Debtor through letter which is part of Annexure- A/2 Vol- II, pages 247 to 249 of the Appeal Paper Book. In view of the categorical acknowledgement by the Corporate Debtor, acknowledging the dues and making requests for the rescheduled the payment of the instalments, we are of the clean opinion that in view of the Judgment of this Appellate Tribunal [ 2020 (9) TMI 582 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] dated 14th September, 2020 the ratio of the judgment is applicable in the facts of this case and this case is squarely covered by the aforesaid judgment. At this stage the plea of the Appellant is that the Application under Section 7 of the IBC is barred by limitation, cannot be sustained in the eye of law. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity - Appeal dismissed.
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2021 (3) TMI 1183
Maintainability of the proceedings under the SARFAESI Act, pending adjudication in the High Court - Validity of appointment of Special Officer as Administrator over the Financial Creditor, only to hold elections - time limitation - account of the Corporate Debtor had been declared NPA on 31st March, 2013 whereas the application under Section 7 of IBC had been filed on 27th August, 2018, after almost five years and five months from the date of accrual of the cause of action - HELD THAT:- There is no rationale for the view that the proceedings initiated by a secured creditor against a borrower under the SARFAESI Act for taking possession of its secured assets, were intended to be excluded from the category of civil proceedings - Even though Section 13 of the SARFAESI Act enables a secured creditor to enforce security interest created in its favour, without the intervention of the Court or Tribunal, the SARFAESI Act does not exclude the intervention of Courts and/or Tribunals altogether. Condonation of delay - Period of limitation under IBC - exclusion of period after the initiation of proceedings under the SARFAESI Act - HELD THAT:- Section 14 excludes the time spent in proceeding in a wrong forum, which is unable to entertain the proceedings for want of jurisdiction, or other such cause. Where such proceedings have ended, the outer limit to claim exclusion under Section 14 would be the date on which the proceedings ended - In the instant case, even if it is assumed that the right to sue accrued on 31.3.2013 when the account of Corporate Debtor was declared NPA, the financial creditor initiated proceedings under SARFAESI Act on 18th January 2014, that is the date on which notice under Section 13(2) was issued, proceeded with the same, and even took possession of the assets, until the entire proceedings were stayed by the High Court by its order dated 24th July 2017. The proceedings under Section 7 of the IBC were initiated on 10th July 2018 - since the proceedings in the High Court were still pending on the date of filing of the application under Section 7 of the IBC in the NCLT, the entire period after the initiation of proceedings under the SARFAESI Act could be excluded. If the period from the date of institution of the proceedings under the SARFAESI Act till the date of filing of the application under Section 7 of the IBC in the NCLT is excluded, the application in the NCLT is well within the limitation of three years. Even if the period between the date of the notice under Section 13(2) and date of the interim order of the High Court staying the proceedings under the SARFAESI Act, on the prima facie ground of want of jurisdiction is excluded, the proceedings under Section 7 of IBC are still within limitation of three years. The Chief Metropolitan Magistrate or the Judicial Magistrate, as the case may be, exercising powers under Section 14 of the SARFAESI Act, functions as a Civil Court/Executing Court. Proceedings under the SARFAESI Act would, therefore, be deemed to be civil proceedings in a Court. Moreover, proceedings under the SARFAESI Act under Section 13(4) are appealable to the DRT under Section 18 of the SARFAESI Act. Mr. Dave s argument that proceedings under the SARFAESI Act would not qualify for exclusion under Section 14 of the Limitation Act, because those proceedings were not conducted in a Civil Court, cannot be sustained. Keeping in mind the scope and ambit of proceedings under the IBC before the NCLT/NCLAT, the expression Court in Section 14(2) would be deemed to be any forum for a civil proceeding including any Tribunal or any forum under the SARFAESI Act - Section 5 and Section 14 of the Limitation Act are not mutually exclusive. Even in a case where Section 14 does not strictly apply, the principles of Section 14 can be invoked to grant relief to an applicant under Section 5 of the Limitation Act by purposively construing sufficient cause . It is well settled that omission to refer to the correct section of a statute does not vitiate an order. At the cost of repetition it is reiterated that delay can be condoned irrespective of whether there is any formal application, if there are sufficient materials on record disclosing sufficient cause for the delay. The NCLAT rightly refused to stay the proceedings before the NCLT. The judgment and order of the NCLT does not warrant interference - Appeal dismissed.
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Service Tax
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2021 (3) TMI 1206
Levy of Service tax - sale of starter packs with prepaid voucher - margin earned by the petitioners during the sale process - HELD THAT:- The issue on hand is squarely covered by the decision of the Hon'ble Division Bench in THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. BHARAT CELL [ 2015 (10) TMI 1111 - MADRAS HIGH COURT ] where it was held that Though the correct procedure for discharge of the service tax liability by the two parties is that the distributors raise bills for commissions that is due to them along with service tax and BSNL takes Cenvat credit of tax paid by distributors for discharging liability on the telecommunication service provided by BSNL, such procedure does not result in extra realization of Revenue. Petition allowed.
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2021 (3) TMI 1202
Scope of SCN - Refund of unutilized CENVAT credit of service tax - sales, marketing and administrative services - export of service or not - allegation is that the impugned order have all travelled beyond the SCN - HELD THAT:- When the show-cause notice dt. 28/03/2014 was issued when the appellant filed the refund claim and the grounds raised in the show-cause notice was lack of nexus, claim is time barred and lack of documentation or discrepancies in documents; whereas when the Order-in-Original dt. 16/01/2018 was passed, the original authority travelled beyond the show-cause notice and came to a finding that the sales, marketing and administrative services are classified as BAS provided in India and hence Rule 6A not fulfilled and the appellant is acting as an intermediary. Further, the appellant has satisfied all the six conditions of Rule 6A which proves that these services rendered by them are export of service. Thus, the impugned order is bad in law as it has travelled beyond the show-cause notice and also on merit, the services rendered by the appellant fall in the definition of Export of Service and the appellant is entitled to refund of the said amount - appeal allowed - decided in favor of appellant.
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2021 (3) TMI 1201
CENVAT Credit - Cargo Handling Services - duty paying invoices - supplementary invoices - the show-cause notice, adjudication order and the Order-in-Appeal have not mentioned anything regarding the issuance of show-cause notice by the Proper Officer for recovery of service tax from the service provider - applicability of exceptions contained in Clause (bb) of Rule 9(1) to restrict the credit - HELD THAT:- Admittedly in the present case, no proceedings have been initiated against the service provider Shri K. Basavaraj by issuing any notice and there is no adjudication order against the service provider who paid the service tax on the advice of the jurisdictional Superintendent and issued the supplementary invoices dated 4.3.2016 and the appellant on the basis of the said supplementary invoices has taken the CENVAT credit. Further, as per Rule 9 of CENVAT Credit Rules, 2004, supplementary invoices issued by the service provider is a valid and prescribed document for taking CENVAT credit and the only embargo for taking CENVAT credit is when the amounts as contained in the supplementary invoices become recoverable from the provider of service on account of non-levy or non-payment or short-payment or short-levy by reason of fraud, collusion, wilful mis-statement or suppression of facts and contravention of any of the provisions of the Finance Act, 1994 or Rules made thereunder with intention to evade payment of service tax as specified in Clause 9(1)(bb) of CENVAT Credit Rules, 2004. It has been consistently held by the Tribunal in the various decisions that in the absence of show-cause notice and determination that the additional amount of duty or tax become recoverable, the tax amounts paid by the service provider cannot be denied on the ground that provisions of Rule 9(1)(bb) of CENVAT Credit Rules, 2004 are attracted. Further, the allegations of adjudicating authority that the appellant have violated the provisions of Rule 4A(1) of CENVAT Credit Rules, 2004 and Rule 3 of the Point of Taxation Rules, is also erroneous because the said Rules are applicable to service provider and not to service recipient. The CENVAT credit of ₹ 25,54,522/- paid voluntarily by the service provider on the strength of supplementary invoices is admissible to the appellant as credit in terms of Rule 9(1)(bb) of CENVAT Credit Rules, 2004 - Appeal allowed - decided in favor of appellant.
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2021 (3) TMI 1195
Entitlement to interest in delayed refund - Section 11 BB of the Central Excise Act, 1944 - HELD THAT:- A perusal of the Orders-in Original reveals that the Assistant Commissioner has not granted or even considered the issue of interest under Section 11 BB ibid as correctly pointed out by the Commissioner (Appeals) in the impugned order. But, however, in the impugned order the Commissioner (Appeals) negatives the appellant s claim for interest terming it as Premature . The refund in the case on hand was sanctioned by the sanctioning authority after considering the facts and documents available as on the date of such sanction. So, there was no issue made out while sanctioning the refunds; the interest on the said refund which is a consequence of the refund, cannot be denied on flimsy grounds. This aspect when considered in the light of the dictum of the Hon ble Supreme Court in Ranbaxy Laboratories Ltd. [ 2011 (10) TMI 16 - SUPREME COURT ], leaves no room for any doubt as to the eligibility of the claimant, especially when the refund is sanctioned. Thus appellant is entitled to interest - cases remanded to the file of the Asst. Commissioner/sanctioning authority to workout appropriate interest and sanction the same to the appellant without any further delay, within a period of 3 months of receipt of this order at the concerned Commissionerate - appeal allowed by way of remand.
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Central Excise
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2021 (3) TMI 1186
Refund of amount paid in excess - rejection on the ground of time limitation - assessee was entitled to seek refund in the year 2006, but the assessee had chosen to seek refund only in the year 2019 - explanation B (ea) to Section 11 B of the Central Excise Act, 1944 - HELD THAT:- There are no hesitations in holding that the appellant s rightful request for refund dated 21.12.2006 which is very much on the record of the Revenue has not at all had been acted upon or rather ignored deliberately and nowhere do I find any denial by the Revenue as to its existence. Hence, I do not subscribe to the reasons given in the impugned order which has only upheld the Order-in-Original for rejecting the refund claim. I also find that the above refund claim of the appellant is very much in order, within the prescribed time and therefore, the impugned order deserves to be set aside. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (3) TMI 1188
Seeking issuance of Form F for first and second quarter - rectification of erroneous particulars were referred in column R 11.3 of Form DVAT-16 - stock transfer - HELD THAT:- The issue decided in the case of RITIKA PVT LTD VERSUS COMMISSIONER OF TRADE TAXES ANR. [ 2018 (11) TMI 1801 - DELHI HIGH COURT ] where the respondents are hereby directed to release the concerned F-forms within two weeks to enable appropriate correction in the relevant quarter. The petitioner shall however, furnish the surety bond to secure the amounts. The present writ petition is disposed of with the direction to the respondent to release Form F to the petitioner within two weeks to enable appropriate corrections to be carried out qua the relevant quarters.
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2021 (3) TMI 1187
Suo motu revisional power - Levy of sales tax on turnover - local sales or interstate sales - the appellate authority concluded that the transaction effected by the petitioner cannot be treated as interstate sale and they are only local sales and After more than 18 months, the revisional authority issued show cause notice - HELD THAT:- The show cause notice was solely based upon a decision of the Hon'ble Supreme Court in Co-operative Sugars (Chittur) Ltd. [ 1993 (4) TMI 270 - SUPREME COURT ] wherein, it was held that when the movement of goods was an incident of sale/purchase, it amounted to interstate sales/purchase. The first respondent has not mentioned in the show cause notice as to how the said decision would apply to the case of the petitioner especially when, the first appellate authority has examined the factual position and granted relief to the appellant. In the said decision of the Hon'ble Supreme Court, the facts were that the appellant therein had it sugar factory in Kerala State and pursuant to a Government Order issued by the Tamil Nadu Government, specifically permitting them to open office in Coimbatore and Pollachi Taluks only with a view to and exclusively for the purpose of transporting to their factory in Kerala, the Hon'ble Supreme Court held that such sale was an interstate sale. As rightly contended by the learned counsel for the petitioner, the facts dealt with in the said decision were peculiar and the first respondent was not justified in issuing show cause to exercise his suo motu power solely based on the said decision, which dealt with on different factual position - The first appellate authority after examining the invoices and the delivery challan, has recorded a finding of fact that a sale was completed in Tamil Nadu and any transportation, which had taken place after the sale at the instance of the buyer from Tamil Nadu to any other State, cannot bring it under the purview of interstate sale in the hands of the petitioner. One more important aspect which has been appealed is whether the revisional authority while exercising suo motu revisional powers can order for restoration of the original assessment orders on the grounds, which were not contained therein. The answer to the said question should be against the Revenue, because in the original assessment order, there is no reference to the decision of the Hon'ble Supreme Court and seeking to revise the order passed by the first appellate authority by referring to a decision, which was not subject matter of the original assessment order is impermissible. The Revenue was clearly barred from directing the original assessment order to be restored on grounds, which were not contained in the original assessment order. The first respondent could not have exercised his suo motu revisional powers to interfere with the order passed by the first appellate authority dated 20.01.1997 - Petition allowed.
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2021 (3) TMI 1184
Refusal to issue Form-C - natural gas purchased by petiitoner in the course of inter- state trade or commerce and used by it for the generation of electricity - whether after the amendment of the CST Act, the petitioner is entitled to be issued C' Forms in respect of the natural gas purchased by it in the course of inter-state sales and used by it for the generation of electricity? - HELD THAT:- Considering the consistent view of nine High Courts, including dismissal of special leave petitions by different Bench of this Court, and being satisfied about the exposition on the matters in issue by the High Court of Madras vide impugned judgment and order being a possible view, we decline to interfere in these special leave petitions. Notably, after the decision of Punjab and Haryana High Court even the Union of India has chosen to act upon the said decision by issuing Office Memorandum dated 1st November, 2018 and directing all the States/Union Territories to follow the view taken by the Punjab and Haryana High Court. SLP dismissed.
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Wealth tax
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2021 (3) TMI 1185
Reopening of wealth tax assessment - assessee has not filed any wealth tax return as on the basis of cash in hand - HELD THAT:- As notice u/s.17 of the Wealth Tax Act, 1957, was issued by the Assessing Officer after verification of balance-sheet filed by the assessee along with return of income pertaining to income-tax assessment, the Assessing Officer has noticed that assessee has shown cash in hand to the amount of ₹ 85 lakhs in the balance-sheet. Assessee has neither paid wealth tax nor filed any wealth-tax return. Therefore, the Assessing Officer has reopened the wealth tax assessment after recording due reasons and obtaining necessary approval. Looking to the aforesaid facts and circumstances of the case, we do not find any infirmity in justifying the reopening of wealth-tax assessment and further on the basis of notices issued to the assessee, we consider that sufficient opportunities were provided to the assessee at the time of wealth-tax assessment. In view of the above, Ground Nos.1 to 3 of the assessee s appeal are rejected. Treating disclosed cash in hand as part of total wealth-tax of the assessee - At the time of wealth-tax assessment, assessee has claimed that aforesaid cash was actually represented outstanding amount as a receivable and incorrectly shown as cash in hand in the balance-sheet. In this regard, it is noticed that assessee has not shown any debtor or any other receivable to substantiate his claim that actually the cash in hand was receivable. As gone through the paper-book filed by the assessee and noticed that assessee has failed to produce any material to authenticate his contention that the cash in hand in his account was actually receivable and pertained to the sales. In the light of above facts and circumstances, it is clear that assessee has not rendered any cogent explanation or documentary evidence to support his contention before the authorities below or before us at the time of appellate proceedings. Even the assessee has not given the basic details of list of debtors from whom the aforesaid amount was receivable. Therefore, no merit in the ground of assessee s appeal.
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