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TMI Tax Updates - e-Newsletter
April 12, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Withholding of refund - Release of refund u/s 241A with Interest u/s 244A - this Court had directed the respondents-revenue to place on record the alleged orders passed under Section 241A of the Act.Today, learned counsel for respondents-revenue states that no order has been passed u/s 241A of the Act till date. - revenue directed to release the refund amounts due to the petitioner within four weeks in accordance with law. - HC
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Reopening of assessment u/s 147 - Reasons to believe - availability of tangible material - Having regard to the materials on record it cannot be said that there is a there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing. AO could be said to have applied his mind to the same. AO could not be said to have merely concluded without verifying the facts that it is the case of reopening of the assessment. - HC
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Penalty under section 271(1)(c) - Unexplained gifts, unexplained cash credit and another unexplained credit entry - he assessee has also not chosen to explain how the additions made by the AO are unjustified. In the absence of the same, the grounds raised before us are general in nature without any material support and therefore, we are unable to decide the issues on merits of the case. - AT
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Assessment under section 153A - when the proceedings before the ITSC fail on the ground of non fulfilment of conditions laid down under section 245 of the Act by the assessee, AO is required to decide the issue independently and is not permitted to make addition merely on the basis of suo-moto disclosure made by the assessee before the ITSC, which is undisputedly on adhoc basis. More particularly, when “no incriminating material” was found or seized during the search and seizure operation carried out on the basis of which assessment has been framed, any addition made otherwise is not sustainable. - AT
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Addition u/s. 56(2)(viib) - shares issued at premium - Valuation under rule 11UA - The argument of the assessee is not acceptable because rules are applicable to year under assessment. - As the shares were allotted during the year under consideration, i.e. 2013-14 itself, Rule 11UA become applicable from 2013- 14 itself. - AT
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Gross profit on deficit of stock - Disclosure made by the assessee during the survey operation - survey operation under section 133A on the premises of the assessee - Assessee has not discharged its onus by producing the primary documents in support of its contention. The primary onus lies on the person who asserts the preposition and not on the person who denies. - AT
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Depreciation on assets on demerger - actual cost as per section 43(1) of the Income Tax Act, 1961 was nil - The demerger led to division of assets in a fixed ratio and the same was duly accounted for both the entities as per the written down value (WDV) as on that date. The depreciation on de-merger cannot be a forgone benefit owing to de-merger, which is the result of state reorganization. - AT
Customs
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Advance Authorisation Scheme - Request of the appellant for endorsing advance authorisation numbers on the free shipping bills and for issue of NOC for considering the free shipping bills as shipping bills - the appellant have exported the goods from Karwar Port which is not authorised - at the time of export of goods, the advance authorisations were very much in existence. More over the appellant have been making repeated requests to the Department for export of goods from Karwar Port under the aforesaid advance authorisations. Therefore, there were all the documents existing at the time of export of goods. On this basis, the appellants are clearly entitled for amendment in the shipping bills by conversion of free shipping bills to shipping bills under advance authorisation. - AT
Indian Laws
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Constitutional validity of the amendments to the provisions of the Foreign Contribution (Regulation) Act, 2010 - Infringement of fundamental rights - - Having noted that the provision became necessary for efficient regulation of foreign contribution on real-time basis, it can neither be said to be manifestly arbitrary nor irrational much less without legitimate objective of the State. Accordingly, there are no hesitation in negating the challenge to these provisions as being violative of Articles 14, 19 and 21 of the Constitution - SC
Central Excise
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Clandestine Removal - Ingots - the charges levelled against the appellants for clandestine manufacture and removal of final products, without payment of duty are not substantiated with cogent and reliable evidence. It is found that a case of this magnitude needs to be corroborated by establishing other facts such as purchase of raw material, deployment of labour, additional consumption of electricity, manufacture of final products, removal and transportation of the same to customers premises and payments received for the same - in the instant case, no other criteria has been investigated and established. The whole case is sought to be made by surmises and conjectures. - AT
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Grant of interest in respect of the refund claim already granted - Revenue’s contention is that they have granted the refund within three months form the date of Commissioner (Appeals) order - it can be concluded that once the Commissioner (Appeals) has allowed the refund, the appellant was entitled for the refund right from the date of filing of the application. Therefore, for the purpose of interest, it is not the date of Commissioner (Appeals) order, but it is the date of filing of refund application needs to be taken. - AT
Case Laws:
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GST
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2022 (4) TMI 510
Rectification of mistake - appealable under Section 86 of the Finance Act, 1994 - seeking opportunity of placing the relevant documents before the authorities - HELD THAT:- The Court is of the considered opinion that as the provisions of Section 74 of the Finance Act, 1994 provides for rectification of mistake, the ends of justice would be met to permit the petitioner to avail the statutory remedy as provided for under Section 74 of the Finance Act, 1994 by applying for rectification of mistakes, if any. The Court records the objection made by the learned Standing Counsel for GST. Be that as it may, as the Finance Act, 1994 provides under Section 74 for rectification of mistakes. Therefore, without adjudicating the issue raised in the writ petition, the Court is inclined to relegate the petitioner to submit a representation before the respondent no. 2 in an appropriate manner under Section 74 of the Finance Act, 1994 and on receipt of such representation, the respondent no. 2 i.e. Principal Commissioner, GST and Central Excise Commissionerate shall dispose of the said representation in accordance with law. Petition disposed off.
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2022 (4) TMI 509
Refund of IGST - zero rated supplies - seeking grant of ex-parte ad interim order - HELD THAT:- Today, when the matter was taken up for hearing, Mr. Trivedi made a statement that this writ application need not now be adjudicated on merits as the refund has been sanctioned and paid to his client with 9% interest. Application disposed off.
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2022 (4) TMI 508
Seizure of goods alongwith conveyance - GST registration obtained by fraudulent documents - tax evasion through bogus billing activities - HELD THAT:- he adjudication of this writ application may take some time. If the writ applicants are ready and willing to deposit the amount of ₹ 15,46,182/- towards tax and penalty, then we should order release of the goods and the conveyance. Let Notice be issued to the respondents, returnable on 7th April 2022.
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Income Tax
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2022 (4) TMI 507
Withholding of refund - Release of refund u/s 241A with Interest u/s 244A - refund after the completion of assessment u/s 143(3) - Petitioners prays for release of refunds comprising principal amount and interest calculated up to February, 2022 along with applicable interest u/s 244A due to the Petitioner for the AY 2017-18 and refunds comprising principal and interest calculated up to February, 2022 along with applicable interest under Section 244A of the Act due to the Petitioner for the AY 2018-19 - HELD THAT:- On the last date of hearing, this Court had directed the respondents-revenue to place on record the alleged orders passed under Section 241A of the Act.Today, learned counsel for respondents-revenue states that no order has been passed u/s 241A of the Act till date. Keeping in view the aforesaid clarification, this Court directs the respondents-revenue to release the refund amounts due to the petitioner within four weeks in accordance with law. With the aforesaid direction, the present writ petitions along with pending applications stand disposed of.
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2022 (4) TMI 506
Reopening of assessment u/s 147 - Reasons to believe - availability of tangible material - HELD THAT:- As in the case on hand, the search assessment was finalized u/s 143(3) read with Section 153A - Thereafter, survey action under section 133A of the Act was conducted by the Investigating Wing, Mumbai in the case of Shri Bijal Ashok Shah, proprietor of M/s. Swastik Corporation. During the course of the survey action, one statement of ijal Ashok Shah was recorded on oath wherein he admitted that he is engaged in the business of providing accommodation entries to the beneficiaries in lieu of commission. Bijal Ashok Shah also disclosed the modus operandi employed by him to provide the entries to the beneficiaries . Bijal Ashok Shah, in his statement, has also named the writ applicant herein as one of the recipients of the accommodation entries. All these facts were not before the Assessing Officer at the time of finalization of the search assessment. It is a settled position of law that the adequacy of the reasons provided by the Assessing Officer fall outside the review powers and remains within the domain of the Assessing Officer at this stage of the proceedings where only a preliminary finding under section 147/148 has been made. Having regard to the materials on record it cannot be said that there is a there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing. AO could be said to have applied his mind to the same. AO could not be said to have merely concluded without verifying the facts that it is the case of reopening of the assessment. We have examined the belief of the AO to a limited extent to look into whether there was sufficient material available on record for the Assessing Officer to form a reasonable belief and whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. The case on hand is not one where it could be argued that the Assessing Officer, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking the pains to form his own belief in respect of such materials. Writ application dismissed.
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2022 (4) TMI 505
Penalty under section 271(1)(c) - Unexplained gifts, unexplained cash credit and another unexplained credit entry - assessee has not submitted any details or evidences in support of his claim, even after issuance of several notices on the assessee - HELD THAT:- As rightly stated by the ld.DR, this is second round of litigation before us. In terms of remand order given by the Tribunal, the ld.CIT(A) passed a detailed order wherein also the assessee has not appeared and nor provided any material to support her claim, rather by a letter, contending something irrelevant to the proceedings pending before the appellate authority. The assessee has also not chosen to explain how the additions made by the AO are unjustified. In the absence of the same, the grounds raised before us are general in nature without any material support and therefore, we are unable to decide the issues on merits of the case. Therefore, all the grounds raised by the assessee are devoid of any merit, they are accordingly rejected. Further, assessment year involved herein is 2004-05, in the absence of any material, no useful purpose is to be achieved.- Appeal of assessee dismissed.
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2022 (4) TMI 504
Late payment of Employee contribution of PF and ESI - addition made by the CPC u/s 143(1) - whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed or ought to have been applied for the purpose of determining the due date under this clause? - HELD THAT:- It is settled issue that no debatable issues are permitted to be made adjustments u/s 143(1) of the Act. In the instant case, what was added in the intimation u/s 143(1) was the employees contribution to PF and ESI. Hon ble Madras High Court in the case of Redington (India) Ltd. held that employees contribution to PF and ESI is also allowable deduction, if, the same is paid before the due date for filing the return of income. This Tribunal in the case of Andhra Trade Development Corporation in [ 2021 (5) TMI 263 - ITAT VISAKHAPATNAM] held that debatable issues are not permitted to be made adjustments while processing the return of income u/s 143(1). As before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees contribution on account of provident fund and ESI, whether the due date is as per the respective Acts or up to the due date of filing of return of income of the assessee. As noted by Hon ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd.[ 2014 (9) TMI 576 - SUPREME COURT] an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would cause undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 by way of Explanation-2 to s. 36(1)(va) of the Act along with Explanation-5 to s. 43B of the Act w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22, cannot be applied retrospectively. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. On merits also, this Tribunal has consistently viewed that the employees contribution to PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income - Decided in favour of assessee.
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2022 (4) TMI 503
Unexplained cash deposits found to be made in the bank account - non-compliance on the part of the assessee before the authorities below - Assessee submitted that during the course of appellate proceedings before the learned CIT(A), one of the close relatives of the assessee was infected with Corona Virus who finally succumbed to the said disease, and in view of this distress condition, the assessee could not comply even with the notices issued by the learned CIT(A) - HELD THAT:- Keeping in view the submissions made by the learned representatives of both the sides and having regard to all the facts of the case, we are of the view that it would be fair and proper and in the interest of justice to give one more opportunity to the assessee to put-forth his case on merit subject, however, to imposition of cost on the assessee for the casual approach. We accordingly direct the assessee to pay an amount of ₹ 5,000/- to the Prime Minister s Relief Fund as cost and subject to the said payment, we restore the matter to the file of the Assessing Officer for deciding the same afresh - Appeal of the assessee is treated as allowed for statistical purposes.
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2022 (4) TMI 502
Deduction u/s 80P - income being interest earned from bank - as observed by the CPC, that deduction under Chapter-VIA will not be allowed unless respective schedules are filled properly - HELD THAT:- Though the assessee has filed a short reply but the same was not supported by any material evidence to justify the same. In the absence of any details, CIT(A) was justified in rejecting the claim of the assessee. Before the Tribunal also, as aforesaid, the assessee has given number of opportunity to defend its case, however, the assessee remained unattended and non- represented. Like in the first appellate proceeding, even before us also there was no material to decide the case of the assessee on merit. It is settled principle of law that the assessee who is claiming a deduction should come with full details and evidences of such claim. In the absence of the same, the authority cannot grant the relief to the assessee. Accordingly, it is presumed that the assessee is not interested in prosecuting its appeal pending before the Tribunal in spite of six hearing notices duly served. Therefore, in the absence of any material to adjudicate its case, we have no hesitation in dismissing the appeal of the assessee. Accordingly, we reject all grounds of appeal of the assessee.
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2022 (4) TMI 501
Addition made on account of notional interest on interest free deposit s received by the assessee - HELD THAT:- As is evident and also admitted by the learned AR that the aforesaid decision in Tip Top Typography [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] was not pointed out and therefore not considered by the Tribunal. Thus, the Co-ordinate Bench of Tribunal had no benefit of the decision of Hon ble Jurisdictional High Court while deciding the assessee s appeal for assessment year 2012 13 and accordingly addition was upheld on the basis of security deposit received by the assessee by following decision rendered in K. Streetlite Electric Corporation [ 2010 (10) TMI 742 - PUNJAB AND HARYANA HIGH COURT] The decision in Tip Top Typography (supra) is rendered by Hon ble Jurisdictional High Court and is thus binding on us. However, in the present case, the addition has been made following the approach adopted in the assessment year 2012 13. Therefore, we deem it appropriate to remand this issue to the file of Assessing Officer for de novo adjudication in light of the decision of Hon ble Jurisdictional High Court in Tip Top Typography (supra). Accordingly, ground nos.1 to 4 raised in assessee s appeal are allowed for statistical purpose.
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2022 (4) TMI 500
Exemption u/s 11 - exemption denied as assessee not furnishing the audit report in form No. 10B along with return of income filed by the assessee - HELD THAT:- Since the assessee in the instant case has got its accounts audited before the due date and has undisputedly filed the same before the completion of the assessment, therefore, we are of the considered opinion that the CIT(Appeals) is not justified in denying the claim of exemption u/s 11 on the allegation that form No. 10B has not been filed in time. Accordingly, order of the learned CIT(Appeals) is set aside and the grounds raised by the assessee on this issue are allowed.
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2022 (4) TMI 499
Rectification u/s 154 - Deduction u/s. 54F on long term capital gain on sale of property - whether it can be said that the facts are straightforward enough to come to an unmistakable conclusion that the assessee has earned short term capital gains and assessee held the asset only for a period of 10 months, as held by the Ld. AO in the 154 order? - HELD THAT:- In our view, perhaps after a long drawn debate, we may come to the conclusion that the assessee did in fact earn short term capital gains and is not eligible for exemption u/s 54F of the Act which is available on sale of asset held for more than 36 months. However, in our view, this decision would not qualify as a mistake apparent from the record . There are few factors which need to be considered while taking a view in the matter. Firstly, the assessee entered into a Banakhat with the seller in 1987 in respect of a piece of land, which was duly registered. Secondly, the said piece of land was converted from agricultural to non-agricultural with the object to effectuate the Banakhat referred to above. Thirdly, the assessee has produced copies of Gota Gram Panachayat tax bills for the period 1988-89 to 2004-05 with the assessee s name was appearing which showed that the assessee had effective right over the property since 1987. The above seems to suggest that assessee had secured the right to purchase the property after completing necessary formalities. Fourth, the same property in respect of which Banakhat was entered in 1987 was transferred in the name of the assessee by the same party/ seller. It would be difficult to conclude that it is a straightforward case wherein the Ld. assessing officer has made a mistake apparent from the record . Assessee has brought various evidences in support of his contention that the assessee had secured effective right to have the asset transferred in his name since 1987. Both parties, the seller and the buyer of land (assessee) took necessary steps to effectuate the sale. The sale of said plot was registered in assessee s name on 08-12-2009. The issue involved requires an analysis of facts before coming to the conclusion whether the sale of land by the assessee qualifies as a short term or long term capital gains. This, in our view, is not an issue which can be a subject matter of section 154 of the Act. Therefore, in our view, the Ld. CIT(A) erred in law and in facts in upholding the order u/s 154 of the Act passed by the Ld. AO. Appeal of assessee allowed.
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2022 (4) TMI 498
Addition being the amount credited to the assessee s capital account in the firm SP - Addition u/s 68 - same in fact forms part of the credit to the assessee s account in the said firm, made, with a corresponding debit to his mother s capital account in the said firm - HELD THAT:- We are wholly unable to fathom the basis of the said addition. The amount under reference stands credited, firstly, to the bank account of VR and, then, to the bank account of SP, i.e., on the transfer of funds by her thereto (SP). The transfer (credit) to the assessee s account in SP is through a corresponding debit to the account of VR on her death, to give effect to her Will dated 06/12/2014 - The impugned amount could therefore be added as unexplained bank deposit in the hands of VR (assessable through her legal representative), or of SP, i.e., u/s. 68 as unexplained credit, the nature and source of which is, rather, apparent. The transfer to the assessee s capital account in SP (which became proprietorship w.e.f. 15.12005) on her death, is only a transfer of an existing credit in the books of SP, i.e., from one account to another. The same could be regarded as unsatisfactory where the AO challenges or otherwise expresses dissatisfaction with the stated reason for this transfer. True, the AO has doubted the Will, claiming it to have been in fact not signed by the mother (VR). CIT(A) has glossed over this aspect, observing that the credit has been passed to the assessee only after her death. It needs to be appreciated that it is only by virtue of the Will that the sum stands credited to the assessee. The only issue that could therefore possibly arise is the claim on the said balance of the other claimants, inasmuch as the same may raise doubts as to its genuineness. Sh. Bardia would during hearing, with reference the Will, explain that VR had bequeathed her capital in each of the three different partnership firms being managed by her three sons, as SP by the assessee, thereto. Further, that the Will is undisputed by any of the Class-1 legal heirs. This, we observe, stands also explained before the AO. Under the circumstances, we find no reason to doubt the genuineness of the credit and, accordingly, confirm the deletion, save the separate addition for ₹ 11.80 lacs forming part of the impugned sum of ₹ 64.51 lacs (to the extent of ₹ 11.44 lacs), and which therefore stands agitated per the assessee s Ground 2. Difference between the opening balance of the assessee s capital account - What does the said difference signify, we fail to understand. None of the entries in the said two accounts, we observe, have been questioned by the AO. In fact, but for the fact at the same stands made explicit by the AO (refer para 10(ii)/page 6 of his order), making the snapshot of the two ledger accounts afore-noted, a part of his order, we would have been disinclined to believe Sh. Bardia that this difference, which carries no meaning, could be the subject matter of an addition, with we also confirming the balance (as on 14.01.2015) of the assessee s capital in the firm (SP) s audited accounts (PB pg. 81). We are completely at loss to understand the basis of the said addition, and neither was any explained to us during hearing. It is accordingly confirmed for deletion. We decide accordingly. Assessee s debit balance in SP as on 14.1.2015 and the credit balance of the said firm in the assessee s personal books of account at the same sum - This is again quizzical. Are not, one may ask, the two balances supposed to be in agreement, and opposite in character, i.e., representing an asset and a liability respectively? And, further, why should the two be added? The addition is meaningless, and rightly deleted, which we hereby confirm. We decide accordingly. Agricultural income - The same has been deleted by the ld. CIT(A) on the basis that the assessee owns 7.17 hectares of agricultural land and, further, had been returning such income in the past. The assessee s case is sans any evidence. No evidence, we find, has been produced at any stage in respect of sale of Masoor Daal , stated to be sold, much less carrying out of any agricultural activity. Two, how, one wonders, the sale of an agricultural commodity, even if shown, would, without anything more, show the same to be cultivated by the assessee? How, again, has the income component therein been determined? The declaration of such income, or even its acceptance, both not shown, for other year/s, would not explain the income for another year, particularly in the absence of any evidence. We, accordingly, find no basis for deletion and, accordingly, direct its restoration.
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2022 (4) TMI 497
Late payment of Employee contribution of PF and ESI - Revenue has disputed that the employees contribution received by the assessee would be treated as income of the assessee because the same has not been deposited in the Government account within the due date as prescribed under the respective Acts - whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed ought to have been applied for the purpose of determining the due date under this clause? - HELD THAT:- This amendment has brought in the statute book to provide certainty about the applicability of provisions of Section 43B in spite of belated payment of employees contribution. We also noted from the memorandum explaining the provisions to Finance Act, 2021, wherein relevant Clauses to said memorandum clearly intended that the amendment shall take effect from 01.04.2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years. In the present case also, before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees contribution on account of provident fund and ESI, whether the due date is as per the respective Acts or up to the due date of filing of return of income of the assessee. As noted in the case of CIT vs. Vatika Township Pvt. Ltd [ 2014 (9) TMI 576 - SUPREME COURT] amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would cause undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 by way of Explanation-2 to s. 36(1)(va) of the Act along with Explanation-5 to s. 43B of the Act w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22, cannot be applied retrospectively. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue of assessee s appeal is allowed.
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2022 (4) TMI 496
Estimation of income - bogus purchases - restricting the addition to the extent of 5% - HELD THAT:- It is a settled law that in case of disputed purchases shown from such hawala dealer s only profit element embedded in such transaction is to be disallowed, to avoid the possibility of revenue leakage and not the substantial part of transaction. No doubt, the AO identified the purchases shown from hawala dealers, the assessee may have shown other transaction with some other parties. However, the assessee has offered a meagre income of ₹ 1,14,580/- for taxation, thus the assessee was shown an extremely low profit. This combination in other similar cases wherein the purchases are shown from Bhanwarlal Jain or Rajendra Jain or Gautam Jain group have restricted or enhanced the addition to the extent of 6% of such amount or disputed purchases. Therefore, taking a consistent view, the disallowance which was restricted to the extent of 5% by ld. CIT(A) are increased to 6% of the impugned purchases of ₹ 7.66 Crores. In the result, the grounds of appeal raised by the Revenue is partly allowed resultantly, the ground No. 2 of assessee s appeal is dismissed
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2022 (4) TMI 495
Disallowance made under the head of PF/ESI for delayed payment under section 36(1)(va) read with section 2(24)(x) and section 43B - HELD THAT:- We find that the issue in hand is covered in favour of assessee by the said order of Vijay Shree Ltd [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] and in the case of Lumino Industries [ 2021 (11) TMI 926 - ITAT KOLKATA] wherein direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139( 1) Considering the uncontroverted factual matrix on record about the deposit of the contributions before the due date of filing of return u/s. 139(1) of the Act and respectfully following the above decision of the Hon ble Jurisdictional High Court, the disallowance made by the ld.AO and confirmed by the ld. CIT(A) is hereby deleted. Grounds raised by the assessee are allowed.
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2022 (4) TMI 494
Deduction u/s 80P(2)(a)(i) - interest income as received by the assessee on the surplus deposited with BDCC Bank Ltd. and also investments of statutory reserve funds - HELD THAT:- On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered in the case of CIT vs. Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] as referring to case of Totgars Co-operative Sales Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon ble Supreme Court in the aforesaid case (supra) not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. As from material on record it is not clear that whether the entire interest income was received from cooperative bank or other bank? - In the circumstances, we remit the matter to the file of the Assessing Officer for the purpose of verifying whether entire interest income of ₹ 8,19,601/- was received from other co-operative bank, if so, allow the same or otherwise restricted the exemption to the extent of income received from other cooperative banks. Thus, the grounds raised by the assessee are partly allowed for statistical purposes.
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2022 (4) TMI 493
Addition on account of interest paid on overdraft - As per AO interest expenditure was not included by the assessee in its closing stock of Work-in-Progress (WIP) of its projects - HELD THAT:- When the assessee had recovered the entire amount of interest that was charged by the bank on the amount which was advanced by it to its sister concern, therefore, as stated by the ld. AR, and rightly so, the claim for deduction of interest expenditure stood nullified in the backdrop of the corresponding interest income that was received from the sister concern. We find that a similar alternate disallowance of interest expenditure that was made by the Assessing Officer in the case of the assessee for the immediately preceding year i.e. A.Y. 2012-13 [ 2016 (11) TMI 1713 - ITAT PANAJI] was vacated by the Tribunal, and the said order had thereafter been approved by the Hon ble High Court of Bombay. Backed by our aforesaid observations we find no merit in the aforesaid grievance of the revenue that the CIT(Appeals) had erred in not sustaining the alternate disallowance - The Ground of appeal raised by the revenue is dismissed in terms of our aforesaid observations. Trading liability which had ceased within the meaning of section 41(1) - HELD THAT:- Ceased liability can be added u/s. 41(1) of the Act only in the year, when some benefit in respect of trading liability i.e., by way of remission or cessation thereof, had been obtained by the assessee. As such, the addition of a trading liability which had ceased can only be made in the previous year, in which, some benefit in respect of such trading liability by way of remission or cessation thereof, had been obtained by the assessee. In our considered view, the Assessing Officer in the case before us had though pointed out that there is a cessation of liability but had failed to place on record any material which would irrefutably evidence that such cessation had taken place during the year in question i.e. A.Y. 2013-14, and as a result thereof, the consequential benefit by way of remission or cessation thereof had been obtained by the assessee during the said year itself. We, thus, in terms of our aforesaid observations not being able to persuade ourselves to the summarily dubbing of the aforesaid amount as the assessee s ceased liability for the year under consideration vacate the same - Decided in favour of assessee.
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2022 (4) TMI 492
Assessment u/s 153A - validity of the search assessment - HELD THAT:- All the additions as confirmed by Ld. CIT(A) in the impugned order are liable to be deleted since the same are not based on any incriminating material unearthed during the course of search operations. We order so. The assessee s legal grounds succeed. Interest on borrowed capital - assessee claimed interest in borrowed capital under the head Income from House Property - CIT(A) held that interest on subsequent loan could be allowed provided the same was taken to repay earlier loans and deduction would be allowable only to the extent of interest on earlier loan used for acquiring the property and not on the unpaid interest on earlier loans - HELD THAT:- We concur with the findings of Ld. CIT(A) since the same are based on facts. The interest is allowable only if the loan has been utilized to acquire the property. To that extent, interest has already been allowed to the assessee. Finding no infirmity in the impugned order, on this issue, we dismiss the ground raised by the assessee. Rental Income - We find that in case of property which has been let out for part of the year, the assessee would be entitled for vacancy allowance if the property remains vacant for part of the year. It is undisputed position that the property has remained unoccupied for part of the year. Therefore, the assessee is entitled for vacancy allowance and this addition has no legs to stand. By deleting the same, we allow the ground of appeal. Legal grounds are concerned, we find that the assessee was subjected to search action on 11.05.2012. The assessee had already filed return of income on 14.03.2012. However, the time limit to issue notice u/s 143(2) had not expired and Ld. AO could have issued said notice by 30.09.2012. Therefore, it is not a case of concluded assessment. Rather Ld. AO was well within his right to make any addition after examination of assessee s books of account. The legal proposition laid down by Hon ble Delhi High Court in Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] also supports this view. No infirmity has been shown to us in the jurisdiction acquired by Ld. AO. - Decided in favour of assessee.
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2022 (4) TMI 491
Assessment under section 153A - Addition based on suo-moto disclosure made by the assessee before the ITSC u/s. 245D(1) - addition made by the AO in the absence of any incriminating material - Assessment proceedings pending before the AO the assessee has exercised its option under section 245D(1) by moving an application before ITSC - HELD THAT:- We have perused the order passed in case of Anantnadh Constructions and Farms (P.) Ltd. [ 2017 (5) TMI 1692 - ITAT MUMBAI] with the assistance of Ld. A.Rs for the parties to the dispute, which is on identical issues and has been decided in favour of the assessee by holding that after reopening of the assessment order no addition can be made on the basis of income suo-moto offered by the assessee before the ITSC when settlement got aborted for one reason or the other mentioned in section 245HA(1) As following the decision in cases of Anantnadh Constructions and Farms (P.) Ltd. (supra) Shivali Mahajan [ 2019 (3) TMI 1196 - ITAT DELHI] we are of the considered view that when the proceedings before the ITSC fail on the ground of non fulfilment of conditions laid down under section 245 of the Act by the assessee, AO is required to decide the issue independently and is not permitted to make addition merely on the basis of suo-moto disclosure made by the assessee before the ITSC, which is undisputedly on adhoc basis. More particularly, when no incriminating material was found or seized during the search and seizure operation carried out on the basis of which assessment has been framed, any addition made otherwise is not sustainable. We are of the considered view that the Ld. CIT(A) has erred in upholding the addition made by the AO in the absence of any incriminating material, merely on the basis of suo-moto disclosure made by the assessee before the ITSC, as the said proceedings got aborted due to non fulfilment of conditions by the assessee, no addition is sustainable in the eyes of law. So the question framed is decided in favour of the assessee and against the Revenue. Consequently, addition made by the AO and confirmed by the Ld. CIT(A) is ordered to be deleted. Hence, appeal filed by the assessee allowed.
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2022 (4) TMI 490
Revision u/s 263 - return was selected for Limited Scrutiny exclusively for verification of claim of weighted deduction u/s 35(1)(ii) - inadequate or lack of enquiry - HELD THAT:- We find from the narration of facts, the ld . AO had indeed carried out requisite enquiries on the issue of deduction u/s 35(1)(ii) of the Act. Once an assessment is framed after conducting enquiries as detailed supra, then the order passed by the ld AO cannot be subject matter of revision u/s 263 - The law is now very well settled that the revision jurisdiction u/s 263 of the Act could be invoked by the ld. PCIT only in the event of lack of enquiry‟ by the ld AO and not on account of inadequate enquiry‟. Reliance in this regard is placed on the decision in the case of CIT vs Sunbeam Auto Ltd [ 2009 (9) TMI 633 - DELHI HIGH COURT] . We deem it fit and appropriate to hold that the ld. PCIT could not have validly invoked revision jurisdiction u/s 263 of the Act and hence the order passed u/s 263 of the Act by him is hereby quashed. Accordingly, the grounds raised by the assessee are allowed.
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2022 (4) TMI 489
Penalty u/s 271 - Defective notice u/s 274 r.w.s. 271(1)(c) as issued as no specific charge was levelled against the assessee - HELD THAT:- Revenue failed to level any specific charge against the assessee which has, therefore, vitiated the penalty proceedings from the very beginning itself. Therefore, since notice issued for levy of penalty is invalid and defective, penalty proceedings carried thereafter deserves to be quashed. We accordingly order so, allow the legal ground raised by the assessee
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2022 (4) TMI 488
Reopening of assessment u/s 147 - jurisdiction of the AO ITO, Ward-36(4)] to frame the reassessment order - HELD THAT:- As per the restructuring there was change in jurisdiction and it is noted that the assessee s assessment has to be done by ITO, Wd-36(4) of Kolkata. Even after transfer of jurisdiction from ITO, Ward-40(4) to ITO, Ward- 36(4), Kolkata, it is noticed that the reopening notice u/s 148 was issued on 27.03.2019 by ITO, Wd-45(4) who did not enjoy the jurisdiction even during the period of pre-circular dated 13.11.2014; and thereafter realizing the mistake ITO has transferred the case to the ITO, Wd-36(4) who thereafter framed the reassessment. It is clear from the perusal of the assessment order as well as from the records that ITO, Wd-36(4) has not issued any notice u/s. 148 whereas notice has been issued by ITO, Ward-45(4) dated 27.03.2019. In this admitted facts and having noticed that the ITO, Wd-36(4) had not issued notice u/s. 148 of the Act before framing the reassessment order we are inclined to allow the appeal of the assessee. Impugned notice of the ITO, Wd-45(4) u/s. 148 who did not had jurisdiction at all is quashed and, therefore, all the consequential action is null in the eyes of law.
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2022 (4) TMI 487
Delayed payment of PF ESI - deposits before filing of Return of Income - HELD THAT:- We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2017-18 and the Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration. See HARENDRA NATH BISWAS VERSUS DCIT, CIRCLE-29 KOLKATA [ 2021 (7) TMI 942 - ITAT KOLKATA] wherein held that we do not accept the Ld. CIT(A) s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund and as per the binding decision of the Hon ble High Court in Vijayshree Ltd [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.
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2022 (4) TMI 486
Disallowance made in respect of PF ESI in respect employee s contribution u/s. 36(1)(va) r.w.s. 2(24)(x) - HELD THAT:- As assessee has remitted the PF ESI dues before the date of filing of return of income u/s. 139(1) of the Act and the same was deposited , which fact is discernable from a perusal of the Tax Audit Report (TAR) and on a perusal of the same it is seen that the assessee has deposited employees contribution before the due date of filing of the return. See LUMINO INDUSTRIES LTD. [ 2021 (11) TMI 926 - ITAT KOLKATA] Therefore allow the appeal of the assessee and direct the A.O. to delete the addition and hold that the Amendment brought in Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature and would apply from AY 2021-22 onwards and, therefore, the amendment is not applicable to this assessment years (Assessment Year 2019-20) under consideration. - Appeal of assessee allowed.
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2022 (4) TMI 485
Revision u/s 263 by CIT - sale of investment in equity shares - HELD THAT:- In the assessment order u/s 143(3) r.w.s. 147 AO specifically mentioned the issue pertaining to alleged transaction from sale of shares and after making a detailed enquiry and considering the documents received from the assessee from time to time, came to a conclusion that the alleged transaction is a genuine transaction of sale of shares as against the sale of investment assessee received consideration and the same is supported by sufficient material evidences. This is a clear case of complete and adequate enquiry conducted by the AO on the very same issue mentioned in the show cause notice issued u/s 263 and, further,AO was satisfied with these documents and those documents have been perused by us also, placed in paper book and find sufficient force in the contention of the ld. Counsel for the assessee that since there is a complete enquiry. Thus, ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act as the AO has taken one of the permissible view provided under the law. This is a clear case of sale of investment by the assessee and, further, even if ld. Pr. CIT was not satisfied with the detailed enquiry conducted by the AO, he should have done independent enquiry on its own so as to find an error in the enquiry conducted by the ld. AO in view of the ratio laid down in the case of DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] - No such finding is there in the impugned order and ld. Pr. CIT has only referred to the report of the Investigation Wing which was already put before the ld. AO and there is no other new material which could support the view of the ld. Pr. CIT holding the assessment order as erroneous and prejudicial to the interest of the Revenue. Firstly the issue raised in the show cause notice has been examined by ld. AO, being part of the reasons recorded for re-opening the case of the assessee and ld. AO after going various rounds and calling for various evidences and documents took the plausible view and accepted the transaction of ₹ 5,00,000/- received from sale of investment in equity shares as genuine. Secondly, ld. Pr. CIT erred in observing that ld. AO has not examined at all the issue of receipt of ₹ 5,00,000/-, thirdly, ld. Pr. CIT failed to appreciate that the assessee company is a non-banking financial company and the accounts are audited under the Companies Act and ld. AO took a permissible view in the matter after thoroughly examining the related documents. Fourthly, the present case is not a case of no enquiry but it is a case where complete and adequate enquiry has been conducted by the ld. AO. We, therefore, quash the impugned order passed u/s 263 of the Act and allow all grounds of the appeal raised by the assessee and restore the assessment order passed u/s 143(3) r.w.s. 147 - Decided in favour of assessee.
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2022 (4) TMI 484
Unexplained cash credit u/s 68 - increase in proprietor's Capital - inadvertent mistake on the part of the employee - HELD THAT:- We find that the assessee not only before the AO but also before the CIT(A) duly explained that the increase in proprietor's Capital was reported due to inadvertent mistake on the part of the employee as he inadvertently consolidated the assets and liabilities of the personal file of the assessee with the assets and liabilities of the proprietorship concern, M/s Selfcare - The Natural Way . The audited accounts of the assessee were duly verified by the AO during the assessment proceedings. So far as the objection of the Assessing Officer that the assessee repeated his mistake in the return for assessment year 2017-18 is concerned, the assessee duly replied that by the time, the aforesaid mistake came to the notice of the assessee, the return for assessment year 2017- 18 was already filed. It was also explained that the assessee has filed the correct Income Tax Return for assessment year 2018-19, wherein, the assets/liabilities of the personal file of the assessee were not consolidated with the assets/liabilities of her proprietorship firm and true picture of the account has been presented and the mistake has been rectified. CIT(A) considering the accounts of the assessee as well as the circumstances leading to the aforesaid mistake has deleted the addition observing that it was not a case of unexplained credits u/s 68 - Decided against revenue.
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2022 (4) TMI 483
Addition u/s. 56(2)(viib) - shares issued at premium - Valuation under rule 11UA - AO and the CIT (A) were not satisfied with the valuation figures adopted by assessee - no valuation certificate issued by the Chartered Accountant to substantiate the valuation of shares - HELD THAT:- The assessee itself adopted NAV method for valuation of shares issued on premium, this method has been accepted in Toto by the AO and CIT (A). There is no challenge to the method of valuation adopted by assessee, although the ld. CIT (A) corrected the figures of NAV calculation as against adopted by the assessee. Which is permissible by law, although method of valuation chosen by assessee can t be changed. As per rule11UA, the assessee only has 2 options for working out FMV of unquoted shares viz., NAV method or discounted cash flow method. Since the assessee did not furnish any valuation report as per DCF method, it can be reasonably inferred that assessee had adopted NAV method. Valuation under rule 11UA is prescribed to ascertain worth of the share issuing entity and simultaneously to justify share premium charged by it. In this case Assessee Company issued the shares on premium first and then invested the same in the shares of M/s Spotless Laundry Services Ltd. to justify its net worth or in other words NAV. The event which is to take place first, occurred second and vice-versa. In the present appeal AO has not challenged the method of valuation adopted by the assessee. He simply tried to rectify the figures wrongly adopted by the assessee as discussed in detail with the help of tables demonstrating funds movement of the assessee.In our considered opinion looking at the records before us and facts of the case, we find no defect in the order of the authorities below and the order passed by the CIT (A) is confirmed. Application of Valuation of unquoted shares under Rule 11UA of Income Tax Rules, 1962 - The grounds of appeal taken by assessee has been considered and found to be baseless as Rule 11UA of Income Tax Rules, 1962 falls under chapter- H-determination of Fair Market Value of the property other than immovable property. Chapter-H inserted by the I.T. (Second Amdt.) Rules, 2010, w.e.f. 01.10.2009. Rule 11UA (1) was simply renumbered as Sub-Rule-1 by the I.T. (fifteenth Amdt.) Rules, 2012 w.e.f. 29.11.2012. So the argument of the assessee that Rule 11UA of Income Tax Rules, 1962 which determines the valuation of unquoted shares and being a provision which purports to determine the income which is chargeable to tax was introduced by Income Tax (Fifteenth Amdt.) Rules, 2012 came into effect on 29.11.2012 and said valuation rules cannot be applied and addition under section 56 of the Income Tax Act, 1961 ought to be restricted to the amount received by the appellant on or after 29.11.2012 and not for amounts received in earlier years and also for amount received prior to 29.11.2012, is not acceptable because rules are applicable to year under assessment. As the shares were allotted during the year under consideration, i.e. 2013-14 itself, Rule 11UA become applicable from 2013- 14 itself.
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2022 (4) TMI 482
Gross profit on deficit of stock - Disclosure made by the assessee during the survey operation - survey operation under section 133A on the premises of the assessee - As per the assessee such disclosure was made to cover up the transactions of unaccounted sales, deficit of stock and other cash transactions. Accordingly, it was contended that there cannot be any separate addition to the total income of the assessee representing the gross profit on the unaccounted sales - Primary onus to prove - HELD THAT:- Assessee has not discharged its onus by producing the primary documents in support of its contention. The primary onus lies on the person who asserts the preposition and not on the person who denies. Moving further, AR at the time of hearing drew our attention on the letter dated NIL written by the director of the company to justify that the disclosure of ₹ 2 crores includes the transactions of the unaccounted sales.We have gone through the letter furnished by the director of the assessee company. In such letter, we note that there was the discussion and admission of the unaccounted sales. From the impugned letter, it is revealed that it starts with the words in addition to the above . These words suggest that the additions of ₹ 2 crores has been made by the assessee besides the disclosure of ₹ 33,50,310/- only. Moreover, we find that the assessee failed to provide the primary documents to appreciate whether the cash transactions is inclusive of unaccounted sales. Therefore, we are not inclined to concur with the arguments of the learned counsel for the assessee. Hence, in the given facts and circumstances, particularly in the absence of the primary documents, we are not inclined to interfere in the finding of the authorities below. Hence the ground of appeal of the assessee is hereby dismissed.
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2022 (4) TMI 481
Undisclosed income - assessee has surrendered income by the statement recorded u/s 132(4) - Proof of incriminating material or documents which indicate concealment of income - HELD THAT:- We find that the statement has been recorded on 23.07.2015 and the same has been retracted on 23.07.2015 and on 03.08.2015 vide letters addressed and posted to Joint Direct(Inv.), Dehradun - assessment has been completed summarily without any reference to the incriminating material or documents which indicate concealment of income. CBDT circular directs the field authorities that no assessment or surrender be extracted without having any relevance to the material found and seized during the search. In the instant case, there was no material to connect the undisclosed income to the assessee. Similarly, the additions made in the case of Yogesh Singla and Mahdu Singla which is a part of the statement given by the assessee with regard to the surrender has been deleted by the Coordinate Bench of the Tribunal [ 2020 (5) TMI 715 - ITAT DEHRADUN] - Since, there was no material before the revenue to attribute undisclosed income, the facts and circumstances of the instant case, we hereby allow the appeal of the assessee.
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2022 (4) TMI 480
Depreciation on assets on demerger - actual cost as per section 43(1) of the Income Tax Act, 1961 was nil - demerger in terms of explanation 4 to section 2(19AA) recognised - AO has disallowed depreciation on the ground that the assessee had received assets free of cost from the Government of Uttaranchal - HELD THAT:- In this case, the assets have been transferred from Uttar Pradesh Government (UPJVNL) to Uttaranchal Government (UJVNL). There is no claim of the depreciation twice by both the Governments. The demerger led to division of assets in a fixed ratio and the same was duly accounted for both the entities as per the written down value (WDV) as on that date. The depreciation on de-merger cannot be a forgone benefit owing to de-merger, which is the result of state reorganization. Hence, we decline to interfere with the reasoned order of the Ld. CIT (A). Prior Period expenses - disallowance of expenses as it do not relate to the previous year under consideration - HELD THAT:- We find in all the years the certain expenses like repair and maintenance, employee cost, administrative cost, administrative expenses which pertain to earlier years having claimed in the current year. It was submitted that due expenses or business expenses and having crystallized during the year. These expenses are overlapping over the years and no double deduction has been claimed. These are the spillover expenses which pertain to more than one previous year and the similar system has been followed continuously in all the years. The Assessing Officers sole reason for disallowance is that they do not relate to the previous year under consideration. However in reality it is found that these expenses belong to the previous year but crystallized in the instant year. In the absence of any change in the tax rate for the successive years the interests of revenue are not jeopardized. Hence, we decline to interfere with the Ld. CIT(A) on this grounds. - Decided against revenue.
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Customs
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2022 (4) TMI 479
Advance Authorisation Scheme - Request of the appellant for endorsing advance authorisation numbers on the free shipping bills and for issue of NOC for considering the free shipping bills as shipping bills - rejection of request on the ground that firstly, the appellant have exported the goods from Karwar Port which is not authorised for which a prior permission ought to have been taken - rejection also on the ground that on the shipping bills, advance authorisation number was not declared - HELD THAT:- The appellant have been writing various letters to the Department for permission of export from Karwar Port against the subject advance authorisation - From the letters, it is clear that the appellant have been requesting the Department for permission to export from Karwar Port under advance authorisation. The Department has not given any response to various correspondences made by the appellant. Therefore, in our considered view, since no response from the Department, the permission deemed to have been received by the appellant. Accordingly, there is no objection exist for export of goods from Karwar Port. Endorsement regarding advance authorisation - Section 149 of Customs Act - HELD THAT:- From the plain reading of Section 149, it is clear that even though, it is discretionary but on certain conditions, the document can be amended even after the goods have been exported on the basis of documentary evidence which was existence at the time of goods were cleared for export - In the present case, the appellant had in possession of Advance Authorisation No.0710065592 dt. 26/06/2009 and Advance Authorisation N.0710065655 dt. 26/11/2010 and the exports of goods have been taken place from 30/06/2009 to 18/11/2010 and 27/12/2010 to 19/10/2012 respectively. Accordingly at the time of export of goods, the advance authorisations were very much in existence. More over the appellant have been making repeated requests to the Department for export of goods from Karwar Port under the aforesaid advance authorisations. Therefore, there were all the documents existing at the time of export of goods. On this basis, the appellants are clearly entitled for amendment in the shipping bills by conversion of free shipping bills to shipping bills under advance authorisation. Thus, the appellants are entitled for conversion of free shipping bills to shipping bills under advance authorisation and for consequential effect such as issuance of NOC for producing before DGFT - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2022 (4) TMI 478
Validity of approved Resolution Plan - claims of the Operational Creditors not appreciated - security and housekeeping services for the projects undertaken by the Corporate Debtor - Resolution Plan is in conformity with Section 30 (1) of the I B Code, 2016 or not - HELD THAT:- The Resolution Plan has been submitted in accordance with Section 30 of the I B Code, 2016. However, Sub-clause b of Sub- Section (2) of Section 30 provides for the payments of debt of Operational Creditors in such manner as may be specified by the Board which shall not be less than (i) the amount to be paid to such creditors in the event of a liquidation of the Corporate Debtor under Section 53 or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the Resolution Plan had been distributed in accordance with the order of priority in Sub Section (1) of Section 53. Further, Section 31 of the I B Code, 2016 deal with approval of Resolution Plan. As per Sub Section (1) if the Adjudicating Authority is satisfied that the Resolution Plan as approved by the Committee of Creditors under Sub-Section (4) of Section 30 meets the requirements as referred to in Sub-Section (2) of Section 30, it shall by order approve the Resolution Plan which shall be binding on the Corporate Debtor and its employees, members, creditors (including the central Government, any State Government or any Local authority to whom a debt in respect of the payment of dues arising under any law for the time being enforced, such as Authorities to whom Statutory dues are owed,) guarantors and other stakeholders involved in the Resolution Plan. Due procedure as contemplated under I B Code, 2016 is to be followed to submit a Resolution Plan. Accordingly, the Resolution Applicant shall submit a Plan before the Resolution Professional and it should contain the requirements as per the said provision including the payments of debts to the Operational Creditors etc. After submission of the Resolution Plan the Committee of Creditors may approve a Resolution Plan by a vote of not less than 66% of voting share of Financial Creditors. After approval of the plan by the Committee of Creditors, the Adjudicating Authority under Sub-Section (1) of Section 31 may approve the Resolution Plan if it is satisfied that the Plan meets the requirements as per Sub-Section (2) (4) of Section 30 of the Code and the same shall be binding on the Corporate Debtor, its employees, members, creditors and other stakeholders - Once the Plan is approved by the Adjudicating Authority under Sub- Section (1) of Section 31 it shall be binding on the Creditors including the Operational Creditors i.e. the Appellants herein. There is no infirmity or illegality in the Plan as approved by the Committee of Creditors by majority vote of 95.07% and approved by the Adjudicating Authority and the same shall be binding on the Appellants apart from other stakeholders. This Tribunal comes to a resultant conclusion that the approval of Resolution Plan is legal and valid - Appeal dismissed.
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Service Tax
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2022 (4) TMI 477
Levy of Service Tax - Business Auxiliary Services or not - services of promotion or marking of goods/services - HELD THAT:- The issue is no more res integra as the very same issue was considered by the learned Kolkata Bench of the CESTAT in the case of SOURAV GANGULY VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA (NOW COMMISSIONER OF CENTRAL GOODS SERVICE TAX CENTRAL EXCISE, KOLKATA SOUTH) [ 2020 (12) TMI 534 - CESTAT KOLKATA] wherein, the issue has been decided in favour of a similarly placed taxpayer. The learned Kolkata Bench has elaborately considered the relevant provisions as well as orders of various Benches of CESTAT and also that of the decision of the Hon ble Bombay High Court in the case of INDIAN NATIONAL SHIPOWNERS' ASSOCIATION VERSUS UNION OF INDIA [ 2009 (3) TMI 29 - BOMBAY HIGH COURT] wherein it has been held that the activity of the appellant therein could not be subjected to levy of service tax under Business Auxiliary Service prior to July 1st, 2010. Thus, there is no liability on the appellant and hence, demands raised for both the periods cannot sustain - appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (4) TMI 476
Clandestine Removal - Ingots - alleged suppressed production - wide variation in the electricity consumption - allegation of Department is that the electricity units consumed by the appellants ranges between 1314 Units/MT to 1663 Units MT, which is much higher than the electricity consumption mentioned in the reports furnished by the expert in the field of metallurgy - burning loss - HELD THAT:- The evidences prove that there is wide variation in the consumption of electricity for the manufacture of one MT of steel ingots. There is no prescribed fixed ratio between the power consumption and the production of ingots. Therefore, the adoption of consumption norm of electricity by the department at the range of 925 Units/ 860 Units for calculating the so-called unaccounted production, is not tenable. The department in this case has linked the trading income with the clearance of alleged suppressed ingots by the appellants. For the said purpose, the adjudicating authority has relied upon the statement of the transporters to hold that the appellants had procured bogus purchase invoices and cleared excisable ingots in the garb of traded goods. In this context, the appellants have contended that the trading income relates to supply of angles, flats, channels, etc. and such trading activities were undertaken at the appellant s Bhilai Unit and not from the appellants factory. On examination of case records, we also find that the transporters in their statements also stated that they had not transported MS angles, channels, flats etc., from the appellants Bhilai Unit to their buyers. Further, it is not the case of Revenue that the sale proceeds of the traded goods were not received by the appellants from their buyers. Therefore, there is no basis to allege that the amount generated in the above manner had any nexus with the sale of ingots by the appellants. Thus, there is gross violation of the principles of natural justice and as such, no negative inference can be drawn from the transporters statement relied upon by the adjudicating authority. The burning loss in this case was less than 10%, except for the year 2005-06, when the same was 11.1% and marginally in the higher side. It is a standard practice in the trade of manufacture of iron and steel that 10% burning loss is usually permissible, owing to the reason of various factors. Considering such practicality, the guidelines issued by the Ministry of Steel has also acknowledged such fact. Therefore, the issue of burning loss cannot be the standalone basis to allege suppression of production. The law is well settled that to prove clandestine removal, the department has to produce evidence of purchase of additional raw material, sale of clandestinely removed goods, mode of payment, flow back of the fund, transport report for movement of raw material and finished products etc. However, no discrepancy, whatsoever, has been found in the records of the present appellants relating to raw materials, finished goods, production, clearances, opening and closing stock, work in progress etc. Therefore, the charges levelled against the appellants that the finished goods were clandestinely manufactured and removed by the appellants are without any basis and the impugned orders passed in confirming the adjudged demands are liable to be set aside. Thus, the charges levelled against the appellants for clandestine manufacture and removal of final products, without payment of duty are not substantiated with cogent and reliable evidence. It is found that a case of this magnitude needs to be corroborated by establishing other facts such as purchase of raw material, deployment of labour, additional consumption of electricity, manufacture of final products, removal and transportation of the same to customers premises and payments received for the same - in the instant case, no other criteria has been investigated and established. The whole case is sought to be made by surmises and conjectures. The allegations of clandestine removal against the appellants do not stand judicial scrutiny. Consequently, levy of duty and imposition of penalties on the appellants are not also substantiated - Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 475
CENVAT Credit - common inputs and input services used in the manufacture of dutiable and exempted goods - non-maintenance of separate records - case of the department is that since the appellant have not filed a declaration for opting of proportionate reversal of credit, they are required to pay 5%/10% of the value of the exempted goods, demand was confirmed - HELD THAT:- The Learned Commissioner (Appeals) held that the appellant is required to pay 5%/10% on the ground that they have not filed a declaration as required for payment of proportionate credit in terms of Rule 6(3)(A) of Cenvat Credit Rules, 2004. It is not in dispute that the appellant have admittedly reversed the proportionate credit and in respect of delay, they have also paid interest. Therefore, in my view as held by the Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] , reversal of Cenvat Credit along with interest shall amount to non-availment of Cenvat Credit, if this be so, then Rule 6 is not applicable. The appellant has rightly reversed the proportionate credit along with payment of interest. Hence, no further payment can be demanded from the appellant - Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 474
Grant of interest in respect of the refund claim already granted - interest rejected on the ground that since, the refund claim was granted within 3 months from the date of the Commissioner (Appeals) order, no interest is payable - Section 11BB of Central Excise Act - HELD THAT:- There is no dispute in the fact that the appellant had filed a refund claim on 11.06.2018 which was though rejected by the original authority but allowed by the Commissioner (Appeals) - From the plain reading of Section 11BB, it is clear that under any circumstances the refund should be disposed of within a period of three months and if there is delay after three months from the date of filing application, the assessee shall be entitled for interest from the date after three months up till the date of sanction of refund. Reliance placed in the case of UNION OF INDIA OTHERS VERSUS M/S HAMDARD (WAQF) LABORATORIES [ 2016 (3) TMI 68 - SUPREME COURT] where it was held that the principle laid down in Ranbaxy Laboratories Limited (2011 (10) TMI 16 - Supreme Court of India ) wherein held liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made would apply on all fours to the case at hand. Thus, if there is any delay in sanction of the refund claim from the date of filing application, the appellant is entitled for the interest from the date of filing of refund claim till the date of sanction. Revenue s contention is that they have granted the refund within three months form the date of Commissioner (Appeals) order - it can be concluded that once the Commissioner (Appeals) has allowed the refund, the appellant was entitled for the refund right from the date of filing of the application. Therefore, for the purpose of interest, it is not the date of Commissioner (Appeals) order, but it is the date of filing of refund application needs to be taken. The appellant is entitled for the interest on the refund - Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 473
Levy of penalty under Rule 15 of Cenvat Credit Rules, 2004 - CENVAT Credit - input services - transporting Furnace Oil to the plant for generation of electricity for supplying to the residential colony - credit denied on the ground that it was not used for manufacture of the excisable goods - HELD THAT:- Since the issue is only about the penalty of ₹ 1,41,541/- imposed on appellants for wrongly availing Cenvat credit on input services therefore, other details of the matter, are not perused. This Tribunal also in the matter of M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. S.T. BHAVNAGAR [ 2018 (6) TMI 1138 - CESTAT AHMEDABAD] where it was held that Appellants are not eligible to the credit on Naphtha used for generation of electricity wheeled outside the factory and due to conflicting views on the issue, imposition of penalty is uncalled for. In view of the peculiar facts of this case no penalty is imposable on the appellants for wrongly availing Cenvat credit on input services - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (4) TMI 472
Determination of taxable turnover - enhancement of turnover - suppressed material found at the time of survey - rate of tax - kesar thandai - shikanji - mango syrup - gulab jal - HELD THAT:- From perusal of the entry Schedule-II Part-A Serial No. 103, it is evidently clear that the fruits including fruit jams, jelly, pickle, fruit squash, paste, fruit drink fruit juice (whether in sealed containers or otherwise) are liable to be taxed @ 4% only plus SAT which comes to 5%. In the case in hand, the items which were found at the time of survey was mango syrup, gulab jal, shikanji and kesar thandai will fall as such in the aforesaid category at serial no. 103 and, therefore, liable to be taxed at a lower rate. Further counsel for the revisionist submits the the tax on purchase was also levied and, if the dealer deposit the tax on the same than as per the provisions of Section 13 of the Act, he is entitled for input tax credit on the full amount of the tax paid to him on purchase - To the said averment, learned standing counsel submits that for redetermining the benefit of input tax credit, the matter has to be examined by the Assessing Authority. The revisions are allowed in part and the matter is remanded to the Assessing Authority for the purpose of redetermining the input tax credit.
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Indian Laws
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2022 (4) TMI 471
Constitutional validity of the amendments to the provisions of the Foreign Contribution (Regulation) Act, 2010 - Infringement of fundamental rights guaranteed to the petitioners under Articles 14, 19 and 21 of the Constitution - HELD THAT:- The provision such as Section 12(1A) and Section 17(1) introduced by the Amendment Act, is a holistic approach adopted by the Parliament to provide for strict regulatory measure and for ensuring transparency and accountability in the matter of foreign contribution. Notably, there was unanimity amongst the members of both the Houses cutting across party lines to have such a strict regime as indiscriminate receipt/inflow and more so utilisation of foreign contribution had been threatening the sovereignty and integrity of the country itself. Being a matter of security of the State, public order and in the interests of the general public, it is not open to question the validity of such a law on the touchstone of Article 19(1)(c) or 19(1)(g) of the Constitution. It is not a provision to completely prohibit forming of the associations or engaging in business of charity as such. It is a provision for regulating the manner of doing business more importantly, concerning foreign contribution. Opening of main FCRA account in the designated bank, as has been rightly contended by the respondents, is only a one-time exercise and for which instructions and protocols have been issued by the competent authority, not to insist for physical presence for complying with the formalities. It can be organised even at the local branches of the designated bank in the manner specified in the instructions issued in that regard. Moreover, the provision does not prohibit the person/registered association from opening multiple accounts in other scheduled banks, wherein the amount received in (primary) FCRA account in NDMB can be transferred; and from where day-to-day activities can be then carried on by them - merely because the registered association has been compelled to open FCRA account in the designated bank at the centralised location for receipt/inflow of foreign contribution from foreign source, it does not follow that such a requirement would be manifestly arbitrary or unreasonable. It is only a one-time exercise to be complied with for availing the permission accorded by the Central Government under the Act to be a certified association or person given permission to receive foreign contribution as a precondition. The need to have only one entry point for the inflow of foreign contribution had been viewed by the Parliament as the best option for regulating the inflow of foreign contribution. This process is expected to increase the efficiency in continual supervision of the inflow of foreign contribution on real-time basis by the concerned Authorities and to enable them to take immediate corrective measures to deal with and pre-empt the impending threat perceived because of its volume including undesirable source of remittance. It is not open to the Court to have a second-guess approach in that regard. In the context of the law made by the Parliament in the interests of the sovereignty and integrity of the country and security of the State, public order, as also in the interests of the general public, such a provision cannot be lightly viewed much less on the specious plea of manifestly arbitrary. The Parliament in its wisdom had deemed it essential to have such a provision because of the prevalent discernible circumstances referred to in the introduction of the Bill. Having noted that the provision became necessary for efficient regulation of foreign contribution on real-time basis, it can neither be said to be manifestly arbitrary nor irrational much less without legitimate objective of the State. Accordingly, there are no hesitation in negating the challenge to these provisions as being violative of Articles 14, 19 and 21 of the Constitution - The fact that the registered associations were already complying with the statutory formalities of furnishing of accounts, intimation, audit and disposal of assets to the satisfaction of the concerned Authorities, it would not follow that the Parliament/Legislature is denuded of its power of changing the regulatory mechanism or framework to make it more effective and to make it real-time regarding the inflow or receipt of foreign contribution and utilisation thereof for the purposes for which it has been so permitted. Accepting the argument of the registered associations would not only be undermining the legislative intent, but also disregarding the object sought to be achieved by the Principal Act. The argument of compelling necessity may have arisen for our consideration only if we were to find that the dispensation provided in the amended provisions is in the nature of complete prohibition to form association or to engage in business. As mentioned earlier, these provisions are only for effective regulatory measures concerning and limited to foreign contribution, in the larger public interests, public order, and more particularly for safeguarding the sovereignty and integrity of the country. Taking any other view would entail in undermining the legislative intent and cannot be countenanced. Validity of Section 12A - HELD THAT:- Reverting to the challenge to the insertion of Section 12A vide the Amendment Act of 2020, it mandates that the person concerned who seeks prior permission or prior approval under Section 11, or makes an application for grant of certificate under Section 12, including for renewal of certificate under Section 16, to provide as identification document, the Aadhaar number of all its office bearers or Directors or other key functionaries. The Statement of Objects and Reasons of the Amendment Act are testimony about the past experience of abuse of foreign contribution receipts and spending on activities not connected with the purposes for which it was so permitted - It is a law made by the Parliament which is competent to make such a law concerning the activities related to foreign donations and more particularly about its acceptance in prescribed manner and utilisation for the purposes defined in the certificate/permission granted by the competent authority. It has a legitimate purpose and nexus sought to be achieved with the objective underlying the Principal Act and the subject amendment. It is not open to argue that associations desirous of obtaining certificate of registration under this Act need not furnish official identification document pertaining to its key functionaries. The provision (Section 12A) envisages that a copy of the Passport can also be provided as identification document of all its office bearers or Directors or other key functionaries or Overseas Citizen of India Card, in case of a foreigner. The underlying purpose of this provision is merely to identify the key functionaries of the registered association so that they can be made accountable for violations, if any - the Passport in case of a foreigner is accepted as sufficient identification document, there is no reason why such Passport of Indian national cannot be relied upon for the same purpose. Thus understood, the challenge to this provision being unreasonable need not detain us nor is required to be taken any further. Whereas, it is held that the provision needs to be construed as permitting furnishing of the Indian Passport of the key functionaries of the applicant who are Indian nationals, for the purpose of their identification. It is declared that the amended provisions vide the 2020 Act, namely, Sections 7, 12(1A), 12A and 17 of the 2010 Act are intra vires the Constitution and the Principal Act, for the reasons noted hitherto. As regards Section 12A, the said provision are read and construed it as permitting the key functionaries/office bearers of the applicant (associations/NGOs) who are Indian nationals, to produce Indian Passport for the purpose of their identification. That shall be regarded as substantial compliance of the mandate in Section 12A concerning identification. Petition disposed off.
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