TMI Tax Updates - e-Newsletter
April 22, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

News

1. Atal Pension Yojana total enrolments crossed 4 crore

2. Shri Piyush Goyal calls upon the Cost & Management Accountants to ensure quality production by industry and help boost India’s exports

3. Shri Piyush Goyal stresses upon making exports the fulcrum of India’ s growth; Says India has the potential to achieve USD 1 Trillion of merchandise and services export each by 2030

4. Shri Piyush Goyal reviews the progress of the India International Convention & Expo Centre (IICC) in Dwarka, Delhi; asks officials to expedite the works for completion of the Phase-1 of the project

Notifications

GST - States

1. S.O. 28 /PGSTR/2017/R.48/Amd./2022 - dated 7-4-2022 - Punjab SGST

Amendment in Notification No. S.O.19/PGSTR/2017/R.48/2021, dated the 28th January, 2021

Income Tax

2. 36/2022 - dated 20-4-2022 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies, ‘SEEPZ Special Economic Zone Authority’ an Authority constituted under the Special Economic Zone Act, 2005 by the Government of India

3. 35/2022 - dated 20-4-2022 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies, ‘Gujarat Real Estate Regulatory Authority’ an Authority constituted by the State Government of Gujarat

Circulars / Instructions / Orders

GST - States

1. ETD-070001/42/2022-GST CELL-ETD - dated 20-4-2022

Standard Operating Procedure for processing Reimbursement of SGST on films by the Excise and Taxation Department

Highlights / Catch Notes

GST

• Supreme Court rules 6% interest on delayed tax refunds, overturning 9% rate by High Court u/s 56.

  Case-Laws - SC : Grant of interest / compensation for delayed Refund of unutilized input tax credit - Rate of interest - HC awarded 9% instead of 6% applying the proviso to section 56 - zero rated supply - export of goods - The instant cases have not arisen from any order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and the cases are strictly within the scope of the principal provision of Section 56 and not under the proviso thereof. - The High Court was in error in awarding interest at the rate exceeding 6 per cent in the instant matters. - SC
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• Court Permits Petitioner to Correct TRAN-1, File TRAN-2; Respondents to Review Under CGST Act Section 140, Rule 117(1).

  Case-Laws - HC : Transitional credit - revision of the Form TRAN-1 and Form TRAN-2 - The interest of justice would be served if we allow the petitioner to correct Form TRAN-1 in Writ Petition No. 1609/2019 and to file Form TRAN-2 without prejudice to the rights and contentions of both the parties. The respondents shall consider the issue whether the Form TRAN-1 and other forms that would be filed/corrected by the petitioner can be entertained in accordance with the provisions of section 140 of the Central Goods and Services Tax Act, 2017 and Rule 117 (1) of the Central Goods and Services Tax Rules, 2017 or not - HC
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Income Tax

• Petitioner Faces Additional Interest for Late Payment Under Income Tax Act Sections 220(2), 234A, 234B, and 234C.

  Case-Laws - HC : Interest demand u/s 220(2A) - petitioner had delayed in paying the interest under Sections 234A, 234B and 234C - Earlier, the application for waiver of interest was rejected - The Demand Notice under Section 156 of the Act also stipulated that if the petitioner failed to pay the aforesaid amount within the period of thirty days from the date of the service of the Demand Notice, the petitioner will also be liable to pay a simple interest at 1.5% for every month or part of a month from the date commencing after the end of the period of 30 days in accordance with Section 220(2) of the Income Tax Act, 1961. - As the petitioner failed to pay the amount in time, the petitioner is liable to pay the interest. - HC
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• India Examines Taxability of Software and Cloud Service Income as Royalty; Misinterpretation of Licensing Rights Highlighted.

  Case-Laws - AT : Income accrued in India - Taxability of revenue from sale of software - Royalty - The Cloud services merely facilitate the flow of user data from the front end users through internet to the provider’s system and back. The ld. AO has fallen in error in interpreting it as licensing of the right to use the above Cloud Computing Infrastructure and Software (para 10.5 of the Ld. AO order). Thus the subscription fee is not royalty but merely a consideration for online access of the cloud computing services for process and storage of data or run the applications. - AT
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• Interest Income Classified as 'Other Sources' Due to Lack of Evidence; Section 57 Deductions Rightly Denied by CIT(A.

  Case-Laws - AT : Treating the interest income as 'income from other sources' - CIT(A) in his order has observed that the assessee submitted profit and loss account and balance sheet only reflecting various assets/sundry creditors and debtors but failed to produce books of accounts or any details to establish the nexus between borrowed fund to such loans and advances. In view of the above, we hold that the ld. CIT(A) has not erred in treating interest income as income from other sources. - Further, CIT(A) has not erred in not granting deduction of expenditure u/s. 57 of the Act, against interest income.- AT
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Customs

• Court Weighs Adding Container Freight Station and Shipping Line to Contempt Petition for Ignoring Detention Certificate Order.

  Case-Laws - HC : Seeking to grant leave to add the container freight station (CFS) and the Shipping Line as party respondents in the contempt petition - the order passed by this Court directing issuance of detention certificate to the Customs which direction was not complied with, though communicated to the Shipping Line - Therefore, the Shipping Line though would have been a third party to the proceedings when the writ petition was heard, on and after they have been issued with the detention certificate, they are precluded from raising a plea that they are third party to the proceedings and alien to the directions issued by this Court, resulting in issuance of the detention certificate. - HC
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• Petitioners Must Respond to Show Cause Notice per Customs Act, 1962; High Court Suggests Appellate Authority for Appeals.

  Case-Laws - HC : Recovery of refund sanctioned - Validity of Show Cause Notice (SCN) - The petitioners have to submit to the jurisdiction of the respondents by filing suitable reply to the impugned Show Cause Notice. If the petitioners suffer an adverse order, there is a hierarchy of the Appellate Authority under the Customs Act, 1962. Therefore, the petitioners have to work out their remedy before the Authorities under the Act. There is no merit in the present Writ Petition - HC
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• Customs Authorities Cannot Enforce Waiver of Demurrage Charges; Only Custodian Can Grant Under Regulations 6(I) & 6(q), 2009.

  Case-Laws - HC : Seeking waiver of demurrage charges in terms of Regulation 6(I) and 6(q) of Handling of Cargo in Customs Areas Regulations, 2009 - it is evident that the Customs Authorities cannot direct waiver of demurrage which can only be done by the Custodian. Moreover, in the present case the decision was given on 6th May, 2019 vide which the fine and penalty were levied upon the petitioner. Admittedly, despite the aforesaid decision, the petitioner has not paid the penalty on the pretext that he would pay the same simultaneous to the release of goods. - The appellant is thus, not entitled to waiver of demurrage charges - HC
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• Court Rules on Duty Recovery and Penalties for Crane Confiscation: Cross-Examination Essential u/s 138B.

  Case-Laws - AT : Recovery of differential duty - Levy of penalty u/s 112 and section 114AA of Customs Act, 1962 - Confiscation of used Cranes - Reliance on statements alone is too fragile a foundation to build a case of undervaluation; such depositions are reliable only with corroborative support. In the absence of corroboration, test of cross-examination is of essence, as mandated by section 138B of Customs Act, 1962, for relevancy.- AT
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Indian Laws

• Accused Acquitted in Cheque Dishonor Case; Appellate Court Cautioned Against Overturning Reasonable Trial Court Decisions.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - acquittal of the accused - burden to prove - It is settled law that if the view as taken by learned trial court is a reasonably possible view, in that case, the appellate court should not disturb it just because it feels that another view of the matter is possible. It is equally settled that an order of acquittal will have to be disturbed if it is perverse. - HC
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• Petitioners Claim No Liability for Dishonored Cheques Post-Resignation; Not Partners During Loan Transaction Per Section 138.

  Case-Laws - HC : Dishonor of Cheque - party to the transaction or not - specific stand taken by the petitioners is that they were not the partners of the firm even at the time of borrowal of loan and at the time of issuance of cheques - In the case on hand admittedly the petitioners were resigned from the first accused partnership firm as early as on 01.04.2014 and as such they are not liable to be punished for the offence under Section 138 of the Negotiable Instruments Act. - HC
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• Manager's Authority in Cheque Dishonor Case Remains Valid Despite Change, Respondent Fails to Refute Presumption.

  Case-Laws - HC : Dishonor of Cheque - Just because there is a change in the person who hold the post of Manager, it cannot be stated that the present Manager is not the authorised person to represent the authorised Firm - Neither the appellant-Firm nor PW1 has disputed about the power given to him to represent the Firm. In this background of facts, it cannot be claimed that the respondent/accused had discharged his reverse burden and refuted the initial presumption that has been drawn in favour of the appellant. - HC
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IBC

• Assignee's Liquidation Bid Denied; Court Grants Extra Time for Resolution Applicant to Pay Corporate Debtor.

  Case-Laws - AT : Delay in implementation of the Resolution Plan - the Appellant is an assignee who is born only after order was passed by the NCLAT on 04.03.2021 by virtue of assignment taken by it on 23rd April, 2021 for an amount of ₹ 255 Crore. - The Appellant who is born only on 23rd April, 2021 i.e., after the Order of the Adjudicating Authority want to push the Corporate Debtor to the Liquidation to realize its dues to the maximum, cannot be the reason for allowing the Application filed by the Appellant for liquidation and Adjudicating Authority after taking into consideration entire facts and circumstances did not commit any error in giving five days further time to the SRA to deposit the amount in the Account of the Corporate Debtor which Corporate Debtor did - AT
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SEBI

• SEBI and SAT Clear Appellants of Insider Trading Allegations Due to Lack of Evidence on Information Sharing and Relationships.

  Case-Laws - SC : Insider trading - Whether existed a close relationship/immediate relation between the appellants? - There is no material on record for the WTM and the SAT to arrive at the finding that both late P.C. Gupta and the appellant Balram Garg communicated the UPSI to the other appellants. The said appellants were not “immediate relatives” and were completely financially independent of the appellant Balram Garg and had nothing to do with the him in any decision making process relating to securities or even otherwise. - SC
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Service Tax

• Sabka Vishwas Scheme: Committees Must Allow Declarants to Explain Discrepancies Before Rejection for Ineligibility.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - voluntary disclosure - If in a situation where the amount estimated by the designated committee is in excess of the amount declared by the declarant, an opportunity of hearing is required to be given by the designated committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject a declaration on the ground of ineligibility without affording an opportunity to the declarant to explain as to why his declaration should be accepted and relief under the scheme should be extended to him. - HC
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• Court Rules Technical Glitch Should Not Penalize Petitioner in Sabka Vishwas Scheme Payment Delay Case.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - the petitioner paid the amount on the last date by debiting the amount electronically from his bank account. However, after the amount was debited from the petitioner's bank account, it was re-credited back due to technical glitches. - There is no justification in not accepting the declaration of the petitioner under the scheme or in not accepting the payment by the petitioner belatedly. - HC
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• SEZ Unit's Service Tax Refund Rejection Overturned Due to Filing Deadline Falling on Holiday and Weekend in April 2018.

  Case-Laws - AT : SEZ unit - refund of service tax - rejection of refund on the ground of period of limitation - last date being public holiday - on examination of the English calendar of the year 2018 in the open Court vis-a-vis Annexure-I, it could be noticed that 28th & 29th April, 2018 were weekends and 30.04.2018 was a Government holiday on account of Buddha Purnima. This being the facts on record, learned Commissioner (Appeals) order rejecting the refund solely on the ground that it is hit by the period of limitation is unsustainable and the same is required to be set aside. - AT
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Central Excise

• Section 11A Limitation Period Not Applicable: No Evidence of Doubt on Assessee's Bona Fides, No Penalties or Interest Imposed.

  Case-Laws - HC : Extended period of limitation - There is nothing to indicate that the appellant revenue doubted the bona fides of the respondent assessee. In such circumstances extended period of limitation could never have been invoked in the assessee’s case. Thus, if Section 11A of the Act could not have been invoked, the question of imposing penalty or levying interest also does not arise. - HC
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• SEZ Unit's Refund Claim for Duty-Paid HSD Valid Despite Missing Duty Details on Invoices; Supplier's Certificate Accepted.

  Case-Laws - AT : Refund claim - SEZ unit - the petroleum product i.e., High Speed Diesel (HSD) being a non-cenvatable goods for which the supplier had raised commercial invoices wherein duty element was not explicitly mentioned, the payment of duty itself was disputed. - the supplier is not a private party, but a Public Sector Undertaking. The certificate issued by the said supplier, clearly indicated that the product supplied by them to the appellant was duty paid. - the payment of duty thereof stands proved and hence, rejection cannot be made only for want of proof regarding payment of duty - AT
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VAT

• Interpretation of "works contract service" as zero-rated under VAT: Deemed sale only if listed in Section 2(39).

  Case-Laws - HC : Works contract service - zero rated supply - deemed sale or not - Section 2(39) uses the expression “includes”. But what has been brought within the inclusive definition of sales or the types of transactions enumerated in Clauses (a) to (e) above. This becomes clear on reading the provision further i.e. after Clause (e) which uses the words “and such”. By use of the words “and such” would mean that such of the transfers, delivery of goods, transfer of right to use goods, supply or service or supply of goods, as mentioned in Clauses (a) to (e) alone can be treated to be the inclusive part of the definition of “sale” as defined under Section 2(39) of the Act. - A deemed sale cannot be interpreted to be a sale “simpliciter” unless the definition of “sale” in that particular statute provides for. - HC
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Case Laws:

• GST

• 2022 (4) TMI 980
  Grant of interest / compensation for delayed Refund of unutilized input tax credit - Rate of interest - HC awarded 9% instead of 6% applying the proviso to section 56 - zero rated supply - export of goods - Section 54 r.w.section 56 of the CGST Act - HELD THAT:- A registered person making export of goods outside India, is entitled in terms of Section 16 of the IGST Act to claim refund of either unutilized input tax credit of export of goods under bond or letter of undertaking or refund of integrated tax paid on export of goods. In terms of Section 20 of the IGST Act, any claim for refund is to be governed by the provisions of the CGST Act which would apply mutatis mutandis as if they were enacted in the IGST Act. The application for refund, therefore, is required to be preferred in accordance with Section 54 of the CGST Act. According to Section 56 of the CGST Act, if an applicant is not refunded any tax ordered to be refunded by the Proper Officer under Section 54(5) within 60 days from the receipt of the application, interest at such rate not exceeding 6 per cent would become payable after the expiry of 60 days from the date of receipt of application till the date of refund of such tax. The proviso to said Section prescribes that where any claim of refund arises from an order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and if the same is not refunded within 60 days from the date of receipt of an application filed consequent to such an order, the rate of interest payable would be 9 per cent. The instant cases have not arisen from any order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and the cases are strictly within the scope of the principal provision of Section 56 and not under the proviso thereof. In light of these provisions, the question which arises for consideration is whether the High Court was justified in awarding interest at the rate of 9 per cent per annum. In GODAVARI SUGAR MILLS LTD. VERSUS STATE OF MAHARASHTRA ORS. [ 2013 (6) TMI 23 - SUPREME COURT] , a bench of two Judges of this Court considered the question whether interest on the compensation amount at the rate of 9 per cent per annum could be awarded when the terms of Section 6 of the Maharashtra Agriculture Lands (Ceiling of Holdings) Act, 1961 prescribed payment of interest only at the rate of 3 per cent per annum. Coming back to the present cases, the relevant provision has prescribed rate of interest at 6 per cent where the case for refund is governed by the principal provision of Section 56 of the CGST Act. As has been clarified by this Court in GODAVARI SUGAR MILLS LTD. VERSUS STATE OF MAHARASHTRA ORS. [ 2013 (6) TMI 23 - SUPREME COURT] and MODI INDUSTRIES LIMITED AND OTHERS VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER [ 1995 (9) TMI 324 - SUPREME COURT] wherever a statute specifies or regulates the interest, the interest will be payable in terms of the provisions of the statute. Wherever a statute, on the other hand, is silent about the rate of interest and there is no express bar for payment of interest, any delay in paying the compensation or the amounts due, would attract award of interest at a reasonable rate on equitable grounds - It is precisely for this reason that paragraph 9 of the decision in Godavari Sugar Mills Ltd. accepted the submission made by the learned counsel for the respondents and confined the rate of interest to the prescription made in the statute. Since the delay in the instant case was in the region of 94 to 290 days and not so inordinate as was the case in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] , the matter has to be seen purely in the light of the concerned statutory provisions. In terms of the principal part of Section 56 of the CGST Act, the interest would be awarded at the rate of 6 per cent. The award of interest at 9 per cent would be attracted only if the matter was covered by the proviso to the said Section 56. The High Court was in error in awarding interest at the rate exceeding 6 per cent in the instant matters. The original writ petitioners would be entitled to interest at the rate of 6 per cent per annum on amounts that they were entitled by way of refund of tax - Appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 979
  Revocation of cancellation of GST registration of petitioner - alleged non-filing of the return - HELD THAT:- The issue raised in this writ petition has already been dealt with by a detailed judgment of this Court in a batch of cases in the matter of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST), THE ASSISTANT COMMISSIONER (CIRCLE), SALEM BAZAAR [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , where it was held that Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, the impugned orders are liable to be quashed and with few safeguards. The present case also can be fit in under the said category, where what are all the direction given by the learned Judge in the case in Tvl.Suguna Cutpiece Center, can be applied to the present case and therefore, the said benefit can be extended to the present petitioner also. Petition disposed off.

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• 2022 (4) TMI 978
  Provisional release of goods along with conveyance - Seeking direction to first respondent to accept the bank guarantee equivalent to the disputed penalty - Section 129(1)(c) of the CGST Act, 2017 - HELD THAT:- This Court permits the petitioner to obtain and annex the bank guarantee within a period of one week from the date of receipt of a copy of this order along with the application/representation. If such bank guarantee and application is made, the respondents are directed to release the detained goods to the petitioner within a period of one week thereafter. Petition disposed off.

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• 2022 (4) TMI 977
  Constitutional Validity of declaration that Rule 117 and Rule 120A of the Central Goods and Services Tax Rules, 2017 - revision of the Form TRAN-1 and Form TRAN-2 - seeking to allow the petitioner to take credit under section 140(3) on the invoices missed out during the initial filing - HELD THAT:- Insofar as judgment of this court in the case of Heritage Lifestyles and Developers and Private Limited (supra) relied upon by the petitioners is concerned, a perusal of the said judgment indicates that the petitioner in that case was allowed to make such claim if the petitioner was otherwise eligible for credit of the amount. Considering those facts, this Court in the said judgment directed the respondents to accept the TRAN-1 filed by the petitioner and to give the due of input tax credit in the electronic credit ledger/input tax credit of the petitioner within two weeks from the date of the order. The interest of justice would be served if we allow the petitioner to correct Form TRAN-1 in Writ Petition No. 1609/2019 and to file Form TRAN-2 without prejudice to the rights and contentions of both the parties. The respondents shall consider the issue whether the Form TRAN-1 and other forms that would be filed/corrected by the petitioner can be entertained in accordance with the provisions of section 140 of the Central Goods and Services Tax Act, 2017 and Rule 117 (1) of the Central Goods and Services Tax Rules, 2017 or not - Jurisdictional Assessing Authority shall also consider all the issues that would be raised by the petitioner including the issue on merits simultaneously. Writ petitions are disposed of.

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• 2022 (4) TMI 976
  Valuation for the purpose of calculated of GST - whether the transaction value would be the entire amount contributed towards the maintenance charges or not - HELD THAT:- The writ appeal is admitted and there will be an order of stay of that portion of the order passed in the writ petition which deals with the circular in question. List the writ appeal along with the batch on 9-12-2021.

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• Income Tax

• 2022 (4) TMI 975
  Disallowance of interest expenditure u/s 36(1)(iii) - Whether ITAT has failed to appreciate that the assessing company had used the borrowed funds for non-business purposes and states that the Company earned interest income at an average rate of 7.6% while on loans the assessee company paid interest at an average rate of 12.1% ? - HELD THAT:- An admitted position that the facts and circumstances in the present appeals (for the Assessment Years 2013-14 and 2014-15) are similar to the facts and circumstances for the Assessment Years 2007-08, 2010-11 and 2012-13 to which the aforesaid orders dated 21st December, 2018 and 08th February, 2019 pertain. It is pertinent to mention that no appeal has been filed under Section 260A of the Act till date challenging the orders dated 21st December, 2018 and 08th February, 2019. Undoubtedly, the principles of res-judicata and estoppel are not applicable in taxation matters. However, it has been held that a departure from a finding during the past years would result in a contradictory finding. ( See: Commissioner of Income Tax vs. Sridev Enterprises [ 1991 (1) TMI 52 - KARNATAKA HIGH COURT ]. In fact, in Commissioner of Income Tax vs Excel Industries Ltd [ 2013 (10) TMI 324 - SUPREME COURT ] the Court had observed that it was not appropriate to allow reconsideration of an issue for a subsequent assessment year if the same fundamental aspect permeates in different assessment years. This Court is of the view that all similar matters should receive similar treatment except where factual differences require a different treatment so that there is assurance of consistency, uniformity, predictability and certainty of judicial approach. Applying the said principles, this Court is of the opinion that no question of law arises for consideration in the present appeals and the same are dismissed.

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• 2022 (4) TMI 974
  Reopening of assessment u/s 147 - accumulation of income under Section 11(2) - unlawful claim of accumulation/deemed application of income and hence, there has been an escapement of income - HELD THAT:- Petitioner received a show cause notice dated 9th November 2018 specifically calling upon petitioner as to why petitioner s explanation should not be rejected. In the show cause notice, it is mentioned that the details on record show that the Trust has been accumulating continuously as per provisions of Section 11(2) of the Act and it is also noticed that the accumulated amount is not utilised for the purposes specified of accumulation. It is also stated in the show cause notice that from the audit report filed in Form 10B it is seen that an amount of Rs. 70,00,000/- has been accumulated as per Explanation 2 to Section 11(1) of the Act and there is no accumulation under Section 11(2) of the Act. Instead of filing Form 9A, the Trust had filed Form 10 with no specific purposes as required mandatorily. Petitioner was called upon to show cause why the application be not denied since necessary requirements have not been fulfilled. Petitioner replied to the show cause notice vide its Chartered Accountants letter dated 14th November 2018 and showed cause as to why petitioner s claim to accumulation should be allowed. Petitioner explained that while mentioning in Form 10B, it was inadvertently mentioned against 11(1) and also in the return as the same software generates all three form, viz., 10B, 10 and ITR-7. This explanation was accepted and no further query was raised and the accumulation under Section 11 of the Act of Rs. 70,00,000/- was factored in while computing the income. Therefore, it is quite clear that this issue was under active consideration during the assessment proceedings. Infact in the affidavit in reply at paragraph 6.13 respondents admit the fact that the amount of Rs. 70,00,000/- was inadvertently shown as deemed application of income and after a show cause notice was issued and an explanation was received, the Income Tax Officer accepted the claim of accumulation of Rs. 70,00,000/- under Section 11(2) of the Act and finalised the assessment under Section 143(3) of the Act on 5th December 2018. As regards the allegation in the reasons recorded that it is not ascertainable whether the amount is accumulation of income under Section 11(2) or deemed application of income as per clause (2) of Explanation to Section 11(1) of the Act, at paragraph 6.17 of the affidavit in reply, respondents have accepted that there is an error in the reasons recorded. Respondents have stated in the affidavit in reply that therefore, the question in reason recorded that it is not ascertainable whether the amount of Rs. 70,00,000/- is accumulation of income u/s 11(2) or deemed application of income as per clause (2) of Explanation to section 11(1) of the Act as shown in return of income does not arise . In the circumstances, it is quite clear that the entire reopening is based on change of opinion. Consequently, the mere formation of another view in the course of assessment proceedings for subsequent years would not justify the Revenue in reopening the assessment for Assessment Year 2016-2017. Therefore, in the present case, there was no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment of subsequent years which can justify the reopening of the Assessment Year 2016-2017 - Decided in favour of assessee.

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• 2022 (4) TMI 973
  Interest demand u/s 220(2A) - petitioner had delayed in paying the interest under Sections 234A, 234B and 234C - Earlier, the application for waiver of interest was rejected - petitioner submits that the petitioner is entitled for waiver of interest on interest as the petitioner has not only paid the tax determined by the respondent AO pursuant to the notice issued us 148 but also paid the interest demanded under Section 234A, 234B 234C of the Income Tax Act - HELD THAT:- Sub Section (2A) is an exception to Sub Section (1). The facts of the case are not in dispute. The petitioner had made an incorrect declaration in his Income Tax Returns for the Assessment Year 2007-2008 and thus, the assessment was sought to be reopened on 31.03.2014. An Assessment Order dated 30.01.2015 came to be passed, pursuant to which, a Demand Notice dated 30.01.2015 was issued under Section 156 of the Income Tax Act, 1961 to the petitioner. As per the Demand Notice, the petitioner was required to pay a sum of Rs. 1,24,85,280/- as detailed above. The Demand Notice under Section 156 of the Act also stipulated that if the petitioner failed to pay the aforesaid amount within the period of thirty days from the date of the service of the Demand Notice, the petitioner will also be liable to pay a simple interest at 1.5% for every month or part of a month from the date commencing after the end of the period of 30 days in accordance with Section 220(2) of the Income Tax Act, 1961. The petitioner, however, failed to pay the interest in time. Instead, the petitioner filed an application under Section 220 of the Income Tax Act, to waive the interest of Rs. 1,24,85,280/-. The said application was dismissed on 28.12.2016. It is only thereafter the petitioner paid the amount quantified in the Demand Notice dated 30.01.2015 issued under Section 156 of the Act. As the petitioner failed to pay the amount in time, the petitioner is liable to pay the interest. Therefore, there is no merit in this present Writ Petition and is liable to be dismissed.

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• 2022 (4) TMI 972
  Assessment u/s 153A - Disallowance of set off of brought forward long term capital loss arising on sale of STT paid shares against Long term capital gain earned - HELD THAT:- AO has repeated the disallowance made in the original assessment order, we find that the ground taken by the Revenue describing the loss is in fact short term capital loss. However, for the reason that disallowance is repeated in 153A order, which was already part of 143(3) proceedings could not have been made by the learned Assessing Officer in 153A proceeding. Same are the facts with respect to the disallowance under section 14A of the Act. Accordingly, grounds no. 1 2 of the appeal of the learned Assessing Officer are dismissed. Short-term capital loss set off against long term capital gain - Assessee has not claimed set off of any brought forward long term capital loss but has claimed set off of short term capital loss ground of appeal raised by the Assessing Officer is not sustainable in view of the provisions of Section 74(1)(a) of the Act, which allows set off of loss related to short term capital asset brought forward to be set off of capital gain earned in respect of any other capital asset. Accordingly, appeal filed by the learned Assessing Officer is dismissed. Accordingly, all the three appeals filed by the learned Assessing Officer are dismissed.

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• 2022 (4) TMI 971
  Set off of brought forward long term capital loss against the long term capital gain on sale of depreciable assets - HELD THAT:- We find that the Hon ble Jurisdictional High Court in ACE Builders Pvt. Ltd. [ 2005 (3) TMI 36 - BOMBAY HIGH COURT ] while holding that section 50 of the Act is a deeming provision and the fiction created under the section is confined to computation of capital gain only and this section cannot convert long term capital asset into short term capital asset. In view of the aforesaid decision rendered by the Hon ble Jurisdictional High Court and also affirmed by the Hon ble Supreme Court V.S. DEMPO COMPANY LTD. [ 2016 (10) TMI 62 - SUPREME COURT] we do not find any infirmity in the impugned order passed by the learned CIT(A) allowing set off of carried forward long term capital loss against long term capital gain arising during the year. As a result, ground no.1, raised in Revenue s appeal is dismissed. Disallowance under section 14A r/w rule 8D - HELD THAT:- We find that the Hon ble Jurisdictional High Court in HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] held that where assessee s own funds and other non interest bearing funds were more than the investment in tax free securities, no disallowance under section 14A of the Act can be made. We further find that recently Hon ble Supreme Court in South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT ] held that disallowance under section 14A of the Act would not be warranted where interest free own funds exceeds the investment in tax free securities and in such a case the investment would be presumed to be made out of assessee s own funds. In another decision, the Hon ble Jurisdictional High Court in Nirved Traders Pvt. Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] held that the disallowance of expenditure in relation to exempt income cannot exceed the exempt income earned by the assessee. We find no infirmity in the impugned order passed by the learned CIT(A) deleting the disallowance made by the Assessing Officer under section 14A r/w rule 8D of the Rules. As a result, ground no.2, raised in Revenue s appeal is dismissed.

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• 2022 (4) TMI 970
  Disallowance u/s 14A - AO has computed the disallowance which constituted disallowance under Rule 8D in so far as the disallowance under Rule 8D(2)(iii) being 0.5% of the average value of investment is not in dispute - CIT (A) has restricted the disallowance under Section 14A of the Act to the extent of exempt income earned - HELD THAT:- We have already incorporated the observations of the AO and the assessee s explanation as to why interest expenditure should not have been disallowed on the facts of the present case. Nowhere the AO has made any observation on these submissions that no interest can be disallowed or recorded his satisfaction as to why the claim of the assessee is not tenable having regard to the books of accounts and the nature of expenditure debited to the profit and loss account. He has mechanically proceeded to make the disallowance u/s 14A without rebutting to assessee s specific claim made before him. Here in this case as is evident from the order AO has nowhere records his satisfaction except for general remarks de-hors the facts of the case and explanation given by the assessee. He has not even examined that assessee had surplus funds which were interest free of more than Rs. 556.07 crores as against the exempt income earning investment of Rs. 63.66 crores. Thus, interest expenditure could not have been disallowed. Now in the latest judgement of Hon ble Supreme Court in the case of South Indian Bank [ 2021 (9) TMI 566 - SUPREME COURT] wherein it has been held that where assessee had interest free funds available which exceeds the investment made in tax free fund security then no interest expenditure can be disallowed and it has to be presumed that it is out of assessee s own fund and proportionate disallowance could not warrant under section 14A even where no separate accounts were maintained by the assessee and other expenditure made for earning tax free income. Disallowance could be legally impermissible for the investment made by the assessee in bonds/shares using interest free funds under Section 14A. Thus proportionate disallowance of interest is not warranted under section 14A for investments made in tax-free bonds/ securities which yielded tax free dividend and interest to assessee banks where interest free funds are available exceeded their investments. Thus, no disallowance on account of section 14A can be made. The disallowance as made by the Assessing Officer under Rule 8D(2)(iii) is deleted. Consequently, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed.

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• 2022 (4) TMI 969
  Disallowance of management salaries - HELD THAT:- It is abundantly clear that the ITAT order shows that the head management salaries is not included to be considered by the AO, to keep the assessee company alive and very much necessary to be incurred. Therefore, ITAT has not remitted the issue back to the file of the AO. Hence, we do not find any infirmity in the order passed by the Ld.CIT(A) and uphold the same. Accordingly, appeal of the assessee on this ground is dismissed. Disallowance of expenditure in respect of staff salaries - AO disallowed the expenditure related to staff salaries observing that some employees of the assessee company were attending to the obligation to the lessor with regard to the poultry equipment / shed etc and the staff who are regularly attending the duties are paid less @Rs. 650/- and @ Rs. 700/- per month, but those who had worked occasionally are paid maximum salaries upto Rs. 3000/- per month - HELD THAT:- It is evident that the assessee leased out entire poultry complex. The assessee could not justify as to why an expenditure of around Rs. 80,000/- per month is incurred to maintain one bore well at the cost which is less than Rs. 50,000/- only. We are of the view that when the entire poultry complex has been leased out, there is no justification to pay salaries to six employees. We find no infirmity in the order passed by the Ld.CIT(A) and uphold the same. Accordingly, this ground raised by the assessee is dismissed. Disallowance of expenditure towards vehicle repairs and vehicle maintenance - HELD THAT:- The assessee company has leased out the entire poultry complex. The assessee agreed before the AO that the expenditure amounting to Rs. 34,871/- and Rs. 94,274/- incurred related to tractor but not lease income. CIT(A) has allowed only an amount of Rs. 10,033/- spent towards petrol for vehicles used by the staff as there is possibility of incurring this expenditure. We do not find any infirmity in the order passed by the Ld.CIT(A) and uphold the same. Accordingly, the ground raised by the assessee is dismissed. Disallowance of poultry equipment repairs - AO disallowed an amount incurred towards poultry repairs u/s 57(iii) of the Act, observing that the said expenditure was capital expenditure which, as per the lease deed, has to be borne by the lessor i.e. the assessee - HELD THAT:- We are of the view that since the poultry complex was leased out, as per the lease agreement, the lessee should bear all the repairs, claims etc. arising out of the maintenance during the lease period. CIT(A) observed from different bills produced that the items are petty in nature, which are to be borne by the lessee. No evidence was produced for the amount claimed of value before the CIT(A) nor before the Tribunal to enhance the capacity of asset under lease, which was treated as the expenditure to be borne by the lessee, but not the lessor. We do not find any infirmity in the order passed by the Ld.CIT(A) and accordingly, uphold the same. Hence, the ground of the assessee is dismissed.

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• 2022 (4) TMI 968
  Correct head of income - Treatment of the income from the sale of mutual funds and shares - capital income or income from business - principles of res judicata - HELD THAT:- As in this case, we note that the revenue has consistently accepted the stand of the assessee that it is a trader of shares and mutual funds from AYs 2005-06 to 2007-08 and the AO deviated only in AY 2008-09 which has been reversed by the Ld. CIT(A) by passing the impugned order. Meanwhile, the AO had again treated the assessee s action as capital gain from investments for AY 2011-12 which was reversed by the Ld. CIT(A) and held it as business income which action of the CIT(A) has not been challenged by the AO, so the finding of Ld CIT(A) that assessee is a trader of of shares and mutual funds crystallises. Therefore, applying the principle of rule of consistency as held by the Hon ble Supreme Court in the case of Radhesoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] since the fundamental facts permeating in the earlier years have not changed, and when certain position has been accepted by the department, then without any change in law, the consistent position/finding cannot be allowed to be changed - Decided in favour of assessee. Disallowance of expenditure by invoking section 14A read with Rule 8D(2)(ii) (iii) - HELD THAT:- The ratio decidendi which emerges is that, it was qua the assessee s covered by the Board Circular No. 18 of 2015 viz., cooperative societies banks (to whom Section 80P was applicable), that the Hon ble Supreme Court NAWANSHAHAR CENTRAL CO-OPERATIVE BANK LTD. [ 2005 (8) TMI 28 - SC ORDER] held that the provisions of disallowance u/s 14A cannot be applied to such assessee s. In the facts of the present case, the assessee is also a cooperative society which is engaged in the business of providing financial assistance to its members and is eligible for deduction u/s 80P of the Act. In our considered view therefore the above the judgment rendered in case of State Bank of Patiala [ 2017 (5) TMI 843 - PUNJAB AND HARYANA HIGH COURT] and South Indian Bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] is squarely applicable to the facts of the present case. We thus hold that the provisions of Section 14A cannot be applied to the assessee cooperative society and accordingly the AO is directed to delete the disallowance so made u/s 14A of the Act. Accordingly, the second and third grounds of appeal of the revenue stands dismissed and the ground in cross appeals of the assessee is allowed.

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• 2022 (4) TMI 967
  Addition u/s 69C - DVO estimated the value of the land less than the stamp valuation less than 10% of the value adopted by the Stamp Valuation Authority - Assessing Officer, proceeded to treat the difference as unexplained expenditure u/s 69C - HELD THAT:- As decided in case of M/s Toffee Agricultural Farms Pvt. Ltd [ 2022 (4) TMI 869 - ITAT DELHI] from the reading of sub-section (1) of Section 142A, it is clear that legislature referred to the provisions of Section 69, 69A and 69B but specifically excluded 69C. The principle of casus omissus becomes applicable in a situation like this. What is not included by legislature and rather specifically excluded, cannot be interpreted by the Court through the process of interpretation. The only remedy is to amend the provision. It is not the function of the Court to legislate or to plug the loopholes in the law. In the light of the above binding precedent the action of the learned CIT(Appeals) in treating the addition made by the Assessing Officer u/s 69C as have been made u/s 69B is contrary to the law laid down by the Hon ble Jurisdictional High Court - therefore, respectfully following the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. Aar Pee Apartments (P) Ltd. [ 2009 (8) TMI 256 - DELHI HIGH COURT] he impugned order is therefore set aside. The addition made u/s 69C on the basis of the report of the DVO by the Assessing Officer deserves to be deleted.- Decided in favour of assessee.

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• 2022 (4) TMI 966
  Income accrued in India - Taxability of revenue from sale of software - Royalty receipt - software is protected by patent, copyright and trade mark protections, therefore the AO held the payments made by the users as the consideration for the use or the right to use of such patents, Software and Cloud Infrastructure covering them in the definition of royalty both by clause 9 (1)(vi) Explanation 2 sub-clause (iii) and (v) of the Income Tax Act, 1961 and also Article 12 (3) of the India US, DTAA - HELD THAT:- Revenue has been following a persistent approach in regard to assessee and its sister assessee subsidiaries of MS Corp holding sale of MS Retail Software Products to Indian Distributors as royalty under the Act as well as under DTAA between India and US. The assessment in the hands of present assessee was made on substantive basis while the protective assessment was in the hands of M/s Microsoft Regional Sales Corporation(MRSC). The assessments in the hands of Gracemac which stands amalgamated with the assessee stands set aside in regard to assessment years 2005-06, 2006-07 and 2007-08 by the co-ordinate Bench s judgment [ 2020 (11) TMI 1049 - ITAT DELHI ] which have been further upheld by Hon ble Delhi High Court by judgment [ 2022 (3) TMI 482 - DELHI HIGH COURT ]. The same were based on the principles of law that sale of software products does not give rise to royalty income as laid down by the Hon ble Delhi High Court in Infrasoft Ltd. case [ 2013 (11) TMI 1382 - DELHI HIGH COURT] which have now further been affirmed by the Hon ble Supreme Court of India in the case of Engineering Analysis Centre of Excellence P. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] In the light of aforesaid as there are no distinguishing facts with regard to present assessment years and as this Bench has also allowed the similar grounds for the assessment year AY for 2010-11, 2011-12 and 2012-13 the grounds in hand are sustained. The assessment order for AY for 2012-13 is liable to be set aside. Income from cloud hosting services - Subscription received towards Cloud Services to be royalty income - HELD THAT:- The cloud base services do not involve any transfer of rights to the customers in any process. The grant of right to install and use the software included with the subscription does not include providing any copy of the said software to the customer. The assessee s cloud base services are though based on patents / copyright but the subscriber does not get any right of reproduction. The services are provided online via data centre located outside India. The Cloud services merely facilitate the flow of user data from the front end users through internet to the provider s system and back. The ld. AO has fallen in error in interpreting it as licensing of the right to use the above Cloud Computing Infrastructure and Software (para 10.5 of the Ld. AO order). Thus the subscription fee is not royalty but merely a consideration for online access of the cloud computing services for process and storage of data or run the applications. Thus the Bench is of considered view that the ld. Tax Authorities below had fallen in error in considering the subscription received towards Cloud Services to be royalty income.

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• 2022 (4) TMI 965
  Addition on account of unexplained expenditure, disallowance being 25% of total expenditure towards unexplained expenditure, unexplained cash deposits in Bank, unexplained unsecured loans, addition on account of unexplained debits in bank statement and addition of unexplained advances - Addition made in absence of details like bank book with narration, nature of transactions, name and address of the parties, ledger account, mode of payment, source of payments with requisite documentary support, the genuineness of the said expenditure made could not be verifiable - CIT(A) upheld the addition in ex parte order by taking a view that the assessee has not substantiated the various grounds with documentary evidences - HELD THAT:- Before us neither the assessee appeared nor filed any documentary evidences, despite the fact Considering the fact that the appeal was filed in the year 2016 and despite passing of more than six years, the assessee has not filed even a single documentary evidence to substantiate various grounds of appeal. Therefore, we do not find any reason to deviate from the order of the ld. CIT(A) and we uphold the same. Appeal of the assessee stands dismissed.

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• 2022 (4) TMI 964
  Exemption u/s 11 - rejection of original application in Form 10A filed by the assessee on 02.03.2017 towards grant of registration under section 12AA - appellant is not entitled to exemption u/s 2(15) of the Act, holding that the activities carried on by it are not charitable in nature - HELD THAT:- As relying on decision of the Hon ble Jurisdictional High Court in assessee s own case [ 2020 (9) TMI 424 - MADRAS HIGH COURT] we direct the ld. CIT(E) to grant registration under section 12AA of the Act. Against the application in Form 10G dated 15.03.2018 seeking approval under section 80G(5)(vi) of the Act, the mandatory requirement of filing copy of the certificate of registration granted under section 12AA of the Act was not filed, the ld.CIT(E) rejected the said application of the assessee. In pursuance to the judgement of the Hon ble Jurisdictional High Court in assessee s own case [ 2020 (9) TMI 424 - MADRAS HIGH COURT] the Tribunal has directed the ld. CIT(E) to grant registration under section 12AA of the Act hereinabove, we also direct the ld. CIT(E) to grant approval under section 80G(5)(vi) of the Act after filing of copy of the certificate of registration under section 12AA of the Act as may be granted. Appeal of assessee allowed.

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• 2022 (4) TMI 963
  Reasonable profit estimation on commission income/commission agents - Computation of profits and gains of business on presumptive basis on Section 44AD by applying profit rate @ 8% of total turnover - counsel stated that the net profit or agency commission earned by commission agents dealing in agricultural produce is at 2% - HELD THAT:- Profit rate as mentioned in the provisions of Section 44AD of the Act, cannot be applied to commission agents who are doing business of agency commission or earning commission income only in view of provisions of Section 44AD(6)(iii) of the Act. Hence, as canvassed by ld.counsel for the assessee, a reasonable profit can be estimated. Accordingly, we estimate the profit at the rate of 4% of total credits determined by the AO at Rs. 1,58,01,195/-, after deducting sweep transfers. The AO will recompute the income accordingly. Appeal filed by the assessee is allowed for statistical purposes

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• 2022 (4) TMI 962
  Disallowance of deduction of interest under section 36(1)(iii) - HELD THAT:- In the present case, the assessee has followed percentage of completion method for the purposes of recognising the revenue from its project. We find that in similar facts and circumstances, the Co-ordinate Bench of Tribunal in M/S. NATIONAL STANDARD PVT. LTD. [ 2021 (4) TMI 1308 - ITAT MUMBAI] dismissed the appeal filed by the Revenue and allowed the claim of deduction under section 36(1)(iii). Similarly, in DCIT v/s Palava Dwellers Pvt. Ltd.[ 2020 (4) TMI 842 - ITAT MUMBAI] , following the decision of Hon ble Jurisdictional High Court in Lokhandwala Construction [ 2003 (1) TMI 93 - BOMBAY HIGH COURT] another Co-ordinate Bench of Tribunal dismissed the appeal filed by the Revenue and allowed the claim of deduction under section 36(1)(iii) - Appeal of assessee allowed.

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• 2022 (4) TMI 961
  Exemption u/s 11 - Application for registration u/s 12A rejected - charitable object u/s 2(15) - HELD THAT:- Till the AY 2014 it was not required to file any return of income and therefore the assessee s contention that it was not aware of the requirements of filing returns of income appears to be bonafide. Further, the assessee has made an application for registration only w.e.f AY 2019-20. In such circumstances, the requirement of law is that the Ld. CIT(E) has to consider whether the objectives of the assessee were charitable in nature and if the activities have already begun, then whether the assessee is carrying on its activities accordingly. Therefore, we agree with the Ld. Counsel for the assessee that the Ld. CIT(E) has not looked into the objectives of this University while considering its application for registration U/s. 12A of the Act. The Ld. CIT(E) has also not disputed the activities carried on by the assessee. In view of the above findings, we deem it fit and proper to remand the issue to the file of the Ld. CIT(E) with a direction to grant registration U/s. 12A of the Act. Appeal of assessee allowed.

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• 2022 (4) TMI 960
  Allowability of depreciation from the estimation of income - Depreciation from the net profit estimated from contractual receipt - HELD THAT:- All deductions are referred to under section 29 are deemed to have been taken into account while making such an estimate. This means that the allowability of expenditure as specified in section 28 to 44 are deemed to have been allowed and no further deductions shall be allowed when the incomes are estimated. We also note that the Ld.CIT(A) has adopted net profit of 8% on gross contract receipts, which is reasonable. CIT(A) after considering the facts and circumstances of the case rightly estimated the net profit at 8% on gross contract receipts. CIT(A) has erred in allowing further deduction such as interest / remuneration to partners and depreciation. Respectfully following the decision of Indwell Constructions [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] and the decision laid down in G.Raja Gopala Rao[ 2017 (1) TMI 1194 - ITAT VISAKHAPATNAM] we are inclined to set aside the directions of the Ld.CIT(A) w.r.t allowing further deduction such as interest / remuneration to partners and depreciation from the estimated income, and allow the appeal of the revenue.

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• 2022 (4) TMI 959
  Reopening of assessment u/s 147 - bogus purchase of Bitumen - HELD THAT:- Beyond doubt, the Assessing Officer had not made any disallowance qua the alleged bogus purchases of bitumen emulsion that were claimed by the assessee to have been made from M/s. Baba Basukinath Petrochemicals Ltd, Kolkata, which had in fact formed the very basis for reopening of the assessee s case u/s.147 of the Act. In sum and substance, the Assessing Officer while framing the assessment u/s. 147 r.w.s.143(3) had though failed to make any addition as regards the issue which had formed the very basis for reopening of the concluded assessment of the assessee firm i.e, bogus purchases but had made independent additions in its hands i.e, addition of bogus purchases. We are of considered view, that as stated by the Ld. AR, and rightly so, now when no addition had been made by the Assessing Officer as regards the issue on the basis of which the case of the assessee was reopened i.e, bogus purchases therein, no independent addition could have made by him - See JET AIRWAYS (I) LTD. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] as held that if after issuing the notice u/s.148 of the Act the Assessing Officer concludes that the income which had initially formed the reason to believe for reopening the case of the assessee, has as a matter of fact not escaped assessment, then it would not be open to the Assessing Officer to independently assess some other income. AO without making any addition as regards the issue on the basis of which the case of the assessee was re-opened u/s.147 of the Act i.e, bogus purchase had therein grossly eared in law in making an independent addition - Appeal of assessee allowed.

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• 2022 (4) TMI 958
  Treating the interest income as income from other sources - disallowing business expenditure after holding that no business was carried out by the appellant during the year under consideration - HELD THAT:- From the above observations of ld. CIT(A) for A.Y. 2004-05 and from the material on record, it can be concluded that no evidence has been filed by the assessee in support of its claim that it was engaged in the business of providing need based finance. The assessee either during the course of assessment or at appeal stage did not produce any books of accounts, bills, vouchers, etc. in support of the genuineness of the claim. Regarding the alternate claim of the assessee that in the event the interest income is treated as income from other sources then the interest expenses should be allowed as a deduction against such interest income u/s. 57 of the Act, we are of the view that in absence of evidence from the assessee that such borrowing is directly linked with such loans/advances, such deduction cannot be allowed u/s. 57. CIT(A) in his order has observed that the assessee submitted profit and loss account and balance sheet only reflecting various assets/sundry creditors and debtors but failed to produce books of accounts or any details to establish the nexus between borrowed fund to such loans and advances. In view of the above, we hold that the ld. CIT(A) has not erred in treating interest income as income from other sources. We are of the view that since the assessee has not established that it is engaged in carryout out any business activity, the ld. CIT(A) has not erred in law and on facts in confirming the action of the ld. CIT(A) in disallowing the entire business expenditure after holding that no business was carried out by the assessee. Further, since the assessee has failed to establish any nexus between payment of interest on borrowed fund and giving of loans and advances for earning interest income, in our view, the ld. CIT(A) has not erred in not granting deduction of expenditure u/s. 57 of the Act, against interest income. Addition u/s. 68 - Onus to prove - HELD THAT:- We note that the assessee has not discharged the onus cast upon it u/s. 68 of the Act. Despite several opportunities the assessee has not produced either the PAN No. of the concerned person nor has produced any details of the address of the person. It is a well established law that the initial onus is on the assessee to prove the genuineness and creditworthiness of the party which has not been discharged in the instant set of facts. Mere production of ledger account and the contention that the amount has been received through banking channel would in our view not suffice when the identity of the creditor itself has not been established. - Decided against assessee. Addition u/s. 22 - Claim of standard deduction u/s. 24 - HELD THAT:- As noted in the preceding paragraphs, the ld. counsel for the assessee has already submitted before us that the Department has already granted 30% standard deduction u/s. 24 of the Act and he has nothing further to submit in the matter. Therefore ground no. 6 of the assessee hereby is dismissed. Disallowance of entire business expenditure after holding that no business was carried out by the assessee during the year under consideration - HELD THAT:- We find no infirmity in the order of Ld. CIT(A), where he has held that the assessee has taken inconsistent position in various years. Further, the Ld. CIT(A) has also specifically observed that there has been non production of books of accounts, bills, vouchers etc. for various expenses claim being genuine both during assessment as well as in appeal proceeding where no such bills, vouchers, were produced. Accordingly, we are of the view that ld. CIT(A) has not erred in confirming the action of the ld. Assessing Officer in disallowing the business expenditure. Penalty u/s. 271(1)(c) - HELD THAT:- We are in agreement with the order of ld. CIT(A) that the assessee has been inconsistent in his approach wherein in one year, he has shown interest as income from other sources whereas in another year he has offered the same as business income . The assessee has not been able to establish that he is carrying on any business and ld. CIT(A) has correctly noted that interest income has been categorized as business income and not as income from other sources in order to claim deduction of various expenses against such income so as to avoid payment of taxes. When the case was opened for scrutiny, the assessee deliberately did not cause appearance and did not produce books of accounts, vouchers, evidence etc. in supports of any of its claim. Even in proceedings before the ld. CIT(A), both in quantum and penalty no evidence was produced by the assessee in respect of any of its claim. The assessee despite having ownership of several properties did not offer tax on any rental income in respect of those properties which were not self occupied. In respect of addition made u/s. 68 of the Act, the assessee was unable to prove the genuineness and creditworthiness of the creditors and failed to discharge the initial onus cast upon him. From the above facts of the case, we are of the view that the ld. CIT(A) has not erred in law and on facts in confirming the penalty levied u/s. 271(1)(c). Penalty u/s. 271D and 271E - HELD THAT:- We are in agreement with argument of the Counsel for the assessee that when as per the Rule of Literal interpretation, when the words of the Statute are plain and unambiguous, the same should be understood to represent the legislative intent. In the instant case, the language of sections 271D and 271E is plain and unambiguous and states specifically that penalty shall be imposed by the Joint Commissioner of Income Tax. We therefore are of the view that the CIT(Appeals) erred in law and in facts in initiating and levying penalty u/s. 271D and 271E of the Act.

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• 2022 (4) TMI 957
  Disallowance of expenses - whether the AO should have been afforded an opportunity of examination? - HELD THAT:- Certain decisive facts were not adjudicated upon by CIT(A) in the remand proceedings viz. the correct proportionate amount of expenditure relatable to the impugned assessment year i.e. AY 2008-09, and the corresponding amount which needs to be allowed for this year in subsequent year and the quantum which is relatable to preceding financial year 2007-08. Neither has the issue of bifurcation of income between AY 2007-08 and AY 2008-09 been discussed with CIT(A) in his order. The assessee placed additional evidences and supporting documents in support of its claim of expenditure before the CIT(Appeals) for the first time, in respect of which no opportunity was given to Ld. AO for verification. CIT-A(A) disallowed the entire expenditure though the AR of the assessee has averred before us that part of the expenses could not been disallowed since they did not pertain to the instant year. Therefore, in our view, since certain important aspects have not been dealt with by Ld. CIT(A) in his order and respectfully following the decision of the Hon ble Gujarat High Court in the case of Pradyuman Patel [ 2013 (9) TMI 1286 - GUJARAT HIGH COURT] in the interests of justice, we are restoring the matter to the file of CIT(A) on the limited point to verify the correct quantum of expenditure Disallowance of amount actually expended carrying out work for FCI - HELD THAT:- Expenditure proportionate to impugned AY 2008-09 i.e. the year for consideration before us be allowed in the year FCI has finally rejected the claim of the assessee. For this purpose, the CIT(A) may carry out necessary verification as to ascertain the precise year when the claim has been finally rejected by FCI and allow deduction of proportionate expenses pertaining to AY 2008-09 in the year, when the claim has been finally rejected by FCI. On the connected issue regarding the quantum of expenditure which would be deductible in the year in which claim is finally rejected by FCI, the Ld. AR of the assessee himself has submitted that only part of the expenses of Rs. 2,51,59,561/- pertain to AY 2008-09. Therefore, in our view, once the CIT(A) after giving due opportunity to Ld. AO has arrived at the correct amount of expenditure relatable to this year, respectfully following the directions of Hon ble ITAT in the assessee s case vide order dated 25/02/2014 for AY 2008-09, the proportionate expenditure incurred in AY 2008-09 be allowed in the year when the claim has been finally rejected by FCI. Bogus Sundry Creditors - HELD THAT:- Since the assessee did not furnish any details in respect of balance creditors before the ld. CIT(A), in our view, the ld. CIT(A) has not erred in confirming the addition in respect of balance sundry creditors with respect to whom details have not been furnished by the assessee. In the result, the cross objection of the assessee is dismissed. Disallowance of Demurrage Charges Disallowance on account of Rail Transit Loss - HELD THAT:- As decided in MAHALAXMI SUGAR MILLS COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1984 (5) TMI 6 - DELHI HIGH COURT] demurrage is a charge by way of compensation and includes amount chargeable for failure to storage and transport goods by contractor for its delayed clearance. It is not a fine paid to the port authorities for any criminal act but is a compensation for the use of port facilities beyond the free period allowed under the rules. Demurrage charges are charged not for any infraction or violation of law but on account of commercial failure of the contractor. In the case of Ripley Co. Ltd. [ 2017 (4) TMI 164 - ITAT KOLKATA] held that demurrage paid by assessee for its failure to complete work within prescribed time allotted by principal was allowable deduction u/s 37(1) - we are of the considered view that ld. CIT(A) has not erred in law and in facts in deleting the addition on account of demurrage/wharfage charges and deletion on account of rail transit loss since the same are not penal in nature. Regarding the second issue in relation to whether the assessee has correctly netted off the charges waived by the relevant rail/port authorities, we observe that the assessee produced relevant copies of ledger accounts and supporting before Ld. CIT(A) for his perusal, who after analyzing the same concluded that on perusal of materials on record it is observed that assessee has charged demurrage/wharfage on net basis after adjusting for waiver by relevant port authorities. In the result, we find no infirmity in the order of Ld. CIT(A) while adjudicating on this issue in favour of the assessee. Disallowance of labour charges - HELD THAT:- We are of the view that ld. CIT(A) has not erred in law or in fact in restricting the disallowance to 10% of the labour charges, especially looking into the facts that assessee employs labour for work at Railway Head, PF and ESI laws are not applicable to daily wage labour and further the ld. A.O. has also not found any material error of irregularity in the copies of ledger accounts and wages register maintained by the assessee. Disallowance u/s. 40(a)(ia) - assessee did not give names of various parties viz. transporters and their PAN Nos. and also did not furnish details of payments made to them - HELD THAT:- On the facts of the case, it is observed that the ld. CIT(A) in orders passed u/s. 271C of the Act and u/s. 201(1)/201(1A) of the Act for A.Y. 2012-13 has granted complete relief on the same set of facts. The facts of the case for the instant year have been analyzed in detail while allowing relief to the assessee for this year. Accordingly, in our view, there is no infirmity in the order of ld. CIT(A) while granting relief for disallowance u/s. 40(a)(ia) of the Act. Restricting disallowance in respect of transportation payment @ 10% of total expenses - HELD THAT:- The Mumbai Tribunal in the case of Parsoli Corporation Ltd. [ 2019 (1) TMI 933 - ITAT MUMBAI] restricted the disallowance to 10% in respect of self-made vouchers as being fair and reasonable. Again, the ITAT Ahmedabad in the case of DCIT v. M/s. Unique Metropolis [ 2022 (3) TMI 891 - ITAT AHMEDABAD] held that in view of the facts of the instant case, in the absence of supporting evidences, genuineness of payment made in cash is not established and therefore disallowance upheld by the ld. CIT(A) at 10% of total cash expenses is found to be quite reasonable and justified. In our view the ld. CIT(A) has not erred in disallowing a sum of 10% of total cash expenses. In our view, looking into the nature of business of the assessee where expenses constitutes a vital part of expenses in this line, the necessity of payment in cash purpose of carrying out the business, the ld. CIT(A) has not erred in law or in fact in restricting the disallowance to 10% of the expenditure.

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• 2022 (4) TMI 956
  Addition u/s 14A r.w.r. 8D - AO noticed that assessee has earned exempt income being dividend from investments made in various mutual funds and stock in trade - suo motto disallowance - HELD THAT:- CIT(A) stated that assessee has made investment in subsidiary/joint venture company which did not require any expenses of day to day basis, therefore, directed the assessing officer to restrict the disallowance @ 0.5% on average investment, other than strategic investment and accordingly, arrived at disallowance to the amount of Rs. 10,53,875/-. Since the assessee has made suo motto disallowance at Rs. 14,70,606/-, therefore, disallowance was restricted to Rs. 14,70,606/-. We consider that it has been held in various pronouncements that Sec. 14A r.w.rule 8D is not applicable to the assessment year 2007-08. The Hon ble jurisdictional High Court of Bombay in the case of Godrej Boyce Hsg. Co. Ltd. [ 2010 (8) TMI 77 - BOMBAY HIGH COURT ] held that Rule 8D shall apply with effect from A.Y.2008-09. The Hon ble Supreme Court in the case of CIT Vs. Essar Tech. Ltd. [ 2018 (2) TMI 115 - SUPREME COURT ] held that rule 8D is prospective in operation and cannot be applied to any assessment year prior to assessment year 2008-09. Therefore, we don t find any error in the finding of ld. CIT(A). Accordingly, this ground of appeal of the revenue stand dismissed. Correct head of income - Investment in IPO - STCG or business income - HELD THAT:- Assessee is in the business of banking and as per the investment policy it has made an elaborate investment in various instrument such as investment in government securities, treasury bills, CD s, CP s, Tier-III Bonds, Debentures IPO s, Equity Shares etc, - CBDT Circular No. 4 of 2007 dated 15.06.2007 provide that assessee can have two portfolio i.e Investment port folio comprising of securities which were to be treated as capital asset and trading port folio comprising of stock in trade which were to be treated as trading assets.The ld. CIT(A) has also discussed that some of the shares subscribed by the assessee in the IPO s were held for duration up to 340 days, therefore, observation of the assessing officer that all the shares were sold immediately after allotment of shares was factually incorrect. Considering the facts and findings elaborated in the decision of ld. CIT(A) that the investment made in shares in various IPO s cannot be considered as trading activity, we don t find any infirmity in his decision, therefore, this ground of appeal of the revenue stand dismissed. Disallowance of bad debt written off - A.O noticed that in the computation of total income the assessee has disallowed the bad debt u/s 36(2)(v) on the ground that the bad debt related to advances to which Section 36(1)(viia) of the Act applicable and the bad debt have to be necessarily debited to the provisions for bad and doubtful debt - HELD THAT:- The assessee being a banking company is entitled to bad debt @ 7.5% of gross total income as deduction u/s 36(1)(viia). In addition to this the assessee is also entitled to bad debt on the basis of actually written off bad debt and this deduction was allowable u/s 36(1)(vii) of the Act. During the year under consideration the assessee had claimed deduction of provision based at Rs. 9,79,68,016/-. In addition the total amount of bad debt actually written off were Rs. 24,14,97,278/-, therefore, the allowability of provision was in accordance with Section 36(1)(viia) at 7.5% of gross total income. We consider that the bad debt actually written off was at Rs. 24,14,97,278/- against opening balance in the provision of amount at Rs. 14,35,29,262/-, therefore, the difference of Rs. 9,79,68,016/- is allowable as deduction. Therefore, we don t find any error in the decision of ld. CIT(A), accordingly, this ground of appeal stand dismissed. Addition being entrance fee paid to club - AO was of the view that such fees paid to clubs for using club facility provide advantage to the assessee of an enduring nature which was capital in nature, therefore, same was added to the total income of the assessee - CIT-A deleted the addition - HELD THAT:- CIT(A) has placed reliance on the decision of ITAT, Mumbai, in the case of Bombay Burmah Trading Corporation Ltd. [ 2001 (1) TMI 974 - ITAT MUMBAI ] and in the case of Otis Elevator [ 1991 (4) TMI 53 - BOMBAY HIGH COURT ] wherein it has been held that even entrance fees paid to club is allowable as deduction. After taking into consideration the decision of Hon ble Jurisdictional High Court and coordinate bench of ITAT as referred above we don t find any infirmity in the decision of the order of the ld. CIT(A), therefore, this ground of appeal of the revenue stand dismissed. Depreciation on lease asset - recharacterisation of various lease transactions in earlier years as Hire Purchase / Financing transactions - HELD THAT:- It is noticed that similar issue on identical facts have been adjudicated by the ITAT in the appeal of the assessee pertaining to assessment year 1995-96 to 2003-04 as per copies of order placed in the asesssee s paper book wherein the issue was set aside to the A.O for adjudicating the same in accordance with law and in the light of the order passed in the earlier years. Accordingly, we restore this matter to the file of the A.O to examine the claim of the assessee in accordance with law as per the direction of the ITAT given in the earlier years. Therefore, this ground of appeal of the assessee is allowed for statistical purposes.

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• 2022 (4) TMI 955
  Delayed remittances of employees contribution towards PF/ESI - assessee has submitted that the employee s contribution to PF ESI has been remitted on or before the due date of furnishing of return of income under section 139(1) - HELD THAT:- As decided in M/S. ADYAR ANANDA BHAVAN SWEETS INDIA P LTD. [ 2021 (12) TMI 558 - ITAT CHENNAI] held that the payment of employees contribution in regard to PF ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B. 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 954
  Disallowance u/s 14A r.w. Rule 8D - Dividend Income received from Mutual Fund - Suo moto disallowance made by assessee - mandation of recording satisfaction before making disallowance - HELD THAT:- While making additional disallowance under section 14A of the Act, the Assessing Officer has not recorded any satisfaction as to how the claim of the assessee was incorrect and had resorted to the provisions under section 14A r.w. Rule 8D As against the voluntary disallowance made under section 14A of the Act by the assessee, the Assessing Officer has not recorded any satisfaction as to how the disallowance voluntarily made by the assessee is not correct and moreover, the AO has not given any findings in the assessment order with regard to the correctness in respect of expenditure incurred to earn exempt income. DR could not controvert the decision of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [ 2018 (3) TMI 805 - SUPREME COURT] which was followed by the Coordinate Benches of the Tribunal in the above cases to decide the issue in favour of the assessee. Thus, respectfully following the decision of the Coordinate Benches of the Tribunal in the case of Shriram Capital Limited [ 2022 (4) TMI 868 - ITAT CHENNAI] as well as the decision of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT (supra), we hold that the Assessing Officer was not justified in making disallowance under section 14A of the Act. Thus, the ground raised by the assessee is allowed.

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• 2022 (4) TMI 953
  Addition on account of unsecured loan - No documentary evidences to prove the genuineness of these loan - HELD THAT:- The assessee has furnished the required detail as placed in the paper book before the ld. CIT(A) as additional evidences to prove genuineness of loan obtained from the aforesaid parties and the ld. CIT(A) vide letter dated 18.07.2016 had directed the assessing officer to furnish the remand report. The appeal of the assessee was dismissed without considering the said additional evidences on the default of the assessing officer for not submitting the remand report. In the light of above facts we are of the considered view that decision of ld. CIT(A) is not justified. Therefore, normally, any irregularity crept in the proceeding then after removing irregularity proceedings is to be initiated from that stage but by remitting the issue to the learned first appellate authority we would be multiplying the litigation, because the ld. CIT(A) would call for a remand report from the assessing officer and proceedings to be commenced on two stages, in order to avoid that situation we would deem it proper to set aside this issue to the file of the A.O for deciding afresh after taking into consideration the additional evidences filed during the course of appellate proceedings before the ld. CIT(A). It is needless to say that observation made by us will not ensure or impair the case of A.O and will not cause any prejudice to the defense explanation of the assessee. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes. Addition u/s 68 - cash deposit in the bank account of the assessee maintained with the Federal Bank Ltd.- HELD THAT:- We observe that ld. CIT(A) has not disproved the supporting evidences furnished by the assessee in support of his claim that aforesaid amount was withdrawn from overdraft bank account maintained with Modal Cooperative Bank ltd. before depositing the same in the bank account maintained with the Federal Bank ltd. Therefore, this ground of appeal of the assessee is allowed. Disallowance of interest - HELD THAT:- AO noticed that comparatively the assessee has paid interest to the one party M/s Kiran A Lund at abnormally higher rate of 24% whereas to the order parties the rate of interest was almost of the said rate of interest. CIT(A) has dismissed the appeal of the assessee stating that no documentary evidences has been furnished by the assessee to justify the payment of interest at higher rate of 24%. Even, during the course of appellate proceedings before us the assessee has simply filed copy of acknowledgment of return of income filed by M/s Kiran A Lund without filing any documentary evidence to substantiate the genuineness of paying interest @ 24%, therefore, we don t find any infirmity in the decision of the ld. CIT(A). Accordingly, this ground of appeal of the assessee stand dismissed. Disallowance of interest of personal loan - Before the ld. CIT(A) the assessee has failed to produce any documentary evidence to prove that personal loan obtained was used for business purposes - HELD THAT:- As during the course of appellate proceedings before us the assesee failed to demonstrate that the personal loan was used for the business purpose of the assessee, therefore, we don t find any need to interfere in the decision of ld. CIT(A). Accordingly, this ground of appeal of the assessee is dismissed.

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• Customs

• 2022 (4) TMI 952
  Seeking to grant leave to add the container freight station (CFS) and the Shipping Line as party respondents in the contempt petition - if the Shipping Line is considered as a third party on whom no specific direction was issued, can they be heard to say that the order does not bind them? - HELD THAT:- Admittedly the detention certificate has to be issued by the Customs in terms of the provision of the Act and the various notifications issued from time to time. If one person, without just cause or excuse deliberately interfered with the trade or business of another, he was said to be acting unlawfully - It is admitted case that the Shipping Line was aware of the order of the direction issued to by this Court for issuance of detention certificate. The department had intimated the Shipping Line by email dated 08.03.2022 about the order passed by this Court on 04.03.2022 and requested them to forward action taken in compliance of the detention certificate dated 18.02.2022. It is not in dispute that the detention certificate was issued on 18.02.2022 and communicated to the Shipping Line and the CFS. Even much earlier by email dated 23.02.2022 and letter dated 25.02.2022, the Customs had called upon the Shipping Line to comply with the direction issued by this Court in its order dated 17.02.2022 at the earliest. The facts clearly disclose that the Shipping Line was communicated with the detention certificate, informed about the orders passed by this Court and they have submitted their reply/objection which would categorically show that they were not inclined to comply with the detention certificate and grant waiver. Thus, the order passed by this Court directing issuance of detention certificate to the Customs which direction was not complied with, though communicated to the Shipping Line - Therefore, the Shipping Line though would have been a third party to the proceedings when the writ petition was heard, on and after they have been issued with the detention certificate, they are precluded from raising a plea that they are third party to the proceedings and alien to the directions issued by this Court, resulting in issuance of the detention certificate. Thus, the Shipping Line is not only a necessary party to the proceedings but also a proper party to the proceedings. So far as the CFS is concerned, they also did not initially comply with the terms of the detention certificate and only during the pendency of this contempt application, it appears that they have complied with or agreeable to comply with the terms and conditions of the detention certificate. Therefore, in order to give a binding direction, the CFS is also held to be a proper and necessary party to the present proceedings - application allowed and the CFS and the Shipping Line are impleaded as party respondents to the contempt petition. Correctness of the contention of the Shipping Line that the detention certificate cannot negate their contractual rights which stands protected under the provisions of the Contract Act - HELD THAT:- In terms of Regulation 6(l) of the 2009 Regulation, there is a complete bar for charging any rent or demurrage on the goods seized or detained or confiscated by the proper officer. Therefore, on an after issuance of the detention certificate, the Shipping Line cannot take umbrage under the proviso to Regulation 10(1)(l) of the 2018 Regulation and contend that their right to claim container detention charges still stands preserved and they can do so after expiry of 60 days. Admittedly, the Shipping Lines have registered themselves under the provisions of the statutory regulations. If that be the case, all conditions stipulated by the Customs under the provisions of the Act and the regulation binds the Shipping Line. The terms of the contract between the petitioner and the Shipping Line which is contended to be preserved and safeguarded under the provisions of the Contract Act would be subject to the conditions under the regulations to which the Shipping Line have consciously submitted themselves. Therefore, the right which according to the Shipping Line exists under the contract is subservient to the conditions under the regulations. Having held that the Shipping Line would fall within the definition of Customs Cargo Service Provider , the 2009 Regulation is held to be applicable and they are required to comply with the mandate under the said Regulation and in particular Regulation 6 (1) therein and they are not entitled to charge any rent or demurrage on the goods seized or detained or confiscated. One more fact which we note is that at no earlier point of time, the Shipping Line had sought to exercise their alleged right under the proviso to Regulation 10(l) of the 2018 Regulation and it is for the first time before this Court such a plea is being canvassed - by conduct, the Shipping Line was fully aware of the effect of the statutory regulations and the present attempt to wriggle out of their obligations is impermissible. The Shipping Line appears to have been sitting on the fence and watching the proceedings and to see as to what extent this Court may exercise its jurisdiction under the provisions of the Contempt of Courts Act. Thus, it can be safely concluded that the attempt of the Shipping Line is to obstruct the implementation of the order and directions issued by this Court by seeking to make an attempt to challenge the detention certificate by appearing before this Court after they have been put on notice in the impleadment application. There is a statutory embargo on the Shipping Line, prohibiting them from charging any rent or demurrages during the period of detention and a certificate having been issued by the proper officer waiving the detention charges, there is no escape from the rigour of such a certificate issued by the proper officer. The contractual rights which have been held to be subservient are to yield to the provisions of the statutory regulations, there is no escape, but to implement the detention certificate in its letter and spirit. No action to be initiated for contempt against the Shipping Line or the CFS but the Shipping Line and the CFS are directed to comply with the terms of the detention certificate issued by the Customs in its letter and spirit and consequently waive the detention charges and demurrages on account of the detention of the cargo along with the container by the proper officer of Customs from the date of detention till the date the cargo along with the container is released from the Customs Barrier. No adverse orders are passed against the officials of the Customs department and a decision will be taken subject to the compliance or otherwise of the directions issued to the Shipping Line and CFS - List the matter on 25.04.2022 for reporting compliance.

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• 2022 (4) TMI 951
  Recovery of refund sanctioned - Validity of Show Cause Notice (SCN) - it is alleged that the refund has been sanctioned erroneously based on the false and fabricated documents - violation of principles of natural justice - HELD THAT:- This Writ Petition is premature. It cannot be said that the impugned Show Cause Notice is without jurisdiction. Whether the petitioners have indeed indulged in submitting fraudulent and fabricated documents / certificates to wrongly claim refund of duty paid, is the subject matter of evidence. A Writ Court under Article 226 of the Constitution of India cannot examine the factual aspects. The petitioners have to submit to the jurisdiction of the respondents by filing suitable reply to the impugned Show Cause Notice. If the petitioners suffer an adverse order, there is a hierarchy of the Appellate Authority under the Customs Act, 1962. Therefore, the petitioners have to work out their remedy before the Authorities under the Act. There is no merit in the present Writ Petition - the first respondent is therefore directed to complete the proceedings initiated pursuant to the impugned Show Cause Notice after following the principles of natural justice and affording an opportunity of personal hearing, preferably within a period of six months from the date of receipt of a copy of this order. Petition dismissed.

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• 2022 (4) TMI 950
  Seeking release of goods for home consumption - seeking waiver of demurrage charges in terms of Regulation 6(I) and 6(q) of Handling of Cargo in Customs Areas Regulations, 2009 - whether the Custom Authorities can direct waiver of demurrages otherwise recoverable by AAI in terms of AAI Regulation, 2003? - HELD THAT:- This aspect was considered in detail by this Court in M/S. GLOBAL IMPEX THROUGH ITS PARTNER, SHREE SHYAM ENTERPRISES, SURENDER KUMAR JAIN THROUGH ITS PROPRIETOR, BISHT INTERNATIONAL THROUGH ITS PROPRIETOR, ROOP SINGH ENTERPRISES THROUGH ITS PROPRIETOR, VERSUS MANAGER, CELEBI IMPORT SHED AND ANR., UNION OF INDIA ORS. [ 2019 (12) TMI 957 - DELHI HIGH COURT] , where after analyzing a catena of judgments has held that liability to pay the demurrage is on the importer, irrespective of the justifiability, or unjustifiability, of the seizure and detention of the goods by the Customs authorities. Even in a case in which the seizure is entirely unjustified, the importer would, in the first instance, have to pay demurrage, to the custodian and, thereafter, pursue, with the Customs authorities, for obtaining reimbursement of the amount. Similar issue arose in the case of MATE (INDIA) PVT. LTD. VERSUS COMMR. OF CUS., INLAND CONTAINER DEPOT [ 2020 (2) TMI 1374 - DELHI HIGH COURT] , wherein similar facts were involved and it was thus concluded by this Court that the Custom Authorities cannot direct waiver of demurrage charges which can only be done by the custodian under AAI Act. Merely because the Custom Authority expends a reasonable time in dispensation of their sovereign functions of search, seizure and investigation, cannot lead to transference of liability to pay demurrage to the Customs Authority. Thus, it is evident that the Customs Authorities cannot direct waiver of demurrage which can only be done by the Custodian. Moreover, in the present case the decision was given on 6th May, 2019 vide which the fine and penalty were levied upon the petitioner. Admittedly, despite the aforesaid decision, the petitioner has not paid the penalty on the pretext that he would pay the same simultaneous to the release of goods. The appellant is thus, not entitled to waiver of demurrage charges - petition dismissed.

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• 2022 (4) TMI 949
  Rejection of SAD refund claim - rejection on the ground of mismatch of description of goods in the import document and subsequent sale invoices - HELD THAT:- In the instant case Statutory Auditor namely Chartered Accountant had issued certificates in respect of all five refund claims, which are also annexed to the appeal memo at page 51, 61, 86 ,126, 169 and noted in the Order-in-Original as well as Order-in-Appeal, which were also produced along with original sale invoices. Therefore, erroneously applying CBEC Circular No. 15/2010-Cus dated 29.06.2010 concerning filing of fraudulent documents like duplicates invoices to seek refund against stock not sold out, is not at all applicable to the Appellant case. There is a clear findings of the Hon ble Madras High Court in JOHNSON LIFTS PVT. LTD. VERSUS ASSTT. COMMR. OF CUS. (REFUNDS) , CHENNAI [ 2021 (2) TMI 401 - MADRAS HIGH COURT ] concerning the admissibility of CA certificate along with original sale invoice wherein it was clearly stipulated that the respondent-department is bound to accept the description of goods in the import documents as well as sale invoice to be one and the same, on the strength of the certificate/correlation statement issued by the Statutory Auditor (Chartered Accountant). The appellant is entitled to refund alongwith applicable interest - appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 948
  Recovery of differential duty - Levy of penalty u/s 112 and section 114AA of Customs Act, 1962 - Confiscation of used Cranes - HELD THAT:- The acceptance of the voluntary payment is beyond the framework of the proceedings as determined by the proposals in the show cause notice and, with that having been set aside, the Tribunal lacks jurisdiction to address retention of such amount for any purpose, including as restitution towards duty that has been short-paid. Nonetheless, the finding in the impugned order that this payment of duty was voluntary, and even despite being beyond the period of limitation and in the absence of any threat or coercion from customs authorities, does throw some light on the bona fides of the importer who, indeed, was not under legal obligation to do so. The prevailing practice of assessment on the basis of weight which has seemingly been followed by M/s Crown Lifters is also on record. There has been no ascertainment of the actual purchase price of each of the nine used cranes , which surely must be available considering that these were sourced at auctions, by the adjudicating authority. The initiation of proceedings for confiscation under section 111(m) of Customs Act, 1962 and penalties under section 112 and section 114AA of Customs Act, 1962 must be viewed through that prism. Clearance of goods for home consumption, in exercise of authority under section 47 of Customs Act, 1962 and subject to satisfaction of proper officer that the goods are not prohibited and that the correct duties have been levied, attains a finality thereby that can be disturbed only upon subsequent finding that the goods are prohibited or that short-payment of duty has occurred with the latter to be re-opened only within the stipulated time-frame. There is no allegation of the goods being prohibited and, indeed, recourse to confiscation under section 111(m) of Customs Act, 1962 repudiates that contingency. The discharge of correct duty liability is a determination of rate of duty, under section 12 of Customs Act, 1962, and value determined in the manner prescribed in section 14 of Customs Act, 1962 - it would appear that confiscation is disproportionate detriment and without any justification to cause such detriment. Consequently, confiscation of nine used cranes imported by M/s Crown Lifters fails along with the penalties arising therefrom. However, as recovery of differential duty has been proposed for the subsequent imports, M/s Crown Lifters Pvt Ltd is not immune to consequence of evasion of duty liability in the event of undervaluation being established. The sole evidence of misdeclaration of value appears to be the admission in the statement of Shri Karim Jaria and the confessional statement of the illicit fund mover, Shri Brijesh Gala. As in the case of the earlier imports, the actual price of each of the five used cranes has not been ascertained. Reliance on statements alone is too fragile a foundation to build a case of undervaluation; such depositions are reliable only with corroborative support. In the absence of corroboration, test of cross-examination is of essence, as mandated by section 138B of Customs Act, 1962, for relevancy. There are no reason to disapprove the rejection of request for cross-examination of some investigating officials and of persons whose statements had not been relied upon for initiation of proceedings, the finding of the adjudicating authority that the statement of Shri Brijesh Gala, despite being corroborative of the confessions in the statements of the noticees, was not of such relevance as to warrant cross-examination is unacceptable - The re-assessment, recovery of differential duty and confiscation of used cranes imported by M/s Crown Lifters Pvt Ltd in the impugned order fails. The order for confiscation of the used cranes imported by both entities under section 111 (m) of Customs Act, 1962 along with the consequential penalties under section 112 of Customs Act, 1962, is set aside - the penalties imposed on the noticees under section 114AA of Customs Act, 1962 as also the recovery of differential duty under section 28 of Customs Act, 1962 from M/s Crown Lifters Pvt Ltd., are set aside - appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 920
  Seeking release of detained goods - seeking waiver of detention charges and other charges - HELD THAT:- The statutory regulations clearly provide for waiver of these charges which the petitioner cannot be compelled to pay. In the instant case the CFS/Shipping Line have not complied with the requirements that they are to fulfil pursuant to issuance of detention certificate. The question would be is the respondent/department powerless or can it be said that they will be a mute spectator to the non-compliance of their directions by the CFS/Shipping Line. The answer to this question lies in 2018 2019 Regulations wherein under Regulation 11 provides for action being taken for suspension of operations or revocation of registration of an authorised carrier. In the 2019 Regulations under Regulation 11 similar power has been provided. It is not for this Court to inform the respondent/department as to what the powers are under the statutory regulations. It is found that CFS and the shipping line are not parties to this application - liberty granted to the petitioner to take appropriate steps in this regard - List this matter on 11th March, 2022.

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• Corporate Laws

• 2022 (4) TMI 947
  Sanction of Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.

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• 2022 (4) TMI 946
  Reduction of share capital of the Petitioner Company - Section 66 of the Companies Act, 2013 - HELD THAT:- It is seen that the Regional Director has stated in its report that after going through the Scheme of Reduction of Capital, the Regional Director has decided not to make any objections to the Scheme. Upon memo of clarification having been filed by the petitioner for the clarification sought regarding Reserves and Surplus; Cash and Cash Equivalents, this Tribunal is of the view that it is just and proper to confirm the Reduction of Share Capital of the Petitioner Company as resolved by the members of the Company by passing a special resolution and by way of consents in the form of Affidavits, This Tribunal also approves the proposed form of minutes to be registered under Section 66(5) of the Companies Act, 2013. While approving the Reduction of Share Capital as above, it is clarified that this Order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any payment is due or required in accordance with the law or in respect of any permission/compliance with any other requirement which may be specifically required under the law. Further, all compliances as are required to be done by the Petitioner Company upon this order confirming reduction of share capital and security premium reserve shall be duly complied with in relation to SEBI, FEMA and Income Tax Laws, as may be applicable. Petition allowed.

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• Securities / SEBI

• 2022 (4) TMI 945
  Insider trading - Whether existed a close relationship/immediate relation between the appellants? - circumstantial evidence (trading pattern and timing of trading) - HELD THAT:- In the present case, as rightly argued by the learned counsel of the appellant, the foundational facts were not proved which could raise the alleged presumption. SEBI failed to place on record any material to prove that the appellants were connected persons to Balram Garg as required by Regulation 2(1)(d)(ii)(a) read with Regulation 2(1)(f) of the PIT Regulations as none of the appellants were financially dependent on Balram Garg or even alleged to have consulted Balram Garg in any decision related to trading in securities. In light of the above principles of law laid down by this Court, it was imperative on the Respondent/SEBI to place on record relevant material to prove that the appellants namely, Mrs. Shivani Gupta, Sachin Gupta, Amit Garg and Quick Developers Pvt. Ltd. were immediate relatives who were dependent financially on appellant Balram Garg or consult Balram Garg in taking decisions relating to trading in securities . However, SEBI failed to do so as has been already recorded by the WTM in its order dated 11.05.2021. The said appellants were not immediate relatives and were completely financially independent of the appellant Balram Garg and had nothing to do with the said Balram Garg in any decision making process relating to securities or even otherwise. In the context of appellant no. namely Quick Developers Pvt. Ltd., the record clearly reveals that it is neither a holding company or an associate company or a subsidiary company of PCJ nor the appellant Balram Garg has ever been the Director of Quick Developers Pvt. Ltd. Therefore, Quick Developers Pvt. Ltd. cannot be held to be a connected person vis vis the appellant Balram Garg. Reliance of the Respondent/SEBI on transactions between appellant Sachin Gupta and PCJ and the subsequent payments of rent by PCJ is against the principles of natural justice as these allegations were not part of the Show Cause Notices There is no material on record for the WTM and the SAT to arrive at the finding that both late P.C. Gupta and the appellant Balram Garg communicated the UPSI to the other appellants. The said appellants were not immediate relatives and were completely financially independent of the appellant Balram Garg and had nothing to do with the him in any decision making process relating to securities or even otherwise. The submission of the learned counsel of the respondent regarding the same residential address of the appellants also falls flat as admittedly the parties were residing in separate buildings on a large tract of land. Lastly, in our opinion, the SAT order suffers from nonapplication of mind and the same is a mere repetition of facts stated by the WTM. The Appellate Tribunal was exercising jurisdiction of a First Appellate Court and was bound to independently assess the evidenced and material on record, which it evidently failed to do. Accordingly, the appeals are allowed and the impugned judgement and final orders of WTM and SAT are set aside. The deposits made by the appellants in both the appeals in terms of the impugned orders or interim orders of this Court shall be refunded to the respective appellants.

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• Insolvency & Bankruptcy

• 2022 (4) TMI 944
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is evident from the Statement of Account that the payments which the Appellant contends have all been made, were not done invoice wise . Not a single payment is reflected as per the invoice raised. It is apparent from the material on record that there is a current account and running account between the Operational Creditor and the Corporate Debtor wherein demands were made, not specific to each invoice raised and therefore the contention of the Learned Counsel for the Appellant that the subject amount is an advance and no services were rendered by the Operational Creditor to the Corporate Debtor, is untenable. It is seen from the Statement of Account that amounts were paid periodically and purchases were made from time to time and invoices raised subsequently. Therefore, this Tribunal is of the earnest view that there were continuous transactions vide invoices raised between the parties to establish a running account. The Adjudicating Authority has rightly relied on the confirmation of debt as shown on 12.02.2019 for an amount of Rs. 4,90,01.183/- and admitted the Application. Additionally, it is pertinent to mention that the contention of the Appellant that this amount is actually an advance and that no services were rendered by the Operational Creditor, was never pleaded in the Reply filed before the Adjudicating Authority to the Demand Notice issued under Section 8 of the Code. This Tribunal is of the considered view that there is no illegality or infirmity with the Order of the Adjudicating Authority and hence this Appeal fails and is accordingly dismissed - Appeal dismissed.

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• 2022 (4) TMI 943
  Delay in implementation of the Resolution Plan - whether after the Judgment of the NCLAT dated 04.03.2021 steps have been taken by the SRA for implementation of the Resolution Plan and whether the actions and conduct of the SRA is such that Corporate Debtor ought to be sent to the Liquidation, accepting the prayers made by the Appellant for liquidation? - HELD THAT:- The Adjudicating Authority has given due consideration to the principles of law and the facts in the present case and sequence of the events. The Adjudicating Authority in its Order had noted that amount of Rs. 322 Crore was already parked by the SRA in an Account which was pointed out in the course of hearing on 22nd February, 2022 which amount was directed to be transferred by the Adjudicating Authority not later than 5 days from the date of the Order i.e. five days from 07th April, 2022. Dr. Singhvi during the course of the submission has made statement that entire amount has already been transferred to the Corporate Debtor as directed by the Adjudicating Authority on 07th April, 2022. There is no lack of intention on the part of the SRA for implementation of the plan after the Judgment of the NCLAT dated 04.03.2021 including offer to deposit the entire amount in the Escrow Account, the pendency of the Appeal of the Vanguard before the Hon ble Supreme Court and further making the payment of Rs. 12.49 Crores to the CIRP Cost on 18th June, 2021 and making Payment of Rs. 7 Crores for workmen which indicate the willingness of the SRA to implement the plan. The Order of the Adjudicating Authority giving five days time as a last opportunity to transfer the amount in the Corporate Debtor s Account can in no manner be said to be contrary to the orders passed by the NCLAT dated 04.03.2021. The Appellant who is born only on 23rd April, 2021 i.e., after the Order of the Adjudicating Authority want to push the Corporate Debtor to the Liquidation to realize its dues to the maximum, cannot be the reason for allowing the Application filed by the Appellant for liquidation and Adjudicating Authority after taking into consideration entire facts and circumstances did not commit any error in giving five days further time to the SRA to deposit the amount in the Account of the Corporate Debtor which Corporate Debtor did - appeal dismissed.

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• 2022 (4) TMI 942
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - ddebt due and payable or not - time limitation - HELD THAT:- Having regard to the letter dated 18.11.2015 which acknowledges the debt amount due and payable to the tune of Rs. 20,58,29,912/-; the cheques dated 23.02.2017 issued by the Corporate Debtor to the Appellant herein for an amount of Rs. 16 crores which has been dishonoured; the acknowledgement of debt in the Reply issued by the Corporate Debtor dated 18.03.2017 which establishes the jural relationship between the parties as envisaged by the Hon ble Supreme Court in the Case of Dena Bank (Now Bank of Baroda) Vs. C. Shivakumar Reddy Anr. [ 2021 (8) TMI 315 - SUPREME COURT ] and specifically the acknowledgment in the Balance Sheets in the Impugned Order which extends the limitation by three years, this Tribunal is of the earnest view that the Respondent has clearly acknowledged the Debt due and payable to the Appellant and even proposed settlement of the accounts. Thus, the Application filed on 10.06.2020 is within three years of the last date of acknowledgment and hence is not barred by Limitation. Appeal allowed.

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• 2022 (4) TMI 941
  Rejection of claim of applicant - rejection on the ground that the claim amount is not reflected in the books of the corporate debtor and also on the ground that the infusion is made to M/s. Nathella Sampath Chetty Co. which is a different entity - diversion of funds to Corporate Debtor - HELD THAT:- The money received in the bank account of M/S. Nathella Sampathu Chetty Co was diverted to the corporate debtor bank account and that the corporate debtor is liable repay the gold scheme investment amount collected from the Applicant through Nathella Sampathu Chetty Co account is bereft of sufficient documentary evidence to show that the funds were diverted to the books of the Corporate Debtor. The contention of the Applicant that the books of the corporate debtor shows that it had received 181.42 crores from M/s. Nathella Sampathu Chetty Co. referring to the FIR registered is for the financial year 2012-2013, while the payment TMT Receipt annexed reflects the date of payment as 28.04.2014. Therefore, it is evident that the amount paid by the Applicant on the gold scheme was not collected by the corporate debtor and that no sufficient evidence as to show the diversion of funds into the Corporate Debtor have been carried out. Under the said circumstances this Adjudicating Authority finds it deems fit to dismiss the instant application for bereft of evidence. Application dismissed.

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• 2022 (4) TMI 940
  Rejection of claim by the Liquidator/Respondent - rejection of claim of the Applicant on the ground that the claim amount is not reflected in the books of the corporate debtor and that the infusion is made to M/s. Nathella Sampath Chetty Co. which is a different entity - HELD THAT:- In the light of the averments made by the applicant that the Order form reflects the name of the Corporate Debtor does not significantly satisfy this Adjudicating Authority while the ledger of the Corporate Debtor does not hold such entry as confirmed by the Respondent/Liquidator. Further, the allegation to prove the liability of the Corporate Debtor is bereft of sufficient documentary evidence. While on the other hand the copy of the scheme-passbook holds the name of M/s. Nathella Sampathu Shetty and Co. which in itself is self-explanatory that the Corporate Debtor has no nexus with the same. Therefore, it is evident that the amount paid by the Applicant on the gold scheme was not collected by the corporate debtor and that no sufficient evidence as to show the diversion of funds into the Corporate Debtor have been carried out. Under the said circumstances this Adjudicating Authority finds it deems fit to dismiss the instant application for bereft of evidence. Application dismissed.

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• 2022 (4) TMI 939
  Admission of claim as unsecured financial debt - subsistence of security interest has not been proved by the applicant bank in a manner prescribed under the Code - Financial Debt or not - HELD THAT:- From Section 52(3) of the Code read with Regulation 21 provides that the proof of security interest is ascertained from records available with the Information Utility as per the Code, through Certificate of Registration of Charge issued by the ROC under section 77 of the Companies Act, 2013 or if there is any proof of Registration of Charge with CERSAI. In the present case, it is observed from the documents on records that the applicant had mentioned about realising the security interest in claim Form D filed on 26.05.2021. The proofs of security interest was not available when the applicant submitted its claim form which is mandated by Regulation 21 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The liquidator after verification of the claim Form D and other documents annexed therein had observed that the charge was not registered and sent a mail communication to the applicant on 03.07.2021. From the facts provided it is evident that the liquidator was not provided with the proof of registration of security interests during the period stipulated as per Regulation 30 and the liquidator classified the applicant as unsecured creditor based on the information as provided by the applicant. Thus with regard to the vehicle loans the liquidator has acted correctly by classifying applicant as unsecured and not allowing to realise their security interest. Amount advanced by the applicant to the group companies of the corporate debtor on the security of FDRs based on a letter of authorisation granted by the corporate debtor - HELD THAT:- Based on the documents placed on records the letters granted by the corporate debtor to the applicant bank are mere authorisations to extend loans to the borrowing companies and no guarantee extended by the corporate debtor and to that extent there exists no payment obligation on the corporate debtor - In the present case, the applicant bank had disbursed money to borrowing companies and no guarantee deed was executed by the corporate debtor and as such there is no payment obligation on the corporate debtor for the default committed by the borrowing companies. Application dismissed.

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• 2022 (4) TMI 938
  Initiation of Liquidation proceedings - Section 33 of the IBC, 2016 - HELD THAT:- From the mail, it is very clear that the CoC member was actively participating in the CoC meeting and taking steps for revival of the Corporate Debtor and it also emerges from this mail that the CoC member was trying to contact various people to sell the Corporate Debtor as a going Concern. Since the attempt made by the CoC member appears to have been failed, this Application under Section 33 filed by the RP in IA/1146/2021 - Therefore, it is very unfortunate that the Learned Counsel for the CoC member states today that the CoC will not contribute towards the CIRP cost. Having participated in all the meetings and have been part of the CoC till date, the CoC members shall satisfy the expenses of the CIRP cost. List all these matters on 11.04.2022 for further hearing.

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• FEMA

• 2022 (4) TMI 937
  Offence under FEMA - maintainability of writ petition before this Court - HELD THAT:- This Court finds that the writ petition filed at Jaipur Bench, Jaipur for challenging the order dated 26.04.2019 passed by the Additional Director, is not maintainable as no cause of action has arisen in the territory of State of Rajasthan. The submission of the petitioner that initially a complaint was filed by the Additional Director and further direction to deposit the penalty amount in Jaipur Office, cannot be termed as a part of cause of action. This Court finds that the complaint which was filed against the petitioner, has resulted into issuance of show cause notice to the petitioner and thereafter, adjudication has to take place and as such the petitioners cannot be allowed to state that part of cause of action, has arisen in the territory of State of Rajasthan. This Court finds that initially the petitioner had filed writ petition against show cause notice in the Punjab and Haryana High Court at Chandigarh and after an order being passed to approach the respondents by giving a detailed and comprehensive representation, the Authorities have finally ajdudicated the issue of violation of Foreign Exchange and order dated 26.04.2019 has been passed. The submission of learned counsel for the petitioners that the petitioners are residents of Jodhpur and further, they are having their business operations in the State of Rajasthan and as such, this Court has ample jurisdiction to entertain the writ petition, suffice it to say by this Court that the residence of the petitioners or their place of carrying business, cannot constitute as part of cause of action. The other reason with regard to maintainability of writ petition before this Court on account of violation of principle of natural justice, suffice it to say by this Court that if the petitioner has any grievance in respect of violation of any provisions of Rules of 2000 or the Act of 1999, the Appellate Forum has been constituted by the legislature and all issues including the issue of violation of principle of natural justice or delay can all be agitated by the petitioner before the Appellate Forum. This is beyond comprehension of this Court that when an appeal is provided, before the Appellate Authority, then litigant cannot raise the issue of violation of principle of natural justice/delay/competence of any Authority to issue the orders. This Court finds that the alternative statutory remedy available to the litigant/petitioners is available to them and the order, which is put to challenge itself makes a reference of such a remedy/Authority for raising the grievance. This Court, in the wake of statutory alternative remedy available to the petitioners, would not like to entertain the present petition filed under Article 226 of the Constitution of India. Accordingly, this writ petition is dismissed on account of alternative, statutory remedy available to the petitioners as well as on the ground of lack of cause of action arisen before this Court.

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• Service Tax

• 2022 (4) TMI 936
  Seeking consideration of declaration of the petitioner as a valid declaration under the category of voluntary disclosure in terms of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Petitioner had filed the declaration under the category of voluntary disclosure on 13.09.2019 for the period 01.04.2016 to 31.03.2017. As on the relevant date i.e. 30.06.2019, petitioner was not facing any enquiry or investigation or audit for the said period. Petitioner was, for the first time, asked by the Superintendent vide letter dated 23.07.2019 to submit the information mentioned therein for the purpose of verification for the financial year 2014-2015. As mentioned in the impugned intimation, the said letter was issued following receipt of report on 23.07.2019 from the Anti-evasion Headquarters. However, in the summons dated 11.09.2019 the period of enquiry is not mentioned. In the subject it is mentioned that the summons pertain to certain enquiry for non-payment of service tax. The summons being so vague would have to be read together with the letter dated 23.07.2019 - On a conjoint reading of the two it would mean that the verification pertains to the period 2014- 2015. Therefore, on due consideration, it cannot be said that petitioner was subjected to any enquiry or investigation or audit as on 30.06.2019 and pertaining to the period covered by the declaration at the time of making the declaration. Under Sub-Sections (2) and (3) of Section 127, in a case where the amount estimated by the designated committee exceeds the amount declared by the declarant, then an intimation has to be given to the declarant. However, before insisting on payment of the higher amount determined by the designated committee, the declarant is required to be afforded an opportunity of hearing by the designated committee. If in a situation where the amount estimated by the designated committee is in excess of the amount declared by the declarant, an opportunity of hearing is required to be given by the designated committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject a declaration on the ground of ineligibility without affording an opportunity to the declarant to explain as to why his declaration should be accepted and relief under the scheme should be extended to him. The matter is remanded back to respondent Nos.3 and 4 who shall consider the declaration of the petitioner afresh in terms of the scheme as a valid declaration under the category of voluntary disclosure - Petition allowed.

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• 2022 (4) TMI 935
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - seeking direction to accept the payment under the scheme - seeking issuance of discharge certificate in form SVLDRS -4 in respect of the arrears payable by the petitioner - HELD THAT:- The facts are not in dispute. The petitioner was indeed entitled to avail the benefits of the aforesaid schme under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, as the petitioner was in arrears of tax. Originally as per the scheme, the amount was to be paid by 31st December, 2019. However, the date was extended and the time limit was extended up to 30.06.2020. In this case, the petitioner also paid the amount on the last date by debiting the amount electronically from his bank account. However, after the amount was debited from the petitioner s bank account, it was re-credited back due to technical glitches. The question therefore raises whether under these circumstances the benefit of the aforesaid scheme can be denied to the petitioner - The scheme is intended to allow chronic defaulters to pay the amount and buy peace. The delay in payment on account of technical glitches cannot come in the way of the petitioner to settle the dispute. There is no justification in not accepting the declaration of the petitioner under the scheme or in not accepting the payment by the petitioner belatedly. The respondents are directed to accept the payment from the petitioner, if the amount has not been paid or collected from the petitioner already, within a period of 30 days from the date of receipt of a copy of this order and bring a closure in true spirit of the Sabka Vishwas Scheme. Petition allowed.

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• 2022 (4) TMI 934
  SEZ unit - refund of service tax - rejection of refund on the ground of period of limitation - last date being public holiday - claim for the period between April, 2017 to June, 2017 had been rejected as the refund application was not filed before 13th April, 2018 i.e. within a period of 1 year in terms of Clause 3(III)(e) of the N/N. 12/2013-ST dated 01.07.2013 - HELD THAT:- Admittedly as has been held in the Order-in-Original and Order-in-Appeal in terms of Notification No. 12/2013-ST the last date for filing of such refund application is before 30.04.2018 or to say in specific terms on or before 29.04.2018, though the same is not absolute but qualified being discretionary at the level of refund sectioning authority. However, on examination of the English calendar of the year 2018 in the open Court vis-a-vis Annexure-I, it could be noticed that 28th 29th April, 2018 were weekends and 30.04.2018 was a Government holiday on account of Buddha Purnima. This being the facts on record, learned Commissioner (Appeals) order rejecting the refund solely on the ground that it is hit by the period of limitation is unsustainable and the same is required to be set aside. Refund sanctioned alongwith applicable interest - appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 933
  Levy of Service Tax - Tour Operator Service - amount collected as entry fee, canter ride, museum and hathi safari charges and short term accommodation - HELD THAT:- The appellant is a Government Authority under the relevant Wild Life Law. Further, the Authority is rendering statutory activities or services under various Government orders under the relevant statutes. It is also noticed that the appellant is depositing all the money collected for whatever charges from the visitors in the Government Exchequer. Thus, the activities of the appellants are exempted from the levy of service tax under Section 66 D (a) read with Mega Exemption under Notification No.25/2012-ST, as amended, read with TRU Clarification dated 28.02.2015. The appeal is allowed.

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• Central Excise

• 2022 (4) TMI 932
  CENVAT Credit - waste and scrap or not - inputs which have not been received back by the respondent-assessee from the job workers - reversal in terms of Rule 4(5) (a) of the Cenvat Credit Rules 2002/2004 - violation of mandatory provision of Rule 4(6) of the Cenvat Credit Rules, 2002 - not obtaining permission from the jurisdictional Central Excise Authority when the goods are not received back into the factory and are removed from Job Workers premises - principles of res-judicata - time limitation to issue SCN - SCN is exact replica of earlier period - HELD THAT:- Applying the principles of consistency, the order binds the department as the transaction is identical and there is no fresh materials available with the Commissioner justifying the issuance of the show cause notice dated 30.04.2007. Merely by stating that the earlier order of adjudication came to be passed without calling for any conclusive evidence cannot be a ground to ignore the earlier order of adjudication. Precisely for such reason, we had extracted the relevant paragraphs of the order of adjudication dated 25.05.2004. A perusal of the said order shows that it is a speaking order and the Commissioner has assigned reasons as to why the proposal in the show cause notice should be dropped. Therefore, the department was wholly unjustified in not only issuing the show cause notice dated 30.04.2007 but also by preferring this appeal. In fact, this is a fit case where exemplary cost has to be imposed on the concerned official of the department for attempting to resurrect a settled issue. The Commissioner who issued the show cause notice dated 31.02.2004, after receiving the reply from the respondent assessee and after hearing the authorized representative in person by a speaking order dated 25.05.2004 dropped the proceedings. The department did not challenge the said order before the learned Tribunal. That apart, part of the period for which the show cause notice dated 30.04.2007 was issued overlaps the period covered in the earlier show cause notice dated 31.03.2004. Therefore, it can be safely concluded that the proceedings initiated in the year 2007, presumably after change of the Commissioner, were without any legal basis and can also be termed as misuse of statutory power conferred on the authority. Whether the show cause notice dated 30.04.2007 was issued within the time permissible or was it time barred? - HELD THAT:- Admittedly, the show cause notice was not issued within the time prescribed under Section 11A (1) of the Act. But the Commissioner had invoked the extended period. If such be the case, what are the fundamental tenets which are required to be fulfilled for invoking the extended period of limitation is required to be seen. For the same subject-matter the earlier show cause notice dated 31.03.2004 was issued. After adjudication the proceedings were dropped, the order attained finality. On the same subject-matter in the year 2007 another notice was issued of which part of the period overlapped. If such is the case, the department can never bring the case of the assessee to be a wilful suppression or mis-statement and if that be the legal position, the extended period under Section 11A cannot be invoked. Furthermore, on perusal of the show cause notice dated 30.04.2007, we find that there is no allegation against the respondent assessee of wilful suppression or mis-statement though the words wilfully suppressed has been used in one place in the show cause notice. Mere use of the words or expression wilfully suppressed with intend to avoid duty cannot hold the assessee guilty of wilful suppression. The same has to be established by the department by pointing out as to on what basis they have come to the prima facie conclusion that there has been wilful mis-statement or suppression of facts. Therefore, mere use of the said words and expression cannot validate the show cause notice. Therefore, the initiation of the proceedings itself is bad in law - There is nothing to indicate that the appellant revenue doubted the bona fides of the respondent assessee. In such circumstances extended period of limitation could never have been invoked in the assessee s case. Thus, if Section 11A of the Act could not have been invoked, the question of imposing penalty or levying interest also does not arise. All these factors are taken into consideration and the Tribunal has rightly granted relief to the assessee. There are no grounds to interfere with the order passed by the Tribunal - appeal dismissed.

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• 2022 (4) TMI 931
  Refund claim - SEZ unit - the petroleum product i.e., High Speed Diesel (HSD) being a non-cenvatable goods for which the supplier had raised commercial invoices wherein duty element was not explicitly mentioned, the payment of duty itself was disputed. - rejection of refund on the ground of non-appreciation of the evidentiary value of the documents - HELD THAT:- There is no dispute regarding receiving of the goods from DTA without payment of duty until withdrawal of the facility for warehousing of petroleum products vide C.B.E.C. Circular No. 796/29/2004-CX dated 04.09.2004. This withdrawal prompted the supplier to charge Excise Duty on the supplies. Here, the supplier is not a private party, but a Public Sector Undertaking. The certificate issued by the said supplier, clearly indicated that the product supplied by them to the appellant was duty paid. The appellant has also placed on record the certificate issued by the manufacturer namely, M/s. Chennai Petroleum Corporation Ltd., a group company of M/s. Indian Oil Corporation Ltd., wherein also they have certified that the product was dispatched to the supplier namely, M/s. Indian Oil Corporation Ltd. on payment of Central Excise Duty plus Educational Cess - When these documents along with other documents were made available, the Adjudicating Authority, without bothering to examine, has brushed aside by holding that no such documents as directed by the First Appellate Authority were made available to substantiate the duty payment - Admittedly, the appellant had claimed refund for the period from September 2004 to April 2007 and since then, the appellant has not been given sustainable reasons for denying its rightful claim for refund. The Revenue has not denied the contents of the certificate issued by the supplier and in turn, the producer of HSD, that the products in question were dispatched on payment of Central Excise Duty plus Educational Cess, which has thereafter been paid to the Government. The only possible conclusion that could be drawn in the absence of specific disputes regarding the contents of the certificates, by the Revenue, therefore, is that the payment of duty thereof stands proved and hence, rejection cannot be made only for want of proof regarding payment of duty - the appellant has made out a case as to its payment of duty and hence, the impugned order is not sustainable - appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 930
  CENVAT Credit - mismatch of address in the duty paying documents - credit denied on the account that the returned goods were not received by the Barauni unit of the Appellant - Rule 16 of CER, 2002 - HELD THAT:- It is seen that the Adjudicating Authority has confirmed the demand of Cenvat credit only on the ground that the document issued by the customers for return of excise paid goods was addressed to the Giridih unit of the Appellant and thus it is not possible for the Appellant to avail Cenvat credit of duty paid goods under Rule 16(1) of the Central Excise Rules, 2002 in the Barauni unit from which goods were actually sold. Both the lower authorities have ignored the submissions of the Appellant with respect to verification of the returned goods by the Ld. Superintendent, Begusarai regarding identification of goods being returned at Barauni unit of the Appellant. Since the Appellant has been able to substantiate that the said goods were indeed received at the selling unit only i.e. Barauni by way of intimation letter dated 03/05/2011 being Exhibit M of the appeal paper book, duly supported by Chartered Accountant s Certificate in this regard, the orders of the lower authorities deserve to be set aside as there is no contrary evidence brought on record. Appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 929
  Entitlement to interest on the amount of pre-deposit - Section 35FF of Central Excise Act - HELD THAT:- The Court below has erred in refusing interest. That under similar facts and circumstances, Division Bench of this Tribunal in the case of M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD ] held that an assessee is entitled to interest on such pre-deposit on being successful in appeal, from the date of deposit till the date of refund @ 12% p.a., following the ruling of Hon ble Supreme Court in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT ]. The appellant is entitled to interest @ 12% p.a., from the date of deposit till the date of grant of refund - the Adjudicating Authority is directed to disburse the amount of interest within a period of 45 days from the date of receipt of this order - appeal allowed.

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• CST, VAT & Sales Tax

• 2022 (4) TMI 928
  Works contract service - zero rated supply - deemed sale or not - consideration money of works order or simply works contract is exempted from tax in view of section 21 A of West Bengal VAT Act and schedule AA or not - whether respective purchase orders and works order be taken as a sale or as a work order or the both orders should be dealt separately subject-wise, or not - HELD THAT:- The entire case of the petitioner rests upon the interpretation of the various provisions of the Act. To put the case of the petitioner in simple terms is that the nature of transaction done by the petitioner was held to be a works contract and deemed to be a sale. If the works contract is deemed to be a sale, then it should fall within the definition of sale as defined under Section 2(39) of the Act and if it is held to be a sale, the same having been affected to SEZs, has to be treated as zero rated in terms of Section 21 A of the Act as the nature of activity done by the petitioner under the said contract falls within Serial No. 04 in Schedule AA to the Act. Section 2(39) uses the expression includes . But what has been brought within the inclusive definition of sales or the types of transactions enumerated in Clauses (a) to (e) above. This becomes clear on reading the provision further i.e. after Clause (e) which uses the words and such . By use of the words and such would mean that such of the transfers, delivery of goods, transfer of right to use goods, supply or service or supply of goods, as mentioned in Clauses (a) to (e) alone can be treated to be the inclusive part of the definition of sale as defined under Section 2(39) of the Act. It is those 5 categories of transactions having been held to be deemed to be a sale and therefore, the question of giving an expansive meaning to the definition of sale merely because the word deemed is used is an incorrect manner of interpretation of the provision. The liability to pay tax in respect of a works contact is under Section 14 of the Act and Sub-Section (1) of Section 14 commences with a non-obstante clause stating that notwithstanding anything contained elsewhere in the Act, any transfer of property in goods whether as goods or in some other form involved in the execution of works contract in West Bengal shall be deemed to be a sale of those goods by the person making a transfer and the purchaser of those goods by the person to whom such transfer is made. Sub-Section (2) of Section 14 makes the dealer liable to pay tax under Section 15 of the Act which is a liability of a casual dealer to pay tax whereas the charging section for a sale simpliciter as defined under Section 2(39) are Section 16 and 16A of the Act - There is a conspicuous omission to include deemed sale which is found in Section 14 of the Act. Therefore, the benefit of the transaction to be treated as zero rated is mandatorily required to be a sale simpliciter to fall within the five categories enumerated in the definition of sale as defined under Section 2(39) of the Act. The purpose of bringing transaction which are works contract exigible to tax the deeming provision was inserted. A deemed sale cannot be interpreted to be a sale simpliciter unless the definition of sale in that particular statute provides for. Therefore, to contend that merely because a deemed sale is not included in the illustrative list it cannot be taken out of the purview of the definition of sale is an argument which is unacceptable. Thus, the petitioner has not been made out any grounds to interfere with the order of the tribunal - petition dismissed.

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• Indian Laws

• 2022 (4) TMI 981
  Proceeding under section 34 of the Arbitration Act, 1996 without insistence for making pre-deposit of 75% of the awarded amount - whether the pre-deposit of 75% of the awarded amount as per section 19 of the MSMED Act, 2006, while challenge to the award under section 34 of the Arbitration Act, 1996, is made mandatory or not? - HELD THAT:-The issue is now no longer res integra in view of the decision of this Court in the case of Gujarat State Disaster Management Authority Vs. Aska Equipments Limited [ 2021 (10) TMI 480 - SUPREME COURT ]. While interpreting section 19 of the MSMED Act, 2006 and after taking into consideration the earlier decision of this Court in the case of GOODYEAR INDIA LIMITED VERSUS NORTON INTECH RUBBERS (P) LTD. AND ANR. [ 2012 (3) TMI 611 - SUPREME COURT ], it is observed and held that the requirement of deposit of 75% of the amount in terms of the award as a predeposit as per section 19 of the MSMED Act, is mandatory. It is also observed that however, at the same time, considering the hardship which may be projected before the appellate court and if the appellate court is satisfied that there shall be undue hardship caused to the appellant/applicant to deposit 75% of the awarded amount as a pre-deposit at a time, the court may allow the pre-deposit to be made in instalments. Therefore, it is specifically observed and held that pre5 deposit of 75% of the awarded amount under section 19 of the MSMED Act, 2006 is a mandatory requirement. The impugned order passed by the High Court permitting the proceedings under section 34 of the Arbitration Act, 1996 without insistence for making pre-deposit of 75% of the awarded amount is unsustainable and the same deserves to be quashed and set aside - Appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 927
  Termination of lease agreement - Seeking deposit of the rental amount for the period between March, 2020 and December, 2021 - Section 17 of the Arbitration Act, 1996 - HELD THAT:- The dispute is with respect to the rental amount for the period between March, 2020 to December, 2021, for which the Arbitral Tribunal has directed the appellant to deposit while passing the order by way of an interim measure on the applications under Section 17 of the Arbitration Act. The liability to pay the lease rental for the period between March, 2020 to December, 2021 is seriously disputed by the appellant by invoking the force majeure principle contained in clause 29 of the lease agreement. It is the case on behalf of the appellant that for a substantial period there was a total closure due to lockdown and for the remaining period the appellant was allowed with 50% capacity and therefore, the force majeure principle contained in clause 29 shall be applicable. When the same was submitted before the Arbitral Tribunal, no opinion, even a prima facie opinion on the aforesaid aspect was given by the Arbitral Tribunal. The applicability of the force majeure principle contained in clause 29 is yet to be considered by the Arbitral Tribunal at the time of final adjudication. Hence, the liability to pay the rentals for the period during lockdown is yet to be adjudicated upon and considered by the Tribunal. Therefore, no order could have been passed by the Tribunal by way of interim measure on the applications filed under Section 17 of the Arbitration Act in a case where there is a serious dispute with respect to the liability of the rental amounts to be paid, which is yet to be adjudicated upon and/or considered by the Arbitral Tribunal. Thus, no such order for deposit by way of an interim measure on applications under Section 17 of the Arbitration Act could have been passed by the Tribunal - As the applicability of force majeure principle (clause 29) is yet to be considered at least, for the period during the complete closure, it would not be justified to direct the appellant to deposit the rental amount for the said period of complete closure by way of an interim measure, pending final adjudication. The order passed by the Arbitral Tribunal passed in applications under Section 17 of the Arbitration Act, directing the appellant to deposit the entire rental amount for the period between March, 2020 to December, 2021, confirmed by the High Court by the impugned judgment and order, is modified and it is directed that the appellant to deposit the entire rental amount for the period other than the period during which there was complete lockdown i.e., 22.03.2020 to 09.09.2020 and for the period between 19.04.2021 to 28.06.2021. However, nondeposit of the rental amount for the aforesaid period during which there was a complete closure/lockdown shall be subject to the ultimate outcome of the Arbitration Proceedings and the Arbitral Tribunal shall have to adjudicate and consider the principle of force majeure contained in clause 29 as contended on behalf of the appellant in accordance with law and on its own merits - The learned Tribunal to adjudicate and consider the aforesaid issue in accordance with law and on its own merits uninfluenced by the present order and observations by this Court in the present order shall be treated to be confined to while deciding the applications under Section 17 of the Arbitration Act and the interim measure order in exercise of powers under Section 17 of the Arbitration Act only, and the same shall not have any bearing on the final adjudication on the liability to pay the rentals even for the aforesaid period. Appeal allowed in part.

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• 2022 (4) TMI 926
  Dishonor of Cheque - acquittal of accused - discharge of legally enforceable debt or not - it is contended by petitioner that once it is admitted by the accused that he signed the cheques which were subsequently dishonoured, presumption of a legally enforceable debt or liability arises and the accused can be held guilty under Section 138 NI Act unless it is rebutted by the accused by adducing evidence - whether an accused charged under Section 138 NI Act can be let off on such grounds after it is proved that cheques were issued by him and the same were dishonoured and despite receiving notice he did not refund the cheque amount to the complainant? HELD THAT:- In a series of judgments, the Apex Court has held that in view of Section 139 NI Act, it has to be presumed that a cheque duly executed was issued for discharge of a debt or other liability. But the presumption is rebuttable by proving the contrary by adducing evidence. So once the execution of the cheque is admitted, a mandatory presumption arises against the accused that the same was issued in discharge of his debt or other liability towards the complainant. Accused cannot escape by saying that he issued a blank cheque in favour of the complainant and the complainant put the figures therein to implicate the accused in a false case. The Apex Court in BIR SINGH VERSUS MUKESH KUMAR [ 2019 (2) TMI 547 - SUPREME COURT ] succinctly held that once a person signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque has been issued for payment of a debt or in discharge of a liability. It has also been held by the apex court by the said judgment that even if a blank cheuqe is voluntarily presented to the payee, towards some payment, the payee may fill up the amount and other particulars which itself would not invalidate the cheque. The cross examination of the complainant [PW-1] would demonstrate that accused did not deny execution of the impugned cheque. He did not also deny his transaction with the complainant. Rather during his examination under Section 313 Cr.P.C he stated that he had a business transaction with the complainant for which he issued a blank cheque which was misused by the complainant. Accused did not adduce any evidence at all to establish such defence case in rebuttal of the presumption arising against him under Section 139 NI Act - Once the execution of the cheque is admitted, mere denial regarding existence of debt cannot save the accused. In the given case the accused other than cross examining the complainant PW-1 did not adduce any evidence at all to rebut the statutory presumption arising against him under Section 139 NI Act. Learned trial court as well as the appellate court seems to have overlooked these aspects of the case - this court should interfere with the concurrent findings of the courts below for correcting miscarriage of justice. Accordingly the judgment and order of acquittal of the accused passed by the trial court and the impugned judgment passed by the appellate court affirming the judgment and order of acquittal are hereby set aside. The case is remanded back to the trial court to decide the matter afresh by delivering judgment after re-appreciation of the facts and circumstances of the case and evidence on record as well as the evidence that may be adduced by the accused to rebut the presumptions under Section 139, NI Act, if he so desires - matter disposed off.

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• 2022 (4) TMI 925
  Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - section 139 of NI Act - HELD THAT:- Admittedly, accused Bankim Chowdhury was the Chief Managing Director and accused Ratna Debnath was the Accounts Director of Tripura Real Estate Constructions Limited, a company registered under the Companies Act, 1956. By appearing before the court as DW-1 and DW-2 respectively, they have asserted that their company came out with an advertisement published in a leading daily namely, Dainik Sambad whereunder the company offered sale of land in plots at various places at Agartala and in response to the said advertisement, complainant agreed to purchase a land and paid a sum of Rs. 1,00,000/- as advance after executing a written agreement with the company. Admittedly, despite execution of written agreement between the parties and receipt of advance by the appellants, no land was transferred to the complainant respondent in terms of such agreement. DW-2 Ratna Debnath who is one of the convict appellants has categorically stated in her cross examination that due to internal problems of Tripura Real Estate Constructions Limited (convict appellant No.1), the agreement for sale of land to the complainant respondent could not be materialised. She did not attribute any fault to the complainant respondent for non execution of the said agreement - presumption under section 139 of the NI Act arises against the convict appellants. Obviously, the convict appellants could not raise a probable defence to create doubts with regard to the existence of such debt or liability. Rather, it is the admitted position of the case that Rs. 1,00,000/- was received by the appellants as advance from the complainant respondent for transfer of land in his favour for a price of Rs. 7,00,000/- in terms of the agreement executed between the parties. Admittedly, as officers of the appellant company they were aware of the fact that advance of Rs. 1,00,000/- was received from the respondent for sale of land to him and the company had an enforceable debt to the complainant as per the terms of agreement. No land was transferred to him nor the advance was refunded to him. In these circumstances, the liability on account of dishonour of the impugned cheque primarily falls on the drawer company which is a corporate liability and convict appellants No.2 and 3 as the officers of the company are vicariously liable for such offence, the principal accused is the company. In these circumstances, service of demand notice on the Chief Managing Director of the accused company is sufficient. Accused appellant No.2 Ratna Debnath who is the Accounts Director of the company cannot escape her liability by saying that no demand notice was issued to her. The impugned judgment passed by the learned Additional Sessions Judge in Criminal Appeal No.17 of 2018 stands affirmed subject to the above modification of the sentence awarded to the company (convict appellant No.1). The company shall pay a fine of Rs. 50,000/- to complainant respondent No.1. Convict appellant No.2 Bankim Chowdhury shall pay Rs. 50,000/- and convict appellant No.3 Ratna Debnath shall also pay fine of Rs. 50,000/- to the claimant respondent and in default Bankim Chowdhury and Ratna Debnath shall suffer SI for a term of 15 days. The criminal revision petition is disposed of.

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• 2022 (4) TMI 924
  Dishonor of Cheque - insufficiency of funds - acquittal of the accused - burden to prove - preponderance of probabilities - Section 118-A and 139 of the N.I Act - HELD THAT:- It is settled proposition of law that in a case under Section 138 of the N.I. Act, the complainant gets the benefit of presumption under Section 118-A and 139 of the N.I Act, but, it does not mean that undue benefit will be given to the complainant. It is also equally settled that a complainant in a case under Section 138 of the N.I Act has to establish his case beyond reasonable doubt, and the accused has to prove his case following the doctrine of preponderance of probabilities. The signature of the complainant as well as the scribe of the said document appeared to be signed and written by the same ink and pen, but, the signature of the respondent no. 1 appears to be of different ink and pen. Though, it is not mandatory that the signature of the writer has to be of the same ink, but, in the context of the case, these circumstances have led this court to suspect the said document (Exbt.-8) and this court has reason to question the very integrity in execution of the said document. Moreover, there is overwriting in mentioning the date of execution of the said document. Initially, it appears to be written as 10.05.2016 , but, later on, by way of overwriting, it appears to be written as 18.05.2016 - These inconsistencies as are surfaced in the said declaration i.e. Exhibit 8 have led this court to draw adverse inference against the genuinity of the execution of the said document (Exbt.- 8). Moreover, the scribe in his cross-examination has stated that he did not identify anybody who signed this document (Exbt.- 8). That apart, most interestingly, the complainant deposing as PW 1, in his cross-examination, has stated that I do not know whether I have submitted written document or any agreement . In the instant case, though the respondent no. 1 has not adduced any evidence, but, he has been able to rebut the initial presumption that he had issued the cheque in discharge of his liability to repay his debt to the complainant. Moreso, learned trial court has acquitted the accused, the respondent no. 1 herein, and on such acquittal there is double presumption of the innocence of the respondent no. 1. It is settled law that if the view as taken by learned trial court is a reasonably possible view, in that case, the appellate court should not disturb it just because it feels that another view of the matter is possible. It is equally settled that an order of acquittal will have to be disturbed if it is perverse. Appeal dismissed.

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• 2022 (4) TMI 923
  Dishonor of Cheque - party to the transaction or not - specific stand taken by the petitioners is that they were not the partners of the firm even at the time of borrowal of loan and at the time of issuance of cheques - HELD THAT:- On a perusal of the document produced by the petitioners namely Form A issued by the Register of Firms with regard to first accused partnership firm by name Sun Coir Mat consisting of five partners, in which the petitioners were the fourth and fifth partners. While being so, they submitted Form No.V on 12.10.2015 after their resignation from the partnership firm as on 01.04.2014 and the same was recorded and their names were deleted on 12.10.2015 and it was duly in Register of Firm under Form A. In fact after receipt of statutory notice issued under Section 138 of the Negotiable Instruments Act, the first petitioner by reply dated 21.09.2017 issued reply notice and categorically stated that they were resigned from their partnership firm as early as on 01.04.2014 and as such they are not liable to pay any debts for the first accused firm. The reply was duly received by the respondent and the respondent also issued re-joinder, dated 09.10.2017. In the case on hand admittedly the petitioners were resigned from the first accused partnership firm as early as on 01.04.2014 and as such they are not liable to be punished for the offence under Section 138 of the Negotiable Instruments Act. Petition allowed.

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• 2022 (4) TMI 922
  Maintainability of petition - initiation of proceedings against the petitioner alone who is an employee of the Company - party to the proceedings or not - it is contended that the Company which ran the chit fund is not made a party to these proceedings and unless, the Company is a party, the petition would not be maintainable - HELD THAT:- Petitioners are accused Nos. 1 and 2 in the very same Spl.C.C. No. 96/2016, which has been quashed by this Court for the reasons rendered therein. The petition is allowed and Spl.C.C. No. 96/2016 dated 22.02.2016 passed by the Principal City Civil and Sessions Judge, Bengaluru (CCH-1) stands quashed in the same terms as is directed in SRI SUDEEP SRINIVAS (REPRESENTED BY HIS GPA HOLDER SMT. PUSHPALATHA G., SMT. PREETHI RAMAMOHAN (REPRESENTED BY HER GPA HOLDER SMT. SHUBHA RAMMOHAN VERSUS STATE OF KARNATAKA BY THE STATE OF KARNATAKA REPRESENTED BY MALLESHWARAM, POLICE STATION, SATISH KUMAR B.P. [ 2021 (9) TMI 1373 - KARNATAKA HIGH COURT] where it was held that The complaint itself was not maintainable without the corporate entity being made as a party but having brought only the Board of Directors or the officers of the Company as accused. Petition disposed off.

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• 2022 (4) TMI 921
  Dishonor of Cheque - burden to prove that the cheque was issued to discharge legally enforceable debt or not - rebuttal of presumption - Section 139 of Negotiable Instruments Act - HELD THAT:- Admittedly, the purchase made vide Ex.P2 is a credit purchase. It is not the case of the respondent/accused that he had paid the sale price for the goods supplied vide Ex.P2. His only contention is that the goods were not supplied to him and the cheque was issued only by way of security. Ex.X1 would show the tax element for the purchase transaction on the purchase was remitted against the account of the respondent to the Commercial Tax Department, the genuineness of the transaction cannot be disputed. Under such circumstances, it goes without saying that the respondent/accused is liable to pay the sale price. Since it is not unusual to make payments by way of issuing cheques, the impugned cheque is used by the appellant towards realising the invoice amount by putting it for collection. PW1 is none other than the Manager of the Firm to whom the power has been given by the Directors of the Firm to represent the cases. Though PW1 might not be the Manager at the time of the transaction, he would have got appointed subsequently. In the Firms/Companies, the employees would change from time to time, but the institution remains. Just because there is a change in the person who hold the post of Manager, it cannot be stated that the present Manager is not the authorised person to represent the authorised Firm - Neither the appellant-Firm nor PW1 has disputed about the power given to him to represent the Firm. In this background of facts, it cannot be claimed that the respondent/accused had discharged his reverse burden and refuted the initial presumption that has been drawn in favour of the appellant. The learned counsel for the respondent/accused submitted that PW1 himself has admitted that in the month of April 2009, a sum of Rs. 4,80,216/- has been paid by the respondent and hence he has the right to get that sum deducted from his dues. It is to be noted that the respondent/accused never claimed that he had made partial repayment towards the impugned purchase made vide Ex.P2-invoice, but he denied his very liability towards Ex.P2 purchase - In the evidence of PW1 he has stated that he received Rs. 4,80,216/- in the month of April 2009 itself. But the fact that the total amount of Rs. 4,80,216/- has been received on two dates vide 21.04.2009 and 27.06.2009 respectively. It has not shown before the Court as to how the payment of Rs. 3,07,576/- has got only relevance to the purchase made through Ex.P2. The account statement of the complainant would show that the purchase of Ex.P1 is still pending. The respondent/accused is found guilty for the offence punishable under Section 138 of Negotiable Instruments Act. The trial Court is directed to secure the accused to undergo the punishment imposed by the trial Court - Appeal allowed.

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