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TMI Tax Updates - e-Newsletter
April 28, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Impleadment in personal capacity - GST officer issuing vague show cause notice and/or order - cancellation of GST registration of petitioner - Non-compliance of earlier order - the respondent no.2 proceeded to pass an order cancelling the registration. The order cancelling the registration on the face of it is as vague as anything. - Warning issued - henceforth if this court comes across any such vague order or show-cause notice duly signed by him, then that will be his last day in the office. - HC
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Recovery of interest payable on delayed payment of tax - Since tax was paid by the petitioner belatedly, petitioner is liable to interest during the period default. There was no excuse for not paying the tax in time from its electronic cash register. Nothing precluded the petitioner from discharging the tax liability from its electronic credit - If there is a belated payment of tax declared in the returns filed, interest has to follow. - HC
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Seeking grant of Bail - availment of fraudulent inward ITC - Considering the nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, prima facie satisfaction of the Court in support of the charge, reformative theory of punishment, and larger mandate of the Article 21 of the Constitution of India, this is found to be a fit case of bail. - HC
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Benefit of exemption - It is evident that the appellant seeks ruling on a different set of facts which were not put forth before the LA. The appellant has not contested the basis of the ruling extended by LA and accepts that after receipt of the ruling by the LA, they have been now guided and rightly so that they are not to be required on the application of Entry 9C, which is a new ground not examined by the LA and therefore this forum cannot adduce any ruling on the same. The appellant has not contested the applicability of the entries 69 & 70 of the Notification, on the support of which, they had claimed exemption for registration before the LA. - AAAR
Income Tax
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Disallowance under the head 'business loss / bad debts' - there was no material available to prove that the loss incurred by the appellant / assessee was for the purpose of acquiring the property at Coimbatore for expansion of its business and hence, the same was not treated as business loss / bad debts. - Such a finding rendered by the authorities below, based on the material evidence, does not require any interfere by this court. - HC
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Additions u/s 2(22)(e) on account of deemed dividend - Accumulated profit - As per the provision of Explanation 2, all the profits of the company up to the date of distribution or payment under section 2(22)(e) of the Act shall be considered as accumulated profits. Thus, the provision of Explanation 2 to section 2(22) of the Act does not distinguish between the profit accumulated in the immediately preceding year and the current year profit, and takes within its ambit all the profits up to the date of payment. - AT
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Transfer of the case u/s 127 - the order of the transfer of case u/s 127 was within the knowledge of the assessee during the course of assessment proceedings and still the assessee had chosen not to participate in the matter of jurisdiction of the AO to whom the case has been transferred. The assessee cannot be allowed latter to challenge the jurisdiction of the AO - AT
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Short Term Capital Loss (on which STT was paid) set off against the Short Term Capital Gain (on which STT is not paid) - Section 70(2) of the Act does not make any further classification between the transactions where STT was paid and the transactions where STT was not paid. The emphasis of the Assessing Officer on the term “similar computation” also only refers to the computation as provided under section 48 to 55 of the Act. - AT
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Penalty under Section 271D and under Section 271E - accepting/repayment of cash - The impromptu response of the purportedly uneducated assessee at the time of survey, in our view, requires to be seen in its natural perspective and requires to be given credence. The assessee has declared that the money was received from family members to meet the business exigencies. Having regard to the nature of business of the assessee and ground realities, such explanation appears plausible. - No penalty - AT
Customs
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ECGS Scheme - Rule of verba chartarum fortius accipiuntur contra proferentem - Relevant date of despatch/shipment - The date of ‘onboard’ Bill of Lading is not applicable to the present facts as no letter of credit was executed, much less providing for application of such date. Therefore, ECGC could not have denied the appellant’s claim, even on a consideration the DGFT Guidelines. - To deny the appellant’s claim over an incorrect interpretation of an ambiguous term, that too with delay amounting to only one day, goes against such duties, especially given the fact that the appellant had transacted with the respondent on several previous occasions. - SC
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Import of restricted item or not - Tyres - This needs to be properly explained by the petitioner. If the petitioner indeed operates a factory in Rajasthan, it is open for the petitioner to file a copy of the GST Registration of the factory and details of documents to substantiate that the petitioner had indeed manufactured the Rubber Crumbs and Granules and sold to various Contractors/statutory authorities engaged in laying of roads. These are the documents which the petitioner is required to produce before the authorities to substantiate that the imported goods do not fall within the purview of restrictions in the Foreign Trade Policy 2015-2020. This exercise has not been carried out. - HC
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Import of prohibited item - second hand medical equipments - In the case on hand, it is observed that there is an expert opinion, who has reported that the goods imported were not E-waste or hazardous, which is not disputed. Further, since no other reason is given by the Adjudicating Authority to hold that the items at Table 6 of the Order-in-Original are prohibited, the said finding is not sustainable. In view of the above, therefore, the order of confiscation under Section 111(d) ibid is not sustainable. - AT
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Jurisdiction - power of Directorate of Revenue Intelligence (DRI) to issue SCN - Learned counsel for the respondent submits that he is giving up on the question of competence of DRI to issue the SCN and will not rely on the decision of Apex court in the case of M/S CANON INDIA PRIVATE LIMITED - AT
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Valuation of imported goods - the EXCEL sheets in the pen drive as well as the invoices recovered during the searches - Section 65B of the Evidence Act - There is nothing on record to show that the procedure prescribed under section 65B of the Evidence Act, section 3 of the Information Technology Act, 2000 or section 138C of the Customs Act were followed. Learned Departmental representative could not also produce anything on record to show that these were followed. Therefore, the pen-drive is inadmissible as evidence despite the vital information which it contained and which was relied upon by the Revenue. - AT
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Refund of Customs Duty paid - principles of unjust enrichment - expenditure written off while creating the entry as Receivable in the Balance Sheet - As soon as a particular amount is charged to expenditure, it is deemed to have been recovered in the shape of the price of the goods. In the instant case, by creating an entry for receivables and thereafter, creating an entry for provision in the ledgers, the appellant has nullified these entries. Consequently, the entire amount of duty paid is passed on as an expenditure to the profit and loss account. Thus the appellant has failed to discharge the burden of unjust enrichment. - AT
DGFT
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New online module for filing of application for recognition as Pre-Shipment Inspection Agency (PSIA), electronic issuance of Pre-shipment Inspection Certificates (PSICs) and electronic verification of authenticity of the PSICs with effect from 01.05.2022.
Indian Laws
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Dishonor of Cheque - It is apparent from the record that the allegation made by respondent is with regard to theft of his cheque which is the subject-matter of complaint registered u/s 138 of NI Act by petitioner. Aforesaid modus operandi on the part of respondent reflects clear mala fide to escape from the liability of issuance of cheque by him and it is a clear abuse of process of Court and same could not be sustained in the eyes of law. - HC
IBC
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Interpretation of Statute - Appointment of Arbitral Tribunal - whether mere filing of a proceeding under Section 7 of the Insolvency and Bankruptcy Code, 2016, would amount to any embargo on the Court considering an application under Section 11 of the Arbitration and Conciliation Act,1996, to appoint an arbitral tribunal? - proceedings in rem - HELD No - HC
SEBI
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Listing Obligations and Disclosure Requirements - TRANSFER AND TRANSMISSION OF SECURITIES [See Regulation 40(7) and 61(4)] -Amended SCHEDULE - 07 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
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Listing Obligations and Disclosure Requirements - Terms of non convertible debt securities and non convertible redeemable preference shares. - Amended Regulation 61 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
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Listing Obligations and Disclosure Requirements- Transfer or transmission or transposition of securities - Amended Regulation 40 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
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Custodian - Prohibition of assignment - Amended Regulation 15 of the Securities and Exchange Board of India (Custodian) Regulations, 1996
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Custodian - Procedure and grant of certificate. - Amended Regulation 8 of the Securities and Exchange Board of India (Custodian) Regulations, 1996
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Custodian - Consideration of application for grant of certificate - Amended Regulation 6 of the Securities and Exchange Board of India (Custodian) Regulations, 1996
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Scope of "custodial services" expended to include "silver or silver related instruments" - Regulation 2 of the Securities and Exchange Board of India (Custodian) Regulations, 1996
Service Tax
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Condonation of delay in filing appeal before the Commissioner (appeals) - since the statutory period specified for filing of appeal (2 months + 1 month) had expired long back in May, 2018 itself and the appeal came to be filed by the petitioner only on 10.01.2022, without substantiating the plea about inability to file appeal within the prescribed time, no indulgence could be shown to the petitioner-assessee at all. The case law in cited by the petitioner is misplaced. - HC
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Refund of amount deposited under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - refund sought on the premise that the withdrawal of the appeal filed by the Tax Department under Government Policy made Petitioners legally entitled for the refund of the amount since there are no dues - In short, the department cannot take disadvantage of their own wrong of in action of withdrawing appeal. In that case there was no reason for the Petitioners to apply under the scheme and consequential deposit of amount as per the declaration. - the Taxing Department cannot enrich itself by unauthorized collection of the amount which needs to be refunded - HC
VAT
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Effect of omission of section 19(2)(v), the proviso and 19 (5) (c) - Scope of the Budget Speech - statement of objects and reasons - As already seen, the original provision along with the proviso was omitted and a new provision was substituted. The word “retrospective” would mean “to look back” or “to go back in time”. A curative provision is held to be effective from a date prior to which it was enacted and so, will have a retrospective effect. - the amendment to Section 19 (2) brought about in the year 2015 is held to be curative in nature. - HC
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Input Tax Credit (ITC) - The position insofar as the right of the manufacturers to avail ITC is, it becomes an absolute right, once the inputs are used in the manufacture or processing of the goods within the State, the subsequent event of the manufactured goods being sold by way of inter-state/ intra-state sale would have no bearing nor does it result in imposing any limitation/restriction or whittle down the right to ITC earned in terms of Section 19(2)(ii) or 19(2)(v) of the TNVAT Act in the interregnum period. - HC
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Input Tax Credit (ITC) - As rightly contended by the learned Additional Advocate General by placing reliance upon the settled proposition of law that ITC is only a concession, it is open to the State to impose restrictions or conditions for availing the ITC. In the present case, prior to the introduction of the proviso, every dealer who effected interstate sale availed ITC under section 19 (2) (v) and the State imposed a restriction on such availment by the proviso, which naturally is binding on the assessees. - HC
Case Laws:
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GST
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2022 (4) TMI 1243
Seeking restoration of appeal - requirement of pre-deposit - HELD THAT:- The writ applicant submit that his client is ready and willing to deposit an amount of ₹ 11,08,961/- in accordance with Section 107(6) of the Act within a period of two weeks from today. His request is that his client may be permitted to deposit this amount so that his appeal can be restored and heard on merits - there should not be any difficulty in acceding to the request made by the learned counsel appearing for the writ applicant. This writ application is disposed off with a direction that the writ applicant shall deposit the amount of ₹ 11,08,961/- within a period of two weeks with the Office of the Commissioner (Appeals) in accordance with Section 107(6) of the Act. If this amount is deposited within the stipulated time then the appeal shall be restored to its original file and the Commissioner (Appeals) shall proceed to hear the appeal on its own merits. Application disposed off.
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2022 (4) TMI 1242
Impleadment in personal capacity - GST officer issuing vague show cause notice and/or order - cancellation of GST registration of petitioner - Non-compliance of earlier order [ 2022 (4) TMI 1144 - GUJARAT HIGH COURT] - HELD THAT:- In accordance with the order passed by this Court as above, it was expected of the respondent no.2 to issue a fresh show-cause notice containing all the necessary information and material particulars to enable the writ-applicant to meet with the same. However, the respondent no.2 proceeded to pass an order cancelling the registration. The order cancelling the registration on the face of it is as vague as anything. Mr. Nanavati, the learned counsel appearing for the writ-applicant very emphatically submitted that this a fit case, in which the respondent no.2 should be proceeded for contempt of court. He pressed very hard for issue of notice to the respondent no.2 for contempt. Mr. Nanavati is fully justified in making such a submission. However, no notice issued for contempt today with a warning to the respondent no.2 that henceforth if this court comes across any such vague order or show-cause notice duly signed by him, then that will be his last day in the office. There is nothing which can be said anything further in this matter. The order dated 29.03.2022 cancelling the registration of the writ-applicant is hereby quashed and set aside. The so-called order dated 05.04.2022, Annexure-P/4, Page-18 is also hereby quashed and set aside - application disposed off.
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2022 (4) TMI 1241
Recovery of interest payable on delayed payment of tax - delayed payment of tax by cash for the period between July 2017 to October 2020 - whether the recovery under the proposed notice pursuant to the order passed by this Court on an earlier occasion will come within the purview of Section 50 of CGST Act, 2017 r/w 142(A) of CGST Rules, 2017 as inserted vide notification No.60/2018- Central Taxes, dated 30.10.2018 w.e.f., 30.10.2018? HELD THAT:- The petitioner appears to have paid the tax for the month of July, 2017 to December 2019 belatedly. Therefore, the petitioner was earlier called upon to pay interest under section 50 of the respective GST Enactments under Notice on 04.03.2020. Proviso to section 50 (1) on the strength of which the present writ petition has been filed was inserted vide Finance Act (No. 2) Act, 2019. It is not relevant to the facts of the present case - The above proviso to Section 50(1) came into force with effect from 1.9.2020 in terms of Notification No. 63/2020-Central Tax Dated 25.08.2020. The Central Board of Indirect Taxes and Customs has also clarified on 26.8.2020 that no recovery of interest shall be made for the past in the light of the decision taken by the GST Council in its 39th meeting on delayed payment of GST. Since tax was paid by the petitioner belatedly, petitioner is liable to interest during the period default. There was no excuse for not paying the tax in time from its electronic cash register. Nothing precluded the petitioner from discharging the tax liability from its electronic credit - If there is a belated payment of tax declared in the returns filed, interest has to follow. The petitioner has to pay the interest on the belated payment of tax and as has been demanded. Even where there is a failure to file returns or circumstances specified under Sections 73 and 74 of CGST Act, 2017, in interest has to be paid. Petition dismissed.
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2022 (4) TMI 1240
Detention of goods alongwith the vehicle - section 129 (3) of the GST Act, 2017 - prayer for direction to respondents department for fresh inspection of goods - levy of penalty - HELD THAT:- Upon sifting the entire documents produced including the order impugned, it reveals that the vehicle in question was carrying the goods in excess of the bilti as well as e-way bill which is evident from the operative paragraph of the appellate authority which finds mention at page no. 56 of the writ petition. Thus, the authorities under the statute were competent to carry out the inspection and upon inspection, the authorities found that the transportation was in violation of the statutory provisions contained in the Act, 2017 and the rules made thereunder and therefore, rightly passed the order of the penalty. Apparently, the entire foundation of the case is based on factual background and no question of law is involved in the matter. The petitioner has further failed to demonstrate as to what legal right of the petitioner has been violated and thus, since the issue involved with the petition is infact pertains to the decision based on facts and do not suffer from any contravention of any statutory provisions or non-compliance of the principle of natural justice. There are no merit in the writ petition and accordingly, the writ petition so filed by the petitioner is dismissed.
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2022 (4) TMI 1239
Vacation of ad-interim relief granted earlier - Transmission or distribution for electricity - exemption from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017 - period of the negative list regime - scenario post GST Regime - HELD THAT:- The issue raised in the present writ application was considered by this Court in TORRENT POWER LTD. VERSUS UNION OF INDIA [ 2019 (1) TMI 1092 - GUJARAT HIGH COURT] . The order passed by this Court in Torrent Power Limited came to be challenged by the Union of India before the Supreme Court. The Supreme Court vide UNION OF INDIA AND ORS. VERSUS TORRENT POWER LTD. AND ANR. [ 2019 (8) TMI 779 - SC ORDER] granted leave to appeal. The matter is now pending before the Supreme Court for final hearing. According to Mr. Sheth, the decision that may be taken by the Supreme Court will ultimately govern the fate of the present writ application. However, the hearing in the Supreme Court may take some time and in such circumstances, the applicant has decided that it should start recovering the requisite amount from its customers and deposit the same with the Authority concerned. Mr. Sheth prays that in such circumstances, the ad interim relief earlier granted in favour of the writ applicant may be vacated. The Civil Application succeeds and is hereby allowed.
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2022 (4) TMI 1238
Review of order - whether it would be required / proper to review the order passed by the Bench after hearing the parties? - Order 47 Rule 1 CPC - HELD THAT:- While examining the sustainability of the order passed by learned Single Judge in M/S. K7 COMPUTING PRIVATE LIMITED, VERSUS THE COMMISSIONER, O/O. THE COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI SOURTH [ 2020 (11) TMI 83 - MADRAS HIGH COURT ], the Division Bench while recording order was of the view that no interference was required in the order of learned Single Judge. Learned senior advocate for the applicant may be justified, standing at the place of the applicant that the consideration of law as was cited, might have led to different conclusion. That itself is no ground to recall / review that order. This application therefore need not be entertained. This Review Application is dismissed.
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2022 (4) TMI 1237
Seeking grant of Bail - availment of fraudulent inward ITC - Section 132 (1) (b) of C.G.S.T. Act - HELD THAT:- Considering the nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, prima facie satisfaction of the Court in support of the charge, reformative theory of punishment, and larger mandate of the Article 21 of the Constitution of India, the dictum of Apex Court in the case of DATARAM SINGH VERSUS STATE OF UTTAR PRADESH AND ANR. [ 2018 (2) TMI 410 - SUPREME COURT] and without expressing any opinion on the merit of the case, this is found to be a fit case of bail. The application is allowed.
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2022 (4) TMI 1236
Benefit of exemption - Requirement of registration under National Skill Development Corporation - State Government has formed this corporation for giving Training to unemployed youth - requirement of registration under the act vide G.O. No.73, Commercial Taxes and Registration (B1), 29th June 2017, Serial No. 69 Heading 9992 or Heading 9983 or Heading 9991 and Serial No. 70 Heading 9985 - Government entity or not - time limitation - HELD THAT:- Prima facie, the appeal is made against Order dated 25.02.2021, which was received on 02.03.2021. The appeal stands filed with a delay of 9 months in filing the appeal. The appellant has requested to condone the delay and to admit the application - Hon'ble Supreme Court IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] , has modified its Order dated 23rd September 2021 and has held that the period from 15th March 2020 to 28th February 2022 would stand excluded for the purpose of Limitation in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (11) TMI 387 - SC ORDER] . Therefore, the appeal is to be considered as filed within the timeline and admitted for consideration on merits. The facts of whether the appellant is a 'Government entity', whether all the activities are extended only to the State Government and whether the consideration received is limited to the 'grants' are fresh facts to be verified/analysed with the respective documentary proof - it is clear that this authority can either confirm or modify the facts examined by the LA and ruling extended. It is evident that the appellant seeks ruling on a different set of facts which were not put forth before the LA. The appellant has not contested the basis of the ruling extended by LA and accepts that after receipt of the ruling by the LA, they have been now guided and rightly so that they are not to be required on the application of Entry 9C, which is a new ground not examined by the LA and therefore this forum cannot adduce any ruling on the same. The appellant has not contested the applicability of the entries 69 70 of the Notification, on the support of which, they had claimed exemption for registration before the LA. There appears no reason to interfere with the ruling of the LA - Appeal dismissed.
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Income Tax
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2022 (4) TMI 1235
Reopening of assessment u/s 147 - Deduction u/s 80IC - HELD THAT:- The deductions have been first of all explained in the documents filed alongwith the return of income. Moreover, during the assessment proceedings, a notice under Section 142(1) of the Act was issued to petitioner calling upon petitioner to furnish reasons for revising the income if the return has been revised. In its reply petitioner has given the reason for revising its income and has expressly stated that the deduction that it claimed under Section 80-IC for the two eligible units was inadvertently claimed at 30% when it was entitled to claim 100%. Petitioner had received another notice dated 8th November 2017 under Section 142(1) of the Act calling upon petitioner to justify the claim of the deduction under Section 80-IC in respect of two units wherein the claim of deduction has been revised to 100% with supporting evidences. Petitioner has provided those details. In the assessment order, Mr. Sharma submitted that, there is no specific discussion regarding the 100% deduction claimed for the two units. In our view, that would not help Mr. Sharma because it is settled law that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If the Assessing Officer has considered the objection raised in the grounds for issuing notice under Section 148 of the Act during the original assessment proceedings but has not rejected those objections, the Assessing Officer is deemed to have accepted the objection. In the assessment order dated 22nd February 2018, the Assessing Officer has discussed on the unit wise details of income and expenses claimed under various heads as 80-IC units and non 80-IC units and has also disallowed certain interest. Therefore, it is quite clear that the issue of deductions claimed by petitioner under Section 80-IC of the Act was under active consideration of the AO during the assessment proceedings. The fact that queries were raised and answers were given also indicate that there is no failure on the part of petitioner to truly and fully disclose material facts.
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2022 (4) TMI 1234
Reopening of assessment u/s 147 - Bogus Long Term Capital Gains/Short Term Capital Lossess in penny stock scrips to the beneficiaries by manipulating stock market - reopening is proposed after expiry of 4 years - HELD THAT:- It is settled law that once a query is raised, during assessment proceeding and assessee has replied to it, it follows that the query raised was subject of consideration of the A.O. while completing the assessment and it is not necessary that assessment order should contain reference and/or discussion to disclose its satisfaction in respect of query raised. Still, in affidavit in reply it is admitted that the A.O. had accepted particulars of transactions furnished by petitioner and the A.O. has treated the same as bonafide transactions and assessed accordingly. Even if, the Assessing Officer had no means to know that the transactions in the scrip of JRI Industries and Infrastructure Limited are not bonafide and even if, we assume that the Assessing Officer had committed a mistake, still, as held in Gemini Leather Stores vs The Income Tax Officer [ 1975 (5) TMI 1 - SUPREME COURT] assessment cannot be re-opened by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts as Income Tax Officer had material facts before him when he made original assessment and he can not take recourse to reopen to remedy the error.
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2022 (4) TMI 1233
Capitalisation of interest on FDRs earned during the period of construction - while utilizing the ECB funds the assessee did not follow RBI guidelines - HELD THAT:- The admitted facts of the present case are that the assessee had taken Foreign ECB loan of ₹ 82.37 crores for the purpose of acquisition of a capital asset i.e. renovation and refurbishment of hotel acquired by the assessee under SARFEASI Act. The entire ECB loan was disbursed in a single trench in the year under consideration and during this year, the assessee could utilise only ₹ 33.70 crores. Therefore, the assessee had temporarily parked the ECB loan in FDRs till utilisation for fixed asset/capital expenditure strictly in compliance with RBI instructions. The assessee had paid interest of ₹ 13.38 crores and has earned interest on FDRs of ₹ 4.03 crores. The net amount of interest of ₹ 9.35 crores has been added to the preoperative expenditure pending capitalization. The judgment passed in Tuticorin Alkali Chemicals [ 1997 (7) TMI 4 - SUPREME COURT] referred to and relied upon by learned standing counsel for the Appellant has been considered and explained subsequently by the Apex Court in Commissioner of Income Tax, Bihar II, Patna vs. Bokaro Steel Ltd., Bokaro [ 1998 (12) TMI 4 - SUPREME COURT] wherein it has been held if the assessee receives any amounts which are inextricably linked with the process of setting up its plant and machinery, such receipts will go to reduce the cost of its assets. These are receipts of a capital nature and cannot be taxed as income. The aforesaid principle has also been reiterated by this Court in Principal Commissioner of Income Tax vs. Facor Power Ltd [ 2016 (1) TMI 461 - DELHI HIGH COURT] Keeping in view the aforesaid, this Court is of the opinion that no substantial question of law arises for consideration as the questions sought to be raised in the present appeal are squarely covered by the decisions of the Apex Court as well as this Court. Accordingly, the present appeal is dismissed.
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2022 (4) TMI 1232
Reopening of assessment u/s 147 - deduction claimed under section 80-IA - HELD THAT:- It is evident from the affidavit-in-reply that the Assessing Officer had all material facts before him when he made the original assessment and issue of deduction under section 80IA of the Act was a subject of consideration during the assessment proceedings. In the present case, the petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. They were carefully scrutinized and figures of income as well as deduction were carefully reworked by the AO. In fact, in the reasons for reopening, there is not even a whisper as to what was not disclosed. In our view, this is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment sought to be reopened on account of change of opinion of the Assessing Officer about the manner of computation and deduction under Section 80-IA of the Act. In our view, the same is not permissible. Petition allowed.
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2022 (4) TMI 1231
Disallowance under the head 'business loss / bad debts' - claim was alternatively made as against the original claim of bad debts u/s.36(1)(vii) of the Act in relation to the transaction involving advancing of monies for purchase of property in the process of making an attempt to expand the business of the appellant by misreading the facts of the case resulting in perversity in the order passed by them - HELD THAT:- It could be seen from the findings of the authorities below that after analysing the entire pleadings and the submissions made on either side, they have in unequivocal terms, held that there was no material available to prove that the loss incurred by the appellant / assessee was for the purpose of acquiring the property at Coimbatore for expansion of its business and hence, the same was not treated as business loss / bad debts. Such a finding rendered by the authorities below, based on the material evidence, does not require any interfere by this court. Further, the decision relied on the side of the appellant as was made before the Tribunal, is of no help to the case of the appellant / assessee, as it is factually distinguishable. It is settled law that a court of appeal interferes not when the judgment under attack is not right, but only when it is shown to be wrong [Refer: Dollar Co. v. Collector of Madras, [ 1975 (5) TMI 87 - SUPREME COURT] . In such view of the matter, there is no question of law, much less substantial question of law arisen for consideration herein
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2022 (4) TMI 1230
Reopening of assessment u/s 147 - HELD THAT:- On a perusal of the order passed by the learned Judge, it could be seen that there was a mention only about the notice dated 25.01.2001 and subsequent notice dated 16.08.2002 relating to the assessment year 1997-98 and the same were set aside, along with the notice issued u/s 148 for the assessment year 1998-99 by order 31.07.2017. More over, what was challenged in the writ petition is only the notice issued u/s 148. Therefore, taking note of the reasons recorded by the assessing officer coupled with the submissions made by the learned counsel for the appellant, we set aside the order of the learned Judge and remand the matter to the respondent for passing appropriate orders. Since the respondent / assessee is now, in possession of the reasons recorded by the AO it is open to them to file its objections within a period of two weeks from the date of receipt of a copy of this order. AO shall proceed with the matter and pass appropriate orders, on merits and in accordance with law, after providing an opportunity of personal hearing to the respondent, within a period of four weeks.
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2022 (4) TMI 1229
Validity of National Faceless Assessment order - denial of natural justice - non affording an opportunity of the petitioner to be heard through Video Conferencing - HELD THAT:- The impugned order has been passed without affording an opportunity of the petitioner to be heard through Video Conferencing. The petitioner's request has not been considered, despite a specific request of the petitioner. Though the Assessment is now through National Faceless Assessment Centre and system enabled and the distribution of work is through portal, nevertheless, the system has to operate in such a way to allow assessee to participate in the proceedings through Video Conferencing if they desire. It is not sufficient for the respondent to state that the petitioner has not pressed the link for Video Conferencing in the notice issued. The order has been passed without giving an opportunity for personal hearing through Video Conferencing to the petitioner, I am inclined to quash the impugned order and remit the case back to the respondent to pass a speaking order on merits and in accordance with law within a period of sixty days from the date of receipt of a copy of this order.
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2022 (4) TMI 1228
Penalty u/s 271(1)(c) - unexplained cash credit under section 68 - HELD THAT:- The record of the Tribunal reveals that the assessment order for the assessment year 2011-12 has not been filed by the assessee alongwith the appeal in the Tribunal. DR has also not apprised us about the present status of the quantum appeal. Nonetheless the legal position is that the onus of proving the nature and source of credit entries in its books of account lies on the assessee. It is for the assessee to offer explanation to the satisfaction of the AO. If an assessee fails to do so and the identity of the creditor, his creditworthiness and genuineness of the transaction remains unproved, the sum so credited may be charged to income tax as the income of the assessee under section 68 of the Act. Levy or otherwise of the penalty relating thereto would depend on the facts and circumstances of each case. There is not statutory bar on passing penalty order pending appeal against an assessment order as remedy in such cases is provided in section 275(1A) which permits revision of the penalty order in conformity with the appellate order(s) in quantum appeal. We have gone through the orders of the Ld. AO/CIT(A), perused the material on record and heard the Ld. DR. It is observed from the appellate order of the Ld. CIT(A) that he has dismissed the appeal filed by the assessee as not admitted for the reason that the appeal had been filed late and existence of sufficient cause had not been established by the assessee before him. As regards merits the Ld. CIT(A) observed that under Explanation 1(A) to section 271(1)(c), an addition made becomes deemed concealment, if assessee fails to offer an explanation. According to him the Ld. AO had communicated the results of inquiries to the assessee and assessee did not offer any explanation. Therefore, the addition becomes deemed concealment and the Ld. AO was not required to establish anything further. Discussion on merits has been held by the Ld. CIT(A) as academic only. We are conscious that the Ld. CIT(A) has to exercise his discretion under section 249(3) in judicious manner but in the case under consideration the assessee did not submit even an application for condonation of delay. Curiously enough, there is no whisper anywhere in the records of the Tribunal also that the appeal of the assessee has been dismissed by the Ld. CIT(A) as it was not presented within the period allowed under section 249(2)(b) of the Act. Thus, the finding of the Ld. CIT(A) remains uncontroverted. It is a clear case of negligence and inaction on the part of the assessee. In DCIT vs. Jaya Publications (2009) 309 ITR (AT) 245 (Chennai), the Chennai Bench of the Tribunal held that in the absence of any acceptable reason and where there was actually negligence and in action the delay could not be condoned. In the case before us the appeal was not presented before the Ld. CIT(A) within 30 days of service of notice of demand. It was presented nearly after a month of the expiry of that period. No reasons for the delay have been given either before the Ld. CIT(A) or before the Tribunal. We, therefore, decline to interfere with the decision of the Ld. CIT(A) in this regard. As regards merits of the case, the assessee has neither appeared before the Ld. CIT(A) nor before us. We have dealt with the contentions raised by the assessee in the synopsis filed before us along with the appeal. Assessee appeal dismissed.
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2022 (4) TMI 1227
Additions u/s 2(22)(e) on account of deemed dividend - Accumulated profit - HELD THAT:- As per the provisions of aforesaid section, loan or advance paid by a company shall be considered as deemed dividend on fulfillment of following conditions (i) the company must be a company in which the public is not substantially interested; (ii) such a company has given advance or loan: (iii) such payment has been made to a shareholder: and (iv) such shares hold not less than 10% of the voting power. From the facts available on record, it is evident that both the companies i.e. M/s Rustagi Projects and M/s Yen Pulses Private Limited, were not the companies in which public was substantially interested - the assessee, being shareholder, was holding shares more than 10% (i.e. 95% in M/s Rustagi Projects and 50% in M/s Yen Pulses Private Limited) in both the companies. Both the companies have credited loan to the assessee. Thus, the basic conditions of section 2(22)(e) are satisfied in the present case. Further, such a payment for the purpose of section 2(22)(e) of the Act should be to the extent to which the company possesses accumulated profits. As per the provision of Explanation 2, all the profits of the company up to the date of distribution or payment under section 2(22)(e) of the Act shall be considered as accumulated profits. Thus, the provision of Explanation 2 to section 2(22) of the Act does not distinguish between the profit accumulated in the immediately preceding year and the current year profit, and takes within its ambit all the profits up to the date of payment. Addition made by the Assessing Officer under section 2(22)(e) of the Act. Thus, in view of the above legal position, we do not find any infirmity in the order passed by the learned CIT(A) affirming the addition on account of deemed dividend. As a result, ground no.1 raised in assessee s appeal is dismissed. Disallowance of depreciation on vehicle - Disallowance @ 20% of depreciation on motor car as being attributable to personal usage of the asset in terms of provisions of section 38(2) - HELD THAT:- We are of the considered opinion that the disallowance of depreciation on vehicle to an extent of 20% was rightly upheld by the learned CIT(A). As a result, ground no.2 raised in assessee s appeal is dismissed.
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2022 (4) TMI 1226
Transfer of the case u/s 127 from Jalgaon to Nashik - HELD THAT:- It is trite law that an assessee is barred from raising contention that no opportunity was given to the assessee while transferring the jurisdiction of the case u/s 127 from Jalgaon to Nashik as the order of the transfer of case u/s 127 was within the knowledge of the assessee during the course of assessment proceedings and still the assessee had chosen not to participate in the matter of jurisdiction of the AO to whom the case has been transferred. The assessee cannot be allowed latter to challenge the jurisdiction of the AO as held in the case of Pannalal Binjraj vs. Union of India [ 1956 (12) TMI 1 - SUPREME COURT] AND SHIVABHAI KHODABHAI PATEL [ 1999 (12) TMI 31 - GUJARAT HIGH COURT] Thus objection raised by the assessee challenging the transfer of jurisdiction of the case does not stand the test of the law. Thus, this contention is devoid of any merit and, accordingly, we dismiss the same. Unexplained investments out of undisclosed sources - HELD THAT:- We have carefully gone through the said loose documents which is also extracted by the AO wherein, the documents indicates total payment - Obviously contents of the notings clearly indicate the payment of interest which means the appellant either repaid the loan with interest or made advance of loan for interest. Notings found therein represents the unexplained income out of which the loan or advance was made warranting addition under the provisions of section 69 of the Act. When this information/material was confronted to the appellant, the appellant had failed to explain the contents of the documents. Therefore, the Assessing Officer was justified in making the addition. Thus, we confirm the addition - Thus, the ground of appeal no.2 raised by the appellant stands dismissed. Unexplained expenditure - Receipts and payments made in connection with the purchase and sale of share of M/s S.V. Electricals and it reflects the name of Shri Deelip V. Kotecha, the appellant before us, had paid cash to the agent involving in booking of accommodations entries. CIT(A) had clearly narrated the transaction that would have taken place the findings recorded by CIT(A) remains uncontroverted by the appellant. When this matter was confronted to the appellant, he gave vague answers and, therefore, presumption created u/s 132(4A) remains un-rebutted. In the circumstances, the lower authorities were justified in making the addition as undisclosed investments u/s 69 of the Act. Thus, the ground of appeal no.3 raised by the appellant stand dismissed.
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2022 (4) TMI 1225
Disallowance u/s 36(1)(iii) - Whether assessee has advanced these interest free funds or lower interest bearing funds? - HELD THAT:- We do not find that any interest bearing funds have been used for advancing loan is to these parties when enough in non-interest-bearing funds are available with the assessee for advancing non-interest-bearing or lower interest-bearing funds to these parties. The presumption is always available in favour of the assessee that non-interest-bearing funds have been used for advancing to the parties, unless otherwise proved. In view of this the addition confirmed by the learned CIT-A u/s 36 (1) (iii) of the act deserves to be deleted. Hence deleted. Accordingly, ground number 1 of the appeal along with sub grounds is allowed. Disallowance u/s 14A read with rule 8D - HELD THAT:- We find that during the year, the assessee has not earned any exempt income and further assessee denied that it has incurred any expenditure. Now therefore it is mandatory on part of the learned assessing officer to record a satisfaction that the claim of the assessee is not correct. Such is the mandate of the provisions of Section 14A(2) of the act. We find that the learned assessing officer has merely on the basis of the investment shown in the annual accounts of the assessee has invoked the provisions of Section 14A read with rule 8D and issued notice to the assessee. When assessee has categorically replied that it has not incurred any expenditure during the year the learned assessing officer is duty-bound to record a satisfaction that why the explanation furnished by the assessee is incorrect. Such satisfaction also has to be based on accounts of the assessee. If assessing officer merely says that as the investment decision are very complex the assessee should have incurred certain expenditure cannot satisfy the requirement of Section 14A (2) of the act. This shows that there is no reference to the accounts of the assessee. Accordingly, we find that assessing officer has failed to record any satisfaction prior to invoking of the provisions of rule 8D of income tax rules 1962 - Decided in favour of assessee.
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2022 (4) TMI 1224
Bad debt deduction u/s 36(1) - Bonafied claim - HELD THAT:- Direct Tax Laws (Amendment) Act, 1987, w.e.f. 01.04.1989 substituted any debt or part thereof, which is established to have become bad debt in the previous year by the words any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year . This is a major development with a view to avoid controversy as to the year in which such bad debt is allowable. It is thus evident that the year of write off is now taken as the year in which the amount is allowable as a bad debt. The amended law w.e.f. 01.04.1989 provides that for an amount to be treated as a bad debt and to be allowed as an expenditure in the year in which it was written off, the assessee has to prove the satisfaction of both section 36(1)(vi) and section 36(2)(i), namely that bad debt had been written off and that bad debt had been taken into account in computing income of the assessee in any one of years mentioned in clause (i) of sub-section (2) of section 36 of the Act. It is also crystal clear that after 01.04.1989, it is not necessary for the assessee to establish that debt has become irrecoverable. It is enough if bad debt is written off as irrecoverable in the accounts of the assessee. The assessee need not prove that debts have become bad. All that the assessee has to do after the amendment w.e.f. 01.04.1989 is to establish that the debt has been written off. It is not necessary to establish that debt has become irrecoverable during the year. We may refer to the judgment of the Hon ble Supreme Court in the case of T.R.F. Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] CIT(A) noticed therefrom that the outstanding balance as on 31.03.2014 is ₹ 5,23,29,230/-. The assessee also submitted the copy of confirmation dated 25.09.2018 from the broker wherein it is mentioned that the remaining balance of ₹ 5,21,16,449/- is receivable by the assessee from NSEL. All this go to prove that the claim of the assessee is bonafide and that he has fulfilled the first pre condition of section 36(1)(vii). As regards the second pre condition, namely that the bad debt should have been taken into account in computing the income of the assessee, the submission of the assessee is that the outstanding debt which was not recoverable as on 31.03.2014 amounted to ₹ 5,23,29,230/-. This amount was included as income during the previous year 2013-14. The amount of sales during the year reflected in the profit and loss account included the said amount of ₹ 5,23,29,230/- which has become irrecoverable. The outstanding bad debt was, thus taken as income of the assessment year 2014-15. To make it more explicit the assessee explained that the total amount of bad debt of ₹ 5,23,29,230/- was included in the income of the assessee via the profit and loss account and out of the said amount ₹ 1,50,00,000/- has been written off during the assessment year 2014-15. Thus, the assessee satisfies the condition laid down in 36(2)(i) as well. The objection of the Ld. AO that the assessee has prematurely written off sum of ₹ 1,50,00,000/- cannot stand in the post amendment era in which a write off cannot be questioned and should be allowed in the year it is written off in the books of the assessee. This change in law has also been pointed out by the Hon ble Delhi High Court in the case of CIT vs. Modi Telecommunication Ltd. [ 2010 (4) TMI 40 - DELHI HIGH COURT] . We, therefore, endorse the findings of the Ld. CIT(A) and reject the appeal of the Revenue.
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2022 (4) TMI 1223
Revision u/s 263 by CIT - AO not making disallowance u/s 40(a)(ia) of the Act on account of non-deduction of tax at source/short deduction of tax at source on payments covered u/s.194A, 194J and 194H - HELD THAT:- On being called upon to produce the details of the parties to whom commission or brokerage was paid and the rate at which deduction of tax at source was made, the assessee failed to furnish any such detail. The same position prevailed at the level of the ld. PCIT as well. In the absence of the assessee having produced details of commission or brokerage, the case of short deduction of tax at source is not established. Be that as it may, it is an admitted position that the assessee reported shortfall on account of lower TDS in its Tax Audit report but the AO did not conduct any inquiry on this point. It is a clear case of non-application of mind by the AO which empowered the ld. PCIT to invoke jurisdiction u/s.263 of the Act. Non-deduction of tax at source on discount to Stockists/Distributors - Admittedly, the AO did not inquire into this issue nor discussed it in the body of the assessment order. For invoking jurisdiction u/s.263 of the Act, it is essential to first ingrain that the point in question could have been decided against the assessee, which the AO either did not examine or decided wrongly after examination. But if the point is of such a nature that it cannot go against the assessee, even after thorough examination, that would not lead to classifying the assessment order erroneous even if there is no discussion of it in the assessment order. As such, it becomes sine qua non on the part of the PCIT to specifically point out as to how the decision of the AO in expressly or impliedly allowing deduction on a particular point is erroneous. Adverting to the factual matrix of the case, it is seen that the assessee company sold its products to distributors at a price lower than the Maximum Retail Price (MRP), which difference has been opined by the ld. PCIT as Commission requiring deduction of tax at source u/s 194H of the Act. It is simple and plain that a manufacturer would sell his goods to Stockists or Distributors at a price below the MRP, who, in turn, will add up their margin and then sell the products to the retailers. MRP is the price which is charged by a Retailer from the ultimate consumers. All the intermediaries between the Manufacturer and ultimate consumer are to be compensated within the overall MRP of the product. The assessee sold its products to Stockists obviously at a price below the MRP, which the Stockists were to sell to Retailers and from Retailers to ultimate consumers. The difference between the MRP and the price sold to Stockists, by no stretch of imagination, can be considered as commission or brokerage paid by the assessee to its Stockists. In order to get covered u/s.194H, it is apparent that principal and agent relation must be established. If the transaction is done on principal-to-principal basis, there can be no scope for payment of commission requiring deduction of tax at source u/s.194H. Here is a case in which the assessee sold its products to Stockists on principal-to-principal basis, who, in turn, sold the same products to Retailers again on principal-to-principal basis for onward sale to customers again on principal-to-principal basis. In that view of the matter, the relation between the assessee and its stockists cannot be described as that of principal and agent. We, therefore, hold that the ld. PCIT was not justified in holding the assessment order to be erroneous and prejudicial to the interest of the Revenue on account non-deduction of tax at source from such amount warranting any disallowance u/s.40(a)(ia) - As there is no involvement of any commission payment to Stockists on this score, we hold that the AO correctly accepted the assessee s claim in this regard even though impliedly. The impugned order is overturned on this score. The order passed by the PCIT is sustainable on three out of four counts as taken note of by him, the impugned order on an overall basis cannot be declared as unlawful. It is, therefore, held that the ld. PCIT was justified in invoking his revisionary power u/s.263
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2022 (4) TMI 1222
Short Term Capital Loss (on which STT was paid) set off against the Short Term Capital Gain (on which STT is not paid) - Assessee adjusted the aforesaid Short Term Capital Loss which was chargeable to tax under section 111A @ 15% against Short Term Capital Gain which was chargeable to tax at the normal rate. HELD THAT:- As per the section 70(2) provision the Short Term Capital Loss can be set off against gain from any other capital asset. Section 70(2) of the Act does not make any further classification between the transactions where STT was paid and the transactions where STT was not paid. The emphasis of the Assessing Officer on the term similar computation also only refers to the computation as provided under section 48 to 55 of the Act. As relying on M/s Mac Charles India Ltd [ 2015 (1) TMI 1232 - ITAT BANGALORE ] and Ashok K. Shah [ 2014 (8) TMI 1225 - ITAT MUMBAI] we find no infirmity in the impugned order passed by the learned CIT(A) allowing set off of Short Term Capital Loss (on which STT was paid) against Short Term Capital Gain (on which STT was not paid). Accordingly, only ground raised by the Revenue in present appeal is dismissed.
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2022 (4) TMI 1221
Eligibility to claim deduction of Employees Contribution to PF / ESI in terms of Sec.43B r.w.s. 36(1)(va) as well as 2(24)(x) - HELD THAT:- As the Employees Contribution has been paid well before due date of furnishing of return of income u/s 139(1) as relying on M/s Benco Thermal Technologies Private Ltd. [ 2022 (2) TMI 1217 - ITAT CHENNAI] we direct revenue authorities to allow the deduction of Employees Contribution to welfare funds like PF / ESI as claimed by the assessee in the return of income. The issue, on merits, stands decided in assessee s favour.
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2022 (4) TMI 1220
Penalty under Section 271D and under Section 271E - accepting/repayment of cash - HELD THAT:- The assessee is engaged as a transporter and has not maintained any regular books of account. The assessment has been made on estimations, keeping in mind the transportation receipts earned by the assessee which also includes some of impugned entries towards cash receipts by way of loan. The assessee in the course of survey itself, on being questioned, responded that the cash has been received by way of temporary loan from family members to meet the business exigency having regard to the nature of business he is involved in. The fact of business exigency has not been denied by the Revenue.CIT(A) has disregarded the defense of the assessee mainly on account of the fact that the assessee has failed to come out with complete facts and documents regarding the transactions. We find that the turnover receipts declared by the assessee at ₹ 39,61,195/- was enhanced to ₹ 1,33,67,162/- for the purposes of estimation of income based on such impounded records. Therefore, imposition of penalty separately towards such receipts by way loan is not justified. The impromptu response of the purportedly uneducated assessee at the time of survey, in our view, requires to be seen in its natural perspective and requires to be given credence. The assessee has declared that the money was received from family members to meet the business exigencies. Having regard to the nature of business of the assessee and ground realities, such explanation appears plausible. Breach of Sections 269SS and 269T for receipt/repayment of cash attributable to business exigencies is a mere technical or venial breach. The assessee has shown existence of reasonable cause in accepting/repayment of cash to meet the immediate business requirements. In our view, mitigating circumstances exists to exonerate the assessee from the recourse of penalty under Sections 271D and 271E of the Act. We accordingly set aside the order of the CIT(A) and cancel the penalty imposed under Sections 271D and 271E of the Act by the competent authority. - Decided in favour of assessee.
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2022 (4) TMI 1200
Exemption u/s 11 - cancellation of registration under Section 12AA(3) based on money laundering activities carried out by the assessee trust with Herbicure Health Care Bio Herbal Research Foundation - HELD THAT:- The assessee submitted his reply denying the allegations and stating as to how the donation was received by cheque and was credited in the bank account of the assessee and the donation was applied for the objects of the assessee - assessee categorically stated that their activities are in accordance with the objects of the Trust and are genuine. In spite of such reply having been given by the assessee, we find that the CIT(E) has not considered the reply, nor brought on record anything to show that the activities of the assessee are not genuine or the activities are not being carried out in accordance with the objects of the Trust. In fact, the order passed by the CIT(E) narrates certain facts about Herbicure, extracts Section 12AA(3) of the Act and holds that the activities of the assessee are not genuine and are not being carried out in accordance with the objects of the society and, therefore, the registration has been cancelled. Mere use of the words and sentences as contained in Section 12AA(3) of the Act, would not be sufficient. CIT(E) has to record a finding on fact as to how the activities of the assessee are not genuine and how the activities of the assessee are not being carried out in accordance with the objects of the Trust. In the absence of any such factual conclusion, we find that the Tribunal was right in setting aside the order of cancellation. Tribunal after elaborately going through the facts, taking note of the answers given by the Director of Herbicure to the various questions posed to him found that there is nothing on record to indicate that the assessee was in contact with the brokers, nor there was any evidence brought on record to show that the assessee was engaged in money laundering as it may be a case of the department that Herbicure was indulging in money laundering. That by itself would not be sufficient to hold that the assessee was also indulging in money laundering in the absence of any evidence to connect the assessee with the money laundering activities of Herbicure CIT(E) did not consider the explanation offered by the assessee as to how the donation was received by cheque and it was credited to the bank account of the assessee and the donation was applied to the objects of the assessee in Trust, were recorded any factual finding on the submissions made by the assessee. Thus, the order passed by the CIT(E) was wholly unsustainable. If the CIT(E) proposed to rely upon the statement of a third party to form an opinion that the assessee is also involved in money laundering activities, the basic principle of natural justice would require that the entire documents based on which the CIT(E) formed such prima facie opinion, should have been made available to the assessee and if third party statement is to be relied on then the third party should have been made available for a cross-examination by the assessee. In fact, a specific ground was canvassed by the assessee by contending that no opportunity of cross-examination was allowed to them and therefore, the order was in violation of the principle of natural justice. The contention advanced by the assessee was perfectly right and justified and the Tribunal after taking note of the entire facts has found that there is no iota of evidence against the assessee to justify the allegation of money laundering - Decided in favour of assessee.
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2022 (4) TMI 1199
Black money - Punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India - complaint under Section 50 of the BMI Act against the petitioner/accused, alleging that he has not disclosed about his financial interest in the bank accounts held by him with the Investec Bank (Channel Island) Limited in its Jersey Branch for the ITR filed by him for the assessment year 2016-17 - contention of petitioner is that the petitioner was a minor at the time of investment i.e. only about two-three years and the petitioner s grandfather made investment in the said company/trust - HELD THAT:- Even assuming the allegations of the complainant to be true, the petitioner was required to disclose the said details in the ITR, as the account was opened in the year 2015 on 25.05.2015 (Financial Year 2014-15) i.e. assessment year 2015-16. Further as per definition of Previous Year under Section 2 (9) of the BMI Act, there was no requirement, at that stage to disclose the same. Further, it has also been contended that petitioner was not benefitted by any benefit and has not received even a single penny. Reference was also made to the provisos to Section 139 along with explanation 4 and 5 of the Income Tax Act. It is contended that the petitioner, on being nominated as beneficiary, an expectancy or anticipation of hope of distribution in his favor, existed and nothing more and Revenue authorities are yet to quantify the assets and/or income received from such assets under assessment proceedings Under Section 10 of BMI Act. The contentions raised by counsel for petitioner appear to be forceful and carry merit subject to the reply to be filed on behalf of respondent. Considering the aforesaid aspects and in the totality of the facts and circumstances, it is directed that the proceedings before the learned trial court shall be subject to the final orders passed in the present petition. However we not inclined to stay the proceedings before the learned ACMM, at this stage and an opportunity is granted to the respondent to file a reply on merits as well as on the point of grant of sanction under Section 55 of BMI Act. Reply be filed on behalf of the respondent within 04 (four) weeks with advance copy to learned counsel for the petitioner. Counsel for petitioner has vehemently prayed that petitioner be granted exemption from appearance before learned Trial Court in case the proceedings are not stayed, since the petitioner is a student undertaking studies at Harvard Kennedy School, John F. Kennedy School at USA. The proceedings initiated on complaint are based primarily upon documents and identity of petitioner is not disputed. Exemption if granted shall not prejudice the complainant in any manner. Learned ACMM may consider granting an exemption from personal appearance to the petitioner through Authorized Representative in accordance with law, in case an appropriate application in this regard is moved before the learned ACMM.
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Customs
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2022 (4) TMI 1219
ECGS Scheme - Rule of verba chartarum fortius accipiuntur contra proferentem - Relevant date of despatch/shipment - whether the NCDRC was correct in placing reliance on guidelines issued by the Directorate General of Foreign Trade (DGFT Guidelines) to interpret the date of despatch / shipment in the Single Buyer Exposure Policy of the respondent (Policy), and thereby deny the appellant s claim? HELD THAT:- Taking into consideration all relevant documents, this Court is of the opinion that the date of loading goods onto the vessel, which commenced one day prior to the effective date of the policy, is not as significant as the date on which the foreign buyer failed to pay for the goods exported, which was well within the coverage period of the Policy. Thus, the claim could not be dismissed simply on such basis, especially given that the date of loading the goods onto the vessel was immaterial to the purpose for which the policy was taken by the appellant. Rule of contra proferentem - HELD THAT:- The rule of contra proferentem thus protects the insured from the vagaries of an unfavourable interpretation of an ambiguous term to which it did not agree. The rule assumes special significance in standard form insurance policies, called contract d adhesion or boilerplate contracts, in which the insured has little to no countervailing bargaining power. This consideration is highlighted in the facts of this case, since the risks that ECGC is mandated to cover is its business, and other insurers rarely foray into the field. Deviating from the rule of contra proferentem, even if in the present instance the third-party DGFT Guidelines were to be applied, it would not favour the ECGC, as a plain reading of provision 9.12 shows that the date on the Bill of Lading has to be considered as the date of despatch / shipment. The date of onboard Bill of Lading is not applicable to the present facts as no letter of credit was executed, much less providing for application of such date. Therefore, ECGC could not have denied the appellant s claim, even on a consideration the DGFT Guidelines. ECGC enjoys a significant position in the market for export credit insurance in India in F.Y. 2012-2013, the total income received by way of premiums exceeded Rupees one thousand crores, with the figures only growing ever since. It is the only government company offering such niche services, and is exempt from following the Trade Credit Insurance Guidelines periodically revised by the Insurance Regulatory and Development Authority of India. To deny the appellant s claim over an incorrect interpretation of an ambiguous term, that too with delay amounting to only one day, goes against such duties, especially given the fact that the appellant had transacted with the respondent on several previous occasions. The impugned order of the NCDRC is hereby set aside - the appellant s complaint is consequently allowed - ECGC is hereby directed to pay the claim amount of ₹ 2.45 crores to the appellant, with interest at the rate of 9% p.a. - appeal allowed.
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2022 (4) TMI 1218
Validity/legality of SCN and Order-in-Original - it is alleged that the Show Cause Notice and Order-in-Original contain errors that are impossible to repair or rectify - waiver of demand along with interest and penalty - HELD THAT:- Since no details have been provided even in the show cause notice to direct respondent to appear and answer such show cause notice would be only adding to their agony. It would not be even possible to answer the show cause notice without any particulars mentioned therein. The Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, the question as pressed do not raises any substantial question of law - appeal dismissed.
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2022 (4) TMI 1217
Import of restricted item or not - Tyres - contravention with the Foreign Trade Policy [FTP] 2015-2020 - import without a proper licence, permitted or not - rejection of request of the petitioner for cross-examination - Violation of principles of natural justice - HELD THAT:- In this case, the import is from the United States of America. It is not clear why the import has been made through Tuticorin Port, in the tip of the Peninsula in the Bay of Bengal. If the petitioner's case is that the import was made for their factory in Rajasthan, the petitioner would have chosen other Ports, which are nearer to Rajasthan either in Gujarat or in Maharashtra or in Goa or in Kerala on the Western Coasts. This needs to be properly explained by the petitioner. If the petitioner indeed operates a factory in Rajasthan, it is open for the petitioner to file a copy of the GST Registration of the factory and details of documents to substantiate that the petitioner had indeed manufactured the Rubber Crumbs and Granules and sold to various Contractors/statutory authorities engaged in laying of roads. These are the documents which the petitioner is required to produce before the authorities to substantiate that the imported goods do not fall within the purview of restrictions in the Foreign Trade Policy 2015-2020. This exercise has not been carried out. The impugned orders are quashed and the cases are remitted back to the respondent to pass a fresh order within a period of three months from the date of receipt of a copy of this order - Petition allowed by way of remand.
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2022 (4) TMI 1216
Smuggling - Gold Jewellery - Currency - Sony Bravia TV - entire case is based on the statements recorded from the appellant Shri Rajan Ran - retraction of statements - Absolute Confiscation - penalty - HELD THAT:- The department does not have a contention that the appellant does not fulfill the criteria of an eligible passenger. In case an eligible passenger intends to import gold, he has to make a declaration at the airport. The case of the department is that the appellant has not declared any dutiable goods. It is also stated that the declaration form filled in by him was collected by the customs officers. The learned counsel for appellant has asserted that as no such declaration form has been made part of the relied upon documents, the allegation that the appellant has attempted to smuggle the gold without declaring cannot be accepted. Though it may be true that the declaration has not been made part of the relied upon documents, it has to be seen that the appellant was intercepted at the exit gate - There is no statement from Vasu Arumugam and the department has not been able to establish the connection between the appellant and Shri Vasu Arumugam. For these reasons, there are no doubt to hold that the view taken by the adjudicating authority that the goods are liable for confiscation are legal and proper and does not merit interference. The appellant has to be given an option to redeem the gold jewellery and currency and the Sony Bravia TV which was imported been carried by him. The appellant, however, has to pay redemption fine to the tune of 10% of the value of the goods as noted in the impugned order as redemption fine for release of the gold jewellery, currency and Sony Bravia TV. Penalty imposed upon the appellant - HELD THAT:- There was no attempt to conceal the gold jewellery by the appellant. However, he has proceeded through the green channel and about to exit the airport without paying the customs duty. A penalty of ₹ 55 lakhs under section 112(a) of the Customs Act, 1962 seems to be on the higher side and we hold that penalty of ₹ 10 lakhs would suffice to the circumstances. The penalty imposed upon shri Vasu Arumugam is reduced from ₹ 10 lakhs to ₹ 5 lakhs. The impugned order is modified to the extent of setting aside the absolute confiscation and allowing the appellant to redeem all items confiscated by paying ₹ 25,00,000/- as redemption fine on all the items confiscated - penalty imposed on the appellant Shri Rajan Ran is reduced from ₹ 55,00,000/- to ₹ 10,00,000/- and the penalty on other appellant Shri Vasu Arumugam is reduced from ₹ 10,00,000/- to ₹ 5,00,000/-. Appeal allowed in part.
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2022 (4) TMI 1215
Import of prohibited item - second hand medical equipments - prohibited item or not - mis-declaration of the goods - imported consignments were for the purposes of its charitable activities - Confiscation - redemption fine - penalty - HELD THAT:- The examination report of the Chartered Engineer, which is part of the records, is not by a private party or the one who was engaged by the appellant; he is on the panel of the Revenue because of being an expert in the relevant field since neither the importer nor the Revenue authority is the expert in that field. Hence, the opinion of an expert which is relevant (under Section 46 of the Indian Evidence Act, 1872) requires consideration. When such an expert clearly opines that the inspected equipments were not E-Waste and hazardous, the same is binding on the Revenue as well as the appellant herein, in the absence of any direct documentary evidences to the contrary. Admittedly, the appellant-importer is neither the end-user nor the trader since it is claimed that it would only pass on the imported medical equipment to other charitable organizations, for the use of the needy. The supplier/donor confirms the donation; the importer, who is not the end-user, confirms that the same would be given to the needy, either directly or through some charitable organization; and the Government, through the Ministry of Finance, has also issued Notifications from time to time relaxing the import conditions, which facts are undisputed. In the case on hand, it is observed that there is an expert opinion, who has reported that the goods imported were not E-waste or hazardous, which is not disputed. Further, since no other reason is given by the Adjudicating Authorityto hold that the items at Table 6 of the Order-in-Original are prohibited, the said finding is not sustainable. In view of the above, therefore, the order of confiscation under Section 111(d) ibid is not sustainable. Redemption Fine - HELD THAT:- When the Adjudicating Authority himself has ordered amendment of bill and re-assessment insofar as items at Tables 7 and 11 of the Order-in-Original are concerned, the order of confiscation on the allegations of improper importation cannot survive. By virtue of the re-assessment, the Bill-of-Entry stands regularized and so would be the import. Consequently, Section 125 ibid will have no effect and hence, imposing redemption fine on the alleged confiscation is meaningless and the same is set aside. Levy of penalty under Sections 112(a)(i) and 112(a)(ii) - HELD THAT:- Since there was no improper importation of goods and hence, there was no scope to levy any penalty under Sections 112(a)(i) and 112(a)(ii) ibid., hence, the penalty of ₹ 2,00,000/- imposed on the appellant-importer cannot also be sustained; the same is set aside. Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 1214
Jurisdiction - power of Directorate of Revenue Intelligence (DRI) to issue SCN - HELD THAT:- Learned counsel for the respondent submits that he is giving up on the question of competence of DRI to issue the SCN and will not rely on M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] and will argue on merits and that the respondent has a very strong case on merits. Accordingly, with concurrence of both sides, this appeal is taken up for hearing for a decision on merits ignoring the jurisdictional issue as it has been given up by the learned counsel for the respondent. Valuation of imported goods - Fitness Equipments - Under-valuation - rejection of declared value - enhancement of value - pen-drives - admissible evidence or not - Section 138C of the Customs Act - Section 65B of the Evidence Act - Section 3 of the Information Technology Act, 2000 - principles of natural justice - section 13 of Customs Act - HELD THAT:- The default position is that the valuation has to be done on the basis of the transaction value and not based on any fixed value. If there are a hundred transactions between the importer and the overseas seller at different prices, for each transaction, the value under section 14 shall be that transaction value. Simply because the price is higher in any particular transaction, such price cannot be applied to other transactions to determine duty. Conversely, the importer cannot claim to pay duty on a lower value than the transaction value in any consignment even if other consignments were sold to the same importer by the same overseas supplier at lower prices. Valuation has to be done for each import as per that transaction value. There is also no provision to take the average price to determine the duty if the transaction values are available. In this case, DRI officers found that the invoice which was presented along with the Bill of Entry was a trader s invoice for a value which was substantially lower than the price at which the trader himself had purchased the goods. Both the manufacturer s invoice on the trader and the trader s invoice on the importer were for exactly the same consignment with the same details as they were back to back orders - According to the Revenue, the trader s invoices are fraudulent and manipulated invoices. Insofar as the first part of the demand indicated in paragraph 10 (a) above is concerned, the EXCEL sheets in the pen drive as well as the invoices recovered during the searches form the basis for the doubt. As far as the second and third parts of the demand indicated in paragraphs 10 (b) and 10 (c) are concerned, the doubt is based on projections. The proposal to reject the transaction value in respect of those imports listed in WORKSHEET II to the SCN is based on the EXCEL sheet recovered from the Pen drive recovered from the residence of Shri Sachdev of the respondent and the copies of invoices recovered from the office of the respondent. As for the imports listed in WORKSHEET IIIA to the SCN and WORKSHEET IV to the SCN, they are based on projections and extrapolations. Since the officers found some reason to reject the transaction value in imports covered by WORKSHEET II, it is also proposed to be rejected in the imports covered by the other two worksheets. There are no legal provision by which the transaction value can be rejected by extrapolation. If the transaction value is higher in any one case, that, by itself cannot form the basis for assessment of other imports. Conversely, if the transaction value in any one case is lower, the importer cannot ask for that to be the basis for assessment of all other imports. A single value has to be reckoned for assessment of all imports only if it is a tariff value fixed by the Board under Section 4 (2) - Undervaluation of goods is a serious charge which entails not only re-determination of duty and recovery of duty but also penalties. If one is found to have undervalued goods in one case, inference cannot be drawn that he has undervalued in all other imports as well. Penalties and pecuniary liabilities based on extrapolation is impermissible and is inconsistent with the legal principles known. If Central Excise officers find that a truck of goods has been clandestinely removed by the manufacturer on a day, it cannot be presumed that the manufacturer has been clandestinely removing one truck of goods every day for the past five years. Each case must be examined only based on the evidence in it. Since each assessment is a quasi-judicial order based on the transaction value in it, transaction values cannot be rejected under Rule 12 by extrapolations. They can be rejected if the officer has reasonable belief based on the evidence in that case, that the transaction value is not true and accurate - the rejection of the transaction value in the imports covered in Worksheets IIIA and IV of the SCN by extrapolation and re-determination of the value have no legal basis and need to be set aside. Consequently, the demands in these cases by re-determination of the values cannot also sustain. There is nothing on record to show that the procedure prescribed under section 65B of the Evidence Act, section 3 of the Information Technology Act, 2000 or section 138C of the Customs Act were followed. Learned Departmental representative could not also produce anything on record to show that these were followed. Therefore, the pen-drive is inadmissible as evidence despite the vital information which it contained and which was relied upon by the Revenue. The mere fact that there was a difference between the two sets of invoices without questioning anyone or investigating as to why there is a difference cannot be a sufficient ground to reject the transaction value and redetermine it as per the manufacturer s invoice and recover differential duty. There are no reasons to interfere with the impugned order and accordingly, it is sustained - appeal dismissed.
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2022 (4) TMI 1213
Refund of Customs Duty paid - principles of unjust enrichment - expenditure written off while creating the entry as Receivable in the Balance Sheet - whether the appellants have been able to establish that the burden of duty has been passed on, or not? - actual date of provisional assessments - artificial accounting juggleries - HELD THAT:- It is seen that when a person shows any amount as receivables it becomes an asset in the balance sheet. Consequently, the said amount is not passed as expenditure in the profit and loss account. Ledgers are just accounts, the net effect of these accounts is reflected in the final figures in the profit and loss accounts as profit or loss. When a disputed receivable is shown as an asset then the impact of said entry is not passed to P L account as the expenditure, consequently, the profit in the profit and loss statement is enhanced by that amount. In the instant case, the appellant has paid a certain amount of customs duty. Thereafter, the appellant has sought to create an asset in the shape of receivables so as to not pass the effect of payment of duty to the profit and loss account. To nullify the effect of the entry receivables , it has created a parallel entry exactly opposite to the receivables in its ledger as provisions . The net effect of creating receivables and provisions on profit and loss and balance sheet is that the customs duty paid is included in expenditure shown in profit and loss account. The legders on the one hand recognizes the disputed amount of customs duty as receivables (an asset) and simultaneously, creates a provision (a liability) for the same amount. These are obviously artificial accounting juggleries as the net combined effect of these two ledger entries in the profit and loss account is that the customs duty gets reflected in the profit and loss as expenditure. The reason why existence of the customs duty as receivables in the balance sheet is considered as evidence of not passing on the burden of customs duty to anybody else is because the said amount shown as receivable is not passed to profit and loss account as expenditure. As soon as a particular amount is charged to expenditure, it is deemed to have been recovered in the shape of the price of the goods. In the instant case, by creating an entry for receivables and thereafter, creating an entry for provision in the ledgers, the appellant has nullified these entries. Consequently, the entire amount of duty paid is passed on as an expenditure to the profit and loss account. Thus the appellant has failed to discharge the burden of unjust enrichment. Both revenue assessee appeals are dismissed.
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Insolvency & Bankruptcy
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2022 (4) TMI 1212
Interpretation of Statute - Appointment of Arbitral Tribunal - whether mere filing of a proceeding under Section 7 of the Insolvency and Bankruptcy Code, 2016, would amount to any embargo on the Court considering an application under Section 11 of the Arbitration and Conciliation Act,1996, to appoint an arbitral tribunal? - proceedings in rem - HELD THAT:- It may be observed that in the present case, a Section 8 of the ACA application was not filed by the applicant before the NCLT. It is in the context of a Section 8 application being filed by Indus Biotech, for referring the dispute to arbitration, the Supreme Court in paragraph 25 observed as to what should be the course to be adopted by the adjudicating authority (NCLT), when the application under Section 8 of the ACA is filed seeking reference to arbitration. Reiterating the legal position that before the Section 7 proceedings are admitted, it would not be an action in rem, the Supreme Court observed that notwithstanding the fact that the corporate debtor files an application under Section 8 of the ACA, an independent consideration of the same by the NCLT de hors the application filed under Section 7 of the IBC and the material produced therewith will not arise. It was observed that the adjudicating authority (NCLT) is duty bound to advert to the material available before it, alongwith the application under Section 7 of the IBC, by the financial creditor to indicate the default alongwith the version of the corporate debtor. In the context that even if an application under Section 8 of the ACA is filed, it was observed that the adjudicating authority has a duty to advert to the contentions put forth under an application filed under Section 7 of the IBC by examining the material placed before it by the financial creditor and record a satisfaction as to whether there is default or not. At the same time while doing so, the contention being put forth by the corporate debtor is to be noted to determine as to whether there is substance in the defence and to arrive at the conclusion whether there is default. It was categorically observed that if the irresistible conclusion of the adjudicating authority (NCLT) is that there is default and the debt is payable, the bogey of arbitration to delay the process would not arise despite the position that the agreement between the parties contains an arbitration clause. Thus, mere filing of the proceedings under Section 7 of the IBC cannot be treated as an embargo on the Court exercising jurisdiction under Section 11 of the ACA, for the reason that only after an order under sub-section (5) of Section 7 of the IBC is passed by the NCLT, the Section 7 proceedings would gain a character of the proceedings in rem, which would trigger the embargo precluding the Court to exercise jurisdiction under the ACA, and more particularly in view of the provisions of Section 238 of the IBC which would override all other laws - In the facts of the present case as the Corporate Insolvency Resolution Process as initiated by the respondent under Section 7 of the IBC is yet to reach a stage of the NCLT passing an order admitting the said proceedings, the Court would not be precluded from exercising its jurisdiction under Section 11 of the ACA, when admittedly, there is an arbitration agreement between the parties and invocation of the arbitration agreement has been made, which was met with a refusal on the part of the respondent to appoint an arbitral tribunal. Once the Section 7 IBC proceedings are admitted, the provisions of Section 238 of the IBC would get triggered to override the application of all other laws, as in such event, the Corporate Insolvency Resolution Process would commence, against such corporate debtor as per the provisions of Section 13 of the IBC which would be proceedings in rem. The Court would be required to allow this application by appointing an arbitral tribunal for adjudication of the disputes and differences which have arisen between the parties under the agreements in question. However, a formal order appointing an arbitral tribunal is not required to be made as after the judgment was reserved, the parties just two days back, have settled the disputes stating that an arbitration is not warranted - Petition disposed off.
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Service Tax
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2022 (4) TMI 1211
Seeking direction to the respondents to decide pending representation keeping in view Circular dated 14.07.2020 - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner has failed to deposit the determined amount, within time limit - Scheme came to an end - whether the time limit can be extended further or not - HELD THAT:- Admittedly the petitioner could not deposit the determined amount under the Scheme of ₹ 18,96,770/- till 30.06.2020. By letter dated 30.06.2020, respondent No.1 has only directed all the Principal Chief Commissioner / Chief Commissioner CGST CX All Zones to contact all major declarant who were unable to pay up to 30.06.2020 due to any difficulty but the period of Scheme was not extended by fixing time limit upto 30.09.2020. Once the Scheme has come to an end, no benefit can be extended to the petitioner hence the direction to decide the representation would be a futile exercise. The Division Bench of this Court in the cases of Maya Fan Air Engineering Private Limited Through Director Amit Chourasia Others v/s Union of India, Revenue Secretary, Ministry of Finance Others [ 2022 (1) TMI 1070 - MADHYA PRADESH HIGH COURT ] has held that once the Scheme has already come to an end, no benefit can be granted to the petitioner who could not deposit the determined amount of tax before the last dated i.e. 30.06.2020. Petition dismissed.
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2022 (4) TMI 1210
Condonation of delay in filing appeal before the Commissioner (appeals) - - Failure to make pre-deposit - non-compliance of mandatory requirement under Section 83 of the Act read with Section 35F of the Central Excise Act, 1944 - relevant date for entertainment of appeal - time limitation under Section 85 of the Act - power to condone the delay in filing the appeal beyond one month after the expiry of normal period specified under sub-section (3A) of Section 85 - HELD THAT:- This Court has considered the rival submissions and examined the statutory provisions. It is an undisputed position that a right to file an appeal is not an absolute right but a right bestowed by the statute. Thus, such a statutory right of appeal can be made subject to conditions. However, though the right of appeal has been made conditional by Section 35F of the Central Excise Act, 1944, as applicable to Finance Act, 1994, by virtue of Section 85 of Chapter-V of the Finance Act, 1994, it is unambiguously suggested that a party who desires to challenge the Order-in-Original in appeal shall have to deposit in terms of provisions contained in Section 35F of the Central Excise Act. The requirement to make such deposit is to be fulfilled for the purpose of entertainment of appeal and not filing of the appeal - whenever the Legislature desired to make a pre-condition that certain amount is required to be deposited before the Appeal is filed, it is so provided in the legislation. Thus, in terms of Section 85 of Chapter-V of the Finance Act read with Section 35F of the Central Excise Act, so long as the appeal is not disposed of/dismissed/rejected by the Appellate Authority, it is open to the party to deposit the conditional amount pending the disposal of the appeal. In the present appeal, the petitioner having not placed any material evidencing compliance of conditions for entertainment of appeal, this Court, therefore, confirms the Order-in-Appeal on this score. Time Limitation - HELD THAT:- The instant case falls within the ambit of sub-section (3A) of Section 85 of the Act which without admitting any ambiguity hints at that an appeal can be presented within two months from the date of receipt of the Order-in-Original passed by the adjudicating authority under Section 73 relating to service tax, interest or penalty under Chapter-V of the Finance Act, 1994. Proviso thereto unequivocally lays down that in case of delay in presentation of appeal, the discretion of the Commissioner of Central Excise (Appeals) in considering application for condonation of delay is restricted. If the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, he has the jurisdiction to allow it to be presented within a further period of one month. In identical setting of provisions of statute that is contained in the statute presently under consideration, the Hon ble Supreme Court has laid down that Section 5 of the Limitation Act, 1963 has no application where the Legislature has prescribed stipulated outer limit restricting discretion to condone the delay - reliance can be placed in CHHATTISGARH STATE ELECTRICITY BOARD VERSUS CENTRAL ELECTRICITY REGULATORY COMMISSION AND OTHERS [ 2010 (4) TMI 1031 - SUPREME COURT] . Regard being had to the position of law, on the material available on record that the petitioner having received the Order-in-Original passed under Section 73 of the Act on 09.02.2018, filed the appeal under Section 85 of Chapter-V of Finance Act, 1994 on 10.01.2022, thereby there caused a delay beyond the period of 3 months (i.e., normal period of 2 months + condonable period of 1 month with the discretion of the Appellate Authority), it is held that there is no infirmity found to warrant interference with the Order of the Appellate Authority. The explanation of the petitioner that the delay was on account of the complexities of law could not stay the operation of law of limitation - since the statutory period specified for filing of appeal (2 months + 1 month) had expired long back in May, 2018 itself and the appeal came to be filed by the petitioner only on 10.01.2022, without substantiating the plea about inability to file appeal within the prescribed time, no indulgence could be shown to the petitioner-assessee at all. Thus, since the statutory period specified for filing of appeal (2 months + 1 month) had expired long back in May, 2018 itself and the appeal came to be filed by the petitioner only on 10.01.2022, without substantiating the plea about inability to file appeal within the prescribed time, no indulgence could be shown to the petitioner-assessee at all. The case law in cited by the petitioner is misplaced. The order of the Commissioner (Appeals) dated 27.01.2022 rejecting the appeal on the ground that the appeal has been filed belatedly beyond the period stipulated under Section 85 of the Act without complying with the condition stipulated for entertainment of appeal under Section 83 of Chapter-V of the Finance Act, 1994 read with Section 35F of the Central Excise Act, 1994 does not warrant indulgence in exercise of power conferred under Article 226 of the Constitution of India - Petition dismissed.
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2022 (4) TMI 1209
Refund of amount deposited under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - refund sought on the premise that the withdrawal of the appeal filed by the Tax Department under Government Policy made Petitioners legally entitled for the refund of the amount since there are no dues - effect of CBIC Instructions dated 22nd August, 2019 raising the monetary limit for fling appeals by the Tax Department before different forums - HELD THAT:- On the date of issuance of CBIC instructions dated 22nd August, 2019 and follow-up instructions dated 14th October, 2019, nothing was due from the Petitioners. However, to get out of the legal conflict raised by way of department s appeal, the Petitioners applied under the scheme. The authority despite knowledge that the appeal would not survive by virtue of CBIC instructions, still processed the declaration and raised demand by keeping the appeal pending. In short, the department cannot take disadvantage of their own wrong of in action of withdrawing appeal. In that case there was no reason for the Petitioners to apply under the scheme and consequential deposit of amount as per the declaration. In all fairness, the Taxing Department cannot enrich itself by unauthorized collection of the amount which needs to be refunded - the Respondents are directed to refund the sum of ₹ 90,92,263/- to the Petitioners, within three months from the communication of this order - petition allowed.
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2022 (4) TMI 1208
Denial of refund claim of the Service Tax paid - input services used by the appellant in its authorized operations in SEZ units - denial of refund for the lack of documents - HELD THAT:- The Revenue has not denied the fact that the services in question were used by the SEZ unit for its authorized operations. Hence, the denial of refund for want of documents is not sustainable. The Learned Bangalore Bench of the CESTAT in the case of MAST GLOBAL BUSINESS SERVICES INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE [ 2018 (9) TMI 258 - CESTAT BANGALORE] has considered the case of a similarly placed taxpayer and held that this is only a procedural and is not a mandatory condition as held by the Commissioner(Appeals). There are no reasons or justification to sustain the impugned order as well as the denial of refund - appeal allowed - decided in favor of appellant.
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2022 (4) TMI 1207
Maintainability of appeal - monetary limit for filing appeal - applicability of section 35F(1) of Central Excise Act, 1944 read with instructions No. 390/MISC/116/ 2017-JC dated 22.8.2019 - competence of Commissioner (Appeals) to demand service tax - HELD THAT:- The present appeal has been filed pursuant to the Review Order No. 117/2020-21 dated 03.03.2021. The Reviewing Authority has held that Commissioner (Appeals) has travelled beyond the scope of mandate of Statute confirming demand of service tax of Rs,20,830/- as he has no power under Section 125(4) of Finance Act, 1944 to pass order where no appeal has been filed by the assessee to challenge amount of demand of ₹ 20,830/- as appeal before Commissioner (Appeals) was also filed by the department. There is no denial of the fact that vide the departmental instructions issued by CBEC under Customs Act dated 22.8.19, the monetary limit for filing the appeal by the Department before CESTAT has been fixed at ₹ 50 lakh and above clarifying that in any case having monetary limit i.e. less than ₹ 50 lakh shall not be filed before the CESTAT. The submission of learned Departmental Representative for being covered under the exemption clause are held not sustainable. Thus, none of the provisions the constitutional validity thereof was challenged. Nor the Original Authority had held any Notification/ instruction/order or Circular to be illegal or ultravires. Hence the exemption from applicability of monetary limit is not available with the Department. It is held that being aggrieved against the order the department is in appeal wherein the amount involved is much less than the monetary limit for maintainability of any appeal before this Tribunal in terms of section 35F(1) of Central Excise Act, 1944 read with instructions No. 390/MISC/116/ 2017-JC dated 22.8.2019. The appeal is accordingly, dismissed as being not maintainable.
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Central Excise
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2022 (4) TMI 1206
Interest on delayed refund - Interest claimed u/s 11BB of CEA on the ground that the provisions of Section 11BB shall not apply in case where the Exemption Notification No. 32/99-CE dated 08.07.1999 is being claimed - HELD THAT:- In the case of DHARAMPAL SATYAPAL LTD. VERSUS UNION OF INDIA [ 2018 (1) TMI 1565 - GAUHATI HIGH COURT] , the Hon ble High Court passed a similar Order and allowed the interest on account of delayed payment of refund under Section 11BB - The SLP filed against the said Order by the Revenue in UNION OF INDIA VERSUS DHARAMPAL SATYAPAL LTD. [ 2018 (7) TMI 2098 - SC ORDER] is pending before the Hon ble Supreme Court and the notice was issued. It is also found that no stay from the operation of the Order of the Hon ble High Court was granted by the Hon ble Supreme Court. Under the prevailing circumstances the Order of the Hon ble Gauhati High Court in the case of M/s.Dharampal Satyapal Ltd. Vs. UOI has the binding effect on this Tribunal. The Appellant is entitled for interest under Section 11BB. Accordingly, the interest to the Appellant is allowed under Section 11BB immediately after 3 (three) months from the date of filing of the application - the Revenue is directed to make the payment of interest to the Appellant within a period of 2 (two) months from the date of receipt of this order. Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 1205
CENVAT Credit - credit availed by the appellants on the basis of the invoices issued prior to 01.09.2014 - HELD THAT:- CESTAT in the cases of M/S. UMESH ENGINEERING WORKS VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU WEST [ 2019 (1) TMI 1158 - CESTAT BANGALORE] , SARDA ENERGY AND MINERALS LTD VERSUS C.C.E. S.T. -RAIPUR [ 2019 (4) TMI 473 - CESTAT NEW DELHI] , M/S. SURYADEV ALLOYS AND POWER PVT. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE CHENNAI OUTER [ 2018 (11) TMI 1019 - CESTAT CHENNAI] , the facts of which are identical to the instant case, has held that credit is admissible. Commissioner (Appeals) also does not dispute the same; instead of allowing the credit he remands the case following BHARAT ALUMINIUM COMPANY LIMITED VERSUS JOINT COMMISSIONER OF CENTRAL TAX, GOODS SERVICE TAX [ 2019 (7) TMI 1084 - CESTAT NEW DELHI] . Extended period of limitation - HELD THAT:- The show cause notice was issued on 04.10.2018 covering the period from July 2014 to February 2017; the issue has been in the knowledge of the Department in view of audit and other verifications conducted. There is no scope for invoking extended period. It is further found that it was not discussed or controverted at the Original Authority level. Though the Appellate Authority has discussed the issue on merits and held that credit is admissible. He remanded the matter to the lower authority for verification of documents. He has not given any specific direction on the other issues - the lower authority should allow the credit after verifying the documents, without going in to merits of the issue. Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2022 (4) TMI 1204
Reversal of Input Tax Credit - interstate sale of goods - applicability of proviso to Section 19 (2) (v) of the TNVAT Act to manufacturers also or not - inputs used in manufacturing or processing of goods in the State, when such manufactured/processed goods are sold in the course of intra-State trade or commerce under sub-section (1) of Section 8 of the Central Sales Tax Act, 1956 - Whether the omission of the proviso to Section 19 (2) (v) by Tamil Nadu Act 5 of 2015 is curative in nature and would have retrospective effect from the date of its insertion i.e., 11.11.2013? HELD THAT:- As a matter of fact, the position in India or throughout the world, is not different. Judiciary as the pillar of democracy is the premise on which the rule of law and democracy rests. The Constitution of the India being law of the land, is the touchstone on which all substantive, procedural or any other law in any form falling under Article 13 of the Constitution, is tested. The High Courts and the Supreme Court created under the Constitution serve as Constitutional bodies to uphold the rule of law. Any law much less the fiscal law is tested on its constitutionality. The question as to whether a law violates any fundamental or constitutional right guaranteed by the Constitution is to be reviewed only by this pillar of democracy. Whenever the executive and the legislature encroach upon the rights guaranteed, judicial review cannot be curtailed. The power of a High Court under Article 226, as agreed and settled by the Apex Court is in fact much wider even than the powers of the Apex Court in its Writ Jurisdiction as the High court is not only entitled to interfere qua infringement of fundamental rights, but also Constitutional rights. In COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT ], the Constitutional Bench, while dealing with a reference regarding the interpretation of an exemption notification, differentiating it with the interpretation of the provisions contained in the statute, after analysing various judgments on the issue, held that a taxing statute must be literally construed in a strict manner and in case of ambiguity in the statute, the view favourable to the assessee must be taken and in case of an exemption or exemption notification, the balance must be tilted in favour of the revenue. From the language employed, it is very clear that there is no ambiguity qua the legislature never intended to give a separate meaning to sale deviating from its plain and natural meaning to exclude the manufactured goods from the ambit of Section 19 (2) (v) similar to section 19(4) and 19 (5) (c). - The issue is therefore, decided in favour of the revenue. Applicability of the proviso to the manufacturers - HELD THAT:- The claim of ITC by the manufacturers will fall under section 19 (2) (ii) only as long as they effect local sales, the moment they sell the goods to a dealer in other State, section 19 (2) (v) or section 19(5) (c) would come into operation. Therefore, the proviso introduced to cover section 19 (2) (v) is applicable to the manufacturers also, at the point of inter-state sale falling under Section 8(1) as the word sale includes sale of goods in the same or different form. As rightly contended by the learned Additional Advocate General by placing reliance upon the settled proposition of law that ITC is only a concession, it is open to the State to impose restrictions or conditions for availing the ITC. In the present case, prior to the introduction of the proviso, every dealer who effected interstate sale availed ITC under section 19 (2) (v) and the State imposed a restriction on such availment by the proviso, which naturally is binding on the assessees. Effect of omission of section 19(2)(v), the proviso and 19 (5) (c) - Scope of the Budget Speech - statement of objects and reasons - HELD THAT:- As already seen, the original provision along with the proviso was omitted and a new provision was substituted. The word retrospective would mean to look back or to go back in time . A curative provision is held to be effective from a date prior to which it was enacted and so, will have a retrospective effect. - the amendment to Section 19 (2) brought about in the year 2015 is held to be curative in nature. The position insofar as the right of the manufacturers to avail ITC is, it becomes an absolute right, once the inputs are used in the manufacture or processing of the goods within the State, the subsequent event of the manufactured goods being sold by way of inter-state/ intra-state sale would have no bearing nor does it result in imposing any limitation/restriction or whittle down the right to ITC earned in terms of Section 19(2)(ii) or 19(2)(v) of the TNVAT Act in the interregnum period. Consequential refund and applicability of doctrine of unjust enrichment - taxes paid on raw material and captively consumed in the manufacture of finished goods within the State - HELD THAT:- the doctrine of unjust enrichment would apply to duty paid on raw materials and captively consumed, it was held that passing of incidence of duty to any other person may be direct such as when the goods imported are themselves sold and the burden of tax thereon is passed on to the buyer or it may be indirect when the goods imported are captively consumed by importer himself and the duty paid thereon is added to the price of the finished goods which are sold to others Period of limitation - HELD THAT:- The Apex Court has held that Article 62 of the Limitation Act, 1908 would appear implying that the period of limitation would be three years from the date of receipt of tax that has been retained by the Revenue. - Article 62 is pari materia to Article 24 of the present Limitation Act, 1963. The plea to invoke the residuary Article 120 under the old Act was turned down. Therefore, for the assessees to claim refund of the tax collected or retained by the State, steps must have been taken by them within three years from the date of their payments to the department. Conclusion. The position as regards section19(2)(ii) and the proviso inserted vide Act 28 of 2013 and its subsequent omission vide Amendment Act 5 of 2015 and the claim of refund, shall be examined - To that extent, the appeals filed by the State are partly allowed. When the power to the statutory authority is granted upto five years to modify the order, it cannot be said that the constitutional authorities would not have power to review the action. Therefore, concurring with the Division Bench, we do not concur with the decision of the Learned Judge to dismiss the writ petitions on the technicality of limitation, that too, when the batch was pending. The appeals filed by the Revenue and the appeals and writ petitions filed by the assessees are partially allowed.
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2022 (4) TMI 1203
Validity of assessment order - reversal of exemption granted to the petitioner for transit sale - claim of exemption disallowed on transit sale by treating it as a local sale - reason for rejection of the claim for exemption is that the Form E1 issued by the supplier from Calcutta contains the place of destination as Kalpakkam and in transit sale, the supplier should not be made aware of the purchaser's name and address. HELD THAT:- The case of the petitioner is that they have received an order from the Atomic Power Project, Kalpakkam for supply of certain electrical goods. The purchase order so received has been forwarded by them to its supplier at Calcutta and they in turn supplied the goods directly to the Atomic Power Project, Kalpakkam. However, it is stated that such supply and/or delivery of goods effected by the supplier at Calcutta is for and on behalf of the petitioner and consequently, they are entitled to claim exemption under Section 6 (2) of the CST Act. But, such claim of the petitioner was rejected and the sale was treated as a local sale by the third respondent on the ground that form E1 issued by the supplier from Calcutta contains the place of destination as Kalpakkam and in a transit sale, the supplier may not be knowing the purchaser's name and address - Therefore, whether the supply of goods effected by the petitioner was a transit sale or it was a local sale, disentitling them from claiming exemption, has to be examined. The supply of goods effected by the petitioner through a supplier at Calcutta to the Atomic Energy Project, Kalpakkam cannot be regarded as local sales and it is a transit sale - Petition allowed.
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2022 (4) TMI 1202
Maintainability of second appeal - failure on the part of the writ applicant to pre-deposit at the stage of second appeal - HELD THAT:- The provision of Section 73(4) of the VAT Act, 2003, apparently makes it clear that ordinarily no appeal against an order of assessment shall be entertained by the appellate authority, unless an appeal is accompanied by satisfactory proof of payment of tax in respect of which an appeal has been preferred. The proviso to clause 4 makes the picture further clear. The said proviso explicitly gives discretion to the appellate authority to entertain an appeal against the orders as provided under clause (a) or (b) or (c) of sub section 4 of section 73 of the act. Thus, the legislation in its wisdom has reposed discretion upon the appellate authority to entertain an appeal without payment of tax with penalty or in appropriate case on proof of the payment of a smaller sum as the appellate authority may consider reasonable or in an appropriate case on furnishing security by the appellant for such an amount which the appellate authority may direct. In the case on hand, while going through the order dated 22.11.2021 passed by the Tribunal, the only reason assigned by the Tribunal is that the hearing of the matter has been prolonged from the year 2019 on the aspect of pre-deposit and stay and the first appeal being summarily dismissed without going into the merits of the case. Thus, the Tribunal deemed it fit to direct the appellant to pay the amount of ₹ 20,00,000/- towards the pre-deposit. This Court has time and again in identical cases has held that Tribunal is obliged to consider a prima facie case, which the appellant may be in position to highlight. It a strong prima facie case is made out, then in such circumstances, there should not be any difficulty in entertaining the appeal even without insisting for payment of tax penalty or even smaller amount - the Tribunal committed serious error of law by not taking note of the prima facie case of the writ applicant while examining the aspect of payment of pre-deposit. Therefore, in the facts and circumstances of the case, the order passed by the Tribunal dated 22.11.2021 is hereby quashed and set aside. Application allowed.
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Indian Laws
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2022 (4) TMI 1201
Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - in the complaint filed u/s 138 of NI Act, the evidence of petitioner is concluded as well as right to cross-examination of respondent has already been struck off and defence has already been closed - Sections 138 and 139 of NI Act - HELD THAT:- It appears that the complaint was filed by respondent in the year 2016 and cognizance has been taken by Magistrate concerned vide order dated 13-11-2021 i.e. after five years. Respondent did not properly pursue the matter and statements of respondent as well as his witnesses were recorded u/Ss 200 and 202 of CrPC in the year 2021 and the JMFC concerned vide order dated 13/11/2021 has taken cognizance for offence under Sections 420, 468, 469 and 471 of IPC against petitioner. It is also apparent from the record that the allegation made by respondent is with regard to theft of his cheque which is the subject-matter of complaint registered u/s 138 of NI Act by petitioner. Aforesaid modus operandi on the part of respondent reflects clear mala fide to escape from the liability of issuance of cheque by him and it is a clear abuse of process of Court and same could not be sustained in the eyes of law. Therefore, the order of taking cognizance passed by Court of JMFC is perverse and same deserves to be quashed. Petition disposed off.
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