TMI Tax Updates - e-Newsletter
April 6, 2023

Case Laws in this Newsletter:

GST Income Tax PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Mere usage of name of Foreign AE not automatically convert a transaction into an international transaction.

   By: Vivek Jalan

2. SVLDRS discharge certificate cannot be denied for delayed payment of tax which was recredited due to a technical glitch

   By: Bimal jain

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

4. Assessment orders passed without affording opportunity of hearing to the assessee is violative of the principles of natural justice

   By: Bimal jain

News

1. ECONOMIC CENSUS

2. More than Rs. 40,700 crore sanctioned to over 1,80,630 accounts under Stand-Up India Scheme in 7 years

Notifications

GST - States

1. 15/2022 – State Tax (Rate) - dated 14-3-2023 - Jharkhand SGST

Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017

2. 14/2022 – State Tax (Rate) - dated 14-3-2023 - Jharkhand SGST

Amendment in Notification No. 4/2017- State Tax (Rate), dated the 29th June, 2017

3. 13/2022 – State Tax (Rate) - dated 14-3-2023 - Jharkhand SGST

Amendment in Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017

4. 12/2022 – State Tax (Rate) - dated 14-3-2023 - Jharkhand SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017

5. S.O. No. 06 - dated 6-3-2023 - Jharkhand SGST

Constitution of the Jharkhand Authority of Advance Ruling

6. S.O. 01 - dated 21-2-2023 - Jharkhand SGST

Governor of Jharkhand is pleased to appoint the Authorities

7. S.R.O. No. 443/2023 - dated 29-3-2023 - Kerala SGST

Amendment in Notification No. 135/2018/TAXES dated 18th August, 2018

8. 02/2023-State Tax (Rate) - dated 14-3-2023 - Mizoram SGST

Seeks to amend Notification No. 13/2017- State Tax (Rate), dated the 7th July, 2017

9. 01/2023-State Tax (Rate) - dated 14-3-2023 - Mizoram SGST

Seeks to amend Notification No. 12/2017-State Tax (Rate), dated the 7th July, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/ MIRSD-PoD-2/P/CIR/2023/51 - dated 5-4-2023

Advertisement code for Investment Advisers (IA) and Research Analysts (RA)

Highlights / Catch Notes

GST

• Rule 138A: Transporters must carry physical invoices during goods transit to meet GST documentation standards.

  Case-Laws - HC : Transportation of goods - Documents to be carried in physical form or electronic form - Rule 138A - When the said provision specifically provided for that documents and devices to be carried by the person-in-charge of a conveyance including the invoice, this clearly means that the invoice has to be carried in physical form and if required shall be produced in its physical form. - HC
  Visit to Get Source

  ---

• GST Rates on Residential Apartment Sales: 12% for Linked Services, 18% for Independent Charges per AAAR Guidelines.

  Case-Laws - AAAR : Classification of services - rate of GST - Other Charges collected from its customers in respect of the sale of residential apartments - it is clear that charges in respect of some services are inextricably linked while other services are independently provided to the customer. The dominant intention test and principles for determination of naturally bundled services point out the independent nature of some of the services - the rate of tax on the inextricably linked services would be 12%. - Rate of GST is 18% on other charges - AAAR
  Visit to Get Source

  ---

Income Tax

• Loss from Share Transactions Not a Colorable Device if Parties Genuine & Benefits to Company Substantiated.

  Case-Laws - AT : Disallowance on loss on shares - colourable device - when all the parties to the transaction are genuine and the intention of the assessee in subscribing to the preferential shares of the company is also supported by the benefits derived by the company, the mere fact that the shares were sold at loss does not result in treating the entire transaction as colourable - AT
  Visit to Get Source

  ---

• Presumptive Taxation u/s 44AD: No Need for Books, Unexplained Cash Credits Rule 68 Not Applicable.

  Case-Laws - AT : Addition u/s 68 - assessee is not required to maintain proper books of accounts since he has opted for presumptive taxation u/s 44AD - Since the assessee is admittedly not required to maintain the books of account, therefore, there is no basis for invoking the provision of section 68 - we delete the addition made for unexplained sundry creditors - AT
  Visit to Get Source

  ---

• Capital Introduced by Partners Excluded from Unexplained Cash Credit u/s 68; No Income Addition Required.

  Case-Laws - AT : Unaccounted and Unexplained cash credit u/s 68 - capital introduced by partners - There was no justification for making addition to the total income of the assessee on account of capital introduced by its partners since the assessee duly justified the identity and creditworthiness of the partners as well as genuineness of the transactions as entered into with them.- AT
  Visit to Get Source

  ---

• Partner Remuneration u/s 40(b)(v) of Income Tax Act Valid if Calculated Per Act; Retroactive Deed Supports Method.

  Case-Laws - AT : Addition u/s. 40(b)(v) - remuneration paid to partners - The supplementary partnership deed operates retrospectively, the calculation of the remuneration paid to partners if in accordance with the provisions of the Act is to be allowed. - AT
  Visit to Get Source

  ---

• Trust Exceeds 5% Income Limit for Religious Activities, Violates Section 80G(5B), Loses Tax Exemption Eligibility.

  Case-Laws - AT : Registration u/s.80G - In the case of the assessee, Shri Sai Bhakta Seva Trust, the main object is to construct and maintain Shri Sai baba temple. This fact has not been disputed by the Ld.AR. The Assessee trust regularly performs Pooja, and other rituals. The expenditure on religious activities is more than 5% of the total income of the assessee. Thus, the assessee has violated provision of Section 80G(5B). - AT
  Visit to Get Source

  ---

• No Penalty Imposed for Late Audit in First Business Year u/s 271B Due to Genuine Delay Explanation.

  Case-Laws - AT : Penalty u/s 271B - failure to get the accounts audited in time - It appears that the book results shown by the assessee were substantially accepted by the revenue as genuine and the compliance was made by the assessee with some delay. The delay has also been explained by the assessee that it was the 1st year of the business - No penalty - AT
  Visit to Get Source

  ---

• Section 263 of Income Tax Act: AO's Choice Not Erroneous if Legally Permissible, Even if CIT Disagrees.

  Case-Laws - AT : Revision u/s 263 - When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue “unless the view taken by the Assessing Officer is unsustainable in law”. - AT
  Visit to Get Source

  ---

• Capitation Fees for Children's Admission Challenged; Commissioner's Justification u/s 69C Deemed Incorrect.

  Case-Laws - AT : Additions made u/s 68 - capitation fee paid for admission of assessee’s children - Though, Commissioner (Appeals) has made an attempt to cover up the legal lacuna by stating that the AO has treated the payment of fee in cash as unexplained expenditure under section 69C, however, such observation of learned Commissioner (Appeals) is factually incorrect, hence, cannot be accepted. - AT
  Visit to Get Source

  ---

Indian Laws

• Cheque Dishonor Case: High Court Upholds Acquittal Due to Insufficient Evidence Proving Debt Beyond Reasonable Doubt.

  Case-Laws - HC : Dishonour of Cheque - legally enforceable debt - financial capacity of the complainant - The learned Magistrate has rightly shifted the burden upon the complainant to prove the case beyond reasonable doubt. In absence of any cogent material being brought on record in the form of evidence, the learned Magistrate has proceeded to record the order of acquittal - No error can be attributed - HC
  Visit to Get Source

  ---

Central Excise

• Extended Limitation and Penalty Not Applied Due to Lack of Willful Misstatement or Suppression Charges by Department.

  Case-Laws - HC : Clandestine Removal - the extended period of limitation could not have been invoked as well as the penalty could not have been imposed since there is no charge of willful mis-statement or suppression made against the assessee - the department has failed to discharge the onus cast upon him to prove the charge of clandestine removal. - HC
  Visit to Get Source

  ---

VAT

• Melamine Utensils: Classify Based on Common Meaning for VAT and Sales Tax, Not Scientific Definitions.

  Case-Laws - HC : Classification of goods - melamine utensils, i.e., plates, bowls, spoons and dinner sets, etc. - The word “appliances” being word of day-to-day use, its popular or commercial parlance meaning has to be adopted as against its scientific or technical meaning because of the well-settled principle of interpretation that in taxing statutes, words of everyday use must be construed not in the scientific or technical sense but as understood in common parlance. - HC
  Visit to Get Source

  ---

• VAT and Sales Tax Penalties Require Discretion; Harmonization of Statutory Provisions Essential for Legal Interpretation.

  Case-Laws - HC : Discretionary power for imposition of penalty - Penalty is not prescribed for mechanical imposition because law permits such a levy. It is well settled legal position that while interpreting the provisions of the statute, every part of the provisions of the statute has to be given effect to and one part cannot be interpreted in a manner inconsistent with another part of the statute that would defeat the object and purpose of the Act and rules framed thereunder - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2023 (4) TMI 157
  Transportation of goods - Documents to be carried in physical form or electronic form - Non-production of relevant documents (by person in charge of conveyance) - principal ground on which the petitioner was defeated before the appellate authority was that the petitioner could not produce the relevant invoices in physical form - Rule 138A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The expression used in the heading of the Rule 138A is clear that documents and devices to be carried by a person-in-charge of the conveyance which included under sub-Rule (1)(a), the invoice. It is trite that the provision in a taxing statute has to be construed strictly and no benevolent interpretation is available while construing taxing statute. When the said provision specifically provided for that documents and devices to be carried by the person-in-charge of a conveyance including the invoice, this clearly means that the invoice has to be carried in physical form and if required shall be produced in its physical form. Considering the issue involved in this writ petition, this Court is of the firm opinion that an opportunity may be given to the petitioner to produce the relevant invoice/invoices before the statutory appellate authority, i.e., the respondent no.2 before taking a final decision on the issue to subserve justice to the petitioner also. The impugned decision of the appellate authority dated December 12, 2022 at page 65 to the writ petition stands set aside and quashed.

  ---

• 2023 (4) TMI 156
  Cancellation of GST registration of petitioner - non-filing of returns for a continuous period of six months - petitioner s appeal rejected on the ground that it was filed beyond the period as stipulated under Section 107(1) of the CGST Act - HELD THAT:- In terms of Section 29(2) of the CGST Act, the proper officer is empowered to cancel the registration from any such date as he may deem fit including from any retrospective date. However, selecting a date from which to cancel the registration cannot be arbitrary. It is essential that the exercise of powers to cancel the registration ab initio, must be based on material on record and some rationale. Further, the taxable person must be put to notice of the proposed action to cancel the registration from a retrospective date so as to provide an opportunity to the said person to show cause why such cancellation should not be from a retrospective date. In the present case, the show cause notice issued to the petitioner did not mention that the proper officer proposed to cancel the registration with retrospective effect. Thus, the petitioner had no opportunity to address any proposed action of cancellation of registration ab initio. The present petition is disposed of with the direction that the cancellation of the petitioner s GST registration would take effect from 11.12.2020 and not from 01.07.2017.

  ---

• 2023 (4) TMI 155
  Classification of services - rate of GST - Other Charges collected from its customers in respect of the sale of residential apartments - composite supply with construction of residential apartment as the principle supply and other services provided are incidental to the main supply or not - charges will be treated as consideration for construction services of the Company and classified under HSN 9954 along with the main residential construction services of the Company or whether the same will be treated as consideration for independent service(s) of the respective head? HELD THAT:- In the present case, the different elements of transactions are available separately. The type of supplies or charges received in this case like advance maintenance charges, club house charges, share of municipal taxes (pertaining to period after occupancy), share money, application entrance fee of the organization, formation and registration of the organization and legal charges in connection therewith and infrastructure charges (for development of common area infrastructure) are independent from construction service. Even though any one or all of them is removed from the contract, the supply of services of construction of residential apartment / dwelling goes unabated. Therefore, the test that different elements are integral to one overall supply, even if one or more is removed, the nature of the supply would be affected, is not satisfied in the present case. So the nature of the other charges in respect of the above said independent services / activities which are not inextricably linked to a residential apartment shows that they don t fulfill the various tests of composite supply. Further the services provided would be considered as provided even when the entire consideration for the immovable property is received after issuance of Completion Certificate or Occupation Certificate. Here the services provided are clearly identifiable separately from the construction service. Further, other services provided can be offered only once and the purchaser of flat cannot offer such a service to a buyer from him during the resale. Thus, it is clear that charges in respect of some services are inextricably linked while other services are independently provided to the customer. The dominant intention test and principles for determination of naturally bundled services point out the independent nature of some of the services - the rate of tax on the inextricably linked services would be 12%. Appeal allowed in part.

  ---

• Income Tax

• 2023 (4) TMI 154
  Recovery proceedings - notice u/s 226 (3) addressed by the Respondent No. 1 to the Respondent No. 4 (R.B.I) declaring the Petitioner as an assessee in default for non-compliance of the notice u/s 226(3)(x) and calling upon Respondent No. 4 (R.B.I) to attach all the bank accounts including FDs/RDs or any other type of deposits, held by the Petitioner with Respondent No. 4 to effect recovery due from Sinhgad Technical Education Society in respect of arrears of income-tax - Petition also seeks setting aside the notice u/s 226(3) and the impugned order declaring the Petitioner an assessee in default - Respondent No. 5 urged that account held in the name of Sinhgad Technical Education Society and others had also turned Non-Performing Assets and it owed Rs. 74.45 crores to them therefore their interest also be protected. HELD THAT:- Be that as it may, we are unable to protect the interest of the Respondent No. 5 at this point. We are of the view that the impasse between the Petitioner and Respondent No. 1 can be resolved by directing the Petitioner to forthwith and in any event by the end of the day remit electronically a sum of Rs. 43 Crores to the Respondent No.1 in the account, details of which would be submitted by Mr. Kumar. Upon such remittance, nothing remains in the Petition and can therefore be disposed off. We pass the following order i. The impugned notice dated 9th March 2023 u/s 226(3), the impugned order dated 28th March 2023, and impugned notice dated 28th March 2023 issued to Respondent No. 4 are quashed and set aside and all further action in respect thereof is prohibited; ii. Rule made absolute in above terms. No costs.

  ---

• 2023 (4) TMI 153
  Disallowance on loss on shares - colourable device - shares were sold at loss - short-term capital loss denied on sale of shares - allegation of the Revenue is that the assessee by investing a huge amount in a loss-making entity and thereafter selling the shares at a meagre amount has tried to take advantage of her position in the aforesaid company to reduce her tax liability and thus the entire transaction is a colourable device - HELD THAT:- As husband of the assessee is the main director on the board and the aforesaid company was regularly assessed to tax and was a genuine company. The aforesaid facts, as recorded in the order of the lower authorities, have not been disputed by the Revenue. Further, it cannot be denied that it is only due to the fact that M/s I Dream Production Pvt. Ltd. was a loss-making entity, the assessee was required to infuse the funds to pay off the debts incurred by the company, being the promoter holding 99.99% shares of the company. As decided in Biraj Investment Pvt. Ltd [ 2012 (8) TMI 805 - GUJARAT HIGH COURT] As long as the Revenue could not doubt the sale price of the shares, it would not be open for the Revenue to contend that the assessee had shown loss which it did not really suffer. We cannot be oblivious to the fact that the Revenue has not disputed the sale price of the shares and the identity of the purchasers is also not in doubt. Therefore, when all the parties to the transaction are genuine and the intention of the assessee in subscribing to the preferential shares of the company is also supported by the benefits derived by the company, the mere fact that the shares were sold at loss does not result in treating the entire transaction as colourable - Appeal by the Revenue is dismissed.

  ---

• 2023 (4) TMI 147
  Procedure when assessee claims identical question of law is pending before High Court or Supreme Court - filing declaration u/s. 158A(1) of the Act in Form No. 8 - assessment of income - as decided in Gautam R. Chadha [ 2011 (7) TMI 514 - DELHI HIGH COURT] 25% of the booking advance received should be treated as the income of the Assessee assuming that there are no cancellations and Assessee shall be entitled to 10% of the travel agents commission after ascertaining the actual outgoings in this regard - aforesaid order passed by the Hon ble Delhi High court was challenged by the legal heirs of Mr. Gautam R. Chadha by filing Civil Appeal before the Hon ble Apex Court as pending - HELD THAT:- As not refuted by the Revenue Department that the issues involved in the instant appeal are similar to the issues involved pending for adjudication before the Hon ble Apex Court and decision of the Supreme Court would be binding on the parties and the Assessee shall not file any reference and/or any statutory appeal either before the Hon ble High Court or before the Hon ble Apex Court qua the issues involved in the instant appeal. Hence, considering the fact that as on today decision on the issues under consideration raised by the Assessee is against the Assessee and therefore in view of the provisions of section 158A(1) of the Act, declaration in Form No. 8 filed by the Assessee u/s. 158A(1) of the Act and certificate issued by the AO u/s 158A(3) of the Act, the instant appeal is liable to be dismissed, with liberty to the Assessee to seek modification of this order, as per outcome of the decision by the Hon ble Apex Court on the identical issues as involved in this case. Assessee s Appeal stands dismissed

  ---

• 2023 (4) TMI 146
  Unexplained capital contribution made - Capital contribution by way of sale of gold ornaments of spouse during the year - HELD THAT:- We note that assessee has given details of purchase of ornaments weighing 555.86 gms. The quantity sold is 704 gms which cannot be doubted in lieu of these purchase details as there are several occasions in family life when gifts in the form of gold ornaments are received. Considering the financial status and standing of the assessee coupled with regular returns filed by the spouse of the assessee having income from business, sale of ornaments of 704 gms cannot be doubted and the capital contribution made from this is therefore, accepted as explained. We also refer to the CBDT Circular no. 1916 (supra) wherein gold ornaments up to 500 gms for a married woman are accepted as permissible. Thus, the addition made in this respect is directed to be deleted. Capital contribution out of gift received from the deceased father of the assessee - As the contents of the gift deed as narrated by the Ld. Counsel explains the nature and source of the said gift made to the assessee. The deceased father was an income tax assessee having PAN. Considering these facts on record, capital contribution by way of gift from the deceased father is accepted and the addition made thereon is directed to be deleted. Other two components of surrender value from mutual fund of LIC and from personal savings and drawings of the past, nothing has been brought on record to demonstrate about the nature and source of these amounts. Accordingly, the addition made in respect of these two amounts is sustained. Ad-hoc disallowance by adopting rate of 20% in respect of expenses claimed by the assessee - As we note that assessee has claimed these expenses on the strength of vouchers which are self made and most of these expenses are not verifiable. Expenses include administrative and selling expenses, conveyance deed expenses, staff and welfare allowances, staff tea and Tiffin and staff food and clothe. The mode of payment of all these expenses is in cash. Assessee has merely submitted copies of ledger accounts from its books to substantiate the claim of these expenses. We do note that there is an increase in the turnover of the assessee as stated above, which is one of the reasons stated by the assessee for incurring these expenses. Before us also Ld. Counsel could not bring anything on record except for copies of ledger accounts forming part of the paper book - we find it proper to restrict the disallowance to the extent of 10% instead of 20% adopted by the Ld. AO and confirmed by the Ld. CIT(A). Accordingly, assessee gets a relief on the disallowance of these expenses up to 10% and the balance is sustained. Appeal of the assessee is partly allowed.

  ---

• 2023 (4) TMI 145
  Revision us 263 by CIT - addition of income of the assessee as income from other sources u/s. 56(2)(vii)(b) - Whether AO order erroneous and prejudicial to the interest of the revenue? - As per CIT AO has failed to make adequate and proper enquiries to ascertain the true nature and period of transfer for purchase of property and the second one relating to applicability of Section 56(2)(vii)(b) when the agreement to purchase the property was executed in the FY 2007-08 though the registry of the conveyance deed was executed in FY 2014-15 - HELD THAT:- It is important to note that the assessment was under limited scrutiny on the issue of purchase of property as stated above. AO had enquired into the transaction of purchase of property by the assessee and necessary details and explanations and corroborative evidence are placed on record. Ld. Pr. CIT while invoking his power u/s. 263 of the Act observed that AO did not make proper enquiry. It is not clear as to what in the opinion of Ld. Pr. CIT is proper enquiry . By using such expression, it principally suggests that Ld. AO did conduct an enquiry. However, in the opinion of Ld. Pr. CIT, the enquiry was not proper for which nothing is stated in clear terms as to how and why the enquiry was not proper. Further, we note that reference has been made to two separate clauses to Explanation (2) to Section 263 which dealt with two different situations. It leads us to believe about the indecisiveness on the part of the Ld. Pr. CIT. Applicability of Section 56(2)(vii)(b)(ii) - As in this case, there was a valid and lawful agreement entered by the parties long back in A.Y. 2008-09 only, when the subject property was transferred and substantial obligations were discharged. The law contained in Section 56(2)(vii)(b) as stood at that point of time, did not contemplate a situation of a receipt of property by the buyer without inadequate consideration. Hence, we are of considered view that ld. Pr.CIT erred in applying the said provision. Because of the mere fact that the flat was registered in the year 2014 falling in A.Y. 2015-16, the amended provision of Section 56(2)(vii)(b)(ii) cannot be applied. Hence, we are not in agreement with the view taken by the ld. Pr.CIT holding the applicability of Section 56(2)(vii)(b)(ii) in the facts and circumstances of the case and therefore we hold that the assessment order, subjected to revision u/s 263, is not erroneous and prejudicial to the interest of the revenue. Appeal of the assessee is allowed.

  ---

• 2023 (4) TMI 144
  Disallowance u/s 14A for the purpose of Section 115JB - HELD THAT:- Argument of the Ld.AR with regard to interpretation, that u/s 115JB of the Act only in case of reporting profit variation to arrive at Book profits can be made, the Bench is not impressesd. As a matter of law, income or profits and gains should be understood as including loss also so that profits and gains represents positive income, whereas loss represents negative income. As decided in in P.R. Basavappa Sons v. CIT [ 1999 (9) TMI 41 - KARNATAKA HIGH COURT] pointed out that it has always been understood that income includes loss, as held in CIT v. Harprasad Co. (P) Ltd. [ 1975 (2) TMI 2 - SUPREME COURT] . So that reduction in loss by way of positive adjustments, i.e amount to be added back if debited to Profit and Loss Account, like in case in hand, disallowance u/s14A of the Act is made, then word net profit as shown in the profit loss account for the relevant previous year would include the loss shown in the return. Thus, there is no substance in this argument or grounds raised in that regard and ground no 3 to 6 are decided against the assessee. Nature of investments to arrive at exempt income - Disallowance u/s 14A c annot exceed the exempt income earned during the relevant assessment year irrespective whether larger amount was disallowed by the assessee u/s 14A of the Act while filing the return of income which has been followed by GMR Enterprises Pvt. Ltd. [ 2021 (11) TMI 565 - ITAT BANGALORE] .So there is no substance in the grounds raised by revenue in it s appeal.

  ---

• 2023 (4) TMI 143
  Disallowance of the expenses incurred in relation to ESOP cost - As per DR any short receipt of such premium would only amount to a notional loss and not actual loss requiring any deduction u/s. 37(1) of the Act as it was a capital expenditure - CIT(A), NFAC deleted the addition - HELD THAT:- Hon ble High Court of Delhi in the case of CIT Vs. Lemon Tree Hotels Ltd. [ 2015 (11) TMI 404 - DELHI HIGH COURT] on a similar issue which was considered by the Coordinate bench in the case of ACIT Vs. People Strong HR Services (P) Ltd. [ 2021 (12) TMI 553 - ITAT DELHI] decided issue in favour of assessee. Considering the facts on record and the judicial precedents referred above as well as going through the analysis of the test contemplated u/s. 37(1) of the Act by the ld. CIT(A), we do not find any reason to interfere with the finding arrived at by the CIT(A). Accordingly, ground taken by the revenue in this respect is dismissed.

  ---

• 2023 (4) TMI 142
  Addition u/s 68 - assessee is not required to maintain proper books of accounts since he has opted for presumptive taxation u/s 44AD - CIT(A) ought to have appreciated the fact that the profit from the business cannot be brought to tax u/s 115BBE r.w.s.68, rather is taxable u/s 28(1) - HELD THAT:- No merit in the action of Ld. AO calling for the details of sundry creditors and further making addition u/s 68 for unexplained creditors - Section 68 of the Act comes into operation only where any sum is found credited in the books of the assessee maintained in the previous year and the assessee offeres no explanation about the nature and source thereof or explanation offered by him, is not in the opinion of the AO satisfactory then such sum so credited may be charged to tax as income of the assessee. Since the assessee is admittedly not required to maintain the books of account, therefore, there is no basis for invoking the provision of section 68 - we delete the addition made for unexplained sundry creditors and allow Ground No. 4. Addition for opening capital balance - HELD THAT:- As we fail to find any merit in the action of the AO because the minimum amount not taxable for the preceding years i.e A.Y. 2014-15 and A.Y. 2013-14 was Rs.2.00 lacs and the assessee files return regularly and having regular source of income from the business and, therefore, can safely presume that he had sufficient accumulated profits to explain the opening capital balance. We thus delete the addition for opening capital balance and allow Ground No. 3. Denial of deduction u/s 80C for life insurance premium payment - HELD THAT:- As we find that assessee failed to file any proof before the lower authorities and before us for payment of LIC premium and in absence thereof such claim cannot be allowed. We thus confirm the findings of the ld CIT(A) not allowing the claim of the assessee u/s 80C of the Act. Thus Ground No 5 is dismissed. Addition invoking the provisions of Section 115BBE - HELD THAT:- We fail to find any merit in the action of the AO since in the instant case we have held that provision of Section 68 cannot be invoked as the assessee was not required to maintain the books of account. Since Section 115BBE comes into operation only in case of income referred in Section 68/69/69A/69B/69C and 69D of the Act which is not applicable on the issues raised in the instant case, therefore, there is no justification for invoking the provisions of Section 115BE - Thus Ground No. 2 of the assessee is allowed.

  ---

• 2023 (4) TMI 141
  Levy of penalty u/s 271B - assessee had filed the audit report which is beyond the extended due date of filing of the return - HELD THAT:- A perusal of the various details filed by the assessee shows that the assessee was not keeping good health for which she was not in a position to obtain the Audit Report in time, and, therefore, could not file the same before the statutory due date. As per the provisions of section 273B, no penalty shall be imposable u/s. 271B on the person or the assessee as the case may be for any failure referred to in the said provision, if the assessee proves that there was a reasonable cause for the said failure. In the instant case, the submission of the assessee during the course of penalty proceedings that she was not keeping good health for which documentary evidences were filed are not disputed - there was a reasonable cause on the part of the assessee for not getting the accounts audited timely and file the same on or before the due date. We, therefore, set aside the order of the CIT (A), NFAC and direct the Assessing Officer to cancel the penalty. Appeal filed by the assessee is allowed.

  ---

• 2023 (4) TMI 140
  Disallowance of brought forward and carried forward total business loss - returns of income could not be filed within due date - HELD THAT:- Revenue has not disputed the fact that in earlier years, from the years 2011-12 to 2014-15, the condonation has been allowed by the Competent Authority u/s 119(2)(b) of the Act. It is stated that the facts are identical and the petition for condonation of delay qua the year under consideration is pending for adjudication before the Competent Authority. Matters need to be restored to the file of Ld.CIT(A) to decide the issue of allowability of business loss to be carried forward relating to the year under consideration afresh and allow carry forward business loss relating to the Assessment Years 2011-12 to 2014-15 where the Competent Authority has allowed condonation of delay in filing the return of income. Thus, grounds raised by the assessee are allowed in the terms indicated herein above. Appeal filed by the assessee is allowed for statistical purposes.

  ---

• 2023 (4) TMI 139
  Revision u/s 263 by CIT - cash deposit during the demonetization period - assessee s case was selected under limited scrutiny for the reason of cash deposit during demonetization period and abnormal increase in sales with decrease in profit as compared to preceding year - HELD THAT:- As evident from the assessment order that the AO has verified the transaction regarding the cash deposit during the demonetization period and the cash sales. The allegation of the Pr.CIT that source of cash deposit during the demonetization has remained unverified without reference to the cash sales as examined by the Assessing Officer has no substance and remained uncorroborated with the support of documentary evidence. Merely based on presumption, questioning the cash deposit during the demonetization period and other issues other than the limited scrutiny such as cash creditors are beyond the domain of the jurisdiction of the PCIT u/s 263 of the Act. Therefore, the action of the PCIT invoking jurisdiction u/s 263 of the Act without pointing out specific defects/errors, or specific point of investigation the decision of ld. PCIT to hold the assessment order erroneous and prejudicial to the interest of the Revenue, is bad in law. In the present case, it could not be said that the assessment order was passed by the AO without making enquiries on the issues of limited scrutiny. The AO has taken one view and where only one view was plausible for such view, no second view can be taken to make the order erroneous and prejudicial to the interest of the Revenue. Thus, PCIT s views cannot be approved to substitute the view of the Assessing Officer. Decided in favour of assessee.

  ---

• 2023 (4) TMI 138
  Condonation of delay of 622 - period of delay comprises of pre-covid 19 and covid 19 pandemic period - As submitted that due to non-service of notices, non-supply of copy of appeal order, COVID-19 Pandemic complete lockdown, assessee being NRI and not present in India, the filing of appeal got delayed - HELD THAT:- For the period of covid 19 pandemic, there is no dispute that the said period needs to be excluded for the purposes of limitation in view of decision of the Hon ble Supreme Court. For the period pre-covid 19 pandemic - Though the assessee has taken excuse of not physically present in the Country at the time of passing of the order and the order not being communicated physically to him, the fact remains that the order was uploaded on the IT portal though it is also a fact that the assessee was not able to access and download the same even today, which may be due to some technical glitch, a fact not disputed by the Revenue. At the same time, as soon as the assessee was ceased of the communication of dismissal of his appeal and in receipt of tax recovery notice from the DCIT, he took steps in reaching out to the DCIT as well as the ld CIT(A) and has filed the present appeal. We therefore find that though there is a delay, there is however no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal. There exists sufficient and reasonable cause for condoning the delay in filing the present appeal and as held by the Hon ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred and the assessee deserve to be heard on merits of the case. Therefore, in exercise of powers u/s 253(5) of the Act, we hereby condone the delay in filing the present appeal as we are satisfied that there was sufficient cause for not presenting the appeal within the prescribed time and the appeal is hereby admitted for adjudication. We are of the considered view that the assessee couldn t be punished unheard as the same would be against the canons of natural justice and therefore, deserve one more opportunity to put forth his submissions and be heard on merits of the case - we set-aside the matter to the file of the ld CIT(A) to decide the matter a fresh as per law after providing reasonable opportunity to the assessee and to ensure in timely completion of the proceedings preferably within two months of receipt of this order.

  ---

• 2023 (4) TMI 137
  Unaccounted and Unexplained cash credit u/s 68 - capital introduced by partners - CIT-A deleted the addition - HELD THAT:- There are no adverse remarks of the AO regarding source of capital introduced by the partners in the assessee firm except for the fact that no documentary evidences were furnished by the assessee during the course of assessment proceedings to justify the source of capital introduced by the partners. On merits, we find that the assessee filed ample corroborative documentary evidences such as confirmation of accounts, bank statements and income-tax returns of the partners along with the copy of capital/ ledger account of the partners in the books of the firm, M/s Motilal Gopikishan and thus, the assessee satisfactorily discharged the primary onus cast upon it under section 68 of the Act. There was no justification for making addition to the total income of the assessee on account of capital introduced by its partners since the assessee duly justified the identity and creditworthiness of the partners as well as genuineness of the transactions as entered into with them. We also find force in the contentions that assessment in the case of two of the partners was also completed by the same Assessing Officer wherein the AO did not take any adverse view in respect of the amount of capital introduced in the assessee firm which in itself justified that the AO was satisfied with the source of capital introduced in the assessee firm. Assessment in the case of the partnership firm from where the partners of the assessee firm withdrew cash/ obtained loan and thereafter introduced capital in the assessee firm was also completed by the same Assessing Officer and that no adverse view was taken in the case of partnership firm in respect of the amount withdrawn by the partners for contributing capital in the assessee firm which further justified that the AO was satisfied with the source of capital introduced in the assessee firm - no reason to sustain addition to the total income of the assessee on account of capital introduced by partners since source of capital introduced by the partners stood duly explained. Addition made by the Ld. AO on account of capital introduced by partners cannot be said to be justified in view of the observations made hereinabove. Appeal filed by the Revenue is dismissed.

  ---

• 2023 (4) TMI 136
  Addition u/s. 40(b)(v) - remuneration paid to partners - amendment to partnership with retrospective effect - assessee challenged the grounds of violation of principle of natural justice - HELD THAT:- The claim of the assessee is also supported by the case laws relied upon by the assessee in the case of Durgadas Devkinandan [ 2011 (3) TMI 20 - HIMACHAL PRADESH HIGH COURT] wherein it was held that the remuneration to partners should be calculated as per the partnership deed subject to the provisions of the Act where the said remuneration should not exceed the maximum amount provided under the Act. We would also like to place our reliance on the decision of CIT vs. Great City Manufacturing Co [ 2012 (12) TMI 875 - ALLAHABAD HIGH COURT] wherein it was held that the A.O. has to see if the conditions of the partnership deed provided for remuneration to working partners and that the same is within the limit prescribed u/s. 40(b)(v). The supplementary partnership deed operates retrospectively, the calculation of the remuneration paid to partners if in accordance with the provisions of the Act is to be allowed. We would also like to draw our support to the contention of the assessee that in the earlier years that the said claim was not disputed by the lower authorities for which we would like to place our reliance on the decision of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] for the proposition that when there are no change in facts and when the claim has been allowed in the earlier years without being in dispute, the same may be considered for the impugned year also. As it is observed that the assessee has been claiming the modified remuneration since the amendment of the provisions for which there was no dispute, we are of the considered opinion that the assessee s claim for the impugned year should also be granted. From the above observation we hereby delete the impugned addition and allow the assessee s claim of remuneration to partners as per the amended provision of the Act. Hence, ground no.1 of the assessee is allowed. Violation of principle of natural justice - As no adjudication, as the assessee has been given a relief as prayed for in the previous ground.

  ---

• 2023 (4) TMI 135
  Registration u/s.80G denied - As expenditure for Religious activities are more than 5% the appellant has not satisfied conditions laid down in Section 80G(5) - assessee s main object is to construct and maintain Shri Sai baba temple - What is Religious? - HELD THAT:- Dictionary meaning is that Religious means relating to or manifesting faithful devotion to an acknowledged ultimate reality or deity. Rituals and observances, ceremonies and modes of worship are regarded as integral parts of religion. Performing Rituals, Ceremonies, worships, Poojas are nothing but religious activities. For the Shri Saibaba Followers Shri Saibaba is a God Incarnate. In the case before us, the assessee have a Shri Saibaba Temple, the assessee has spend more than 5% of its income on the activities like Pooja, Prasad, Mandir Jirnodhar etc. In the light of the dictionary meaning of the word religious activity given above and the general understanding of the word religious activity, these activities are nothing but religious activities as all the members of the assessee are Shri Saibaba Devotees and the pooja, rituals performed are nothing but Religious activities. The main aim of the assessee trust is to construct and maintain the Shri Saibaba Memorial. Distinguishing Case law relied by Assessee - Assessee relied upon ARANYASHWAR DEVALAYA TRUST VERSUS CIT-1, PUNE [ 2015 (8) TMI 1083 - ITAT PUNE] case wherein as held that the conditions prescribed in section 80G(5B) are satisfied as the expenses on religious activities i.e. pooja expenses are less than 5%. However, in the instant case the expenses incurred on religious activities are much higher than the 5% as discussed in the order of CIT(Exemptions) Legal Precedence - Hon ble SC in the case of Upper Ganges Sugar Mills Ltd [ 1997 (8) TMI 4 - SUPREME COURT] held that even if one purpose or object of the trust is religious or substantially religious, the trust will not be eligible for benefit of Section 80G - assessee was not eligible for benefit u/s.80G as it supported prayer halls and places of worships, which is religious purpose. In the case of the assessee, Shri Sai Bhakta Seva Trust, the main object is to construct and maintain Shri Sai baba temple. This fact has not been disputed by the Ld.AR. The Assessee trust regularly performs Pooja, and other rituals. The expenditure on religious activities is more than 5% of the total income of the assessee. Thus, the assessee has violated provision of Section 80G(5B). ITAT Cochin Bench in the case of Nilackal St. Thomas Church Ecumenical Centre Trust [ 2014 (1) TMI 604 - ITAT COCHIN] has held that the Trust was not eligible for registration u/s.80G as it had spend more than 5% of its income on religious activities. We uphold the order of the Commissioner of Income Tax (exemption) rejecting the application for registration u/s.80G of the Act. Decided against assessee.

  ---

• 2023 (4) TMI 134
  Addition on account of declaration in IDS - assessee was not eligible for declaring in IDS, 2016 and appellant failed to provide explanation for source of said income disregarding the submissions given by the appellant - At the time of hearing, the ld. A.R for the assessee contended that they wish to file certain additional evidences - HELD THAT:- The orders of the subordinate authorities, the submissions of the parties and the additional evidences filed, we are of the considered view, in the interest of justice, these evidences may be admitted and the matter be remanded back to the file of the ld. A.O for re-adjudication as per law while complying with the principles of natural justice. In view thereof we set aside the order of the ld. CIT (A) and restore the matter to the file of the ld. A.O accordingly. Grounds of appeal of the assessee are allowed for statistical purposes.

  ---

• 2023 (4) TMI 133
  Disallowance u/s 14A r.w.r 8D - As submitted that if the calculation is done in terms of clause (ii) of rule 8D(2), the disallowance would get substantially reduced - HELD THAT:- It is clear from the language of the rule that 1% disallowance is to be made of the annual average of the monthly averages of opening and closing balances of the value of the investment and not the average of opening and closing balances on annual basis. We, therefore, set aside the impugned order on this score and remit the matter to the AO for computing 1% disallowance by considering the annual average of the monthly averages of opening and closing balances of the value of investments. Disallowance on account of interest - HELD THAT:- As seen from the assessee s balance sheet that the investments in securities yielding exempt income has been reflected as Non Current Investments amounting to Rs.197.98 crore under the broad head Non Current Assets . As against that, the assessee s balance sheet shows shareholders fund to the tune of Rs.166.20 crore plus Other long term borrowings Unsecured to the extent of Rs.127.50 crore taken from related parties and directors which are non-interest bearing. If we add up the total amount of non interest bearing funds available with the assessee, it clearly emerges that the said amount is far in excess of the amount of investment in exempt income yielding securities to the tune of Rs.197.98 crore. Hon ble Supreme Court in Godrej Boyce Manufacturing Co. Ltd [ 2017 (5) TMI 403 - SUPREME COURT] has held that no disallowance of interest can be made as per rule 8D when interest bearing funds are more than the investments made by the assessee in securities yielding exempt income. Disallowance of interest made by the AO as sustained in the first appeal, cannot be countenanced. We, therefore, order to delete the addition to this extent. Appeal is partly allowed.

  ---

• 2023 (4) TMI 132
  Exemption to Long Term Capital Gains as per section 2(14) - Nature of land sold - distance measured from the municipal limits - assesses claim of the impugned land qualifying as not being a capital asset in terms of section 2(14) - HELD THAT:- Assessee furnished certificate from Gandhinagar Municipal corporation stating distance of the land being more than 6 kms from it and a certificate from Gandhinagar Urban development Authority showing the distance of the said land being 9.53 kms from the municipal limits of Ahmedabad. He also furnished evidence of growing agricultural crop of Jawar on the said land, furnished Revenue record in Form No12 reflecting the said fact. No infirmity in the order of the Ld.CIT(A) upholding the AO s rejection of the documents submitted by the assessee evidencing his land to qualify as not being a capital asset as per section 2(14) of the Act. We find that the assessee did submit distance certificates of the land both from Gandhinagar and Ahmedabad municipal limits ,issued by the Gandhinagar municipal corporation and GUDA stating the land to be at a distance of 6Kms and 9.53 Kms respectively from the two municipalities. The Ld.CIT(A) has not dealt with these certificates submitted by the assessee. The assessee also contended that the land was used for growing Sorghum (Jawar) and furnished copies of Form No.12 evidencing the fact of the land being cultivated since 2007-08. The Ld.CIT(A) has not addressed this aspect also. We find that the Ld.CIT(A) has confirmed the addition made without dealing with the contentions and evidences filed by the assessee. The issue clearly needs reconsideration. Since the matter for determination is the factual aspect of whether the land sold by the assessee fulfilled the criteria of section 2(14) of the Act to qualify as not being a capital asset, it would serve the interest of justice by restoring the issue to the AO who may determine the same by making all necessary inquiries and taking note of the evidences filed by the assessee.Appeal of the assessee is allowed for statistical purposes.

  ---

• 2023 (4) TMI 131
  Penalty u/s 271B - failure to get the accounts audited and furnished the audit report within the prescribed time - HELD THAT:- Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Admittedly, the income declared by the assessee in the return of income was accepted by the revenue without making any addition and disallowance. Likewise, the assessee has also furnished the tax audit report before the completion of the assessment. It appears that the book results shown by the assessee were substantially accepted by the revenue as genuine and the compliance was made by the assessee with some delay. The delay has also been explained by the assessee that it was the 1st year of the business. We are not inclined to uphold the findings of the authorities below. Accordingly, we set-aside the finding of the learned CIT-A and direct the AO to delete the penalty by him. Hence, the ground of appeal of the assessee is hereby allowed.

  ---

• 2023 (4) TMI 130
  Revision u/s 263 - Exemption u/s 54 - As discussed assessee has neither purchased nor constructed any residential unit during the allowable period of one year before or two/three years after the sale of the original asset - HELD THAT:- The Hon ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . We note that a mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the AO did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. We are of the view that none of the reasons set out by the CIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the CIT has to be quashed for the reason that order of the AO sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the AO ought to have made in the given facts and circumstances of the case. We accordingly quash the order u/s 263 of the Act and allow the appeal of the assessee, only for the exemption/deduction of Rs.54,35,981/-. Appeal of the assessee is partly allowed.

  ---

• 2023 (4) TMI 129
  Addition u/s.69 - assessee is a farmer and deposited cash from agricultural crops sale income - D.R. submitted that the assessee has not submitted any concrete proof of earning of higher agricultural income and therefore the addition was confirmed - HELD THAT:- It is pertinent to note that the assessee as a head of the family was holding 20 acres of land as supported by Talati Certificate alongwith his brothers. The cash received from agricultural crop sale was properly given as per the Form No. 8A, Form No. 7A and Form 12 all agricultural land ledger. All these documents were submitted before the Assessing Officer as well as CIT(A). Assessee also claimed expenditure for earning agricultural income and has given the relevant receipts/bills to that effect. All these components were not taken into account by the CIT(A) and simply stated that the assessee cannot hold such a large land and cannot earn that much income. But the detail submission alongwith annexure has explained that the assessee was earning agricultural income which is exempt with the supporting documents such as copy of bills and vouchers and also agricultural receipts and expenses. Addition made by AO as well as the enhancement done by the CIT(A) was not justifiable. Hence, the appeal of the assessee is allowed.

  ---

• 2023 (4) TMI 128
  Reopening of assessment u/s 147 - Addition u/s 68 - bogus share transactions - details not furnished for the persons who had bought the shares from the assessee - Non independent application of mind by AO - Borrowed satisfaction - HELD THAT:- AO has merely repeated the information received from the Investigation Wing without carrying out any verification and the addition made in the reassessment is on the basis of factually incorrect assertions/statements and fundamentally wrong facts as discussed in details above. Accordingly, we hold that the reassessment proceeding initiated by issuing notice u/s.148 of the Act and passing the order u/s. 147 of the Act is not legally valid and is directed to be set aside. Thus, ground taken by the assessee in its Cross Objection is allowed. Addition u/s 68 - Shares sold by the assessee during the year for which the addition has been made were purchased in the preceding year and formed part of the closing stock of shares as on 31.03.2009, duly reported and reflected in the audited Balance Sheet of the assessee, details of which are already extracted above - we are not inclined to interfere with the finding given by the Ld. CIT(A) on the merit of the case whereby the addition made by the Ld. AO has been directed to be deleted. Accordingly, grounds taken by the revenue in its appeal are dismissed.

  ---

• 2023 (4) TMI 127
  Unexplained cash deposit u/s.69A - non-compliant attitude of the assessee, both during the assessment and appellate proceedings, and non-compliance of various statutory notices CIT(A) confirmed the finding of the AO in treating the impugned deposits as deemed income - HELD THAT:- We find that the assessee was given a number of opportunities to defend his case before authorities below to justify the impugned deposits made in the Bank. Various statutory notices issued by Revenue authorities to the assessee remained non-complied, not to talk of participation in the proceedings. Both the authorities have recorded a finding to this effect, which have been reproduced by us hereinabove. Even before the Tribunal, after filing appeal, assessee has not come forward to attend in response to any of the notices nor filed any submissions. Therefore, it is clear that the assessee except coming forward to file appeals before the appropriate authorities, is not interested in following up with its matter. Therefore, the order of the ld.CIT(A) upholding the addition calls for no interference. Thus, grounds of appeal raised by the assessee are accordingly rejected.

  ---

• 2023 (4) TMI 126
  Additions made u/s 68 - capitation fee paid for admission of assessee s children - Additions u/s 68 instead of u/s 69C - incriminating materials found and statement recorded in course of the search and seizure operation carried out or not? - HELD THAT:- As the primary condition of section 68 that the amount must be credited to the books of account of the assessee is not fulfilled. Though, Commissioner (Appeals) has made an attempt to cover up the legal lacuna by stating that the AO has treated the payment of fee in cash as unexplained expenditure under section 69C, however, such observation of learned Commissioner (Appeals) is factually incorrect, hence, cannot be accepted. Thus, the conditions of section 68 having not being satisfied, the addition made under the said provision has to be deleted. Accordingly, additions made u/s 68 of the Act are hereby deleted. Disallowance of part of the expenses on ad-hoc basis - HELD THAT:- As 50% of the expenditure claimed has been disallowed on purely ad-hoc basis. The disallowance made not being backed by valid reasoning is deleted. Unexplained deposits in bank account - HELD THAT:- As the amount was paid through account payee cheque to the assessee and in the said confirmation, the concerned person has clearly stated that the amount paid was towards consideration of the car sold. Thus, when the assessee has furnished evidence to prove the source of the deposit, no addition can be made under section 68 of the Act without conducting any inquiry. Other deposits the assessee has stated that said deposit was out of fees paid by the patients. As it appears on record, the first appellate authority has rejected assessee s explanation without making any inquiry, either himself or through the AO to ascertain the veracity of assessee s claim - delete the addition made in assessment year 2012-13. Assessee appeals are partly allowed.

  ---

• PMLA

• 2023 (4) TMI 152
  Seeking issuance of Writ of Mandamus directing the respondents to remove the petitioner s name from the data base maintained by them, pertaining to those individuals, who are not allowed to travel abroad - seeking revocation of Look Out Circular (LOC) erroneously issued qua the petitioner - HELD THAT:- It is true that the petitioner is the defacto complainant in the FIR in Crime No.39/2019 for the offences under Sections 420, 465, 468, 471 and 120B IPC and Crime No.282/2019 for the offences under Sections 409, 420, 465, 468, 471 and 120B IPC registered against the accused. The FIR allegations in Crime No.39/2019 shows that petitioner owns 92,00,000 shares in M/s. 8K Miles Software Services Ltd. He is the promoter of this Company. It is a listed company in BSE and NSE. To meet his business financial requirements, Shri.R.S.Ramani, the Whole time Director introduced one Mr. Rohit Arora (Loan Broker) and he assured that he can arrange loan against his shares being provided as collateral security - The accused criminally conspired with an illegal intention to cheat and without his knowledge, illegally and fraudulently fabricated the documents and forged his signature on various Delivery Instruction Slip and criminally breached the trust and transferred 23,00,000 shares from his DP Account to their DP account and sold their shares in the open market for a sum of 144crores and criminally misappropriated the same. Section 12A deals with Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control. Section 12A (c) prohibits engagement in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder - it is too early for the petitioner to contend that there is no offence made out against him for prosecuting him under Section 12A r/w Section 24 of SEBI Act. Prima facie as per the orders of the SEBI, commission of offence under Section 12 A (c) of the SEBI Act, 1992 is made out against the petitioner. Therefore, petitioner cannot contend that Enforcement Directorate has no jurisdiction to investigate the case against him for violating/committing the offences under the SEBI Act, 1992. This Court is of the considered view that as of now, petitioner is not entitled to seek for removal of his name from the database maintained in respect of the persons, who are not allowed to travel abroad on account of the Look Out Circular issued against them and to revoke the Look Out Circular issued against the petitioner until the completion of investigation. The first respondent is directed to complete the investigation in ECIR bearing reference No. ECIR/CEZO-1/17/2020 as early as possible and file the complaint before the competent Court within a period of three months from the date of receipt of the copy of this order. This Writ Petition is dismissed with a direction to the first respondent to complete the investigation and file the complaint before the competent Court within a period of three months from the date of receipt of the copy of this order.

  ---

• 2023 (4) TMI 151
  Seeking grant of Bail - Money Laundering - challenge to decision in the case of Directorate of Enforcement, Lucknow vs. Yadav Singh and others - HELD THAT:- There are no infirmity, illegality or perversity in the case of Yadav Singh. However, considering the request of learned Senior Advocate and also considering the ailments and physical condition of the present applicant, as considered in earlier order liberty is given to the present applicant to appear before the learned trial court within one week from today. To be more precise on or before 1.2.2023 and file her bail application. The said bail application shall be heard and disposed of expeditiously preferably on the same date, if possible. It is further provided that the learned counsel for the applicant shall supply the advance copy of the bail application to the learned counsel for the opposite parties by 30.1.2023, so that the learned counsel for the opposite parties may seek instructions and may file objection, if so needed. Application disposed off.

  ---

• Service Tax

• 2023 (4) TMI 125
  Condonation of delay in filing appeal - delay on account of misplacement of some of the file papers in the office which were recovered later on and the matter further got delayed due to oversight and inadvertence - HELD THAT:- Although the appellant had somewhat improved its explanation for the reasons which had led to the delay in filing the present appeal, it is apparent that the same were also wanting in particulars - It is well settled that each day of delay in filing has to be explained. In the present case, there are large gaps in the time period for which no ostensible reason has been provided. The appellant has not only delayed in filing the present appeal but there is also an unexplained and inordinate delay in re-filing the appeal. The above captioned appeal was filed on 31.05.2019. It was returned under objection on 10.06.2019 - there was complete inaction for more than two years and five months. Even if the period commencing from 15.03.2020 is excluded on account of disruption caused due to outbreak of covid 19. There was a period of six months between the date on which the appeal was marked as defective and the date when the lockdown was imposed in the wake of the pandemic. In the case of OFFICE OF THE CHIEF POST MASTER GENERAL VERSUS LIVING MEDIA INDIA LTD. [ 2012 (4) TMI 341 - SUPREME COURT ] the Supreme Court held that it is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and there was bona fide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red tape in the process. There is no explanation for this inordinate delay as well. The applications seeking condonation of delay in filing and re-filing the appeal, are dismissed.

  ---

• Central Excise

• 2023 (4) TMI 124
  Clandestine Removal - production by showing lesser production in the ER-1 return - Demand of Central Excise Duty with reference to the installed capacity when the finished goods are not notified under Section 3A of the Central Excise Act, 1944 - no material to show any unrecorded manufacture or clearance of the finished goods - reason for issuing show-cause notice to the assessee was based on the quantity of production difference between the annual installed production capacity statement as declared in the ER-7 statement and the ER-1 return - allegation of clandestine removal is solely based upon the annual installed capacity of the unit of the assessee as mentioned in the ER-7 return compared with the ER-1 statements - suppression of facts or not - extended period of limitation. HELD THAT:- The allegation is one of the suppression of the production and clandestine removal of excisable goods without payment of excisable duty. Therefore the burden of proof is on the department to establish that the charge of clandestine removal for which there should be cogent and relevant material to pen down the assessee on a charge of clandestine removal. In the instant case, it is found there was no material which was available with the Commissioner to come to such a conclusion. As pointed out earlier, the genesis of the entire matter is the audit objection. There are two known ways of dealing with an audit objection. Firstly, the respondent department will examine the objection and answer the audit para by giving an explanation. In the event, the same is found to be not acceptable and the findings are reiterated, then the department will have to conduct an enquiry into the aspect and satisfy itself that there are materials to proceed against the assessee and then issue the show cause notice clearly disclosing the case the assessee has to meet. Unfortunately the observation made in the audit objection was taken by the department as gospel truth and without conducting any enquiry or investigation as the authority straight away proceeded to issue the show cause notice. In fact, the reply given by the assessee to the Superintendent, Central Excise department at the first instance was not even taken note of and mechanically the show cause notice was issued. The learned tribunal failed to see that the charge of clandestine removal is very serious charge and to establish the same there should be cogent and relevant materials. Extended period of limitation - suppression of facts - HELD THAT:- Admittedly, the audit objection was based upon the information culled out from the return filed by the assessee and therefore there can be no charge of suppression or willful mis-statement and consequently the extended period of limitation could not have been invoked. The learned tribunal did not take enough effort to examine the facts of the case which are very crucial in the case on hand qua the allegations set out in the show cause notice - For invoking extended period of limitation, the revenue ought to have established wilful mis-statement or suppression on the part of the assessee which has not been brought on record. Thus, the extended period of limitation could not have been invoked as well as the penalty could not have been imposed since there is no charge of willful mis-statement or suppression made against the assessee - the department has failed to discharge the onus cast upon him to prove the charge of clandestine removal. The order passed by the tribunal as well as the adjudicating authority are set aside - Appeal allowed.

  ---

• CST, VAT & Sales Tax

• 2023 (4) TMI 150
  Classification of goods - melamine utensils, i.e., plates, bowls, spoons and dinner sets, etc. - exigible to tax @ 1% under Part-I of Schedule to the OET Act or not - misclassification of melamine utensils as non-scheduled goods under the OET Act, 1999, or not - Reduction of demand raised in the assessment framed under Section 10 of the Odisha Entry Tax Act, 1999 to NIL - tax periods from 01.04.2007 to 31.12.2010 - conclusion of proceeding ex parte whereby entry tax has been levied on the sale of finished goods as per Section 26 taking into consideration the figures disclosed in the returns and the turnover suppressed as alleged. HELD THAT:- There is no ambiguity in mind that melamine being used in making plastics , it itself cannot be said to be plastic . Therefore, considering that melamine may be one of the ingredients for manufacture of plastic , it cannot be said to be plastic simpliciter and thereby melamine utensils may not strictly fall within the connotation of plastic goods , the Revenue has abandoned such contention. The word appliances being word of day-to-day use, its popular or commercial parlance meaning has to be adopted as against its scientific or technical meaning because of the well-settled principle of interpretation that in taxing statutes, words of everyday use must be construed not in the scientific or technical sense but as understood in common parlance. However, the word appliance as used in Entry 35 of Part-II of Schedule is to be construed in the sense it is accompanied by other items. Further investigation into the matter revealed that in COMMISSIONER, SALES TAX VERSUS HM INDUSTRIES [ 1980 (1) TMI 172 - ALLAHABAD HIGH COURT ] it has been made clear that sewai ki machine is used as a means to an end; it is a device which gives the desired result by producing sewai by mechanical method. It is therefore an appliance. Sewai ki machine made of iron (machine for producing vermicelli) is understood in common parlance as kitchen appliance. Kitchen is a room where food is cooked, and it is in this sense that it is normally understood. An article may not be of direct use yet its use may be such without which it may not be possible to run the kitchen. Thus, the item in question cannot be attributed the meaning of all kinds of kitchen appliance as enumerated in Entry 35 of Part-II of the Schedule. Entry 87 of Part-I of Schedule used the symbol / which is preceded by kitchen ware and succeeded by utensils . It is well established principle of construction that an effort must be made to give effect to all parts of statute and unless absolutely necessary, no part thereof shall be rendered surplusage or redundant. The intention is clear that symbol / in Entry 87 of Part-I signifies that the OET Act wanted to restrict the levy of tax to such kitchen ware which are similar in nature and use as utensils and such utensils must be of similarity with goods as that of rice cooker and pressure cooker . Therefore, drawing distinction between entries in the OET Act and entries under the Karnataka statute, it may not be inept to say that Stovekraft Pvt. Ltd. (supra) does not come in aid of the contention of the Revenue. Whether dinner set made of melamine fell within the scope of any of the entries in the Schedule to the OET Act was never under consideration before the taxing authorities. It is the melamine utensils which was subject-matter of examination by the authorities. Even the grounds of second appeal filed by the Revenue did not suggest the same. Instead of making prevaricating statements, the Standing Counsel for the Revenue before the Tribunal should not have confused by taking new plea for adjudication as to whether plates, bowls, spoons and dinner sets would be exigible to rate of tax @ 1% without specifying the particular entry in which melamine utensils would fall - As the item melamine utensils does not fit into any of the entries as suggested by Sri Sunil Mishra, learned Additional Standing Counsel, the Tribunal is apt to hold the same to be non-scheduled goods, and therefore, entry tax is not exigible on the finished goods sold by the opposite party-dealer. Hence, the revision preferred by the Revenue under Section 19 of the OET Act fails. Since plates, bowls, spoons and dinner sets were never came for adjudication before the Assessing Authority nor the First Appellate Authority, for the first time before the Tribunal the Revenue could not have raised such a plea - the Odisha Sales Tax Tribunal has not committed error in classifying melamine utensils as non-scheduled goods under the OET Act, 1999. Revision petition dismissed.

  ---

• 2023 (4) TMI 149
  Levy of Entry Tax - Hydrate Lime being a chemical can be treated as a schedule goods under the O.E.T. Act as mentioned in SI. No.6 Part-1 of Schedule appended to the O.E.T. Act, or not - validity of confirming the charging of entry tax on imported coke, when the dispute is pending for decision by the Larger Bench of the apex Court - imposition of penalty U/s. 7(5) of the O.E.T. Act - HELD THAT:- Section 7(5) has to be construed to mean that the presumption contained therein is rebuttable and the penalty of one and half times of tax assessed stipulated therein is only the maximum amount, which could be levied and the Assessing Authority has the discretion to levy lesser amount depending upon the facts and circumstances. In the absence of satisfaction, the presumption is that non-disclosure in the return is with an intention to evade payment of entry tax and, as such, depending on the facts of each case the Assessing Authority has to decide what would be the reasonable amount of penalty to be imposed. Thus, cardinal principle of the statute is that under the Act penalty may be imposed for failure to pay entry tax and furnish the return in due time, but the liability to pay penalty does not arise merely upon proof of default in filing return or failure to pay entry tax and furnish the return in due time. The Odisha Entry Tax Act being a new legislation and the petitioner being under the bona fide belief that the disputed goods is an un-scheduled goods and there being some confusion with regard to levy of entry tax on goods imported, being a new legislation, which is in a fluid state, no penalty should have been imposed - The cardinal principle of taxing statute is that when two views are possible, the view favourable to the assessee should be preferred and in that view of the matter no penalty should have been imposed on the petitioner. In view of the meaning attached to the word penalty under different provisions of different taxing statute, in an unequivocal term it can be said that the penalty ordinarily becomes payable when it is found that an assessee has wilfully violated any of the provisions of the taxing statute. In view of the fact that in the instant case the petitioner has already paid the tax and so far as payment of tax is concerned there is no dispute. Since there is no violation or deviation in payment of tax, as a consequence thereof, the petitioner is not liable to pay the penalty - the impugned orders passed by the Assessing Authority, First Appellate Authority and the Sales Tax Tribunal, Cuttack, so far as imposition of penalty under Section 7(5) of the O.E.T. Act is concerned, are hereby quashed. The revision is allowed.

  ---

• 2023 (4) TMI 148
  Levy of penalty under Section 7(5) of the OET Act - rejection of revised return and enhancement of turnover on valid materials and evidence and the books of accounts maintained by the petitioner - absence of any adverse material on record - HELD THAT:- In view of the meaning attached to the word penalty under different provisions of different taxing statute, in an unequivocal term it can be held that the penalty ordinarily becomes payable when it is found that an assessee has wilfully violated any of the provisions of the taxing statute. Above being the meaning attached to the word penalty , if that would be taken into consideration in the present context, without accompanying the revised return, no best judgment assessment could be done by the Assessing Authority. As such, no reason for rejection of revised returns has been pointed out by the Assessing Authority. More so, no reasons have been assigned as to why the penalty will be imposed under Section 7(5) of the O.E.T. Act. Even against the order of assessment when appeal was preferred, the Appellate Authority though quashed the same, but in the Second Appeal the Tribunal set aside the order passed by the Appellate Authority and confirmed the order passed by the Assessing Authority which clearly indicates that the same has been passed by the Tribunal without any application of mind. Once the Assessing Authority has come to a conclusion that there is no mistake in the books of account, imposition of penalty under Section 7(5) of the O.E.T. Act cannot be sustained in the eye of law. There is no dispute that the Assessing Authority initiated proceeding under the O.S.T. Act but not under the O.E.T. Act. By asking information without proper manner cannot be treated as initiation of proceedings against the petitioner. As such, the Assessing Authority has committed error without initiating the proceeding under O.E.T. Act and without issuing notice to the petitioner under the O.E.T. Act - This Court in similar circumstances in the case of RAM KISHAN RAJKUMAR VERSUS ASSESSING AUTHORITY, CUTTAK-I WEST CIRCLE, CUTTACK AND ANOTHER [ 2004 (6) TMI 600 - ORISSA HIGH COURT ] has interfered with the assessment under Section 7 of the O.E.T. Act read with Rule 15 of the O.E.T. Rules (as it stood at the relevant point of time) and quashed the order of assessment. Therefore, the assessment which has been made for imposition of penalty cannot be sustained in the eye of law. No doubt, the petitioner has filed all the monthly statements and returns, as shown in the monthly statements and also paid due admitted tax before filing the said return. As such, the petitioner is in no way a defaulter in payment of admitted tax under the O.E.T. Act. Therefore, the provisions contained under Section 7(5) of the O.E.T. Act is not applicable. The question is answered in favour of the assessee-petitioner and against the Department - revision allowed.

  ---

• 2023 (4) TMI 123
  Impact of the regular assessment order on the penalty imposed before assessment - misinterpretation of section 40 (2) of the JVAT Act - concealed turnover - evasion of tax or not - HELD THAT:- It appears that on 27.4.2015 the petitioner filed NIL Returns for the month of March though before that on 30.3.2015 itself it had raised a bill for Rs 6,73,233/- and this fact finds mention in the order dated 29.4.2016 of the Appellate Court and nowhere denied by the petitioner. Further, since the petitioner was aware of having raised bill of Rs 6,73,233/-, there was no occasion for the petitioner to file returns for the month of March, 2015 showing it be NIL returns. This filing of NIL returns itself is self- sufficient to make out a case under Section 40(2)(b) of the JVAT Act, 2005 - The petitioner himself has admitted the fact that it had received the TDS certificate from the Government on 01.07.2015. Though, the TDS certificate was received by the petitioner on 01.07.2015 but he did not revise the returns for the month of March, 2015 on any day prior to 30.07.2015. If the same would have been revised on any day prior to 30.07.2015; then the proceeding under Section 40(2) of the Act would not have been initiated; rather the conduct of petitioner in not revising the returns despite admittedly having received the TDS certificate from the government on 01.07.2015, appears to be indicative of the mens- rea of the petitioner. The proceeding u/s 40(2) was initiated on 30.07.2015 and notice was issued to the petitioner. Thereafter, the returns were revised only after initiation of the proceeding and issuance of notice to the petitioner and therefore, any attempt to revise the returns after the initiation of proceeding will be hit by the mischief of rule 14(7) of JVAT Rules, 2006. Further, Section 40(2) states that if the prescribed authority in the course of any proceeding or upon any information, which has come into his possession before assessment is satisfied that any registered dealer has concealed any sales or purchases or any particulars thereof, with a view to reduce the amount of tax payable by him under this Act, or has furnished incorrect statement of his turnover or incorrect particulars of his sales or purchases in the return furnished under sub-section (1) of Section 29; or otherwise, it could initiate penalty proceedings - In the instant case when information regarding excess turnover than what was disclosed by the petitioner came into the possession of the prescribed authority and that petitioner has not disclosed the Turnover of March, 2014 inspite of having full knowledge, concealed the same in the Returns filed by him and thereby furnished incorrect particulars, the prescribed authority rightly initiated the penalty proceedings and issued notice upon the petitioner. In the instant case, the actual turnover was shown as NIL for March 2015 in the return filed on 27.04.2015 in-spite of the fact that the petitioner had raised bill for the amount of Rs.6,73,233 on 30.3.2015 itself. Further though TDS certificate was received by the petitioner on 1.7.2015 but Returns were not revised till 30.7.2015 when proceedings u/s 40(2) was initiated. Thus, the intent to evade tax or conceal/suppress turnover appears to be clear indicative of mens rea on his part. As a matter of fact, after the proceeding under section 40(2) of the JVAT Act was initiated and the notice was served to the petitioner he filed the return on 05.08.2015 i.e., after the period of three months for filing revised return. There is no document on record to suggest or any averments giving reason for non-filing of revised return within time. As such, the element of mens rea on the part of the petitioner is also made out. The fact of the instant case as enunciated herein before clearly shows absence of bona-fide on the part of the petitioner in not filing the revised return even after getting the TDS certificate as he filed the revised return only on 05.08.2015 after initiation of proceeding under section 40(2) of the JVAT Act on 30.07.2015. It is thus clear that the instant case does not fall under section 30 (4)(d); rather is covered by the condition prescribed under Rule 14(7) of the JVAT Rules. As such the action of the respondent revenue authority is fully justified; no error has been committed by the learned Tribunal by rejecting the revision petition of the petitioner. Application dismissed.

  ---

• 2023 (4) TMI 122
  Discretionary power for imposition of penalty - Rule 12(4) of the Central Sales Tax (Odisha) Rules, 1957 - concessional rate of tax against declaration in Form C - suppression of turnover or not 0- tax periods from 01.04.2010 to 31.03.2012 - HELD THAT:- In the case at hand, nothing has been placed on record indicating that the turnover disclosed in the return has been escaped assessment so as to entitle the assessing authority to impose penalty under Rule12(4)(c) of CST (O) Rules, 1957. But the assessing authority imposed penalty in exercising his discretion and such discretion has been exercised without any reasonable cause. There is a specific finding that the petitioner has not suppressed any turnover which will affect the revenue. It is no doubt true that a discretionary power has been vested with the assessing officer for imposing penalty under Rule 12(4)(c), but when suppression of any turnover or commission of any fraud has not been established, nor the petitioner has been found to have illegally deducted any turnover as exempted sale to affect the tax liability, in that case imposition of penalty under Rule 12(4)(c) cannot have any justification. The discretionary exercise of power amounts to something that is not compulsory, but it is left to discretion of the person or authority involved, such as a discretionary grant. It is opposite to mandatory. Therefore, discretionary is a term which involves an alternative power, i.e., a power to do or refrain from doing a certain thing. In other words, it would be power of free decision or choice within certain legal bounds. If Rule 12(4)(c) provides for exercise of discretionary power for imposition of penalty, the assessing officer should have exercised such discretionary power reasonably. In absence of any rationality or reasonability, exercise of discretionary power can be construed as arbitrary and unreasonable exercise of power by the authority. Therefore, when the first appellate authority examined the fact vis- -vis contention raised by the parties and came to a definite finding that the petitioner has not suppressed any turnover which will affect the revenue and the discretionary power has been vested with the assessing officer while imposing penalty under Rule 12(4)(c) and in fact there has been no suppression of any turnover or fraud nor the petitioner has been found to have illegally deducted any turnover as exempted sale which will affect the tax liability, it limited the penalty to Rs.30,000/- instead of Rs.1,22,052/- - The learned Tribunal has failed to consider the effect of words if he is satisfied that the escapement is without any reasonable cause contained in Rule 12(4)(c) of the CST (O) Rules. But nothing has been placed on record to that extent and, as such, there is no question of levy of two times of penalty in case the assessing authority comes to the conclusion that the escapement is with reasonable cause. Therefore, reduction of penalty by the first appellate authority appears to be improper, when such determination of liability against the petitioner is absolutely based on no record. Penalty is not prescribed for mechanical imposition because law permits such a levy. It is well settled legal position that while interpreting the provisions of the statute, every part of the provisions of the statute has to be given effect to and one part cannot be interpreted in a manner inconsistent with another part of the statute that would defeat the object and purpose of the Act and rules framed thereunder - It is also well-established that where language of any provision in a statute is clear, it is impermissible to vary the language unless the plain and unambiguous language leads to an absurd result. In the present case, the language of Rule 12(4)(c) in unequivocal terms spells out that satisfaction of the Assessing Authority as to the reasonableness of the cause is imperative. In absence of such material borne on record, the very invocation of exercise of power to impose penalty is considered to be flawed. Since penalty is a statutory liability and is substantive in nature, the provisions for imposition thereof are to be strictly construed. It is, therefore, pertinent to put forth the well-accepted principle with regard to strict interpretation. In a taxing statute one has to look at what is clearly said. There is no equity about a tax. There is no intendment. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly on the language used. If the meaning of the provision is reasonably clear, Courts have no jurisdiction to mitigate harshness - The Court is to ascribe the natural and ordinary meaning to the words used by the Legislature and the Court ought not, under any circumstances, to substitute its own impression and ideas in place of the legislative intent as is available from a plain reading of the statutory provisions. The question of law as framed by this Court is answered in the negative, i.e., in favour of the petitioner-assessee and against the State of Odisha-Revenue - the sales tax revision petition allowed.

  ---

• Indian Laws

• 2023 (4) TMI 121
  Dishonour of Cheque - insufficient funds - legally enforceable debt - acquittal of accused - rebuttal of presumption - complainant has beyond doubt proved that the complainant has complied with the mandatory provisions envisage under Section 138 and Section 142(1)(b) of the Negotiable Instruments Act while filing the present complaint - Whether the complainant has beyond doubt proved that the accused has handed over the cheque against the legally enforceable debt, which being dishonored on the ground of insufficient funds , has committed offence under Section 138 of the Negotiable Instruments Act? HELD THAT:- Under Section 138 of the Negotiable Instruments Act, once the cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act in favour of the holder would be attracted. Section 139 creates a statutory presumption that a cheque received in the nature referred to under Section 138 of the Negotiable Instruments Act is for the discharge in whole or in part of any debt or other liability. The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt - It is for the accused to adduce evidence of such facts and circumstances to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration. In the present case, the accused has set up the specific defence in the reply given to the legal notice sent by the complainant. The accused has specifically raised the case of complainant being partner in a Krishna Lease Finance and the manner in which the cheque has been misused. The complainant in his cross examination has categorically admitted about defence of misuse of a signed blank cheques lying with Krishna Finance, being taken in reply to notice - In opinion of this Court, the accused counsel in cross examination has raised probable defence by questioning his financial capacity which raised serious doubt of the very claim of handing over the loan of Rs.10 lakhs in cash to accused. Thus, the existence of legally enforceable debt in absence of cogent material brought by the complainant, has not been established. The learned Magistrate has rightly shifted the burden upon the complainant to prove the case beyond reasonable doubt. In absence of any cogent material being brought on record in the form of evidence, the learned Magistrate has proceeded to record the order of acquittal - No error can be attributed to the learned Magistrate in recording order of acquittal of respondent-accused. Application for leave to appeal stands rejected.

  ---

• 2023 (4) TMI 120
  Scope of Contractual obligations and counter obligations - Foreign Exchange variation - Liability to pay/meet the difference in Foreign Exchange rate-U.S. $ vis-a-vis Indian Rupee - Interest on unadjusted advance - It is the case of the appellant that the contract awarded to the 1st respondent was a fixed/firm price contract and the words and phrases used in the contract in so many words clearly indicated that there could be no bargain with regard to the total price of Rs.17,23,16,160/-, which was agreed between the parties - Whether the counter claim of 1st respondent against the claimant Board is beyond the scope of arbitration agreement and whether this Tribunal has jurisdiction to decide the same? Whether the contract was indeed a firm price contract and if so, whether the appellant was justified in making the claim for refund, seeking excess amounts paid to the 1st respondent , over and above the contract value of Rs.17,23,16,160/-, which has been arrived at fixing a $ rate at Rs.31.61? - HELD THAT:- It is easy to say that there is no clause in the final purchase order regarding the liability that arises on account of variation in Foreign Exchange rate. However, when the parties had clearly negotiated with their open eyes and did not meet eye to eye on this aspect and finally, consciously omitted to include clause 1.4.4 pertaining to exchange rate in the final draft Purchase Order, this Court finds that the said clause would have been omitted only because of the 1st respondent s persistence with its stand that any variation on account of Foreign Exchange rate would be to the appellant s account. Therefore, this Court is unable to accept the argument advanced by the learned Senior counsel for the appellant in this regard that since the Purchase Order does not contain any clause fixing the liability on the appellant, the express words used in the Purchase Order terming the contract as a firm price contract should be respected and the amount of Rs.17,23,16,160/- (Rupees Seventeen Crores twenty three lakhs sixteen thousand and one hundred and sixty only) alone would bind the parties. The prices are mentioned in INR value and there is clear mention that the prices are FIRM for indigenous equipments. This is not disputed by the learned Senior counsel for the 1st respondent also. However, it is only the application of the clause that the prices are FIRM to the imported equipment creates confusion. The clause in the final Purchase Order clearly mentions that the prices are FIRM for CIF value in U.S.Dollars - This Court keeping in mind the fact that the entire discussions and negotiations between the parties was only on this specific issue of variation in Foreign Exchange rate and the resultant conduct of the parties viz., agreeing to omit the specific clause 1.4.4 under the exchange rate in the draft Purchase Order, only indicates that the 1st respondent was never agreeable to absorb any variation in Foreign Exchange. This Court also does not find any violation of Sec.28(3) of the Act as strongly canvassed by the learned Senior counsel for the appellant. While deciding and making an award the Arbitral Tribunal certainly has to take into account the terms and conditions set out in the contract. However, in cases like these where there are grey areas, it is well open to the Arbitral Tribunal to fall back on the exchange of correspondence between the parties, intention of the parties as expressed therein, all of which culminated in the final contract being drawn. Even on this view of the matter, this Court does not find that the majority award of the Arbitral Tribunal suffers from any infirmity on the ground of violation of the Sec.28(3) of the Act. This Court answers against the appellant and in favour of the 1st respondent. Whether this Court, sitting in appeal U/s. 37 of the Act is entitled to set aside the majority award and accept the minority award, despite the learned Single Judge dismissing the Arbitration Original Petition, finding no grounds for interference U/s. 34 of the Act? - HELD THAT:- The Hon ble Supreme Court and this Court have repeatedly shown restraint in setting aside award on trivial or factual issues. The object of arbitration itself is only a result of mutual consent of two parties who are in conflict, to redress their respective grievances, by opting to avoid the normal recourse to the Courts and instead go in for arbitration, which according to them would be quicker and effective - When the power available to the High Court U/s. 34 of the Act is itself very limited and more supervisory in nature, this Court exercising jurisdiction U/s.37 as an Appellate Court is further circumscribed to interfere in the absence of the above set out features or factors that alone would warrant interference. This Court has gone through the order passed by the learned Single Judge and does not find any of the circumstances available, in order to term the same as patently illegal or the award being opposed to public policy going unnoticed by the learned Single Judge. Admittedly, in this case there is no allegation of fraud or bias. Therefore, this Court exercising powers U/s. 37 of the Act does not see or find any reason whatsoever to set aside the order by the learned Single Judge rejecting the challenge to the majority award of the Arbitral Tribunal. In short, this Court does not find the majority award or the order of the learned Single Judge to shock the conscience of the Court - Appeal dismissed.

  ---