Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 14, 2022
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Anti-profiteering - power of suo moto investigation in terms of Rule 133 of the Central Goods and Service Tax Rules, 2017 - The object is to ensure healthy competition in the market as it is expected to bring about various benefits for the public as well as the economy. This is similar to the Anti-profiteering provision and the spirit and object behind its insertion. The distinction sought to be made by the petitioner is thus rejected. The cases relied upon by the petitioner are distinguishable for this reason. - HC
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Profiteering - supply of Monitors and TVs of screen size upto 32 inches - benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the price - the Respondent has not submitted any argument against the charges framed in the DGAP's Report. Therefore there are no basis to differ from the findings of the DGAP that the Respondent had indeed contravened the provisions of Section 171 of the CGST Act 2017 - NAPA
Income Tax
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Implementation of the judgment of the Hon'ble Supreme Court [2022 (5) TMI 240 - SUPREME COURT] (Union of India v. Ashish Agarwal). - Order-Instruction
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Deduction claimed u/s 80IA(4)(iii) in respect of profits from industrial park known as “Salarpuria Touchstone” - Undisputedly till date the project has not been notified by the competent authority which was a pre-condition for grant of deduction u/s 80IA (4) of the Act. Under these circumstances, we are of the view that the deduction u/s 80IA(4) in respect of Salarpuria Touchstone park cannot be allowed. - AT
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Exemption u/s 54F - investment of new residential house in the name of assessee wife - claim of deduction U/s 54F of the Act cannot be denied merely on the ground that the new residential house was purchased in the name of his wife when the investment made by the assessee from the sale proceeds of the existing asset and yielded capital gain from the said transactions. - AT
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Addition u/s 68 on unexplained capital - erroneous filing of ITR and is a result of mistake committed by the assessee partnership firm - the capital introduced by the partners cannot be taxed in the hands of the assessee-firm under section 68 - we are of the considered opinion that the ld. CIT(A) has fully justified in deleting the addition made under section 68 of the Act. - AT
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Treatment of rental income under house property - Disclosure of rental income received from the property by the assessee as business receipts and the assessee has claimed the other expenditure against the business receipts - On perusal of the facts, prima-facie the claim of business expenses against the rental income in not a prudent practice. - AT
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Validity of order passed by the National Faceless Appeal Centre - We also observe that the Ld. NAFC has not looked into this fundamental principle of "audi alterm partem", which has not been provided to the assessee as per the 1st proviso of section 143(1) of the Act, but proceeded with the case on merits and also confirmed the addition made by the CPC. NAFC is thus erred in conducting the faceless appeal proceedings in a more mechanical manner without application of mind. - AT
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Ad hoc disallowance made out of the interest paid by the assessee - No comparable case was cited, wherein the rate of interest less than 12% was paid to the persons from whom unsecured loan was raised. It is also not the case of the department that the loans received by the assessee were used elsewhere and not for the business purpose. In the instant case, it is an admitted fact that 80% of the payment of interest was considered as genuine by the AO and the remaining amount was disallowed without any basis. - Additions deleted - AT
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Revision u/s 263 - claim of deduction u/s. 54F - The fact remains that the calculations were provided to the ld. PCIT. It is seen that he has failed to find any infirmity in the claim. - PCIT, instead has set aside the order u/s. 143(3)/148 in order to grant one more inning to the Revenue to find some shortcoming in the claim on the suspicion that possibly the AO has missed something in the first round. Such an action cannot be supported. Powers u/s. 263 of the Income Tax Act are not on the Statute for such whimsical and arbitrary actions. - AT
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Deduction u/s 36(1)(iii) - double deduction for deduction of interest - once these amounts are allowed as deduction in the year of incurring the expenditure, the same shall not be eligible for being allowed as deduction yet again as a part of the work in progress being debited to the profit and loss account in any subsequent year. The double deduction will thus not be permissible. The conclusions arrived at by the learned CIT(A), subject to this observation, are approved. - AT
Customs
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Power of DRI officials to seize goods though found outside SEZ area - property is in SEZ zone or not - removal of the goods from SEZ area or storage of goods in bonded warehouse for the purpose of export, imported under a licence issued for the said purpose as and when vessel is available or otherwise, cannot be brought within the purview of DRI officials under the Customs Act and it is only officials under SEZ Act, who would be bestowed with jurisdiction to initiate the proceedings. - HC
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Seeking refund with interest on the IGST paid on the export of goods - wrongful mentioning the code in the shipping bills under which drawback is claimed - despite the correction having been permitted in the shipping bill, the refund of IGST was not granted to the petitioner - The respondent/revenue is directed to refund IGST against the aforementioned shipping bills - HC
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Availability of alternative remedy - bar to invoke writ jurisdiction or not - Once the petitioner has availed the remedy of appeal, it would be inappropriate to entertain the Writ Petition more particularly when further remedy of Appeal is available. There is no impediment for the petitioner to avail the remedy of Appeal. Only because the petitioners will have to file 111 and 88 Appeals would be no ground to invoke Writ Jurisdiction of this court. - HC
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Re-classification of imported goods - Mineral Hydrocarbon Oil - Mixed Mineral Hydrocarbon Oil - The goods under import are to be classified as per CTH heading claimed/declared by the appellant in the bills of entry. Accordingly, we hold that rejection of transaction value is also bad and thus, declared value has to be accepted. Redemption fine and penalties on the appellants are also set aside - AT
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Refund Claim of excess duty - time limitation - once it is established that more than what is payable under the statute has been paid by the tax-payer, the tax-payer automatically gets a right to get back the whole amount - The Authority without parity of law cannot be permitted to retain the amount because the appellant paying the double duty has committed a mistake. - AT
Direct Taxes
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Prohibition Benami Property Transactions - change of the Adjudicating Authority - The Court further finds its unable to either countenance or discern an indefeasible right which may be recognised in law as inhering in the petitioners to seek continuance of the authority who had heard the matter on 16 September 2021 despite the appointment of Mr. Sanjog Kapoor in October 2021. Once that officer came to be appointed as the competent authority for SAFEMA, he statutorily and by operation of law also became the Adjudicating Authority for the purposes of the 1988 Act. - HC
Indian Laws
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Dishonor of Cheque - recovery of interim compensation as land revenue - public demand or not - Once it is held that the interim compensation ordered under the NI Act falls within the ambit of Schedule I of the Recovery Act, realization thereunder cannot be stopped. The learned Court below was correct in issuing an order under Section 143A of the NI Act for recovery of interim compensation as land revenue - HC
IBC
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Initiation of CIRP - proceedings under SARFAESI ACT, DRT and before PBPT were pending - the Appellant cannot take a stand that the proceedings are pending before DRT and PBPT and the application under Section 7 of the I & B Code, 2016 cannot be maintained does not merit. The application under Section 7 filed by the financial Creditor before the Adjudicating Authority is very well maintained - Order of NCLT admitting the application sustained - AT
SEBI
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Guidelines for seeking NOC by Stock Brokers / Clearing Members for setting up Wholly Owned Subsidiaries, Step Down Subsidiaries, Joint Ventures in GIFT IFSC - Circular
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Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Circular
Service Tax
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Validity of SCN - extended period of limitation - earlier show cause notice was adjudicated by the Authority and the proceedings were dropped - In the present case, the period of present show cause notice and earlier show cause notice prima facie appear to be different and it is not the case of petitioner that the Authority issuing show cause notice inherently lacks jurisdiction - The writ petition is disposed of with liberty to the petitioner to file reply to the show cause notice and put-forth his stand. - HC
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CENVAT Credit - There are substance in the submission of the appellants on merits as it is undisputed that the appellants are engaged in providing renting of immovable property service and all the inputs, capital goods and input services which are in dispute were used for construction of buildings which were then rented out and service tax was paid on the renting of immovable property service. - credit allowed - AT
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Levy of Service tax - Composite Maintenance Contract - The entire plant was handed over by TWAD Board to Appellant for operation and completing the contract to TWAD Board in rendering such activities, even if the Appellant undertakes the maintenance or repair services which are for self and the services of management, maintenance or repair are not attracted as the same is not provided to any client/customer - there are no hesitation in holding that the demand of service tax is not sustainable. - AT
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Condonation of delay in filing appeal before Commissioner (appeals) - The relevant date in terms of Section 85 of the Finance Act, the date of receipt of the order of the adjudicating authority. As per Department’s own document the said date is 24.07. 2020. Hence the appeal filed on 31.08.2020 was very much within the period of two months stipulated under section 85 (3) of the Finance Act 1994 for the purpose of filing the said appeal. - AT
Central Excise
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Process amounting to manufacture or not - activity of blending of various mineral oils and selling the same to various industrial consumers or persons engaged in the construction of roads - The demand is raised well in time by the respondent and the appellant cannot deny the payment of his legal dues towards the respondents - this Court finds that the judgment passed by the learned Appellate Authority below, upholding the order passed by the authorities below is just reasoned after appreciating the facts - HC
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Levy of Central Excise duty - intermediate goods used in the manufacture of exempt final goods - the duty liability would fall on the manufacturer who is a job worker in this case and not on the appellant. Since duty demand has been made on Brass Casted Rods and the appellant is not a manufacturer of the same, the demand is not sustainable and accordingly, the impugned order demanding duty from appellant is legally not correct.- AT
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Refund of Central Excise Duty - return of goods post GST era which were supplied earlier - It is held that for such deemed lapse in procedure, the substantial benefit of refund of duty paid at the time of clearance cannot be denied to the appellant, as the appellant have fulfilled all the conditions precedent for being entitled to refund - refund allowed - AT
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Refund claim - relevant date u/s 11B of CEA - refund application is time barred or not - The very perusal of section 35FF which talks about interest on delayed refund of amount of pre deposit under section 35F makes it clear that the provision is absolutely silent about any time limit for the assesee to claim his amount which was deposited by him for the purpose other than duty. - AT
VAT
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Validity of Provisional attachment - Admittedly, except saying that the orders of provisional attachment are passed in order to protect the interest of the Government revenue, no other reasons are assigned by the fourth respondent in the impugned orders of provisional attachment. - the contention that the reasons for ordering provisional attachment were recorded in the Note File and that there is no need to extract the same or state the same in the provisional order of attachment, in the considered opinion of this Court, cannot stand for judicial scrutiny. - HC
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Search and Seizure - failure in filing regular monthly returns/statements - consignment of taxable goods transported by it - The respondent no. 5 is a competent officer as prescribed under section 3 of the Act and no challenge to the authority or power of the officers empowered under section 3 of the Act have been made by the petitioner. The only ground of the challenge is that the respondent no. 5 was not a member of the vigilance group or wing on the date when the search and seizure was made - the materials recovered during a search, which may not have been conducted as per the provisions of law, are also admissible in evidence and it is permissible to take consequential actions under the provisions of law, as have been done in the present case. - HC
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Levy of advertisement tax - MSOs - The MSO is only retransmitting the programing services received from the broadcaster. It is not the case of the Respondent Department that the Petitioner is transmitting his own programming services for simultaneous reception and that he has received the advertisement for consideration so as to be made liable for the advertisement tax. - The impugned notice cannot be sustained and is quashed and set aside - HC
Case Laws:
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GST
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2022 (5) TMI 637
Maintainability of petition - availability of alternative remedy of appeal - Cancellation of GST Registration Certificate of the Petitioner - Section 30 of the CGST Act - HELD THAT:- Only on the ground that the present Petitioner had an opportunity to comply with the provisions of the regulations / statute and the Petitioner failed to avail of the remedy under Section 30 of the CGST Act for revocation of cancellation of the registration, the Appellate Authority has failed to entertain the appeal. The Appellate Authority, if it came to the conclusion that the Petitioner ought to have fled an appeal before the same Authority for revocation, then ought to have accorded an opportunity to the Petitioner to fle an Application. The Appellate Authority, it appears, has condoned the delay in fling the appeal, as the appeal was admitted and heard on merits. However, no decision on merit was given. The appeal was fled on 29.09.2021. Under Section 30, the Application has to be fled within 30 days. The Additional Commissioner or the Assistant Commissioner may extend the time for 30 more days and the Commissioner can extend it for further 30 days. An opportunity is accorded to the Petitioner to file an Application before the Authority under Section 30 of the CGST Act - petition disposed off.
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2022 (5) TMI 636
Maintainability of adjudication proceedings - time limitation - inordinate delay of over 13 years - HELD THAT:- There is no dispute that the Petitioner immediately on receipt of the show cause notices, filed its reply to all the show cause notices within time. It is not the case that adjudication of the impugned show cause notices was delayed at the behest of the Petitioner. Petitioner cannot be faulted with for non adjudication of the show cause notice for slumber of 10 to 13 years. No steps were taken by the Respondents to adjudicate the show cause notices. The impugned show cause notices not having adjudicated for almost 13 years, are quashed and set aside - petition allowed.
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2022 (5) TMI 635
Maintainability of appeal - Time Limitation - admissibility of credit in the GST regime in respect of EC and EHEC - HELD THAT:- On the first date, the predecessor bench of this Court on 21.12.2022 asked the learned Counsel for the Respondents to take instruction whether impugned order passed by appellate authority can be set aside and remanded back for deciding the matter afresh. It would appear that the appellate authority has not considered the judgement of this Court in case of GODREJ BOYCE MFG. CO. LTD. VERSUS UNION OF INDIA AND ORS. [ 2021 (11) TMI 157 - BOMBAY HIGH COURT ] - The said judgment is relied by the Petitioner to contend that in similar circumstances, show cause notice issued seeking to recover transition of EC and SHEC in the Electronic Credit Ledger based on the Amendment Act, 2018 was set aside. The said aspect has not been dealt with by the appellate authority. Additional submissions also does not appear to have been considered. The contention of the Petitioner that the order could not travel beyond the show cause notice, also does not appear to have been considered by the appellate authority. The matter is remanded back to the appellate authority for deciding afresh - Petition allowed by way of remand.
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2022 (5) TMI 634
Refund of IGST on goods exported - higher draw back claimed or not - HELD THAT:- From the facts on record, it is evident that the Petitioner is claiming draw back of the custom component only for the goods exported by the Petitioner at the rates specified therein. The rates of draw back under column A and B for the product exported by the Petitioner is the same. The said fact is not disputed by the Respondents. It is only on technical ground that affixing suffix A claim of the Petitioner is denied. Respondents shall sanction the refund towards IGST paid in respect of the goods exported i.e. supply made by shipping. Of course, in case, if there is no other impediment, statutory interest shall follow - Petition allowed.
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2022 (5) TMI 633
Anti-profiteering - power of suo moto investigation in terms of Rule 133 of the Central Goods and Service Tax Rules, 2017 - widening of the scope of enquiry to include suo moto review from 01.07.2017 with the inception of GST, till date of the complaint - HELD THAT:- The provisions of Section 171 of the CGST Act compare well with the spirit and intention of Section 18, though perhaps not the language. The Competition Act addresses anti-competitive agreements and has a laudable purpose behind it. The object is to ensure healthy competition in the market as it is expected to bring about various benefits for the public as well as the economy. This is similar to the Anti-profiteering provision and the spirit and object behind its insertion. The distinction sought to be made by the petitioner is thus rejected. The cases relied upon by the petitioner are distinguishable for this reason. Coming to impugned notice dated 10.07.2020, the Authority has called upon the petitioner, based upon report of the DGAP dated 01.07.2020 to show cause why the aforesaid report not be accepted and the petitioner s liability for profiteering determined. The petitioner is thus at liberty to comply with the directive under the impugned notice, put forth its explanation in writing within a period of three (3) weeks from date of uploading of this order in the official website of this Court, appear before the Authority on a date to be fixed by the authority per mutual convenience of the parties and contest the findings and conclusion in the report of the DGAP dated 01.07.2020 - Barring the aspect of assumption of jurisdiction that has been held adverse to the petitioner, both parties are at liberty to pursue all lines of argument as they believe are available to them and nothing contained in this order shall stand in the way of a de novo hearing on the merits of the matter, with all issues left open, for decision afresh. Petition dismissed.
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2022 (5) TMI 632
Benefit of lower rate of tax - item wise billing for every product in the Air Handling units independently, can be done or not - naturally bundled supply or not - procurement of higher rate items i.e. 28% from different company and rest of the system (less than 28%) from other company is agreeable? - Section 8 of GST Act - HELD THAT:- As per the application at box 12(b) the nature of the activity undertaken by the applicant involves supply, installation and commissioning of the clean room HVAC project. As seen from the literature pertaining to Cleanrooms, they are specially constructed, environmentally controlled enclosed spaces where the concentration of airborne particles (contaminants) is kept within specified limits. In industry, cleanrooms are used in the manufacturing of electronic hardware such as integrated circuits (ICs) and hard drives. In biotechnology and medicine, cleanrooms are used when it is necessary to ensure an environment free of bacteria, viruses, or other pathogens. Further it is the contention of the applicant that they are bifurcating the purchase order for the components and installation contract. The crux of the issue boils down to whether the contract for installation HVAC clean room system is divisible into one for supply of material and other for service or not. Further whether it is a composite supply or a mixed supply. And in case it is composite supply, then what is the principle supply. In order to answer these questions which are related to the issues raised by the applicant they are requested to produce copies of purchase orders of material and orders for erection contracts - However, they have not produced the copies of purchase order and erection order as promised during the personal hearing till date. In the absence of the key elements to discern the nature of the contract as to whether it is a naturally bundled supply or not their application stands rejected.
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2022 (5) TMI 631
Profiteering - supply of Monitors and TVs of screen size upto 32 inches - benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the price - contravention of Section 171 of the CGST Act, 2017 - levy of interest and penalty - time limitation - HELD THAT:- A plain reading of Section 171 (1) of the CGST Act, 2017 indicates that it deals with two situation:- one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the record that there has been a reduction in the rate of tax from 28% to 18% on Monitors and TVs of screen size upto 32 inches w.e.f. 01.01,2019, vide Notification No. 24/2018-C.T.(Rate) dated 31.12.2018. Therefore, the Respondent is liable to pass on the benefit of the above tax rate reduction to his customers in terms of Section 171 (1) of the above Act, It is also apparent that the DGAP has carried out the present investigation w.e.f. 01.01.2019 to 30.06.2019. It is also evident that for computing the profiteered amount the DGAP has calculated item-wise profiteering during the pre rate reduction period and calculated the average base price (without GST) of particular item by dividing the total taxable value with the total quantity of that item sold. He has compared the average pre rate reduction base price of the item with the actual selling prices of that item sold during the post reduction period i.e. after 01.01.2019 and assessed the profiteered amount on particular item. The mathematical methodology employed by the DGAP to compute the profiteered amount is correct, appropriate, reasonable and in consonance with the provisions of Section 171 (1) and the same has not been challenged by the Respondent in any of his submissions. Further, the Respondent has not submitted any argument against the charges framed in the DGAP's Report. Therefore there are no basis to differ from the findings of the DGAP that the Respondent had indeed contravened the provisions of Section 171 of the CGST Act 2017 - the profiteered amount is determined as Rs. 4,699/- for the period from 01.01.2019 to 30.06.2019 as mentioned in the DGAP's Report dated 28.02.2020 as per the provisions of Section 171 (1) read with Rule 133 (1) of the CGST Rules, 2017. Further, since the recipients to whom the benefit of rate reduction as determined above is required to be passed on, are not identifiable, the Respondent has deposited the profiteered amount of Rs. 4,699/- along with interest of Rs. 1,500/- in the CWFs of the Central and the State Government. Levy of interest - HELD THAT:- It is revealed from the submissions of the Respondent that the Respondent has voluntarily paid the interest amount of Rs. 1500/-. However, the same has not been verified by the DGAP. Accordingly, the DGAP is directed to ensure that the interest, at the applicable rate, is paid by the Respondent and submit his report confirming payment of the interest within three months of this Order. Penalty - HELD THAT:- The Respondent has contravened the provisions of Section 171 (1) of the CGST Act, 2017. However, since, the penalty prescribed under Section 171 (3A) of the CGST Act, 2017 for violation of the above provisions has come in to force w.e.f. 01.01.2020 and the infringement pertains to the period from 01.01.2019 to 30.06.2019 and the Respondent has also deposited the profiteered amount along with the interest therefore, no penalty is proposed to be imposed on the Respondent. Time limitation - HELD THAT:- This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017. Application disposed off.
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Income Tax
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2022 (5) TMI 630
Reopening of assessment u/s 147 - Notice u/s 148A(b) issued/passed in the name of Bioseed Research India Pvt. Ltd., yet the same had been served upon the successor entity i.e. DCM Shriram Ltd - HELD THAT:- Having heard learned counsel for the parties, the admitted position is that the assessment of the petitioner company i.e. DCM Shriram Ltd. for the assessment year 2018-19 has not concluded yet and the same is pending adjudication before DRP. Consequently, this Court is in agreement with the submission of the petitioner that notice for reassessment could not have been issued to the petitioner for the assessment year 2018-19. Accordingly, on this short ground alone, the present writ petition and application are allowed. If the law permits the respondent/revenue to take further steps in the matter, it shall be at liberty to do so.
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2022 (5) TMI 629
Reopening of assessment u/s 147 - preliminary objection of the Petitioner that there was no valid jurisdiction with Respondent No.1 (located at Jaipur) for issuance of notice or proposed initiation of reassessment proceedings - Petitioner further states that Respondent No.1 has issued the impugned notice under Section 148 of the Act initiating reassessment proceedings in case of the erstwhile non-existing entity - HELD THAT:- Having perused the letter dated 9th May, 2022 written by the Income Tax Officer, Ward 6(2), Jaipur, this Court is of the view that the said Income Tax Officer had no jurisdiction to issue notice dated 14th March, 2022 to propose initiation of reassessment proceedings, as the petitioner s jurisdictional Assessing Officer is based in Delhi, Circle 10(1). Consequently, as the impugned notice under Section 148A(b) as well as the impugned order under Section 148A(d) have been issued by a non-jurisdictional Assessing Officer, the same are quashed. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioner has a grievance, it shall be at liberty to take its remedies in accordance with law.
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2022 (5) TMI 628
Reopening of assessment u/s 147 - Eligibility of reasons to believe - Assessee was engaged in sale of immovable property with a capital gain was occurred, as per insight verification details - HELD THAT:- It is wholly undisputed that reasons to believe recorded by the Assessing Authority for assuming jurisdiction under Section 148 of the Act, 1961 by issuing impugned notice, was totally unfounded and non existent. The Assessing Authority formed the reasons to believe on the ground that petitioner Assessee has sold an immovable property and gained the capital gain during the F.Y. 2012-13 relevant to A.Y. 2013-14 but has not shown the same in his return of income, which was totally unfounded and not bonafide. In the case of Radha Krishna Industries vs. State of H.P. [ 2021 (4) TMI 837 - SUPREME COURT] Hon ble Supreme Court reiterated the law laid down in its earlier judgments in the case of Kelvinator of India Limited. [ 2010 (1) TMI 11 - SUPREME COURT] and TechSpan India (P.) Ltd. [ 2018 (4) TMI 1376 - SUPREME COURT] and held that the power to reopen an assessment must be conditioned on the existence of tangible material and that reasons must have a live link with the formation of the belief . Since the impugned notice under Section 148 of the Act, 1961 is a jurisdictional notice and the reasons to believe recorded by the Assessing Authority was totally unfounded and not bonafide, therefore, the notice itself was without jurisdiction and the Assessing Authority could not have assumed jurisdiction to issue notice under Section 148 of the Act, 1961. Therefore, the impugned notice under Section 148 of the Act, 1961 issued by the Assessing Authority can not be sustained and deserves to be quashed. Consequently, the impugned reassessment order can also not stand and, therefore, it also deserves to be quashed. WP Allowed.
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2022 (5) TMI 627
Reopening of assessment u/s 147 - Period of limitation to issue notice - Date of issuance of notice - communication in electronic form - objection of the petitioner against the notice under Section 148 - date and time of triggering of e-mail for issuing notices and orders - digitally signing notice automatically amount to issuance of notice - Whether digitally signing a notice and issuing it are two different acts ? - Breach of Judicial Discipline-Misconduct-Contemptuous - HELD THAT:- From the averments made by the respondent nos. 2,3 and 4 in the aforesaid short counter affidavit, it is evident that the notice under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2013-14 was issued to the petitioner on 01.04.2021, whereas the limitation of issuing the notice expired on 31.03.2021. Thus notice under Section 148 of the Income Tax Act, 1961 was time barred and consequently it was without jurisdiction. Since large number of writ petitions are being filed in which the date and time of issuance of notice under Section 148 of the Income Tax Act, 1961 are in issue, and, importantly, those notices are being issued by e-mail, it is directed that the respondent no. 1 shall ensure that the date and time of triggering of e-mail for issuing notices and orders are reflected in the online portal relating to the concerned assessees. Facts of the case as discussed above, particularly the observations made by the respondent no.4 in the last line of the impugned order dated 19.03.2022 noticed by us in our order [ 2022 (5) TMI 421 - ALLAHABAD HIGH COURT] above clearly indicates that the order dated 19.02.2022 has been passed by the respondents in breach of judicial discipline and propriety causing harassment to the petitioner/assessee on account of the failure to give effect to the order of this Court [ 2022 (3) TMI 1373 - ALLAHABAD HIGH COURT] which was filed by the petitioner. We propose to comment on the conduct of the officer concerned but the respondents have tendered unconditional apology by filing a short counter affidavit dated 22.04.2022, as noted in para 7 above, therefore, in view of the unconditional apology tendered by the deponent Sri Pawan Kumar Sharma, Additional Commissioner of Income Tax in the aforesaid short counter affidavit, we do not propose to proceed against the respondent no.4 by referring the matter for contempt. However, we direct the respondents to be careful in future and must have due regard to the judgments and orders of this Court, keeping in mind the settled principal of judicial propriety and discipline We direct the respondents to maintain judicial discipline and follow the doctrine of binding precedent and be careful in future, having due regard to the authorities of the Court, keeping in mind the judicial propriety and discipline. The impugned notice under Section 148 of the Income Tax Act, 1961, being without jurisdiction, cannot be sustained and is hereby quashed. Decided in favour of assessee.
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2022 (5) TMI 626
Disallowance of deduction claimed u/s. 80-IB(10) - AO denied the exemption u/s 80IB(10) only on the ground that the plot of land on which the housing project was constructed is less than the prescribed limit of area i.e. 1 acre - AO came to the conclusion that the area of land is less than 1 acre based on the report submitted by the Government Registered Valuer as well as sanction of plan by the Town Planning Department - HELD THAT:- The contention of the appellant that the he had purchased the land subsequent to the sanction of plan by Town Planning Department to adapt to the area of plot is rejected by the Government Registered Valuer on the ground that it is only purchase of right to access not purchase of land, this remain un-controverted by the assessee. Departmental Valuer also mentioned in the report that 7/12 extracts were not produced and the report submitted by the Department clearly mentioned that even on actual measurement the area of land is only 4000 sq.mtrs. which is less than 1 acre. It is not the case of the appellant that the report of the valuer as relied upon by the Department without giving an opportunity of hearing. Thus, the appellant had failed to prove that the area of land is more than 1 acre which is a condition precedent for availing the benefits of deduction u/s 80IB(10) of the Act. In the circumstances, we do not find any merit in the appeal filed by the assessee. Accordingly, the grounds of appeal filed by the assessee stand dismissed.
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2022 (5) TMI 625
Condonation of delay - Levy of late filing fee under section 234E of the Act for belated filing of TDS returns - assessee had filed appeals beyond due date for the reason that at the time of introducing section 234E by the Finance Act, 2015, there was an ambiguity and no clear directions regarding levy of late filing fee under section 234E of the Act for belated filing of TDS returns - HELD THAT:- We have also gone through the orders of the Ld. Revenue Authorities as well as the order of the Coordinate Bench of the Tribunal in the case of Works Manager Govt. Central Automobile Workshop, Chennai [ 2020 (10) TMI 1326 - ITAT CHENNAI] cited by the Ld. Counsel for the assessee. It is also noticed that the amendment made to U/s. 200A of the Act w.e.f 01/06/2015 is held to be prospective in nature and hence no late fee can be levied U/s. 234E of the Act while processing the TDS returns filed prior to 01/06/2015. Further, on perusal of the said order of the ITAT, Chennai Bench we find that under the similar set of facts and circumstances, after careful consideration, the Tribunal condoned the delay in filing appeals before the First Appellate Authority and restored the matter to the file of the Ld. CIT(A) with a direction to decide the issues on merits. We hereby condone the delay in filing the appeals before the Ld. CIT(A) and restore the matter back to the file of the Ld. CIT(A) to decide the issues involved in these appeals on merits and in accordance with law.
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2022 (5) TMI 624
Deduction eligible u/s. 36(1)(viia) - provision for bad and doubtful debts - disallowance of provision in excess of seven and one half percent of the income as provided in section 36(1)(viia) -AR conceded that the provision towards standard assets is not liable for deduction under the Income Tax Act, 1961 - HELD THAT:- We find that the issue of eligible deduction under the First proviso was not raised before the Ld. AO. We have also noted that this option of claiming deduction under the first proviso was exercised by the assessee only before the Ld. CIT(A). We note that the Cooperative Bank is basically mentioned in sub clause (a) of section 36(1)(viia) of the Act whereas in the first proviso only a scheduled and non-scheduled bank is being referred in the Act. We therefore note that the term Cooperative Bank is specifically excluded in the first proviso to sub clause (a) of section 36(1)(viia) of the Act. Accordingly, the Ld. AO has rightly computed the deduction eligible U/s. 36(1)(viia) of the Act. We therefore uphold the order of the Ld. AO on this ground. Loss incurred by the sale of Government Securities - Investments classified under HTM category need not be marked to market and are carried at acquisition cost unless there are more than the face value, in which case the premium should be amortized over the period remaining to maturity - HELD THAT:- In the instant case, the impugned loss arose on sale of Government securities emanated from the investments which were classified under AFS category. In view of that, we find merit in the claim of the assessee that the loss arising out of sale of Government Securities is of trading loss notwithstanding the securities are grouped under the head investment owing to the prescribed format of the RBI. We find that the order of the Ld. CIT(A) is in consonance with the CBDT instructions as well as the facts of the case and does not require any interference. Accordingly, grounds raised by the Revenue on this aspect are dismissed.
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2022 (5) TMI 623
Levy of penalty u/s 271(1)(c) - whether for furnishing of inaccurate particulars of income or concealment of income? - deduction u/s 35(1)(ii) has been disallowed by the Assessing Officer after due inquiry from the person who has issued certificate u/s 35(1)(ii) of the Act and said inquiry was duly confronted to the assessee - HELD THAT:- The contention of the Ld. counsel of the assessee that no inaccurate particulars has been filed by the assessee are rejected being devoid of merit. Accordingly, we do not find any error in the order of Ld. CIT(A) and uphold the penalty sustained. Appeal of assessee dismissed.
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2022 (5) TMI 622
Disallowance u/s 10A - re-allocation of salary wages (Admn.), power consumption, stationary which are clearly incurred for both SEZ Unit and non-SEZ Unit - HELD THAT:- It is pertinent to note that the CIT(A) has given categorical finding that the assessee in the revised Form No.56A has taken the profit from SEZ Unit at Rs.1,33,37,787/- which was reduced by the expenditure related to Electricity, Sundry Balance and depreciation of patent. The assessee already admitted and the Assessing Officer in remand report also verified that as per the corrected Form No.56F the eligible profit of SEZ unit was of Rs.1,33,37,787/- excluding the amount of Rs.1,71,73,667/- where no bank realisation certificate is there on record on this profit the eligible claim under Section 10A of the Act at the rate of 50% as claimed was of Rs.66,68,894/-. But now the claim after re-working of eligible profit at Rs.73,43,346/- @ 50% comes to Rs.36,71,673/- for which the assessee is entitled for claim of deduction under Section 10A of the Act. There is no need to interfere with the findings of the CIT(A). Hence, ground no.1 of Revenue s appeal is dismissed. Disallowance of interest under Section 36(1)(iii) - when the assessee failed to discharge its onus that the advances to its subsidiaries were made for the purpose of business - HELD THAT:- The said issue is covered in favour of the assessee by the Tribunal which is confirmed by the Hon ble High Court of Gujarat for A.Y. 2007-08 [ 2018 (2) TMI 442 - GUJARAT HIGH COURT] - Decided against revenue. Addition on account of miscellaneous expenses - HELD THAT:- From the perusal of the assessment order, it can be seen that the basis of making this addition was not demonstrated by the Assessing Officer in the assessment order. In fact, books were also now rejected by the Assessing Officer. Thus, merely on conjectures and surmises the Assessing Officer cannot make adhoc disallowance. There is no need to interfere with the findings of the CIT(A). Hence, ground no.3 of Revenue s appeal is dismissed. Addition on account of licence fees - D.R. submitted that the payments were made on monthly basis and the same is in the nature of revenue and, therefore, addition on account of licence fees is totally uncalled for by the Assessing Officer - HELD THAT:- AO has totally ignored the factual aspect of payment of Licence Fees which was for the purpose of business and, therefore, revenue in nature. The payments were made on monthly basis and these facts were not controverted by the revenue. The CIT(A) has rightly deleted this addition and there is no need to interfere with the observations of the CIT(A). Hence, ground no.4 of the Revenue s appeal is dismissed. Addition on account of vehicle expenses and travelling expenses - HELD THAT:- It is pertinent to note that the vehicle expenses and travelling expenses were made during the business exigencies. The Assessing Officer has ignored this fact. The CIT(A) has rightly made 10% addition which was totally on adhoc basis and deleted the same by giving detailed findings to that extent. Hence, gourd no.5 of Revenue s appeal is dismissed. Addition on account of bonus and leave encashment as well as provisions of Excise Duty - HELD THAT:- It is pertinent to note that it is admitted fact related to bonus/leave encashment which are of A.Y. 2008-09 and the same were not debited in current year. The CIT(A) has rightly deleted this addition and there is no need to interfere with the findings of the CIT(A). D.R. s contention that Excise Duty was paid after filing of return of income was not correct. Hence, ground no.6 of Revenue s appeal is dismissed. Disallowance on account of pre-paid insurance expenses - HELD THAT:- From the perusal of records, it can be seen that the assessee is claiming insurance on payment basis consistently and in previous years the Assessing Officer has not disallowed this claim. The CIT(A) has given detailed finding and there is no need to interfere with the same. Ground no.7 of the Revenue s appeal is dismissed. Disallowance u/s 40A(2)(b) - D.R. submitted that the assessee has not given any evidence before the Assessing Officer and, therefore, the onus was not discharged by the assessee during the assessment proceedings - HELD THAT:- It is an admitted fact that this disallowance is purely on mechanical basis by the Assessing Officer and the assessee has given all the evidences before the CIT(A). The Assessing Officer has not pointed out any discrepancy; hence ground no.8 of the Revenue s appeal is dismissed. Disallowance made under Section 14A - HELD THAT:- It is admitted fact that no exempt income was earned by the assessee during the year. All the investments in shares as notified in the Profit Loss Account as well as in the books of the assessee Company. In fact, interest-free funds were in excess of investments in shares and, therefore, the CIT(A) has rightly deleted this disallowance. Hence, ground no.9 is dismissed. Disallowance on account of rent expenses - HELD THAT:- A.R. demonstrated before us as well as before the CIT(A) that the TDS was deducted from the rent and the income was shown in return of income of receiver i.e. Lavjibhai P. Patel. Thus, the CIT(A) has rightly deleted this disallowance. Ground no.10 is thus dismissed. Disallowance on account of Sundry Balance written off - CIT-A deleted the addition - D.R. submitted that the deletion is not just and proper on behalf of the CIT(A) as such amount did not satisfy the precondition laid down under Section 36(2) - HELD THAT:- It is pertinent to note that the advance to employees and credit note received for inferior quality of goods sold were neither received in current A.Y. nor in subsequent A.Y. and it was rightly written off by the assessee. The said Sundry Balance was allowable as business expenses and Excise Duty added in opening stock of next year was also on record before the CIT(A). The CIT(A) has rightly deleted this disallowance. Hence, ground no.11 of Revenue s appeal is dismissed. Penalty u/s 271(1)(c) - deduction under Section 10A of the Act at 100% whereas the assessment year in question i.e. A.Y. 2009-10 which is the 6th year - HELD THAT:- It is pertinent to note that the assessee has pointed out that the claim of deduction under Section 10A of the Act was wrongly claimed 100% and subsequently the assessee has filed revised Form no.56F and, therefore, it cannot be stated as concealment of particulars of income or furnishing of inaccurate particulars. The mistake cannot be treated as deliberate mistake on the part of the assessee as held by Hon ble Supreme Court in the case of Price water house coopers [ 2012 (9) TMI 775 - SUPREME COURT] Hence, penalty under Section 271(1)(c) imposed by the Assessing Officer is hereby deleted.
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2022 (5) TMI 621
Deduction claimed u/s 80IA(4)(iii) in respect of profits from industrial park known as Salarpuria Touchstone - Claim rejected on the ground that the assessee has failed to furnish the CBDT notification qua the said Industrial Park - HELD THAT:- We note that the assessee has also filed a writ petition before the Hon ble Karnataka High Court seeking the direction to CBDT/competent authority to bring out a notification in respect of Salarpuria Touchstone and the Hon ble Karnataka High Court was also pleased to give certain directions to competent authority in respect of above Industrial Park however again due to the failure of competent authority to follow the directions of Hon ble Karnataka High Court, another writ petition was filed by the assessee before the Hon ble Karnataka High Court seeking necessary directions to the competent authority which is pending for adjudication. Undisputedly till date the project has not been notified by the competent authority which was a pre-condition for grant of deduction u/s 80IA (4) of the Act. Under these circumstances, we are of the view that the deduction u/s 80IA(4) in respect of Salarpuria Touchstone park cannot be allowed. However, in case the Hon ble High Court decides the issue favorably and the project is notified in future by the competent authority , then the assessee may approach the AO for grant of relief/deduction 80IA(4) of the Act and the AO will be bound to amend the order accordingly. Subject to above observations, this issue is decided against the assessee. Accordingly, ground nos. 1 2 are dismissed with the above observations. Disallowing the relief in respect of TDS being the short credit allowed by the AO by restoring the issue back to the file of AO with the direction to allow the TDS on the basis of TDS certificates - HELD THAT:- We are inclined to direct the AO to allow the credit of TDS of Rs. 1,38,282/- to the assessee after verifying the TDS certificates and other evidences as may be furnished by the assessee in respect of its claim. Accordingly the ground no. 3 is allowed for statistical purposes. Allowability of MAT credit of taxes of earlier years u/s 115JAA - HELD THAT:- After hearing the rival parties and perusing the facts on records as placed before us we are convinced that the assessee is entitled to credit of MAT as per the provisions of the Act. However the said claim has been made for the first time before us and therefore involves verification of facts at the end of the AO. Accordingly we restore this issue back to the file of AO with the direction to decide the issue as per the provisions of the Act by doing necessary verification after affording a reasonable opportunity of hearing to the assessee. Accordingly ground no. 4 is allowed for statistical purposes. Assessment u/s 153A - HELD THAT:- After carefully analyzing the facts of the acts and after the perusal of assessment order, we find that there is no reference at all by the AO to any such incriminating material found during search. The various additions were undisputedly made on the basis of observation of the AO during assessment proceedings for which were no incriminating materials found during search. The additions made inter alia include disallowance u/s 14A, disallowance of interest on service tax TDS , disallowance of donation , membership and subscription and loss on sale of fixed assets etc. the case of the assessee is squarely supported a series decisions as decided by various judicial forums which have laid down the same ratio namely PCIT vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] , CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] - Under these facts and circumstances and respectfully following the ratio as laid down in the above decisions, we hold that the additions have been made without any incriminating material found during the course of search and, therefore cannot be sustained. The legal and jurisdictional grounds raised by the assessee are allowed. Addition u/s 14A r.w.r. 8D - HELD THAT:- We find that during the year the assessee has not earned any exempt income. The ld. Counsel of the assessee took us through the audited balance sheet for the year ended on 31.03.2014 to show that there is no exempt income during the year. Besides the Ld. Counsel of the assessee also argued that sum of the share capital reserve and surplus are far more than the investments made by the assessee and therefore no disallowance can be made in consonance with the ratio laid down by the Hon ble Apex Court in the case of Max India Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] . After perusing the order of Ld. CIT(A) in the light of the decisions as discussed above, we do not find any infirmity in the appellate order and accordingly ground nos. 1 of the revenue s appeal is dismissed. Addition on account of bad debts during the year - HELD THAT:- We note that sundry balances were written off by the assessee including unserviceable stocks to the tune of Rs. 2,36,454/- which were apparently arising in normal course of business or pertaining to amounts receivable and therefore the assessee is entitled to charge the same against the profits during the year in terms of ratio laid down in T.R.F Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] We therefore do not find any infirmity in the order of Ld. CIT(A) and accordingly ground no. 3 raised by the revenue is dismissed. Addition on account of on money received upon sale of flats - HELD THAT:- As no addition can be made on the basis of doubt unless there is material to prove the receipt of on-money by the assessee. Similarly the addition made on the basis of statement without any corroborative material cannot be sustained as has been held in the case of Best Infrastructure India Pvt. Ltd.. [ 2017 (8) TMI 250 - DELHI HIGH COURT] , Shri Saurabh Mittal [ 2018 (9) TMI 1233 - ITAT JAIPUR] and SRM Securities Ltd.[ 2018 (9) TMI 1233 - ITAT JAIPUR] . Considering the facts of the cases, in the light of the decisions as mentioned and discussed earlier, we are inclined to uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue
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2022 (5) TMI 620
Addition of sundry balances written off towards excise duty and others - acquisition of control by the Resolution Applicant over the company pursuant to the duly approved resolution plan by Hon ble NCLT, Kolkata - HELD THAT:- From the perusal of the order of NCLT, Kolkata dated 11.10.2018 in the assessee s own case being a Corporate Debtor under the Code, we note that the assessee company was in default with Banks and was taken before NCLT under the Code. After deliberation, resolution plan of the resolution applicant was approved by the CoC and the same was duly proved by the NCLT, Kolkata Bench on 11.10.2018. Unhesitatingly, in our mind, we are convinced by the appraisal of the Ld. AR about subsequent developments in the case of the assessee under the Code before the NCLT, Kolkata and find that the issue discussed is no longer res integra . In the present set of facts where the impugned year i.e. AY 2013-14 relevant to financial year 2012-13 relates to a period prior to the date of order of NCLT, Kolkata which is dated 11.10.2018, we are inclined to restore the present matter to the file of Ld. AO for taking necessary action in accordance with the law, which on the same issue was similarly dealt by the Co-ordinate bench of ITAT Kolkata [ 2021 (10) TMI 1255 - ITAT KOLKATA] keeping in view the legal position emanating from the judicial pronouncements of Hon ble Supreme Court referred [ 2018 (8) TMI 1775 - SC ORDER] under the similar set of facts and law. Accordingly, appeal of the assessee is allowed for statistical purpose.
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2022 (5) TMI 619
Delay in remittance of employees contribution towards provident fund - HELD THAT:- As relying on M/S MOHANLAL KHATRI VERSUS A.C.I.T., CIRCLE-2 AJMER [ 2021 (11) TMI 1035 - ITAT JAIPUR] and AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT held that the payment of employees contribution in regard to PF ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B. Scope of amendment - Whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed ought to have been applied for the purpose of determining the due date under this clause? - In our opinion, this amendment has been brought in the statute book to provide certainty about the applicability of provisions of Section 43B of the Act inspite of belated payment of employee s contribution. We also noted from the memorandum explaining the provisions to Finance Act, 2021, wherein relevant Clauses to said memorandum clearly intended that the amendment shall take effect from 01.04.2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years. We are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee s appeal is allowed.
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2022 (5) TMI 618
Addition u/s 69A - Undisclosed investment in cash deposits and transfer of cheque - unexplained investment - additional evidences submitted under the Rule 46A of the ITAT Rules - HELD THAT:- Addition made by the AO on various counts and during the appellate proceedings these documents were being placed before the ld.CIT(A) and the ld.CIT(A) called for remand report, since additional documents were being placed by invoking Rule 46A. As it can be seen from the remand report and rebuttal filed by the assessee, the factum of the transactions were clearly brought on for each addition with documentary evidences, and also the three immovable properties stated to have been purchased by the assessee only in his capacity as partner of the firm and the transactions were being shown as stock-in-trade in its balance sheet, which is also assessed to tax and scrutiny assessment has also been passed on 21.3.2014 in the case of the partnership firm M/s.Monarch Infra Venture. Considering the above facts, the ld.CIT(A) deleted the additions made by the AO. During the course of hearing before us, the ld.DR could not able to produce any contrary view or evidence on the deletion made by the ld.CIT(A). Therefore, we are of the considered opinion that deletion made by the CIT(A) does not require any interference and grounds raised by the Revenue are hereby rejected. Consequently, cross objection filed by the assessee being in support of the order of the ld.CIT(A), becomes infructuous, and disposed off accordingly.
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2022 (5) TMI 617
Delay in payment towards Provident Fund (P.F.) / Employees State Insurance Corporation Scheme (ESIC) under section 36(1)(va) r/w section 2(24) - intimation under section 143(1) - HELD THAT:- As relying on KALPESH SYNTHETICS PVT LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CPC BENGALURU. [ 2022 (5) TMI 461 - ITAT MUMBAI] When the due date under Explanation to Section 36(1)(va) is judicially held to be not decisive for determining the disallowance in the computation of total income, there is no good reason to proceed on the basis that the payments having been made after this due date is indicative of the disallowance of expenditure in question. While preparing the tax audit report, the auditor is expected to report the information as per the provisions of the Act, and the tax auditor has done that, but that information ceases to be relevant because, in terms of the law laid down by Hon ble Courts, which binds all of us as much as the enacted legislation does, the said disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1). Viewed thus also, the impugned adjustment is vitiated in law, and we must delete the same for this short reason as well. adjustment in the course of processing of return under section 143(1) is vitiated in law, and we delete the same. As we hold so, we make it clear that our observations remain confined to the peculiar facts before us, that our adjudication is confined to the limited scope of adjustments which can be carried out under section 143(1) and that we see no need to deal with the question, which is rather academic in the present context, as to whether if such an adjustment was to be permissible in the scheme of Section 143(1), whether the insertion of Explanation 2 to Section 36(1)(va), with effect from 1st April 2021, must mean that so far as the assessment years prior to the assessment years 2021-22 are concerned, the provisions of Section 43B cannot be applied for determining the due date under Explanation (now Explanation 1) to Section 36(1)(va). That question, in our humble understanding, can be relevant, for example, when a call is required to be taken on merits in respect of an assessment under section 143(3) or under section 143(3) r.w.s. 147 of the Act, or when no findings were to be given on the scope of permissible adjustments under section 143(1)(a)(iv). That is not the situation before us. - Decided in favour of assessee.
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2022 (5) TMI 616
Delay in payment towards Provident Fund (P.F) / Employees State Insurance Corporation (ESIC) and other welfare fund under section 36(1)(va) r/w section 2(24) - intimation under section 143(1) - HELD THAT:- As relying on KALPESH SYNTHETICS PVT LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CPC BENGALURU. [ 2022 (5) TMI 461 - ITAT MUMBAI] When the due date under Explanation to Section 36(1)(va) is judicially held to be not decisive for determining the disallowance in the computation of total income, there is no good reason to proceed on the basis that the payments having been made after this due date is indicative of the disallowance of expenditure in question. While preparing the tax audit report, the auditor is expected to report the information as per the provisions of the Act, and the tax auditor has done that, but that information ceases to be relevant because, in terms of the law laid down by Hon ble Courts, which binds all of us as much as the enacted legislation does, the said disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1). Viewed thus also, the impugned adjustment is vitiated in law, and we must delete the same for this short reason as well. adjustment in the course of processing of return under section 143(1) is vitiated in law, and we delete the same. As we hold so, we make it clear that our observations remain confined to the peculiar facts before us, that our adjudication is confined to the limited scope of adjustments which can be carried out under section 143(1) and that we see no need to deal with the question, which is rather academic in the present context, as to whether if such an adjustment was to be permissible in the scheme of Section 143(1), whether the insertion of Explanation 2 to Section 36(1)(va), with effect from 1st April 2021, must mean that so far as the assessment years prior to the assessment years 2021-22 are concerned, the provisions of Section 43B cannot be applied for determining the due date under Explanation (now Explanation 1) to Section 36(1)(va). That question, in our humble understanding, can be relevant, for example, when a call is required to be taken on merits in respect of an assessment under section 143(3) or under section 143(3) r.w.s. 147 of the Act, or when no findings were to be given on the scope of permissible adjustments under section 143(1)(a)(iv). That is not the situation before us. - Decided in favour of assessee.
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2022 (5) TMI 615
Additional ground raised before the ld. CIT(A) which was not considered during appellate proceedings - iolation of Rule 46A of the Income Tax Rules, 1962 by stating that Income-tax Non Statutory Form-51 [ITNS-51] is not sufficient - HELD THAT:- In the case of Ramco Cements Ltd. [ 2014 (11) TMI 447 - MADRAS HIGH COURT] as directed the ld. CIT(A) to consider the additional ground which was raised before the ld. CIT(A) and which was not considered during appellate proceedings, as the assessee in that case has given certain reasons with records to show that it was a bonafide claim but out of inadvertence, it was not stated in the return of income, whereas, the matter was not remanded to the Assessing Officer on the pretext that the Assessing Officer is not empowered to adjudicate a claim which was not claimed in the original return of income or by way of revised return. We are of the considered opinion that the ld. CIT(A) has perfectly assumed the jurisdiction by exercising of powers conferred upon him under section 250(4) of the Act read with sub-rule (4) of Rule 46A of the Income Tax Rules to adjudicate the ground raised in the appeal based on the materials available on records. We find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. Addition u/s 68 on unexplained capital - HELD THAT:- Figures of Balance Sheet reported by the assessee firm while filing its return of income for the impugned assessment year are erroneous and is a result of mistake committed by the assessee firm. The only basis for making the addition by the Assessing Officer was purely on the basis of amounts reflected in the return of income and not with reference to any other documentary evidence. Thus, the addition made by the Assessing Officer is erroneous for the reason that the basis for making the addition itself is erroneous and liable to be deleted. Whether the unexplained partners capital is assessable in the hands of the assessee or not in terms of section 68? - Whether the partners capital is assessable in the hands of the assessee firm has been adjudicated by various Benches of the Tribunal as well as various courts and held that there cannot be any addition in the hands of the assessee firm on account of capital contribution by its partners. See INDIA RICE MILLS VERSUS COMMISSIONER OF INCOME-TAX [ 1995 (12) TMI 55 - ALLAHABAD HIGH COURT] and M/S. M. VENKATESWARA RAO OTHERS [ 2015 (3) TMI 153 - ANDHRA PRADESH HIGH COURT] Thus the capital introduced by the partners cannot be taxed in the hands of the assessee-firm under section 68 - we are of the considered opinion that the ld. CIT(A) has fully justified in deleting the addition made under section 68 of the Act. Thus, the appeal filed by the Revenue is dismissed. Penalty levied under section 271(1)(c) - Once quantum addition has been deleted at appellate stage and duly confirmed by the Tribunal hereinabove, the penalty levied under section 271(1)(c) of the Act could not survive. Accordingly, the appeal filed by the Revenue is dismissed.
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2022 (5) TMI 614
Income accruing or arising in India u/s 9(1)(i) - amount received by the assessee from Tata Communications Ltd as standby maintenance charges - whether it is in the nature of Fees for Technical Services under section 9(1)(vii)? - HELD THAT:- We find that the Co-ordinate Bench of Tribunal in assessee s own case in Reliance Globalcom Ltd [ 2021 (7) TMI 46 - ITAT MUMBAI] for assessment year 2014 15, while holding that amount received by the assessee towards standby maintenance charges from Tata Communications Ltd is not in the nature of Fees for Technical Services under section 9(1)(vii). - Decided against revenue.
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2022 (5) TMI 613
Scrutiny assessment - Invalidity of the notice u/s. 143(2) as the same stands admittedly issued under CASS - if the formulation of guidelines, based on broad identifiable filters, for selection of cases for scrutiny by the assessing authority, is ultra vires the powers of the Board u/s. 119 of the Act - Whether the Board Instruction 04/2016, dated 13/7/2016, to the extent it advocates or furnishes guidelines under CASS 16 for selection of scrutiny of tax returns, is ultra vires the Constitution of India inasmuch as it usurps the power reserved under the Act for an assessing authority thereunder? - HELD THAT:- Question cannot be answered by the Tribunal, a creation of the statute itself, but only by a Constitutional Court, i.e., the Hon'ble High Court or the Hon'ble Supreme Court of India, under its writ jurisdiction. The Hon'ble Court shall, in appropriate proceedings, examine if the said Board Instruction satisfies the test of intelligible classification and on that basis decide if it offends the principle of equality before law enshrined in Article 14, or not. This, to our mind, would be the only valid challenge as the Board has wide powers, both u/s. 119(1), to which reference was made by Sh. Mishra, as well as u/s. 119(2), to which it was not, conferred on it for furtherance of the objects and administration of the Act. Reference in this context may profitably be made to the decision in Pahwa Chemicals (P.) Ltd.[ 2005 (2) TMI 136 - SUPREME COURT] wherein the Hon'ble Apex Court clarified that the Instructions by the Board u/s. 37B (of the Central Excise Act, 1944), which is akin to s. 119 of the Act, are circumscribed by the consideration stated in section 37B itself, i.e., in furtherance of the provisions of the Act. It is, as such, difficult to contend, as Shri Mishra does, that Board Instruction 04/2016 violates section 143(2) of the Act, which provision finds specific reference in section 119(2)(a). Instruction is in breach of or ultra vires section 119(1)(a) as it requires the AO to make an assessment in a particular case - The words in a particular manner qualify not only the words dispose of a particular case but also the words making a particular assessment , preceding the same. The ld. counsel is, I am afraid to say, reading a comma (,) after the word assessment , where none exists. Now, it is nobody s case, nor could possibly be, that selecting a particular case, based on certain broad parameters, viz. investment in real estate; cash deposited in bank (above certain monetary limits), etc., the Board is requiring the assessing authority to make an assessment in a particular manner. It is only, for the efficient management of the Act, facilitating the selection of a return for scrutiny. Nothing more and, nothing less. None of the decisions cited is on the point or in any manner contradicts or repudiates what stands stated here-in-above, which conforms to the well-established law, with, rather, and on the contrary, to the extent in relation to the Board Circular/Instruction, actually supportive of the same. Assessee challenges the assessment on the ground of territorial jurisdiction of the AO, claiming that the same lies with ITO, Ward-2, Jabalpur, and not with ITO, Ward-1, Jabalpur, i.e., the authority who has framed the impugned assessment - The objection is invalid as, firstly, the notice u/s. 143(2) is validly issued on the basis of the address mentioned in PAN (refer: Pr. CIT v. I-Ven Interactive Ltd. [ 2019 (10) TMI 785 - SUPREME COURT] ), change in which, where so, is required to be intimated by it u/s. 139A of the Act. In fact, the objection itself can be raised only within 30 days of the service of notice u/s. 143(2), i.e., by 01/9/2016 (section 124(3)). Thirdly, the resolution of the matter in case the assessee is not satisfied with the AO s disposal of his objection, timely raised, is through the administrative channel, and not through the appellate procedure, law on which is again well-settled (s.124(2); R.B. Seth Teomal v. CIT [ 1959 (3) TMI 3 - SUPREME COURT] . Whether no opportunity was given to him, to quote the relevant Ground: to make compliance of assessment as per the scheme of scrutiny of the case. ? - The argument is ex facie baseless. Para 5 read with para 4 of the letter dated 06/10/2017 (PB-1, pg. 52) clearly conveys (to the assessee) that non-exercise of the option to participate in the assessment proceedings electronically by 15/10/2017 would imply the continuation of proceedings manually. Further, para 3 of the Board Instruction 04/2016, to which reference was made by Shri Mishra, is applicable only to an assessee located in seven cities specified therein (and which does not include Jabalpur) and, two is for not being assessed electronically. The ground itself is misconceived. This decides the vaguely stated Gd. 5, giving it the meaning stated by Sh. Mishra which translates into a legal ground, liable for admission. Further, we observe this to be also the subject matter of the Additional Gd. 10, not pleaded for admission by Sh. Mishra, which though gets also decided alongwith. Assessee claimed a higher expenditure under the head Other Expenses (OE), i.e., vis-a-vis the preceding year - The scope of the limited scrutiny could be, as per the Board Instruction, extended by the AO only upon seeking approval for the same from the competent authority (PB-1, pgs. 39, 54), and which has not been - we cannot agree more with the assessee. The expenditure, for an aggregate of Rs. 38,43,334 afore-noted, also qualifies as direct trading expenditure, and ought to have, like-wise, i.e., as that on paper consumption, excluded from the purview of the limited scrutiny, as the assessee s return was selected only for the limited purpose of verifying OE claimed per its profit loss account, and scope of which has not been extended. The assessee being in the business of newspaper publishing, the said expenditure, a direct cost of its operations, stands rightly debited to the trading account, in contradistinction to the profit loss account, i.e., considering the assessee trade. As for the balance expenditure of Rs. 7.56 lacs (i.e., 46.00 - 38.44), the assessee s claim of the vouchers being not available as the same are small expenses, is specious and untenable. During hearing Shri Mishra could not answer as to why vouchers are not available for expenditure, such as DTP expenditure, newspaper, postage, photostat, etc. The disallowance at 20% is, under the circumstances, not unreasonable, nor any case stands made out for it being regarded as not so, much less substantiated inasmuch as no evidence stands adduced at any stage. The disallowance to that extent is confirmed, and the assessee gets part relief. Assessee s appeal is partly allowed.
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2022 (5) TMI 612
Delay in payment towards Provident Fund (P.F.) / Employees State Insurance Corporation Scheme (ESIC) under section 36(1)(va) r/w section 2(24) - intimation under section 143(1) - HELD THAT:- As relying on KALPESH SYNTHETICS PVT LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CPC BENGALURU. [ 2022 (5) TMI 461 - ITAT MUMBAI] When the due date under Explanation to Section 36(1)(va) is judicially held to be not decisive for determining the disallowance in the computation of total income, there is no good reason to proceed on the basis that the payments having been made after this due date is indicative of the disallowance of expenditure in question. While preparing the tax audit report, the auditor is expected to report the information as per the provisions of the Act, and the tax auditor has done that, but that information ceases to be relevant because, in terms of the law laid down by Hon ble Courts, which binds all of us as much as the enacted legislation does, the said disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1). Viewed thus also, the impugned adjustment is vitiated in law, and we must delete the same for this short reason as well. adjustment in the course of processing of return under section 143(1) is vitiated in law, and we delete the same. As we hold so, we make it clear that our observations remain confined to the peculiar facts before us, that our adjudication is confined to the limited scope of adjustments which can be carried out under section 143(1) and that we see no need to deal with the question, which is rather academic in the present context, as to whether if such an adjustment was to be permissible in the scheme of Section 143(1), whether the insertion of Explanation 2 to Section 36(1)(va), with effect from 1st April 2021, must mean that so far as the assessment years prior to the assessment years 2021-22 are concerned, the provisions of Section 43B cannot be applied for determining the due date under Explanation (now Explanation 1) to Section 36(1)(va). That question, in our humble understanding, can be relevant, for example, when a call is required to be taken on merits in respect of an assessment under section 143(3) or under section 143(3) r.w.s. 147 of the Act, or when no findings were to be given on the scope of permissible adjustments under section 143(1)(a)(iv). That is not the situation before us. - Decided in favour of assessee.
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2022 (5) TMI 611
Assessment u/s 153A - Proof of incriminating material found in search - HELD THAT:- On the date of search, there was no assessment pending for the impugned assessment year, therefore, this year shall be treated as unabated assessment. In case of unabated assessment for making addition there must be some incriminating material. On perusal of the entire order of the AO we do not find anywhere that seized material has been used by the AO for making the addition, which could be treated as incriminating material. As per the decision of various courts in case of completed assessments, the addition can be made only on the basis of incriminating material. In support of our observations, we rely on the judgment of the Hon ble High Court of Delhi in the case of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] Since no incriminating material was unearthed during search, no additions could have been made to income already assessed. Therefore, we direct the AO to delete the additions made by the AO on the assessment framed u/s 153A - Decided in favour of assessee.
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2022 (5) TMI 610
Treatment of rental income under house property - Disclosure of rental income received from the property by the assessee as business receipts and the assessee has claimed the other expenditure against the business receipts - AO has recomputed the rental income under income from house property and applied the provisions of Sec. 23(1)(a) of the Act in respect of annual value of the property and assessed the total income after allowing the deduction of municipal taxes paid and deduction u/s 24(a) - HELD THAT:- On perusal of the grounds of appeal raised by the assessee, the contentions are that the assessee is a private limited company and certain statutory fixed expenditure has to be incurred even though there is no business activities. In the course of hearing, we found that the assessee has not filed any supporting evidences to substantiate the claim except the papers/ orders filed along with the appeal memo. On perusal of the facts, prima-facie the claim of business expenses against the rental income in not a prudent practice. We are of the opinion that the CIT(A) has considered the facts, circumstances, provisions of the Act, judicial decisions, and the assessee own case for the A.Y 2010-11 of his predecessor and sustained the addition and passed the reasoned order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the assessee.
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2022 (5) TMI 609
Exemption u/s 54F - investment of new residential house in the name of assessee wife - HELD THAT:- The assessee claimed exemption U/s 54F of the Act against the investment of new residential house in the name of his wife is justifiable . The assessee sold immovable property for sale consideration of Rs.14,75,000/- on 11-10- 2010.The value of which was estimated at Rs.14,79,960/-by the Stamp Duty Authority. Out of the sale consideration of Rs. 14,75,000/- the assessee made investment of RS.7,48,000/- in the purchase of new residential house property in the name of his wife namely, Smt. Garima Singh, within the prescribed time limit as prescribed under the provisions of section 54F of the Act. Exemption was claimed U/s 54F of the Act on this account is Rs. 6,33,190/-. It is further noticed that the AO has not disputed the purchase of new house in the name of wife of the assessee though the claim was denied by the AO - claim of deduction U/s 54F of the Act cannot be denied merely on the ground that the new residential house was purchased in the name of his wife when the investment made by the assessee from the sale proceeds of the existing asset and yielded capital gain from the said transactions. Further we taken into consideration that the Ld AR for the assessee has placed the reliance on various decisions in which exemption u/s 54/ 54F/54B/54EC of the Act has been allowed notwithstanding the fact that investment in a new residential house was made in the name of wife/brother /sons. CIT (A) erred in not allowing the exemptions claimed u/s 54F by following the decision of following the decision of Hon'ble Rajasthan High Court in the case of Shri Kalya [ 2012 (6) TMI 239 - RAJASTHAN HIGH COURT] has not allowed the exemption claimed by the assessee u/s 54F holding /observing that the decision of the Hon'ble jurisdictional Rajasthan High Court above, the contention of the assessee cannot be accepted. We are of the considered view that the decision which was cited by the CIT (A) does not have any relevance with the present case. - Decided in favour of assessee. We are allowing the exemption claimed u/s 54F of the Act. Appeal of assessee allowed.
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2022 (5) TMI 608
Validity of order passed by the National Faceless Appeal Centre - Disallowing late payment of employees' contribution to PF and ESIC - assessee pleaded that Ld. NFAC has grossly erred in deciding the debatable issue viz. disallowance made under section 36(1)(va) of the Act in 143(1)(a) - HELD THAT:- Admittedly, the assessee filed its return of income on 19.9.2018 and admitting total income of Rs. 26,03,940/-. The same was processed under section 143(1) on 19.10.2019. The said intimation is in the form of calculation in tabulated columns running into seven pages. There are two main columns; one column description showed as provided by Taxpayer in Return of Income and another column showed As computed under section 143(1) . There is no description in this intimation or explanation/note why such disallowance or addition made by the CPC in the 143(1) proceedings. A return can be processed u/s. 143(1) by making adjustments on six types of adjustments only. The first proviso to section 143(1)(a) make it very clear that no such adjustment shall be made unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode. Apparently in the case of the assessee, no intimation had been given to the assessee for making any adjustment or disallowance either in writing or in electronic mode. Thus, the CPC center has not followed the first proviso to section 143(1)(a) of the Act. This position was not controverted by the Ld. DR also. Assuming a moment, if such an intimation is given to the assessee as per first proviso, then the second proviso stipulates that if any response is received from the assessee, the same should be considered before making any adjustment or disallowance, and also in a case where no response is received, then within thirty days of the issue of such intimation, department is free to make such adjustment. On going through the above intimation made under section 143(1), CPC has not followed the above provisos by giving proper opportunity to the assessee to defend its case as per the first proviso to section 143(1)(a). Further, the NFAC order is also silent about the intimation to the assessee. Therefore, we find that intimation issued under section 143(1) dated 19.10.2019 is against first proviso to section 143(1)(a), and therefore, the entire 143(1) proceedings is invalid in law. We also observe that the Ld. NAFC has not looked into this fundamental principle of audi alterm partem , which has not been provided to the assessee as per the 1st proviso of section 143(1) of the Act, but proceeded with the case on merits and also confirmed the addition made by the CPC. NAFC is thus erred in conducting the faceless appeal proceedings in a more mechanical manner without application of mind. We therefore hereby quash the intimation issued by the CPC and allow the appeal filed by the assessee.
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2022 (5) TMI 607
Penalty levied u/s 271(1)(c) - reopening of assessment u/s 147 - concealment and/or furnishing of inaccurate particulars of income in respect of additions made on account of confirming the total income without allowing any deduction on account of income already assessed and added in the immediately preceding year viz., Asst. Year 2007-08 - HELD THAT:- This penalty has been confirmed by the Ld. CIT(A) also as the assessee has not filed regular return of income under Section 139(1) of the Act, but after issuance of 148 and other statutory notices. Therefore, the confirmation of penalty is correct in law, which does not require any interference and pleaded to dismiss the appeal filed by the assessee. We do not find any merits in the ground raised by the assessee namely without allowing any deduction on account of income already assessed in the A.Y. 2007-08. Both the Ld. Assessing Officer and the Ld. CIT(A) has levied and confirmed the penalty only on the addition of Rs. 6,14,178/-. Therefore, the ground raised by the assessee is rejected and the appeal of assessee is dismissed.
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2022 (5) TMI 606
Disallowance of employee s contribution of PF and ESI deposited after the due date under the specified act but before due date of filing of return of income u/s 139(1) - HELD THAT:- As relying on case of Vinod Kumar Sharma [ 2022 (3) TMI 617 - ITAT JAIPUR] the disallowance made on account of employees contribution towards PF ESI deposited before due date of filing of return of income u/s 139(1) of the Act is deleted - Decided in favour of assessee.
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2022 (5) TMI 605
Ad hoc disallowance made out of the interest paid by the assessee - HELD THAT:- As noticed that the assessee paid the interest to the relatives and family members of the directors @ 12%. In the preceding years also the interest was paid at the same rate, which had been accepted by the department while framing the assessments u/s. 143(3) for the A.Ys. 2012-13 to 2014-15. Copies of the assessment orders are placed of the assessee's compilation. It is also noticed that the Ld. CIT(A) had not given any calculation for working out interest @ 6.86% on the loan given to different parties. In the present case assessee's compilation is the copy of list of short term loans and advances as on 31-03-2017, it is noticed that most of the entries were related to the trade advances not the loans. In the present case the AO made ad hoc disallowance @ 20% of the interest paid by the assessee, but he had not given any cogent reason for the same. No comparable case was cited, wherein the rate of interest less than 12% was paid to the persons from whom unsecured loan was raised. It is also not the case of the department that the loans received by the assessee were used elsewhere and not for the business purpose. In the instant case, it is an admitted fact that 80% of the payment of interest was considered as genuine by the AO and the remaining amount was disallowed without any basis. We, therefore, considering the totality of the facts are of the view that the CIT(A) was not justified in sustaining the disallowance made by the AO. Accordingly, the same is deleted. Disallowance of car lease paid to the persons covered u/s. 40A(b) - AO disallowed 20% of the said payment by invoking the provisions of section 40A(2)(b) - HELD THAT:- In the present case, it is an undisputed fact that similar payment in the preceding years had been accepted by the department while framing the assessments u/s. 143(3) of the Act for the A.Ys 2012 to 2014-15 and the AO did not bring any material on record to substantiate that lease rent paid by the assessee for Innova car was excessive in comparison to the market rate. In that view of the matter, the disallowance made by the AO and sustained by the Ld. CIT(A) is deleted.
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2022 (5) TMI 604
Ex-parte order - powers of the CIT(A) to dismiss appeal for non prosecution - HELD THAT:- We find that though the impugned order states that more than three times the notice was issued but nowhere had it been noted in the impugned order that such a notice was served on the assessee. In the given facts and circumstances of the case, we are of the view that interest of justice would be met, if the order of CIT(A) is set aside and the appeal of the Assessee before CIT(A) be directed to be decided afresh after affording opportunity of being heard to the Assessee. Appeal is treated as allowed for statistical purpose.
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2022 (5) TMI 603
Revision u/s 263 - Funds utilized for executing the land deal and providing loan to the third party - Addition u/s 69B as unexplained investment - assessment u/s 153A - HELD THAT:- We observed that the issue raised by the Pr CIT in the revisional order is different i.e., two materials were found during search, one is the above issue of land dealings and other one is the loan transaction - Pr.CIT raised the issue of second i.e. loan transaction. With regard to first issue, it reached the finality because of the first appellate order. Therefore, we are in agreement with the Ld AR. Second issue raised by Pr CIT relating to the loan transaction, we observed from the submissions made by the Ld AR that this issue was raised by respective assessing officers in both the assessment proceedings i.e., 153A and 147, assessee has submitted the relevant statement of Mr Deepak Shah, promotor of the Swastik Group who stated that the loan amounts represented funds were belongs to Swastik Group and there is no link with the persons whose names were mentioned in the seized documents, he submitted in reference to the question no 15 put before him. This explanation was submitted before AO in 153A and 147 proceedings, and the respective Assessing Officers accepted the same. In our considered view, from the above facts, it is clear that the allegation of the Pr CIT that the Assessing Officer in framing the assessment under section 143(3) r.w.s. 147 has not taken cognizance of the incriminating material seized during the course of search at the premises of Swastik Group is incorrect. In both the proceedings, the respective AO's has agreed and taken one of the possible view and now Ld Pr CIT cannot impose his another possible view. In order to accept the propositions of the Ld Pr CIT for revision, it is the duty of the Pr CIT to bring on record the relevant material to substantiate the claim that there is a transaction between the assessee and the Swastik Group. In two proceedings conducted by the respective AOs has accepted the stand of the assessee, without there being any material linking the transactions with the assessee and the Swastik Group, the Pr CIT cannot once against direct the AO to further investigate. Hence, the Pr CIT has no jurisdiction to initiate proceedings u/s 263 of the Act, without there being any material or clear finding by him. Thus, the basic premise that cognizance of the seized material was not taken by the Assessing Officer is patently incorrect and the revision action under section 263 of the Act is not proper and hence, the order of the Pr.CIT is set aside and quashed. - Decided in favour of assessee.
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2022 (5) TMI 602
Revision u/s 263 - cost of stores debited to profit and loss account - HELD THAT:- We find the assessee has filed the information incompliance to the notice issued and clarifications are filed over a period of time in the assessment proceedings on the cost of stores debited to the profit and loss account. AR has demonstrated the documents filed in the factual paper book discussed. Accordingly the assessee has diligently complied with the provisions of Act, and maintained the facts /details in the books of accounts and fallowed the Accounting standard -2 in valuation of inventories. Therefore we are of the opinion that the directions of the Pr.CIT order in respect of claim of stores in the profit and loss account cannot be sustained and allow the grounds of appeal pertaining to the disputed issue on claim of stores. Set off of brought forward business loss against the short term capital gains - The contentions of the Ld.AR are that the Building and plant machinery were sold as block of assets and short term capital gains worked out over and above the WDV. The assessee has carried forward business loss of A.Y.2007-08 and claimed set off with the short term capital gains and relied on the judicial decision on merits. The Ld.DR submissions are that the PCIT has dealt on the facts which proves that the A.O. has not applied his mind and not made enquiries on the issues. We find the assessee has submitted the assessment order pertaining to A.Y 2007-08 before the A.O on 17.04.2017. We find the A.O has called for the information, but there is no examination and verification of the facts or findings by the A.O on the set off of short term capital gains with carry forward loss. Accordingly, the matter needs to be verified and reasons for claim should be justified. We do not find infirmity in the order of the Pr.CIT on the directions to A.O. for verification of set off of loss and up hold the same and dismiss this ground of appeal of the assessee and partly allow the assessee appeal.
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2022 (5) TMI 601
Revision u/s 263 - claim of deduction u/s. 54F - HELD THAT:- PCIT at best can be said to have entertained a suspicion, however, he has failed to point out any infirmity in the order. On the contrary, considering the replies of the assessee on record including the submissions as advanced before the ld. PCIT himself, we find that the claim allowed by the AO is fully supported on facts and evidences. The order under challenge fails to point out any error let alone such an error which can be said to be erroneous and prejudicial to the interests of the Revenue. The fact that the construction cost details were actually provided on query to the AO or not as they do not find any mention in the assessment order, we find in the peculiar facts is neither here nor there. The fact remains that these were provided to the ld. PCIT. We do not need to cite any decisions to address the well accepted position that the assessee cannot be faulted on how the assessment orders are written. The writing of assessment orders are exclusively in the hands and the domain of the Revenue and merely because facts on which the AO is satisfied are not found mentioned in the order, the absence of discussion thereon shall not by itself be an indicator of the fact that the AO has failed to examine the issue. Such an inference cannot be drawn. We have seen the queries raised in the course of the assessment proceedings. We have seen the responses given thereto. No doubt that the assessee is faced with a handicap that the counsel representing before the AO and before the ld. PCIT has passed away in the COVID times, however, the fact which remains to be demonstrated by the Revenue is the error and that too such an error which is prejudicial to the interests of the Revenue. These requirements cannot be said to have been met by the absence of discussion on facts on which the AO was satisfied after having raised the queries and considered the replies. How the assessment orders are to be written cannot be dictated to by the assessee. The remedy at best lies in providing better training, if so deemed fit to the Revenue officers and hence, lies in-house with the Revenue itself. The suspicion that it was possibly not seen by the AO cannot be the backbone of exercising the powers u/s. 263 of the Act. The fact remains that these calculations were provided to the ld. PCIT. It is seen that he has failed to find any infirmity in the claim. PCIT, instead has set aside the order u/s. 143(3)/148 in order to grant one more inning to the Revenue to find some shortcoming in the claim on the suspicion that possibly the AO has missed something in the first round. Such an action cannot be supported. Powers u/s. 263 of the Income Tax Act are not on the Statute for such whimsical and arbitrary actions. The powers are expected to be necessarily exercised by pointing out clearly the error in the order passed which is sought to be set aside exercising the Revisionary powers and that too, such an error which is prejudicial to the interests of the Revenue. Appeal of assessee allowed.
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2022 (5) TMI 600
Excess sugar cane price paid to the Members and Non-members - sale of sugar cane at concessional rate to the Members - HELD THAT:- As relying on KARMAVEER SHANKARRAO KALE SAHAKARI SAKHAR KARKHANA LTD. VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR. [ 2020 (12) TMI 1330 - ITAT PUNE] both the issues i.e. excess sugar cane price paid to Members and Non-members and the issue of sale of sugar at concessional rate to Members are remanded to the file of the ld. A.O for fresh adjudication for the purpose of giving effect to the directions of the Hon'ble Apex Court [ 2019 (3) TMI 321 - SUPREME COURT] in its proper perspective. The ld. A.O shall comply with the principles of natural justice and adjudicate the issues as per law. The grounds of appeal raised by the assessee in both these appeals are therefore, allowed for statistical purposes.
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2022 (5) TMI 599
Deduction u/s 36(1)(iii) - treatment given to the interest paid by the assessee on its loans, while the assessee takes it to the work in progress, but then in the computation of income, the same is claimed as a deduction under section 36(1)(iii) - double deduction for deduction of interest as also deduction of WIP at the pint of booking revenue - HELD THAT:- The coordinate benches have consistently held that in view of the specific provisions under section 36(1)(iii), interest is to be allowed as a deduction irrespective of its capitalization as WIP, but while charging the WIP, corresponding reduction is to be allowed for the interest already claimed as deduction. In any event, the very foundation of disallowance is special bench decision in the case of Wall Street Construction [ 2005 (9) TMI 228 - ITAT BOMBAY-F] which stands reversed in the case of CIT Vs Lokhandwala Construction Industries Limited [ 2003 (1) TMI 93 - BOMBAY HIGH COURT] which holds good even today. The proviso to Section 36(1)(iii) does not come into play in the present case as the residential units are part of the stock in trade, and not the capital assets. Respectfully following the views so expressed by the coordinate benches, we approve the detailed and well-reasoned approach adopted by the CIT(A) and decline to interfere, in principle, in the matter. As regards the learned Departmental Representative s apprehension of double deduction, however, we consider it fit and proper to add that once these amounts are allowed as deduction in the year of incurring the expenditure, the same shall not be eligible for being allowed as deduction yet again as a part of the work in progress being debited to the profit and loss account in any subsequent year. The double deduction will thus not be permissible. The conclusions arrived at by the learned CIT(A), subject to this observation, are approved. Learned representatives fairly agree that whatever we decide for the assessment year 2013-14 will equally apply to the other two assessment years 2014-15 and 2015-16 as well. The conclusions arrived at by the learned CIT(A) for the other two years must also be approved, subject to the observations above, as well. Appeal dismissed.
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2022 (5) TMI 598
Eligibility to claim deduction of Employees' Contribution to PF/ESI in terms of Sec. 43B r.w.s. 36(1)(va) as well as 2(24)(x) - HELD THAT:- As relying on M/S BENCO THERMAL TECHNOLOGIES PVT. LTD. VERSUS ASST. DIRECTOR OF INCOME TAX, BENGALURU [ 2022 (2) TMI 1217 - ITAT CHENNAI] we direct revenue authorities to allow the deduction of Employees' Contribution to welfare funds like PF/ESI as claimed by the assessee in the return of income. The issue, on merits, stands decided in assessee's favor. Considering the submissions of Ld. Sr. DR, a liberty is given to revenue to seek rectification of this order in accordance with law for any valid reasons or in case the dues are found to have been deposited by the assessee beyond due date of furnishing of return of income u/s. 139(1). Assesse appeal allowed.
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2022 (5) TMI 597
Addition u/s 68 - assessee did not furnish any supporting evidence to establish the identity and creditworthiness of the parties from whom loan was availed - none of the ingredients of section 68 could be satisfactorily established by the assessee, before the learned First Appellate Authority, assessee furnished certain additional evidences and sought admission of them under Rule 46A - HELD THAT:- Additional evidences sought to be furnished by the assessee are mostly its own documents and must be internally available with the assessee. The assessee has not furnished any satisfactory explanation why such documents could not be furnished in course of assessment proceedings. As rightly observed by learned Commissioner (Appeals), assessee cannot adduce any additional evidence as a matter of right. The assessee has to explain satisfactorily why such evidence could not be furnished in the earlier proceedings. In the facts of the present appeal, assessee has failed to furnish any such cogent explanation. Therefore, learned Commissioner (Appeals) was justified in rejecting the additional evidences. As regards the merits of the issue, the material available on record clearly reveal that the assessee did not furnish any evidence which can either prove the identity and creditworthiness of the creditors or the genuineness of the loan transaction. That being the factual position emerging from record, no relief can be granted to the assessee. Thus, we do not find any valid reason to interfere with the decision of learned Commissioner (Appeals) on the issue. Grounds are dismissed.
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2022 (5) TMI 596
Delay in payment towards Provident Fund, ESIC and any Other Welfare Fund u/s 36(1)(va) r.w.s 43B and 2(24)(x) - HELD THAT:- As find that the amendment was brought in finance Act 2021 w.e.f 1-4-2021.The law was not framed/amended in the relevant Assessment year and any legal proposition which cast additional burden/liability on the assessee cannot be implemented retrospectively. We considering the overall facts, circumstances, judicial decisions, are of the reasoned view that the amendment to section 36(1)(va) of the Act will not be applicable to Assessment Year 2018-19. The assessee has deposited the employees contribution of provident fund ESIC before the due date u/sec 139(1) of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to delete the disallowance and allow the grounds of appeal in favour of the assessee.
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2022 (5) TMI 595
Disallowance of employee s contribution of PF and ESI deposited belatedly but before due date of filing of return of income u/s 139(1) - Scope of amendment - HELD THAT:- There is no dispute that prior to the amendment brought by the Finance Bill, 2021 in Section 36(1)(va) as well as Section 43B of the Act, the issue of allowability of employees contribution towards PF and ESI and depositing the same in the government account before the due date of filing of return of income U/s 139(1) of the Act was settled and decided in favour of the assessee by various binding precedents of Hon ble High Courts including the Jurisdictional High Court. The limited controversy is whether the amendment brought to Section 36(1)(va) as well as 43B of the Act is applicable retrospective or from assessment year 2021-22 as it is specifically stated in the memorandum of Finance Bill, 2021 was decided in favour of the assessee by holding that amendment in Section 36(1)(va) as well as Section 43B of the Act by way of inserting the explanation vide Finance Bill, 2021 are applicable only from A.Y. 2021-22 and subsequent assessment years and therefore, the said amendment is not applicable to the assessment year under consideration. - Decided in favour of assessee.
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2022 (5) TMI 553
Reopening of assessment u/s 147 - Notice issued on the basis of information that the petitioner has deposited a sum of Rs. 12,50,14,500/- in bank account - HELD THAT:- As decided in [ 2022 (5) TMI 550 - ALLAHABAD HIGH COURT] petitioner is a cold storage company in which business dealings are mainly with farmers who usually transact in cash. The total cash deposit as has been taken in the impugned re-assessment order, was fully disclosed by the petitioner-assessee in his books of account and in the audited balance sheet filed along with the return. Thus, there was absolutely no material before the assessing authority for initiating proceedings under Section 148 of the Act, 1961 and the reasons to believe recorded by the respondents were totally unfounded. The manner in which the proceedings under Section 148 of the Act, 1961 has been initiated against the petitioner, prima facie, reflects illegal and arbitrary approach of the respondents on one hand and on the other hand to cause harassment to the petitioner/assessee. In the event counter affidavit is not filed within the time granted as aforesaid, then the respondent no.3 shall remain personally present before this Court and shall show cause for non filing of the counter affidavit. In its counter affidavit the respondent no.1 shall show cause that what action and measures are being proposed by the Government against illegal and arbitrary exercise of powers by the respondent nos.1, 2 and 3 while issuing notices under Section 148 of the Income Tax Act, 1961. Matter put up as a fresh case for further hearing on 04.05.2022.
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Benami Property
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2022 (5) TMI 594
Prohibition Benami Property Transactions - change of the Adjudicating Authority - grievance of the petitioners essentially is that on more than one occasion the Adjudicating Authority constituted under the Prohibition for Benami Property Transactions Act, 1988 [ 1988 Act ] has been transferred out after final hearing of matters had been concluded and orders reserved - HELD THAT:- As the change of the Adjudicating Authority firstly came about by virtue of the statutory amendments which were introduced. Further although the Adjudicating Authority of Mumbai who held additional charge of Delhi had reserved orders on 16 September 2021, no final verdict was rendered prior to appointment of Mr. Sanjog Kapoor in October 2021. From the aforesaid it is manifest that no wrongdoing can be fastened upon the respondents nor can they be held accountable for a failure on the part of the erstwhile Adjudicating Authority to have rendered final judgment prior to the appointment and posting of Mr. Sanjog Kapoor in October 2021. The Court further finds its unable to either countenance or discern an indefeasible right which may be recognised in law as inhering in the petitioners to seek continuance of the authority who had heard the matter on 16 September 2021 despite the appointment of Mr. Sanjog Kapoor in October 2021. Once that officer came to be appointed as the competent authority for SAFEMA, he statutorily and by operation of law also became the Adjudicating Authority for the purposes of the 1988 Act. Admittedly, the authority who had heard the matter had not rendered judgment prior to 1 October 2021. The consequences which would flow from the appointment which was made on 1 October 2021 could not have possibly been interdicted by any administrative order directing the continuance of the officer who had reserved orders on 16 September 2021. The reliance placed by learned counsel for the petitioners on certain practice directions which this Court follows while effecting transfers of Judicial Officers is noticed only to be rejected. This since the appointment of Mr. Sanjog Kapoor was validly made and in any case does not form subject matter of challenge. The petitioners as noted above cannot not claim any right which may be enforced under Article 226 of the Constitution to seek the continued posting of Mr. Hari Govind Singh notwithstanding the appointment of Mr. Sanjog Kapoor in October 2021. Regard must also be had to the undisputed fact that Mr. Hari Govind Singh was essentially appointed as the Adjudicating Authority to deal with matters placed before the Bench dealing with matters relating to the 1988 Act at Mumbai. He had only been granted additional charge of the Bench at New Delhi. Viewed in that light there was a clear and continuing imperative operating upon the respondents to make a regular appointment of an Adjudicating Authority insofar as the Bench at Delhi is concerned.
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Customs
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2022 (5) TMI 593
Constitutional Validity of N/N. 5/2019-Cus dated 16th February 2019 - Vires of Customs Act 1962 and/or Customs Tariff Act 1975 read with Entry No.83 of List I of Schedule VII to the Constitution of India - seeking to insert tariff item 9806 00 00 in the First Schedule to CTA - goods imported from Pakistan or not - HELD THAT:- Under the impugned Notification if the goods are imported from Pakistan it would carry 200% customs duty. The Petitioner had paid 18% duty. The Respondents have prima facie found the containers and the product therein to be of Pakistan origin. The reasons for the belief has been set out by the Respondent Authorities. At this prima facie stage, the writ Court would not sit in an appeal over the said prima facie observations of the Authorities. The request is to allow the re-export of the goods. Prima facie, it does not appear that the goods are brought over at the port under some bona fide mistake and belief. At this stage, it would not be proper to pass any orders with regard to the goods of which the investigation is in progress. As per Circular dated 20th January 2015, re-export of the goods imported can be considered when the goods are destined for elsewhere but which are inadvertently imported at a particular customs station. In such case, the permission for re-export may be granted on merit by the officer concerned - In the present case, prima facie, the Respondent Authorities have found that the goods are not imported from the place the Petitioner claims but have been imported from Pakistan, probably to evade 200% customs duty. The Petitioner would not suffer any irreparable loss if the goods, at present, are not re-exported and are retained till the investigation is over. The prayer of the Petitioner for re-export of the goods, cannot be entertained - Place the matter for hearing on 11th July 2022.
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2022 (5) TMI 592
Power of DRI officials to seize goods though found outside SEZ area - property is in SEZ zone or not - Maintainability of the Writ Petition - availability of alternative remedy of appeal - HELD THAT:- It is not in dispute that a remedy of appeal is available, but here is a case where jurisdiction of the authority in issuing the Show Cause Notice is questioned. The Hon ble Supreme Court in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] has laid down certain guidelines as to when a Writ Petition would lie before the Court though there is a remedy of appeal - From the judgment of the Hon ble Supreme Court, it is very much clear that a Writ Petition can be entertained by this Court though an alternate remedy is available when the authority issuing the Show Cause Notice has no jurisdiction to issue the same. Hence, there are no hesitation in coming to the conclusion that in the given set of circumstances, Writ Petition can be entertained. Whether the DRI officials have jurisdiction to seize goods though found outside SEZ area but in relation to a SEZ unit? - HELD THAT:- A reading of Section 53 of Customs Act, provisions makes it clear that the Customs authorities (DRI officials) have no power or jurisdiction to inspect or seize goods in respect of units situated in SEZ area. The power to investigate in respect of any offence committed in SEZ unit is conferred on Officers empowered under Section 22 of the SEZ Act - the Central Government in exercise of powers conferred under Sections 21 and 22 of the Act issued a Notification dated 05.08.2016, authorizing the Additional Director General, Directorate of Revenue Intelligence to investigate into offences under Customs Act committed in a SEZ - But, the same cannot be invoked in the instant case as the alleged violation was prior to 2016. Whether the property can be said to be in Special Economic Zone? - HELD THAT:- The fact that the goods were imported from U.S.A. is not in dispute. Even assuming that the goods imported were not subjected to physical process in view of the report of the Analyst, but, as observed by us earlier, the petitioner has licence to import and trade in Bio Diesel as well, which fact is not disputed. Therefore, processing of the imported material is not mandatory as the petitioner has licence to trade - the passage of goods from SEZ to a Port has to necessarily take place for the purpose of export, more so, when there is no enough space for storage of these goods in SEZ area, which is also an admitted fact. Merely, because, the goods were taken out from SEZ area to be transported to Port or to a storage unit before they are exported cannot be brought within the purview of Customs authority. A reading of the undertaking issued in the year 2010 would makes it clear that the goods can be moved from SEZ to bonded warehouse which shall be informed to Customs Department within 45 days. The delivery challans show that the goods were moved after filing shipping and delivery challans [not disputed]. The endorsement made by the Preventive Officer of SEZ Customs also evidences the same. The delivery was at East India Petroleum Private Limited, which is a bonded warehouse. Therefore, removal of the goods from SEZ area or storage of goods in bonded warehouse for the purpose of export, imported under a licence issued for the said purpose as and when vessel is available or otherwise, cannot be brought within the purview of DRI officials under the Customs Act and it is only officials under SEZ Act, who would be bestowed with jurisdiction to initiate the proceedings. As the petitioner is having licence to trade, storage of goods outside the SEZ area namely in a bonded warehouse, for the reasons stated earlier, cannot automatically confer power on the DRI Officers to initiate proceedings under the Customs Act - The judgment of the Hon ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] squarely applies to the facts in issue, but however, learned Assistant Solicitor General would contend that a Bill is being introduced in the Parliament making suitable amendments, but no information about the same is placed before this Court. The DRI officials have no jurisdiction to issue the impugned show cause notice - Petition allowed.
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2022 (5) TMI 591
Seeking refund with interest on the IGST paid on the export of goods - wrongful mentioning the code in the shipping bills under which drawback is claimed - despite the correction having been permitted in the shipping bill (on payment of fee and penalty), the refund of IGST was not granted to the petitioner - Section 16 of the IGST Act, 2017 (IGST Act) read with Rule 96 of the Central Goods and Service Tax (CGST) Rules, 2017. HELD THAT:- The issue at hand is covered by the judgments of the Division Bench of the Gujarat High Court in Amit Cotton Industries v. Principal Commissioner of Customs, [ 2019 (7) TMI 472 - GUJARAT HIGH COURT] and in M/s Shyam Textile Through Proprietor Rakesh Ram Swaroop vs. Principal Commissioner of Customs dated 05.04.2021 [ 2021 (4) TMI 870 - GUJARAT HIGH COURT] where reliance placed in the case of AWADKRUPA PLASTOMECH PVT. LTD. VERSUS UNION OF INDIA [ 2020 (12) TMI 1116 - GUJARAT HIGH COURT] where it was held that respondents are directed to immediately sanction the refund towards the IGST paid in respect to the goods exported i.e.'Zero Rated Supplies' made vide the shipping bills. The respondent/revenue is directed to refund IGST against the aforementioned shipping bills - further having regard to the fact that the necessary fee and penalty was paid as far back as on 24.10.2018, interest will be paid at the rate of 7% (simple) per annum, albeit from 25.10.2018, when correction was effected by the respondent/revenue. Petition disposed off.
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2022 (5) TMI 590
Seeking provisional release of imported consignment - Magnesium Lump - HELD THAT:- The provisional release of the goods (Magnesium lump) ordered upon furnishing of the bank guarantee, bond and the undertaking subject to the following terms and conditions: [a] The writ applicants shall submit a bank guarantee of Rs.10 Lakh (Rupees Ten Lakh only) for a period of twelve weeks of any nationalized bank or a private bank in favour of the respondent No.1. [b] The Managing Director of the writ applicant company shall file an undertaking with the respondents authorities and before this Court that he possess sufficient assets and in the event the consignment is found to have origin from Pakistan, he shall pay the differential duty if the petitioner No.1 is not in a position to pay the differential amount as may be adjudicated. [c] Additionally, the writ applicants shall file a bond for the differential duty as per the Customs Act, 1962 and the rules made thereunder, before the authority. Once the bank guarantee is furnished of the requisite amount as above, the goods shall be provisionally released in favour of the writ applicants - application disposed off.
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2022 (5) TMI 589
Availability of alternative remedy - bar to invoke writ jurisdiction or not - Valuation of imported goods - rejection of declared value - re-determination of the value - HELD THAT:- It is accepted by the petitioner that the Appeal is provided Against the impugned Order passed by the Commissioner of Customs (Appeals). Availability of alternative remedy is certainly not an anathema for this court to exercise its writ jurisdiction under Article 226 of the Constitution of India. The rule of alternate remedy is a rule of self-restraint. If substantive remedy of Appeal is available, the court would be slow to exercise its writ jurisdiction under Article 226 of the Constitution of India. In the present case, the principle of natural justice appears to have been adhered to. Opportunity of hearing has been accorded to the petitioner. Petitioners are not challenging the vires of the statute or delegated legislation. The respondent authorities had the jurisdiction to pass the orders. Only because according to the petitioner, orders are erroneous or that there is some infraction of procedure, that would not be sufficient to term the order as an excess of jurisdiction or without jurisdiction. The factual dispute is about the valuation and the manner in which it had been valued is not accepted by the Commissioner or the Assessment Officer. Same can be challenged on merits. The said aspect can be dealt with and considered by the Appellate Authorities. Once the petitioner has availed the remedy of appeal, it would be in appropriate to entertain the Writ Petition more particularly when further remedy of Appeal is available. There is no impediment for the petitioner to avail the remedy of Appeal. Only because the petitioners will have to file 111 and 88 Appeals would be no ground to invoke Writ Jurisdiction of this court. Writ Petitions are disposed of with liberty to the petitioner to avail alternate remedy, as is permissible in law. In that event, all contentions on merits are kept open.
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2022 (5) TMI 588
Re-classification of imported goods - Mineral Hydrocarbon Oil - Mixed Mineral Hydrocarbon Oil - freely importable goods or not - whether the Revenue was correct in re- classifying the imported goods declared as Mineral Hydrocarbon Oil-CTH 27101988 and Mixed Mineral Hydrocarbon Oil-CTH 27101990 as diesel under CTH 27101944 and as Superior Kerosene Oil under CTH 27101932? - confiscation - redemption fine - penalty. HELD THAT:- It is admitted position of law that for a product to be classified under CTH 27101944/27101932 as SKO, it has to meet with the specifications in Supplementary Note (C) under Chapter 27 - Thus, the product or material shall consist of refined petroleum distillates. It shall be free from visible water sediments and suspended material. The material shall also comply with the requirements given in Table-I, when tested according to the appropriate method prescribed under P Series of IS:1448, reference to which is given in Col.4 of the Table-I. Reliance placed in the Apex Court in HINDUSTAN FERODO LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1996 (12) TMI 49 - SUPREME COURT] , wherein it was observed that, it is not in dispute before us as it cannot be, that onus of establishing that the said rings fell within Item No.22 lay on the Revenue. Revenue has led no evidence. The onus was not discharged, therefore, the Tribunal was right in rejecting the evidence that was produced on behalf of the appellant, the appeal should nevertheless have been allowed. It is further noticed that the appellant had sought cross examination of the persons, whose statements were relied upon by the Revenue in support of its allegations. But the cross examinations have been denied arbitrarily. Thus the impugned order is bad for violation of principles of Natural justice as well as the mandate of section 138B of the Act. The goods under import are to be classified as per CTH heading claimed/declared by the appellant in the bills of entry. Accordingly, we hold that rejection of transaction value is also bad and thus, declared value has to be accepted. Redemption fine and penalties on the appellants are also set aside - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 587
Refund Claim of excess duty - time limitation - it is alleged that since there were Bills of Entry which were still provisionally assessed, the limitation of those bills have to be counted after the final assessment - HELD THAT:- There is no denial to the fact that Bills of Entry in both these appeals (8 BE in Appeals No. 52292/2021 and 5 BE in Appeals No. 50001/2022, the duty as was to be paid at the relevant time has been paid twice, once on 24.11.2014 and another on 25.11.2014. There is no denial to the fact that second payment was made because the payment made on 24.11.2014 was not reflected in ICES portal. The said admitted facts makes it clear that on the same number of BEs duty has been paid twice. As per Constitution of India Article 265, thereof duty cannot be collected beyond what is permissible by the law. This Bench in the case of DEXTEROUS PRODUCTS PVT LTD VERSUS C.C.E. S.T., INDORE [ 2018 (12) TMI 381 - CESTAT NEW DELHI] that though of the decision of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] was in favour of the department, but the Hon ble Apex Court in th said case has discussed in length the various situations of the seeking refund. While appreciating the same this Bench has already held that section 11B of Central Excise Act which is para materia to section 27 of the Customs Act (as has been involved in the present case) and the time bar therein is not applicable to the cases similar to the present one. The amount paid for the same duty but twice, one of the payment has to be refunded. Otherwise also in terms of section 17 of Limitation Act, whenever there is an application for a relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could with reasonable diligence, have discovered it. Since from this angle also, the bar of limitation is held to have wrongly applied against the impugned refund application - the duty was for Bills of Entry which were provisionally assessed, the fact remains is that duty which was to be paid at the relevant time has been paid twice, it is opined that remanding the matter back for reconsideration is not justified. The gist of Mafatlal Industries case also is that once it is established that more than what is payable under the statute has been paid by the tax-payer, the tax-payer automatically gets a right to get back the whole amount - The Authority without parity of law cannot be permitted to retain the amount because the appellant paying the double duty has committed a mistake. The appeals are allowed.
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2022 (5) TMI 586
Refund of balance SAD, paid at the time of import - goods were re-sold and on such sale, the rate of VAT/Sales Tax was nil - HELD THAT:- There is no merits in the grounds of appeal. SAD is applicable at the time of import by way of an equitable levy in lieu of sales tax, so as to protect the domestic industry - Further, the Customs Tariff Act itself provides for refund of SAD on re-sale of the goods. The mechanism of refund has been provided vide notification no.102/2007-Cus, which provides that one of the conditions for refund is that the goods must be re-sold and appropriate VAT/Sales Tax should have been paid. This Tribunal in precedent ruling of the M/S GAZAL OVERSEAS, M/S MAYANK ENTERPRISES, M/S ANAND ASSOCIATES VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2015 (12) TMI 427 - CESTAT NEW DELHI] has held that the refund of SAD is available even if the rate of VAT/Sales Tax is lower than the rate of SAD or nil. There is no error in the impugned order-in-appeal. Accordingly, this appeal by Revenue is dismissed.
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Corporate Laws
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2022 (5) TMI 585
Cancellation of allotment of shares - seeking return of amount granted by the appellant/applicant as Loan to the Respondent No. 1 company - HELD THAT:- In this case, though there is no written agreement as regard to the grant of loan, nor any other document has been brought on record, but it is also evident by the conduct of all the respondents that they are not in a position to controvert the claims made by the appellant as regard to the nature of the transaction. If the respondents were in a position to controvert the claims made by the appellant, they could have produced the letter of request or any other document signed by the appellant for purchase of shares of a Private Limited Company which are not freely transferable. Further, they could also produce that the shares, minutes and other share certificate showing the compliance to the provisions of law as regard to issue and allotment of shares - the respondent No. 1 Company is directed to delete the name of the appellant from the Register of Members within two weeks from the date of this order and file requisite documents with RoC also, who shall take on record such documents in terms of the relevant provisions of law. Appeal disposed off.
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2022 (5) TMI 584
Sanction of Scheme of Arrangement - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- There appears to be no reservation to grant sanction to the Scheme and the sanction of the present Scheme is not against public policy, nor it would be prejudicial to the public interest at large. In addition to above, all the statutory compliance seems to have been complied with by the Petitioner Companies, therefore, the present Company Petition deserves to be allowed in terms of its Prayer clause. The scheme is sanctioned - application allowed.
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2022 (5) TMI 583
Seeking restoration of name of the company in the Register of Companies being maintained by the Registrar of Companies, Guwahati, Assam - section 252 of Companies Act, 2013 - HELD THAT:- On perusing the materials made available on record along with the report of the ROC, it is opined that it would be just and equitable to revive the name of the company Well Will Infrastructures Private Limited in the statutory register as being maintained by the Registrar of Companies, Guwahati. In exercise of the powers conferred on the Tribunal under section 252(3) of the Companies Act, 2013, the present Petition is partly and conditionally allowed with directions and subject to the compliance of conditions issued - application allowed.
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Insolvency & Bankruptcy
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2022 (5) TMI 582
Auction - permission to pay/adjust the Sale consideration partly by way of investment into the equity shares of the Corporate Debtor and the balance amount in the form of Optionally Convertible Debentures - HELD THAT:- On perusal of Clause 1(12) under Schedule I of the Liquidation Process Regulations, 2016, it is clear that 90 days period provided for making the deposit is the maximum period under which the Auction Purchaser had to make the deposit. 2nd Proviso of the Item 12 of the Schedule I provided that sale shall be cancelled if the payment is not received within 90 days. When the Consequence of non-compliance of the provision is provided in the statute itself, the provision is necessary to be held to be mandatory. Item 12 provides that payment is to be made within 90 days and with interest after 30 days at the rate of 12 percent. Non-compliance of 2nd Proviso, sale shall be cancelled if the payment is not received within 90 days. The Adjudicating Authority has rightly observed that in view of the Appellant having not made payment in 90 days, Adjudicating Authority has no option except to allow the Application filed by the Liquidator for cancellation of the sale. The action taken by the Adjudicating Authority is in accordance with the statutory provisions. No error has been committed by the Adjudicating Authority in passing the Impugned Order by allowing the Application filed by the Liquidator and closing the Applications filed by the Appellant - Appeal dismissed.
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2022 (5) TMI 581
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - pendency of proceedings under SARFAESI ACT, DRT and before PBPT - existence of debt and dispute or not - Time limitation. Whether the pendency of proceedings under SARFAESI ACT, DRT and before PBPT, prohibits the Respondent/financial Creditor for initiation of Proceedings under IBC, 2016? - HELD THAT:- The IBC, 2016 is a special enactment and is an act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individual in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship. The aim and object of the Code is not for recovery of debts but for Resolution of Corporate Persons - the financial Creditor/ Operational Creditor/Corporate Persons can file an application under Section 7 ,9 10 of the I B Code, 2016 before the respective Adjudicating Authorities even though in respect of same any proceeding pending before other forums on the ground that the provisions of I B Code, 2016 is overriding effect of other laws. In view of the aforesaid reasons the Appellant cannot take a stand that the proceedings are pending before DRT and PBPT and the application under Section 7 of the I B Code, 2016 cannot be maintained does not merit. The application under Section 7 filed by the financial Creditor before the Adjudicating Authority is very well maintained - Issue answered against the Appellant. Whether the debt and default is proved in respect of Corporate Debtor? - HELD THAT:- Form-1 dated 09.03.2021 filed by the Respondents/financial Creditor at part -IV regarding particulars of financial debt shown as Rs. 5,20,00,000/- and the Appellant has in para 6 of the counter filed before the Adjudicating Authority admitted that the Appellant obtained three credit facility from the financial Creditor to a tune of Rs. 5,20,00,000/- on various dates by producing the subject property as collateral. In view of the reason the Appellant had admitted the debt and default. The Adjudicating Authority also took the stand that the existence of debt and default had been proved beyond reasonable doubt - issue answered against the Appellant. Whether the application is barred by limitation? - HELD THAT:- The Respondent/financial Creditor in the application form-1 dated 09.03.2021 in part IV column -2 with regard to date of default it is mentioned that the date of default is 31.05.2018, however the fact remains that the application filed by the Respondent/financial Creditor before the Adjudicating Authority is on 18.03.2021 which is within the period of limitation i.e. 3 years from the date of default as per Section 137 of the limitation Act since the limitation act applicable to the proceedings under IBC. Therefore, the application filed before the Adjudicating Authority is within the period of limitation and accordingly the point is answered against the Appellant. Whether the order under challenge is reasoned order dealing with all issues as raised by the Appellant/Corporate Debtor? - HELD THAT:- The order passed by the Adjudicating Authority in admitting the application filed by the 1st Respondent against the Corporate Debtor is a well reasoned order and there are no legal or factual infirmity in the order and no interference is called for. Appeal dismissed.
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2022 (5) TMI 580
Seeking to restore the Application - initiation of CIRP against the Corporate Debtor on the grounds that the CP filed by the Applicant was withdrawn on the basis of the Memorandum of Understanding (MoU) - HELD THAT:- The contention that once the Application is revived, the Applicant would be entitled to claim the entire amount mentioned in the claim petition which he cannot do, in view of the fresh Memorandum of Understanding, is not at all cogent. A Memorandum of Understanding came into picture only to put an end to the issue and once the parties failed to comply with the terms of the MoU the situation as before the MoU would get revived in toto. The Application is allowed, restoring the main Petition.
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2022 (5) TMI 579
Seeking to withdraw the Application - settlement between the parties and the amount under settlement has been paid, inspite of which the Respondent No. 1/Operational Creditor is not coming forward to file an Applicant - Section 12A of IBC - HELD THAT:- The inherent powers can be exercised to meet the ends of justice in an application which is maintainable under the provisions of the Code and to prevent an abuse of process of the Tribunal involved in deciding such application. A settlement presupposes a consensus between the parties entering into a settlement. If from the inception of the settlement, one of the parties proceeds with an element of cheating in its mind, it cannot be termed as a settlement. Section 12A permits withdrawal of the application only if there is an agreed settlement between the parties. Since the Application under Section 9 of IBC is filed by Respondent No. 1 and since withdrawal of an Application can be done only by a person who filed it, it implies that the Applicant referred to in Section 12A would only be the Operational Creditor or the Financial Creditor as the case may be. It is true that after having induced Respondent No. 2 to pay the entire claim amount, it would not be in the interest of fairness to put forth the plea of interest. But at the same time this Tribunal cannot direct Respondent No. 1 to act on the draft settlement deed which is not yet signed by the parties by considering the correspondence between the parties and Respondent No. 1 cannot be asked to forgo the above mentioned interest or to file a suit or proceeding for recovery of the same - taking into consideration the events presented before this Tribunal and by relying on what the NCLAT has done in the case of BHASKAR BISWAS VERSUS M/S. DEVI TRADING HOLDING PVT. LTD. ANR. [ 2019 (8) TMI 1731 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], the Applicant is allowed to approach the Operational Creditor as sought for by them, for having further talks on the matter and with regard to the interest for the above mentioned period and Respondent No. 1 may consider the proposal that would be made by the Applicant with regard to the same and in the interest of fairness, consider withdrawing the Application. Application disposed off.
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2022 (5) TMI 578
Maintainability of application - initiation of CIRP against the respondent/guarantor - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - HELD THAT:- It is made known to everyone that on filing this Application by the Applicant/Creditor the interim-moratorium commences in terms of section 96(1)(a) of IBC, 2016. The Applicant/Creditor has proposed name of Mr. Neeraj Kumar Sureka, an Insolvency Professional, having Registration No. IBBI/IPA-001/IP-P01539/2019-2020/12517, of Central Plaza , 6th Floor, Room No. H, 41, B.B. Ganguly Street, Kolkata 700012, West Bengal for appointment as Resolution Professional - The Resolution Professional shall exercise all the powers as enumerated under section 99 of the IBC, 2016 read with the Rules made thereunder. List this matter on 06/06/2022.
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2022 (5) TMI 552
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is no longer res Integra that proceedings under Section 7 of IBC, 2016 is filed for Insolvency Resolution of the Corporate Debtor and not for recovery of money from the Corporate Debtor. In so far as Application under Section 7 of IBC, 2016 is concerned, the Adjudicating Authority is required to satisfy that there is a debt and default on the part of the Corporate Debtor. Once the same is adjudicated, then the Adjudicating Authority is required to initiate Corporate Insolvency Resolution Process as against the Corporate Debtor in terms of Section 7(5) of IBC, 2016. In view of the same, application filed by the Respondent is devoid of merits and accordingly stand dismissed. The financial debt is proved by the Financial Creditor and the default is being committed on the part of the Corporate Debtor, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. The Application stands admitted in terms of Section 7(5) of IBC, 2016 and the moratorium shall come in to effect as of this date.
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PMLA
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2022 (5) TMI 577
Money Laundering - proceeds of crime - schedule offence - obtaining/acquiring huge properties and made bank transactions in the Jharkhand and other states by involving in process and activities connected with the proceeds of the crime of the schedule offences - framing of charges - HELD THAT:- The facts of the case of DSP Chennai Vs. K. Inbasagaran [ 2005 (12) TMI 50 - SUPREME COURT ] and the case of REKHA NAMBIAR, BHOJRAJ TELI VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2015 (11) TMI 1862 - DELHI HIGH COURT] (are entirely different from the facts of this case as the case of DSP Chennai Vs. K. Inbasagaran is a case where the appeal was considered by the Hon ble Supreme Court of India where the trial court did not consider the defence evidence in its proper perspective but it is settled principle of law that at the stage of framing of charge, the defence of the accused could not be considered as held by Hon ble Supreme Court of India in the case of M.E. Shivalingamurthy vs. Central Bureau of Investigation , Bengaluru [ 2020 (1) TMI 1547 - SUPREME COURT ]. So far, the case of Rekha Nambiar Vs. CBI (is considered the offences involved in that case were not the offences punishable under the Prevention of Money Laundering Act, 2002 but the offences relating to schedule offence under Penal Provision for the offences punishable under section 109 of Indian Penal Code and under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988. Hence, the ratios of these two judgments, in the considered opinion of this court, are of not much help to the petitioner. There is no dispute regarding the settled principle of law regarding the materials to be considered by the trial court while considering the discharge petition as also framing of charge but coming to the facts of this case, this court finds that there is specific allegation against the petitioner of having laundered money to the tune of Rs.7,97,96,888/- and also there is specific allegation of adopting three modus operandi for the same. There is no illegality in the impugned order - Petition dismissed.
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Service Tax
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2022 (5) TMI 573
Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 - quantification of tax payable - opportunity of hearing - it is alleged that the declaration of the Petitioner was rejected without hearing the Petitioner and the reason given for the rejection is Amount not quantified before 30.06.2019 - Circular dated 27.08.2019 - HELD THAT:- The term quantification was subject matter of interpretation in various judgments of this court. The quantification of the duty, demand or duty liability has to be on or before 30.06.2019 to avail the benefit of SLVDRS. In the present matter, the Petitioners have given a statement about the service tax liability. Even in the affidavit in reply, the Respondents have averred that the assessee was summoned and that one Mr. Kothari in his statement dated 16.05.2019 voluntarily stated that for the outstanding dues of the service tax for the period November, 2015 to June 2017 is Rs.46,36,960/- and in his statement dated 17.05.2019, he had stated that the outstanding dues for service tax was Rs.46,59,031/- and the amount of Rs.42,77,721/- was paid and, therefore, the outstanding was Rs.3,81,310/-. The Petitioners had made out a case wherein the Petitioners ought to have been given an opportunity of hearing. In the present case, the declaration of the Petitioners under SVLDRS-1 scheme has been rejected without giving an opportunity of hearing. The Petitioners could have pointed out all these facts. Under the circular dated 27.08.2019, it has also been clarified that the written communication will include a letter intimating duty demand, or duty liability admitted by a person during enquiry, investigation or audit or audit report. Statement of the Petitioners is recorded much before the cut-off date viz. 30.06.2019. The same ought to have been considered by the Respondents. The impugned order dated 15.01.2020 rejecting Petitioner no.1 s declaration in terms of Form SVLDRS-1 is set aside - Respondents shall after hearing the Petitioners decide afresh declaration made by the Petitioners in terms of Form SVLDRS-1 after giving an opportunity of hearing to the Petitioners - Petition disposed off.
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2022 (5) TMI 572
Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - levy of service tax on Renting of Immovable Property Services - Circular No.1073/06/2019.CX dated 29th October 2019 - HELD THAT:- The circular clarifies that the Retailer Association of India has represented that the department has initiated proceedings against lessors for non-payment of service tax on rent over immovable property rented by the members - It is further clarified in the aforesaid circular that such members are allowed to file declaration under the Scheme and avail the benefits. The petitioner/lessor has filed appeal before the Apex Court. The said circular is clarificatory in nature. Needless to state that the petitioner is required to comply with all the conditions under the Scheme for availing the benefit of the said scheme. Respondents shall reconsider the declaration of the petitioner and shall not reject it on the ground upon which impugned order is passed. Writ petition is disposed of.
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2022 (5) TMI 571
SVLDR Scheme - Litigation category - Arrears category - remission of duty - recovery of the CENVAT credit - Section 121 of the Finance Act - HELD THAT:- It is stated that on 31st October, 2020, the scheme Sabka Vishwas (Legacy Dispute Resolution) Rules, 2019 has come to an end. On or about 27th January, 2020, the Form No. SVLDRS-3 was given and the Petitioner was directed to pay estimate amount of Rs.7,09,444/-. The Counsel for the Petitioner during the course of hearing before the Authority, accepted the category as Arrears. The Respondents accepted the same and issued the estimated amount payable by the Petitioner under the Scheme. It is trite that concession given by an Advocate against the statute would not bind the litigant. However, it needs to be considered that though the estimated amount payable by the Petitioner under the Arrears category, was informed to the Petitioner on or about 27th January, 2020. The Petitioner did not take any steps against the same. There are no bona fide on the part of the Petitioner in offering to make payment nor the Petitioner approached this Court within a reasonable time - The Apex Court in case of M/S. YASHI CONSTRUCTIONS VERSUS UNION OF INDIA ORS. [ 2022 (3) TMI 110 - SC ORDER] , has confirmed the order of High Court, refusing to grant relief to the Petitioner therein for extension of period to make deposit under the scheme. Considering the delay and latches in approaching this Court, so also lack of bonafides on the part of the Petitioner, the Writ Petition cannot be entertained - petition disposed off.
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2022 (5) TMI 570
Validity of SCN - earlier show cause notice was adjudicated by the Authority and the proceedings were dropped - advantage of extended period of lockdown once the similar issue has been adjudicated by the Authority - HELD THAT:- The party against whom the show cause notice is issued has an opportunity to file his say and contest the show cause notice on merits. Prima facie, the earlier show cause notice issued to the petitioner and was adjudicated upon, recites about the Department s opinion on variation of taxable value reported in the returns fled for the period of 2012-13 and 2013-14. The basic premise for issuance of show cause notice in the year 2017 was, in the opinion of the Department, variation of taxable value as reported in the return by the assessee in 2012-13 and 2013-14, whereas the period involving the present show cause notice is 2014-2015, the same is spelt out in the present show cause notice. As prima facie the period of show cause notice do not overlap and they are distinct so also the earlier show cause notice and the present show cause notice does not appear to be for same period, we are not inclined to exercise the writ jurisdiction - In the case of Supermax Personal Care Pvt. Ltd. [ 2021 (4) TMI 368 - BOMBAY HIGH COURT ] decided by the Division Bench of this Court, the notice was issued by the Commissioner, Thane, who had no jurisdiction and the Court observed that the goods are manufactured at Una, Himachal Pradesh, the Commissioner at Thane had no jurisdiction to issue show cause notice/demand notice. In the present case, the period of present show cause notice and earlier show cause notice prima facie appear to be different and it is not the case of petitioner that the Authority issuing show cause notice inherently lacks jurisdiction - The writ petition is disposed of with liberty to the petitioner to file reply to the show cause notice and put-forth his stand.
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2022 (5) TMI 569
CENVAT Credit - providing renting services - inputs/capital goods/input services used for construction of buildings and structures, which are then used for providing services - case of Revenue is that the inputs, capital goods and input services which go into creation of such an immovable property does not qualify as input, capital goods service or input service under the CENVAT Credit Rules, 2004 - HELD THAT:- This issue was addressed by various High Courts - In COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [ 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] , the High Court of Andhra Pradesh has decided that CENVAT credit is admissible on cement and TMT bars for construction of warehouses by M/s Sai Samhita who were providing storage and warehousing services. There are substance in the submission of the appellants on merits as it is undisputed that the appellants are engaged in providing renting of immovable property service and all the inputs, capital goods and input services which are in dispute were used for construction of buildings which were then rented out and service tax was paid on the renting of immovable property service. The only question which remains is whether, by virtue of the fact that the building which emerges is neither a good nor a service, the appellant can be denied CENVAT credit. The jurisdictional Delhi High Court in VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2018 (11) TMI 713 - DELHI HIGH COURT] has held in favour of the appellant. The appellants are entitled to the disputed CENVAT credit. Consequently, the impugned orders seeking to deny and recover CENVAT credit along with interest and seeking to the impose penalties cannot be sustained - Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 568
Levy of Service tax - Composite Maintenance Contract - erection and installation of water treatment plants its repair etc. - whether the activity carried out by the Appellant is taxable service under the management, maintenance or repair service‟ as per department or the said activity is of conversion of portable water out of sea water and not attracting service tax? - benefit of cum-tax value - demand of penalty and interest - HELD THAT:- It can be seen from the definition of maintenance or repair services, that the requirement of statute prior to 2005 and even after the 2005 for taxability of the services rendered is very clear i.e. the maintenance or repairs has to be provided by any person under contract or agreement - Undisputedly in the case in hand for the entire period, there was no specific maintenance contract entered by the appellant with M/s Tamil Nadu Water Supply and Drainage Board (TWAD Board). The Appellant is being paid an amount of Rs. 57.94 Per Kilo Liter water and the agreement reveals that the same is for supply of a quantity of 3800 m3 per day portable water of specified standard, on kilo Liter rate basis every day at the inlet of TWAD Board Product water tank of plant site for a period of seven years.As per the clause 42.1 the charges payable by M/s TWAD to Appellant for supply of potable water shall be in nature of water capacity charges, water variable charges and energy charges and invoices is prepared for supply of potable water with the same understanding - the contract is for supply of potable water every day at the inlet of TWAD Board Product water tank of plant site. The said contract/ agreement is not a maintenance contract . Accordingly, the demand raised on the appellant on this count is unsustainable. The entire plant was handed over by TWAD Board to Appellant for operation and completing the contract to TWAD Board in rendering such activities, even if the Appellant undertakes the maintenance or repair services which are for self and the services of management, maintenance or repair are not attracted as the same is not provided to any client/customer - there are no hesitation in holding that the demand of service tax is not sustainable. Benefit of cum-tax value - HELD THAT:- The said appeal is solely on the issue of the benefit of cum-tax value extended by the Adjudicating authority to Appellant. Since the matter in favour of Appellant on merit itself, revenue appeal is not sustainable. Demand of penalty and interest - HELD THAT:- Since the entire demand has been set aside, consequently penalties and demand of interest are also not sustainable. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 567
Condonation of delay in filing appeal before Commissioner (appeals) - appeal rejected on the ground of time limitation - appeal was filed with a delay of more than 10 months from the expiry of stipulated period of two months for filing the appeal - Section 85 (3) of Finance Act 1994 - HELD THAT:- The bare perusal of the provisions makes it clear that the period of limitation of two months as is stipulated therein, has to reckon from the date of receipt of the decision of the Adjudicating Authority against which the appeal has been filed - In the present case the date of receipt of the Order-in-Original is mentioned by the appellant as 03.06.2020. There is no denial for the said fact except the mention that earlier notices including the service of show cause notice and the service of Order-in-Original were made on the same address as that of the notice which was received by the appellant on 3.6.2020. However, it is perused that no document is produced on record by the department to prove the service of said earlier notices and even of the SCN. It is also apparent that O-I-O has been passed exparte. There have been catena of decisions which mandate that it is not the issuance of notice but the service there of which is relevant for holding the same as the evidence of the services of the notice. The said document is miserably missing. The only document produced by the Department is the service report of the letter dated 24.07.2020 vide which the Order-in-Original dated 26.04.2019 was served upon the appellant. In fact this date has to be considered as the relevant date for the purpose of Section 85 - However, in the present case as per appellant s own submission of date of knowledge of the Order-in-Original is mentioned as 03.06.2020. Hence the same is the relevant date for the period of two months in Section 85 (3) of the Act to reckon. The appeal before the Commissioner (Appeals) was filed on 31.08.2020. It becomes clear that appeal has been filed within the stipulated period of two months from the date when the fact of passing of the Order-in-Original came to the notice of the appellant on 03.06.2020. The relevant date in terms of Section 85 of the Finance Act, the date of receipt of the order of the adjudicating authority. As per Department s own document the said date is 24.07. 2020. Hence the appeal filed on 31.08.2020 was very much within the period of two months stipulated under section 85 (3) of the Finance Act 1994 for the purpose of filing the said appeal. Accordingly, it is held that findings in para 6.2 of the order under challenge are not sustainable. However the order of Commissioner (A) was merely on the technical grounds. The order on merits is yet to be passed. The matter is therefore, remanded back to Commissioner (Appeals) for adjudicating the matter on merits of the case - appeal allowed by way of remand.
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Central Excise
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2022 (5) TMI 576
CENVAT Credit - admissibility of credit on inputs received on stock transfer - applicability of Rule 57AE of the Central Excise Rules, 1944 and Rules 7(3) and 7(4) of the Cenvat Credit Rules, 2001/2002 as were in force at the material point of time - purchase of inputs and maintaining a record inventory of the inputs so purchased are mandatory conditions to be fulfilled for availing Cenvat Credit on inputs received by a manufacture prior to February 28, 2003 - discharge of burden of proof fulfilling the criterion of keeping a records on inventory of th inputs purchased by them while availing Cenvat Credit or not? - HELD THAT:- Tribunal had followed the decision in the case of EXIDE INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., HALDIA [ 2008 (1) TMI 190 - CESTAT, KOLKATA] and allowed the appeal filed by the assessee. The decision in Exide Industries appears to have attained finality and the Tribunal had been consistently following the said decision in other cases as well. In one such case, COMMISSIONER OF CENTRAL EXCISE, KOLKATA-VI VERSUS M/S. COATES OF INDIA LTD. [ 2018 (7) TMI 251 - CESTAT KOLKATA] , the learned Tribunal had followed the decision in Exide Industries. The decision in Coates of India Limited was appealed against by the revenue before this Court and Hon ble Division Bench by judgment COMMISSIONER OF CENTRAL EXCISE, KOLKATA-VI VERSUS M/S. COATES OF INDIA LIMITED [ 2019 (7) TMI 1926 - CALCUTTA HIGH COURT] dismissed the appeal noting that the Tribunal in the said case had followed the decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [ 2007 (8) TMI 10 - SUPREME COURT] - There are no distinguishing circumstances in the case on hand and more importantly, the revenue has not raised any ground to state as to why the decision in Exide Industries or the decision in Ballapur Industries Ltd. cannot be made applicable to the assessee s case. There are no ground to interfere with the order passed by the Tribunal - appeal dismissed - decided against Revenue.
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2022 (5) TMI 566
Process amounting to manufacture or not - activity of blending of various mineral oils and selling the same to various industrial consumers or persons engaged in the construction of roads - Area Based Exemption - substantial expansion of their plant and machinery to the extent of 25% or more or not - time limitation - HELD THAT:- The case of the appellant is that there are two ingredients for manufacturing the thinner/industrial oil. The product of the appellant is just a blend of two oils and has nothing to do with the manufacturing of new product, as only the viscosity of the final product is reduced. This Court while taking into consideration the manufacturing process, comes to the conclusion that there are three ingredients, which are (a) two oils as raw-material are used; (b) blending is there with the electric motor and (c) process is carried out for reducing the viscosity of the final product. The final product is sold in a different name. As held by the Hon ble Supreme Court in NOVOPAN INDIA LTD., HYDERABAD VERSUS COLLECTOR OF CENTRAL EXCISE AND CUSTOMS, HYDERABAD [ 1994 (9) TMI 361 - SUPREME COURT] to the facts of the present case, it is clear that (1) two oils are used for the manufacturing the produce (2) Oils are mixed with the electric motor (3) by mixing the oils the viscosity is reduced (4) the final product is used as industrial oil (5) the final product is sold with a different name and brand, so the goods are transformed into other goods, which are different and/or new after electric process, after reducing the viscosity, the use is also changed for the industrial process, marketed with different name(s) and in these circumstances, there is no other conclusion except that the appellant is carrying manufacturing process. The detailed discussion herein above makes it amply clear that the appellant has made substantial expansion of their plant and machinery to the extent of 25% or more which is the basic requirement of exemption under notification No. 50/2003-CE, dated 10.6.2003, the appellant has carried out the manufacturing activities in the plant. So, it is concluded that M/s SRK Petrochemicals Ltd. are engaged in the manufacture of Thinner and Industrial Fuel Oil. Time Limitation - HELD THAT:- The demand is raised well in time by the respondent and the appellant cannot deny the payment of his legal dues towards the respondents - this Court finds that the judgment passed by the learned Appellate Authority below, upholding the order passed by the authorities below is just reasoned after appreciating the facts which have come on record to its true perspective and the same needs no interference as the same is as per law. The net result of the discussion is that reducing the viscosity of two oils by electric process is nothing but manufacturing and the further act of selling the same with a new name and brand is also an additional ingredient to conclude that the appellant is doing the manufacturing process - the order passed by learned CESTAT needs no interference and the same is upheld. Appeal dismissed.
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2022 (5) TMI 565
CENVAT Credit - steel items - inputs and capital goods used in connection with the erection and commissioning of the plant - periods in dispute in the present appeals are November 2005-August 2006, December 2006-March 2007, May 2007-March 2008, and January 2009-March 2009 - HELD THAT:- The credit of Rs.25,63,542/- has been disallowed by the Ld. Commissioner (Appeal) merely on the basis of the decision of the Larger Bench in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] - The observation made in Para 5.4 of the Appeal Order is examined wherein the Learned Commissioner (Appeals) has relied on the decision of Larger Bench in the case of Vandana Global to disallow the credit. The said decision of the Tribunal s Larger Bench was challenged by the assessee before the Hon ble Chhattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] wherein the Tribunal s decision has been set aside on 13.09.2017, i.e. after the date of passing of the appeal order impugned herein. The contentions of the Ld. Advocate is agreed upon that the very basis followed by the Learned Commissioner (Appeals) has now been settled in their favour. In the facts of the present case, it is not in dispute that the various steel items have been used for the purpose of setting up of sponge iron kiln along with the power plant as also certified by the Chartered Engineer have been duly verified by the lower authorities in the adjudication stage. Therefore, applying the user test principle, as followed by the various High Courts, the assessee is entitled to avail credit on the steel items. Appeal dismissed - decided against Revenue.
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2022 (5) TMI 564
Levy of Central Excise duty - intermediate goods used in the manufacture of exempt final goods - whether Central Excise Duty is payable on the intermediate products viz. Brass Casted Road, manufactured at their unit own by appellant and Job Work Basis and further used in manufacture of exempted final products viz. Brass Parts of Agriculture Products which is exempted from payment of Central Excise Duty? - denial of benefit of exemption N/N. 67/95-C.E. in respect of intermediate products viz. Brass Casted Rod used captively for manufacture of exempted goods - denial on the ground that the exemption contained in the said Notification does not apply to inputs used in or in relation to the manufacture of final products which are exempted from the whole of duty of excise leviable thereon or are chargeable to NIL rate of duty. HELD THAT:- From the Rule 6 it can be seen that as per sub-rule (1) of Rule 6, the assessee is not required to avail the Cenvat credit in respect of the inputs used in the manufacture of exempted goods. As per the fact of the present case it is undisputed fact that the appellant during the impugned period not registered with the Central Excise Department, hence, has not availed the Cenvat credit in respect of any of the inputs used either in the final product or in the intermediate product i.e.,Brass Casted Rods. Therefore, the condition of sub-rule (1) of Rule 6 stands complied with. The finding of the adjudicating authority as regard the applicability of above notification is misleading and absolutely incorrect - the appellant has discharged the obligation under Rule 6(1) accordingly they are legally entitled for the exemption Notification No. 67/95-C.E., dated 16-3-1995 in respect of their intermediate product i.e., Brass Casted Rods. In the present matter appellant also claimed exemption alternately under the provisions of Notification No. 08/2003 -CE dated 01.03.2003. Since as per the finding appellant are legally entitled for the exemption Notification No. 67/95-C.Edated 16.03.1995 in respect of their intermediate products i.e. Brass Casted Rods, the alternative exemption claimed by the Appellant, need not be discussed. Whether any exemption from duty can be available to the Appellant as regard to the intermediate products viz. Brass Casted Rods manufactured by the Appellant through Job Worker and further used in manufacture of exempted goods? - HELD THAT:- In the present matter Learned Adjudicating Authority disputed benefit of the N/N. 84/1994-CE dated 11.04.1994 only on ground Appellant have cleared their raw materials or semi-finished goods to the job-worker and received intermediate goods viz., Brass Casted Rods manufactured by the Job-Worker without following the prescribed conditions, without preparing the job- work challans and without maintaining any records. However, the said notification grants exemption to the specified goods manufactured in a factory of job worker subject to only condition that the supplier of raw materials or semi-finished goods gives an undertaking to the proper officer having Jurisdiction over the factory of the Job Worker. In the instant case in para 38 of impugned order the Ld. Adjudicating authority itself admitted that Appellant has given undertaking. Therefore, benefit of said notification cannot be denied on this ground alone. Without prejudice, as regard the said issue it is also found that even if the benefit of job-work notification denied to the Appellant, the duty liability rests on the job worker. Therefore, the show cause notice demanding duty from the Appellant on the goods manufactured by the Job-worker cannot be sustained. Once the Revenue took a view that the inputs could not have been sent to a job worker claiming the Job-work exemption Notifications and the process undertaken by the job worker amounted to manufacture and resulted in products namely, Brass Casted Rods, the duty liability would fall on the manufacturer who is a job worker in this case and not on the appellant. Since duty demand has been made on Brass Casted Rods and the appellant is not a manufacturer of the same, the demand is not sustainable and accordingly, the impugned order demanding duty from appellant is legally not correct. In the facts and circumstances of the present case, the demand on this count also must be quashed and set aside. Since the entire demand has been set aside, consequently penalties and demand of interest are also set aside - Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 563
Refund of Central Excise Duty - return of goods post GST era which were supplied earlier - duty deposited on excisable goods cleared in the month of June, 2017, which were rejected by the buyer and same were finally returned back in January, 2018 - Rule 16 of Central Excise Rules, 2002 - Applicability of principles of unjust enrichment - HELD THAT:- Section 142(3) of CGST Act provides that Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of Section 11B(2) (unjust enrichment). Thus, various provisions and requirement for refund, it is found that the appellant has satisfied all the conditions as required under Section 142(1) read with Rule 16 of Central Excise Rules. Further, there is only some confusion with regard to the status of the buyer returning the goods, whether the registered or not registered. Under the facts and circumstances that the buyer was not a registered dealer under the provisions of Central Excise Act but was registered under the provisions of the GST Act, it is held that the Court below have erred in holding that the goods has been returned by a registered dealer, and hence there should have been proper invoice for return, and in such circumstances, there is no time limit applicable. In such circumstances, the selling dealer/ manufacturer is entitled to cenvat credit under the provisions of GST, on the strength of the invoice for return of goods. It is held that for such deemed lapse in procedure, the substantial benefit of refund of duty paid at the time of clearance cannot be denied to the appellant, as the appellant have fulfilled all the conditions precedent for being entitled to refund - Adjudicating Authority is directed to grant refund within a period of 45 days from the date of receipt of a copy of this order alongwith interest under Section 11BB of the Central Excise Act - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 562
100% EOU - refund claim - relevant date u/s 11B of CEA - refund application is time barred or not - HELD THAT:- Refund claim of the amount of Rs. 5 lakhs (fixed in two bank guarantees initially of Rs. 2.5 lakhs each) has wrongly been denied to be refunded invoking section 11B of Central Excise Act. Perusal of the provision shows that the provision relates to the claim for refund of duty. Once it is clear that the amount in question is not the amount of duty, the said provision cannot be invoked. It is also an apparent fact that the aforesaid amount has already been treated by this Tribunal as an amount of pre-deposit (vide order on stay application dated .9.01.2006). The relevant provision applicable to impugned amount is section 35F and 35FF. The very perusal of section 35FF which talks about interest on delayed refund of amount of pre deposit under section 35F makes it clear that the provision is absolutely silent about any time limit for the assesee to claim his amount which was deposited by him for the purpose other than duty. The Hon ble Apex Court in the case of U.O.I. VERSUS SUVIDHE LTD. [ 1996 (8) TMI 521 - SC ORDER] while holding the decision of Bombay High Court in SUVIDHE LTD. VERSUS UNION OF INDIA [ 1996 (2) TMI 136 - BOMBAY HIGH COURT] has held that Section 11B of the Act can never be invoked to cases of pre-deposit of duty in compliance of section 35 of the Act. Since the pre-deposit condition is not payment of duty but it is only pre-deposit for availing the right of appeal that the time bar of Section 11B cannot be imposed on such an amount while sanctioning the refund thereof. Thus, the provision of Section 11B of Central Excise Act is not applicable to the refund in question - reliance can also be placed in the case of BAJAJ AUTO LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD [ 2007 (1) TMI 408 - CESTAT, MUMBAI] wherein it was held that the amount which was deposited during the initial stages of proceedings cannot be retained by the Revenue and if the same is retained then such retention is without the authority of law, that the same will amount violation of Section 365 of Constitution of India. Department also cannot be allowed to be unjustly enriched by retaining the amount for which it had no authority of law to collect. Thus, it is held that the Commissioner (A) has wrongly invoked the time bar of Section 11B of Central Excise Act despite that the amount in question was not the amount of duty - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 561
Cross-examination of witnesses - Relevancy of statements under certain circumstances - whether the witnesses examined at the stage of investigation be allowed to be cross examination by the appellant? - Section 9D of Central Excise Act - HELD THAT:- A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant for the purpose of proving the truth of the facts contained therein - Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J K CIGARETTES LTD. ORS. AND M/S. GTC INDUSTRIES LTD VERSUS COLLECTOR OF CENTRAL EXCISE ORS. [ 2009 (8) TMI 64 - DELHI HIGH COURT] clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well - There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. In the present case, the witness has time and again reiterated that the appellant has never been involved in the alleged clandestine removal. He has tried to explain the shortage as was noticed at the time of physical verification of the stock - he has specifically mentioned that production records are maintained by production units, hence, shall be available there. The separate invoice for captive consumed sponge iron and MS ingots has specifically been denied to be generated. Weighment slips were used to be made manually with no record thereof has been mentioned specifically to answer absence of weightment slips. To test the veracity of these submissions in the light of simultaneous acknowledgement to deposit the differential duty demanded, it is opined that interest of justice shall best be served when this witness is cross examined and his testimony is relied upon after following the procedure of aforementioned section 9D of the Central Excise Act. In addition it is apparent that granting such a permission will in no circumstance be prejudicial to the interest of the Department, except in the case of the cross examination of the Departmental witnesses. The original adjudicating authority shall be cross examining the witness and it is thereafter denovo adjudication of the impugned show cause notice be conducted by Original Adjudicating Authority - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2022 (5) TMI 560
Validity of Provisional attachment of accounts of the petitioner in the respondents 6 and 7 banks - formation of opinion or subjective satisfaction or not - whether as on the date of the orders of provisional attachment, there were no proceedings pending under Section 67 of the Act nor any proceedings have been initiated either under Section 73 or 74 of the Act? - HELD THAT:- A perusal of the impugned orders of provisional attachment shows that the fourth respondent herein stated in the said orders that, as per the information available with the Department and in order to protect the interest of the Government revenue, in exercise of the powers conferred under Section 83 of the Act, the account is provisionally attached - it may be appropriate to refer to the provisions of Rule 159 of the Sales Tax Rules. According to sub-Rule (5) of Rule 159 of the Rules, the assessee may, within seven days of the attachment under sub-Rule (1), file an objection to the effect that the property attached was or is not liable to attachment before the Commissioner and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC-23. Admittedly, except saying that the orders of provisional attachment are passed in order to protect the interest of the Government revenue, no other reasons are assigned by the fourth respondent in the impugned orders of provisional attachment. When sub-Rule (5) of Rule 159 of the Rules specifically provides for filing objections against the orders of provisional attachment, the contention that the reasons for ordering provisional attachment were recorded in the Note File and that there is no need to extract the same or state the same in the provisional order of attachment, in the considered opinion of this Court, cannot stand for judicial scrutiny. This Court is of the opinion that the petitioner has made out prima facie case for grant of interim relief - there shall be interim suspension of the provisional attachment orders, dated 01.04.2022 and 06.04.2022, till 15.07.2022. Post the matter for hearing on 05.07.2022.
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2022 (5) TMI 559
Search and Seizure - failure in filing regular monthly returns/statements as required to be filed in respect of the consignment of taxable goods transported by it - only ground of the challenge is that the respondent no. 5 was not a member of the vigilance group or wing on the date when the search and seizure was made - HELD THAT:- In the present proceedings, the departmental authority, upon information received, proceeded to examine the books of accounts and registers maintained by the petitioner No. 1, who is a transporter. This search was admittedly made in the place of business of the petitioners. Pursuant to the seizure of books of accounts and registers, notices were issued to the petitioner No. 1 to appear before the Assessing Officer and to explain the books of accounts and/or the registers seized - In order to recover the outstanding taxes and penalty due from the petitioner, recovery proceeding had been initiated which, however, was stayed by orders of this court passed in the present proceedings. Under section 44 it is clearly provided that any authority appointed under sub-section (1) of section 3, besides requiring any dealer to produce books of accounts, registers or documents or information relating to any transaction, is authorized, for reasons to be recorded in writing, to seize such books of accounts, registers or documents of any dealer including persons transporting goods or any owner of warehouse/godown. Therefore, it is clear that under the provisions of the Act, an authority prescribed under section 3(1) will be an authority who is empowered to proceed for search and seizure of any records, registers, books of accounts relating to any transaction - In the present case, respondent no. 5 is a Superintendent of Taxes and is one of the officers of the State who is vested with the powers for search and seizure under section 44, by virtue of the powers vested on him under section 3 of the Act. It is not the case of the petitioners that it is only an officer under the enforcement group/wing who is competent to conduct search. Rather, it is petitioners case that the respondent no. 5 misrepresented himself to be a member of the vigilance group or wing and conducted search on the date on which the respondent no. 5 had not been made a member of such group or wing. In view of the mandate of section 3 of the Act of 1993, even if the petitioners contentions are to be accepted that the impugned search was conducted by the respondent no. 5 without actually being a member of the vigilance group or wing on the date when the search was conducted, the respondent no. 5 is admittedly a Superintendent of Taxes and, therefore, an officer authorized to assist the Commissioner of Taxes for carrying out the provisions of the Act as prescribed under section 3 of the Act of 1993. Section 44 of the Act permits search at business premises and seizure of books of accounts, documents, registers etc. - in the absence of any challenge made by the petitioner regarding the powers under section 3 not being available to respondent no. 5, the mere fact that the respondent no. 5 may not have been a member of vigilance wing/group on the date when the search was conducted will not prevent an officer appointed under section 3 of the Act to conduct such search and seizures for reasons to be recorded. There is no bar under the Act that officers in the rank of respondent no. 5 and below are not the competent officers to carry out any search or seizure prescribed under section 44 of the Act of 1993. No such averment is made by the petitioners as well. In the present case, even if this court comes to a finding that the search and/or seizure made against the petitioners is not as per the provisions of law, then the evidence collected and the materials recovered against the petitioners can be used by the department, if otherwise found admissible, in the proceedings provided for under the Act of 1993 - There are statutory provisions available to the petitioners for taking recourse to for statutory remedies in respect of any assessments made pursuant to the search and seizure. Such remedial measures have, however, not been taken recourse to by the petitioners. The sole ground of the challenge made to the entire proceedings is the lack of jurisdiction of the respondent no. 5 in conducting the search and seizure operation. The respondent no. 5 is a competent officer as prescribed under section 3 of the Act and no challenge to the authority or power of the officers empowered under section 3 of the Act have been made by the petitioner. The only ground of the challenge is that the respondent no. 5 was not a member of the vigilance group or wing on the date when the search and seizure was made - the materials recovered during a search, which may not have been conducted as per the provisions of law, are also admissible in evidence and it is permissible to take consequential actions under the provisions of law, as have been done in the present case. There are no merit in the present writ petition and the same is, therefore, dismissed.
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2022 (5) TMI 558
Levy of advertisement tax - MSOs - conduct of business thereby transmitting signals of various channels belonging to different broadcasters to LCOs and includes broadcasting of private and local advertisements - demand of fine and penalty as well - HELD THAT:- It is trite that a taxing statute has to be strictly construed. No tax can be levied except in accordance with law. Reading the provisions, it is manifest that the advertisement tax is levied on advertisement at any place of entertainment where the advertisement is exhibited for payment. The MSOs, it appears, only transmit the signals of various TV channels belonging to different broadcasters to LCOs who, in turn, retransmit signals for viewership by their own viewers. If the Petitioners are only transmitting the signals, then, in such an event, they cannot be made liable to pay advertisement tax in terms of the Advertisement Tax Act. The advertisement is not exhibited at its place, as the MSOs only transmit the signals of various channels belonging to different broadcasters to LCOs, unless the Respondents could demonstrate that the MSOs independently received the advertisements. The MSO in the present case only retransmits the programing services received from broadcaster and/or his authorized agency or transmits his own programing services for simultaneous reception either by multiple supplier directly or through one or more LCOs. The MSO is only retransmitting the programing services received from the broadcaster. It is not the case of the Respondent Department that the Petitioner is transmitting his own programming services for simultaneous reception and that he has received the advertisement for consideration so as to be made liable for the advertisement tax. Petitioner is issued with the demand and is penalized purportedly under Section 4 of the Advertisement Tax Act and non compliance of Section 4 of the Entertainment Charges Act (Maharashtra Entertainments Duty Act) - HELD THAT:- Section 4 of the Entertainment Charges Act 1923 only states no person other than a person who has to perform some duty in connection with an entertainment or a duty imposed upon him by any law, shall be admitted to any entertainment except with a valid printed ticket or complimentary ticket. In the present case, said question does not arise. The impugned notice cannot be sustained and is quashed and set aside - Petition allowed.
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2022 (5) TMI 557
Levy and collection of Entry tax - Cigarette - applicability of provisions of Section 28-A to goods which are exempt under Section 4 of U.P. Trade Tax Act, 1948 - Whether the provisions of Section 6 of the U.P. Tax on Entry of Goods Act, 2000 cast an obligation on an Importer to carry Form- 31 in case of goods which are exempt under clause (a) of Section 4 of the U.P. Trade Taxt Act, 1948? - HELD THAT:- Admittedly, along with goods in question, bill, bilti and Form-35 were present and no discrepancies were found in the said documents except the fact that Form-31 could not be produced which was duly submitted later on. All entries of dispatch of goods either outside the State or in the State of U.P. have been duly made in the books of account so there cannot be said to be any intention to evade payment of tax - Further this Court in the case of M/s Sarvashri Ramesh Chand Santosh Kumar vs. Commissioner of Trade Tax, U.P. Lucknow [ 2010 (7) TMI 906 - ALLAHABAD HIGH COURT ] has held that in absence of Form-31, the penalty cannot be justified. The intention to evade payment of tax is not there. Further recently, this Court in M/s Colgate Palmolive India Limited vs. Commissioner of Commercial/Entry Tax, Lucknow [ 2021 (11) TMI 68 - ALLAHABAD HIGH COURT ] has held that non availability of Form-31 cannot be a ground for levying of penalty under Section 15-A (1) (O) in absence of specific intention to evade payment of tax. In the case in hand, it is evidently clear from the record that all entries were made in the books of account of the revisionist and there was no intention to evade payment of tax, hence the penalty order passed by the Tribunal cannot be sustained in the eyes of law and is hereby quashed. The revision is allowed.
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2022 (5) TMI 556
Reopening of assessment - Deemed assessment - time limitation - impugned notices issued beyond the period prescribed under Section 27 of TNVAT Act, 2006 or not - Assessment Year 2010- 2011 - HELD THAT:- As far as the impugned notice dated 28.2.2019 for the assessment year 2010-11 is concerned, there was a deemed assessment on 30.6.2012 by the operation of law under proviso to section 22 (2) of the Tamil Nadu Value Added Tax Act, 2006.No previous notice for reopening of the assessment appears to have been issued. Therefore, the impugned notice dated 28.2.2019 seeking to reopen the deemed assessment completed on 30.6.2012 appears to be time-barred as no notice was issued within time and is therefore liable to be declared as time barred. The assessment which was completed long after the period of limitation was held barred by law. This is not the case in the case of the petitioner. It is also not open to the petitioner to plead the helplessness by citing rule 6 (11) of the Tamil Nadu Value Added Tax Rules, 2007. As long as the notices for reopening of the assessment had been issued and re-assessment was not completed, it was incumbent on the part of the petitioner to have maintained the records. If the petitioner failed to maintain the records, petitioner has to face the consequences. The respondent is therefore directed to complete the assessment of the assessment years 2006-07 to 2009-10 within a period of three months from date of receipt of this order. Needless, to state, before passing such orders, the petitioner shall be heard - In case the petitioner fails to file any reply or participate in the personal hearing, the respondent shall proceed to pass appropriate orders on merits and in accordance with law based on the available materials. Petition dismissed.
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2022 (5) TMI 555
Reversal of input tax credit - interstate sale - Section 19(2)(v) and 19(5)(c) of the TNVAT Act, 2006 - HELD THAT:- The subsequent notice issued on 31.08.2021 was responded to by a communication dated 28.09.2021 by the petitioner stating that, he needs some more time to file further objections. However, prior to that, pursuant to the earlier show cause notice, the petitioner had already given a reply on 08.11.2017, wherein he has stated that, the only transaction which is involved does not fall under interstate purchase and therefore it does not attract input tax credit under Section 19(2)(v) and 19(5)(c) of the TNVAT Act, 2006, therefore, the proposal made in this regard through the show cause notice should be dropped. However, whether this reply given by the petitioner has been considered or not has not been mentioned in the impugned order. Therefore, on that ground, this Court feels that, the matter can be remitted back to the respondent for reconsideration. The matter is remitted back to the respondent for reconsideration - Petition allowed by way of remand.
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2022 (5) TMI 554
Validity of order of reassessment - time limitation - whether the reassessment was possible only under Section 21(3) of the Value Added Tax Act, 2005 within one calendar year from the concerned year? - HELD THAT:- There is no manner of doubt that the appellants had specifically raised preliminary objection before the assessing officer that the proposed action had become time-barred and hence notice under Section 21(7) of the VAT Act issued to the appellant(s) by the authority was illegal and unjust being void ab initio. The assessment order passed by the competent authority, however, does not deal with this contention at all. That grievance had been made by way of writ petition, as the issue of limitation would go to the root of the matter being bordering on jurisdiction and authority of the officer concerned. The Single Judge accepted the said grievance of the appellant(s), as can be discerned from the observations in paragraph 34 of the judgment and answered the same in favour of the appellant(s). As the issue regarding limitation goes to the root of the matter, it could be taken as preliminary objection before the competent authority and the competent authority was under obligation to answer the same one way or the other. That being the grievance in the writ petition, the learned Single Judge justly addressed the said objection and answered it in favour of the appellants. Whether the view taken by the learned Single Judge on the said contention is tenable or otherwise ought to have been examined by the Division Bench on its own merits. The parties are relegated before the Division Bench of the High Court for reconsideration of the restored/remanded writ appeal(s) on its own merits and in accordance with law.
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Indian Laws
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2022 (5) TMI 575
Dishonor of Cheque - recovery of interim compensation as land revenue - public demand or not - Whether an order for payment of interim compensation under the Negotiable Instrument Act can be enforceable under the Bihar Orissa Public Demands Recovery Act, 1914 as a public demand? - HELD THAT:- Section 143A of the NI Act under sub- section (5) specifically states that interim compensation payable under this Section is recoverable as a fine under Section 421 of the Code of Criminal Procedure. Section 421 (1) (b) provides for issuance of warrant to the Collector to realize amounts as arrears of land revenue from movable and immovable properties of said defaulter. Further, clause 3 of Schedule I of the Recovery Act states that any money realizable as arrear of land revenue by process authorized for said purpose shall be deemed a public demand under Section 3 of the Act. The interim compensation so ordered under Section 143A of the NI Act is recoverable as a fine under Section 421 of Cr.P.C. which then, as shown from the above discussion, clearly falls under the definition of public demand . The petitioner s contention of non-applicability of the Recovery Act, therefore, necessarily has to be negated. Once it is held that the interim compensation ordered under the NI Act falls within the ambit of Schedule I of the Recovery Act, realization thereunder cannot be stopped. The learned Court below was correct in issuing an order under Section 143A of the NI Act for recovery of interim compensation as land revenue - petition disposed off.
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2022 (5) TMI 574
Dishonor of Cheque - insufficiency of funds - compromise has been entered into between the parties and the entire dispute has been finally resolved - compounding of offences - HELD THAT:- From the facts, it is apparent that both the contesting parties are ad idem that the compromise has been effected between the parties without any pressure, threat or undue influence and the terms of the said compromise have been duly complied with. The compromise would go a long way in maintaining the peace and harmony between the parties and thus, a prayer has been made to the Court for compounding the offence in terms of Section 147 of the Act. Since the offence relating to dishonour of cheque has a compensatory profile and is required to have precedence over punitive mechanism, therefore, the present revision petition deserves to be allowed. In the present case, the petitioner was stated to be running a Tent house and on account of COVID-19 pandemic, his business had completely finished and it is the case of the petitioner that his family had to sell their tables and chairs so as to collect money to pay the complainant so as to compromise the matter with him. The fact that the complainant has agreed to finally settle the matter for an amount of Rs.2,60,000/- with respect to all the three cheques i.e. for Rs.1,25,000/-, Rs.70,000/-and for Rs.1,20,000/-, for a total amount of Rs.2,60,000/-, also shows that the financial position of the petitioner is not in a good State. It is settled law that this Court has the power to set aside the judgment of conviction against the petitioner on the basis of a valid compromise. The compromise in the present case is genuine and valid. The present criminal revision petition is allowed.
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