Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 19, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Extends the due date for depositing the tax due under proviso to sub-section (7) of section 39 of the Central Goods and Services Tax Act, 2017 in FORM GST PMT-06 for the month of April, 2022 till the 27th day of May, 2022 - Where return is required to be furnished quarterly
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Extends the due date for furnishing the return in FORM GSTR-3B for the month of April, 2022 till the 24th day of May, 2022 - Notification
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Detention of goods alongwith vehicle - generation of two e-way bills - Once the delivery of the goods which has not been taken by the petitioner, has not been disputed by the Revenue as well as validity of the e-way bill generated by Maharastra party, which was valid up to 15.2.2020 i.e. the date of detention and passing of the order under Section 129 (3) of the G.S.T. Act, there cannot be any violation or contravention of the provisions of G.S.T. Act as well as the Rules framed thereunder. - In the case in hand once the valid document i.e. e-way bill and tax invoice, builty was accompanying with the goods, therefore the authorities ought not to have drag the petitioner in an unnecessary litigation - HC
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Transitional Credit (ITC) - Permission for re-opening the common portal so as to enable the petitioner to submit the Form GST TRAN-1 electronically or to permit the petitioner to manually submit Form GST-TRAN-1 - In the initial months of implementation of GST enactment, there was confusion as to which of the assessees would be assessed by the Commercial Tax Department and which of the assessee would be assessed by the officers under the Central Government from the Central Excise Department - there are no justification in the stand of the respondent in not allowing the credit to be utilised. - HC
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Classification of goods - article of stationary or not - activity of printing - Pattadar pass book cum title deed (document of title) - Composite supply or not - The authority for Advance Ruling and the Appellate Authority for Advance Ruling have rightly given a ruling that ’Pattadar Pass Book cum Title Deed’ is classifiable under HSN 4820 and it is not a document classifiable under HSN 4907 - HC
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Profiteering - supply of Services by way of admission to exhibition of cinematography films - benefit of reduction in the GST rate not passed on - the Respondent is therefore directed to reduce the prices of his tickets, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. - NAPA
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Profiteering - construction service - Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the prices - the ITC, as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 1.02%, whereas, during the post-GST period (July-2017 to April, 2020). it was 1.84%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 0.82% (1.84%-1.02%) of his turnover and the same is required to be passed on by him to the recipients of supply - NAPA
Income Tax
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Deduction of TDS / Collection of TCS at higher rate for non-filing of ITR by the deductee - The deductor or the collector may check the PAN in the functionality at the beginning of the financial year and then he is not required to check the PAN of non-specified person during that financial year. - Asking the deductee/collectee to file evidence of furnishing of their return defeat the purpose of this taxpayer friendly measure. - CBDT
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Reopening of assessment u/s 147 - reasons to believe - “tangible material” - There is no whisper in the impugned reassessment order as to how the AO has arrived at the aforesaid amount as undisclosed income and that how the aforesaid amount represents undisclosed income of the petitioner/assessee. Thus the reassessment proceeding initiated by the AO against the petitioner for the AY 2017-18 was not only without jurisdiction but also it was abuse of power - HC
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Revision u/s 263 - an order which is erroneous and prejudicial to the interest of Revenue - When all the evidences relating to commission/brokerage paid by assessee both to domestic as well as overseas agents are available on record, what more evidences are required to be furnished by the assessee is beyond comprehension. When the facts on record reveal that the Assessing Officer has made proper enquiry on the issues, on which limited scrutiny was directed, by merely referring to Explanation 2(a) to section 263 of the Act, the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue by making a general observation that proper enquiry, which the Assessing Officer ought to have made was not made. - AT
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Reopening of assessment u/s 147 - Unexplained cash deposits - in the order-sheet, the assessee’s representative has accepted that the bank accounts wherein cash deposited, which are nothing but belongs to the assessee only. Therefore, the contention of the assessee that the bank account are not belongs to him is not proved with proper evidence. - Additions confirmed - AT
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Cash deposit of during demonetization period - total deposits made by the assessee to his bank account was below Rs.2,50,000/- - when the CBDT Circulars clearly provide, no further clarification and verification is required to be made in the case of an Individual who is earning income from salary filing return of income has deposited during demonetization period. Therefore, addition made by the Assessing Officer and confirmed by the ld. CIT (Appeals) cannot be held as sustainable as the same is clearly against the Instruction issued by the CBDT. - AT
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Disallowances u/s.40A(3) r.w.r 6DD - payment to agent or not - payment of expenses was made in cash exceeding the stipulated amount - it is seen that the assessee made payment to contractors and such payments were as such recorded as expenditure in the books of account of the assessee. In such circumstances, it cannot be said that the contractors were agents of the assessee for the provision of labour. - the authorities below were justified in coming to the conclusion that clause (k) of Rule 6DD was not attracted. If Rule 6DD is taken out of purview, then the payment is otherwise in violation of section 40A(3) of the Act. - AT
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Eligibility for Tonnage Tax Scheme - whether the assessee is only a fractional owner - In this case, the claim of the learned AR for the assessee was that the assessee had claimed benefit of tonnage tax, as per definite and ascertainable share of the assessee in terms of agreement with other co-owners. Therefore, we are of the considered view that there is no merit in the observations of the Assessing Officer that operation of the ship was done by M/s. West Asia Maritime Ltd. and thus, the assessee is not entitled for benefit of tonnage tax. - AT
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Capital gain computation - cost of acquisition as well as cost of construction - AO has not even attempted to verify the correctness of the cost of land and construction claimed by the assessee. Hence, in the absence of any proper verification and enquiry by the AO, the claim of proportionate cost of acquisition as well as cost of construction based on the valuation report cannot be denied. - AT
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TDS u/s 194C - determination of job work charges / miller cost - milling of paddy - As per AO milling costs paid by the appellant are discounted costs and need to be increased by the cost of by-products for the purpose of TDS - since we have held that the property in the by-product was not passed on by the assessee / Procurement Agencies as milling charges, hence, it is held that TDS provisions of section 194C are not attracted in this case. - AT
Customs
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Enabling export of Bangladesh goods to India by rail in closed containers - procedure is prescribed for movement and clearance of goods imported in containers on trains returning from Bangladesh - Circular
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Classification of goods - mill processed non-allow ferrous waste metal goods wound in a coil - goods has been treated as waste material or not - The metal waste is invariably subject to physical examination, as there are various factors to be considered to conclude that particular good is a waste product or not, it depends on who is purchasing and how it would be used therefore, an advanced ruling cannot be treated as blanket permission to the importers to import the goods of all kinds of waste and scrap. - HC
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Enhancement of penalty without given a reasonable opportunity of hearing - power of the commissioner of customs (appeals) - The 1st respondent/the Commissioner in appeal has enhanced the penalty imposed by the original authority contrary to the provisions of Section 128-A of the Customs Act, 1962. - Matter restored back - HC
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Penalty u/s 114(i) - illegal activities with the tenants - tenant was using the property, which was rented out by the petitioner for storing turtles and tortoises. - It is quite possible that the tenant was engaged in illegal activities, which would be violation of the Customs Act, 1962, Wildlife Protection Act, 1972, CITES and any other enactments. Imposition of penalty of Rs.4,50,00,000/- makes the appellate remedy illusory for a small time agriculturist, who had the misfortune of renting out the property to a person, who had actually indulged in illegal export - HC
DGFT
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Prohibition on export of wheat - wherever wheat consignments have been handed over to Customs for examination and have been registered into their systems on or prior to 13.5.2022, such consignments shall also be allowed to be exported.
IBC
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Seeking direction upon Respondent No. 1 to hand over the possession of Birpara Tea Estate (Tea Estate) to the Resolution Professional - The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence; it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership. - Tri
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Liquidation of the Corporate Debtor - CIRP period has expired and no resolution plan was approved by the Committee of Creditors - The Corporate Debtor is ordered to be liquidated - Tri
SEBI
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Pledge of shares - Pawnor and the pawnee’s right to sue for recovery and sell the pawned goods - As to be held that registration of the pawn, that is the dematerialised shares, in favour of PIFSL as the ‘beneficial owner’ does not have the effect of sale of shares by the pawnee. The pledge has not been discharged or satisfied either in full or in part. PIFSL is not required to account for any sale proceeds which are to be applied to the debt on the ‘actual sale’. The two options available to PIFSL as the pawnee under Section 176 of the Contract Act remain and are not exhausted. - SC
Service Tax
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Demand of service tax on partners services to partnership firm - separate identity - mutuality of services - there cannot be a service provider – service recipient relationship between a partner and the partnership firm when a partner discharges his duties as a partner pursuant to deed of partnership. Hence no service tax is payable on the activities performed by the respondent in the capacity of partner to the firm - HC
Central Excise
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Non-appointment ‘Member’ in the various Benches of the Settlement Commission - We hope and expect the respondent/Government to act in time so that, at the end of one year, we are not faced with the same situation again, when the tenure of the new Appointees expires in terms of the decision communicated vide letter dated 29.04.2022 taken note of. - HC
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CENVAT Credit - inputs - capital goods - input services - receipt of goods and thereafter use for fabrication as per Chartered Engineer’s Certificate is not contested, but contested only on a point that the inputs do not fall under the category of capital goods and hence not eligible for Cenvat credit, will not support the case of the Revenue. - AT
Case Laws:
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GST
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2022 (5) TMI 845
Detention of goods alongwith vehicle - generation of two e-way bills - goods was in transit and the delivery was not taken - Sections 68, 129 (3), 130 Central Goods and Service Tax Act 2017 as well as Rules 130 and 138 A of Central Goods and Service Tax Rules, 2017 - HELD THAT:- Once before starting the journey e-way bill was generated from Maharastra and ending at Sandila, at the place of ultimate purchaser i.e. K.R. Industries was mentioned, it can not be said that there was any contravention of the provisions of the Act. The department was well aware of the fact that the goods in question was to be delivered at Sandila (U.P.). It is not the case of the department at any stage that the goods which were coming from Maharastra, the delivery of the same was taken from Transporter and the goods were unloaded in the business premisses of the petitioner and thereafter the goods were again sent from the business premisses of the petitioner to its ultimate buyer i.e. K.R. Industries, Sandila. Once the delivery of the goods which has not been taken by the petitioner, has not been disputed by the Revenue as well as validity of the e-way bill generated by Maharastra party, which was valid up to 15.2.2020 i.e. the date of detention and passing of the order under Section 129 (3) of the G.S.T. Act, there cannot be any violation or contravention of the provisions of G.S.T. Act as well as the Rules framed thereunder. The Court finds that there is neither any intention to evade the payment of tax nor any fault nor any contravention of the Act as all valid documents were accompanying with the goods as required under the Act, therefore, the proceedings initiated against the petitioner cannot sustain and are hereby quashed. In the case in hand once the valid document i.e. e-way bill and tax invoice, builty was accompanying with the goods, therefore the authorities ought not to have drag the petitioner in an unnecessary litigation. The writ petition is allowed with cost of Rs. 5000/-.
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2022 (5) TMI 844
Permission for re-opening the common portal so as to enable the petitioner to submit the Form GST TRAN-1 electronically or to permit the petitioner to manually submit Form GST-TRAN-1 - section 140 of the Central Goods and Services Tax Act, 2017/Section 140 of the Tamil Nadu Goods and Services Tax Act 2017 read with rule 117 of the Central Goods and Services Tax Rules 2017/Rule 117 of the TamilNadu Goods and Services Tax Rules 2017 - HELD THAT:- The fact that whether the petitioner was having unutilised credit as on 30.01.2017 would have been available with the officers from the Service Tax Department drawn from the Central Excise Department. The fact that the petitioner has uploaded the relevant Form in Form TRAN-1 is not in dispute as it has been acknowledged by the Commercial Tax Department Tamil Nadu on 04.10.2017. It cannot be said that the petitioner has not uploaded the TRAN-1 as it has been acknowledged by the Commercial Tax Department Tamil Nadu. In the initial months of implementation of GST enactment, there was confusion as to which of the assessees would be assessed by the Commercial Tax Department and which of the assessee would be assessed by the officers under the Central Government from the Central Excise Department - there are no justification in the stand of the respondent in not allowing the credit to be utilised. If such credit existed as on 30.06.2017, being the last date after which the Goods and Services Tax regime was in place, credit should be allowed. This writ petition by directing the respondents 1 and 2 to ascertain from the Service Tax Returns filed by the petitioner whether prior to the implementation of the Goods and Service Act, input tax credit was validly availed but had not been utilised by the petitioner. If such credit remained unutilised, which according to the petitioner amounts to Rs.37,83,380/-, the same shall be allowed either by way of corresponding credit entry in the electronic cash register of the petitioner or by way of cash refund.
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2022 (5) TMI 843
Classification of goods - Pattadar pass book cum title deed (document of title) - Composite supply or not - classifiable under HSN 4904 or it is an article of stationary classifiable under HSN 4820 - tax is to the paid at the rate of 12% or at the rate of 18%? - HELD THAT:- Pattadar Pass Book cum Title Deed is a document in the form of a small bound book containing the details of land owned by a person (Pattadar), Photo identity of Pattadar and changes of ownership subsequent to the issue of Pattadar Pass Book cum Title Deed. This Pattadar Pass Book cum Title Deed is issued by Revenue Department under the law called Record of Rights Act - The activity of printing involves both supply of goods and services which is recognized as Composite supply in terms of the definition under Section 2(30) of the CGST Act, 2017. Further Section 8 of the CGST Act, 2017 determines taxability of composite supply which states that a composite supply comprising two or more taxable supplies, one of which is a principal supply, shall be treated as a supply of such principal supply as goods or service would depend on which supply is the principal supply. As per provision of Act 1971, that the Pattadar Pass Book cum Title Deed is a document containing the details of the land owned by a person. The entries in the Pattadar Pass Book are based on the Record of Rights which is prepared in terms of the provisions of the Act 1971. The legal provisions for issue of the Pattadar Pass Book were first introduced in the Amendment Act 11/1980 to the Andhra Pradesh Record of Rights in Land and Pattadar Pass Book, Act, 1971 - The Act 1971 mandates that any person effecting transaction on the land such as sale or purchase or mortgage, such sale or purchase or mortgage document has to be registered before the registering authority by paying registration fee and stamp duty. Such registered document will have fiduciary value and is considered as document of title. Further if any person effects any alienation or transfer of land without such registered document, either alienee or the transferee has to deposit registration fees and the stamp duty in accordance with the provisions of the Registration Act, 1908 and get the certificate from the Mandal Revenue officer. In such cases the certificate issued by the revenue officer is considered as document of title. Therefore, either a registered document or certificate issued from the Mandal revenue officer after paying registration fee and stamp duty is considered as document of title and on the basis of such document of title the revenue authority updates the Record Rights. In STATE OF HIMACHAL PRADESH VERSUS KESHAV RAM AND ORS. [ 1996 (10) TMI 517 - SUPREME COURT] , the Supreme Court held that the entries made in revenue record cannot form basis for declaration of title. The authority for Advance Ruling and the Appellate Authority for Advance Ruling have rightly given a ruling that Pattadar Pass Book cum Title Deed is classifiable under HSN 4820 and it is not a document classifiable under HSN 4907 - Writ petition is dismissed.
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2022 (5) TMI 842
Profiteering - supply of Services by way of admission to exhibition of cinematography films - benefit of reduction in the GST rate not passed on - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Respondent has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate, on Services by way of admission to exhibition of cinematograph films where price of admission ticket is above one hundred rupees from 28% to 18% w.e.f. 01.01.2019 upto 30.06.2019. On this account, the Respondent has realised an additional amount to the tune of Rs. 42,60,104/-from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteered amount is determined as Rs. 42,60,104/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. As per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, the Respondent is therefore directed to reduce the prices of his tickets, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of Rs. 42,60,104/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering in two equal parts, of Rs. 21,30,052/- in the Central Consumer Welfare Fund (CWF) and Rs. 21,30,052/- in the Telangana State Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with interest @18%. The above amount shall be deposited within a period of 3 months from the date of receipt of this Order failing which the same shall be recovered by the jurisdictional Commissioner CGST/SGST as per the provisions of the CGST/SGST Act, 2017. Penalty - HELD THAT:- Respondent has denied the benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and resorted to profiteering and hence, committed an offence under section 171 (3A) of the CGST Act, 2017. Therefore, the Respondent is liable for the imposition of penalty under the provisions of the above Section. Accordingly, a notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Application disposed off.
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2022 (5) TMI 841
Profiteering - construction service - Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the prices - contravention of section 171 of CGST Act - penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1) that, it deals with two situations:- one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period. Hence, the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST, The Authority finds that, the ITC, as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 1.02%, whereas, during the post-GST period (July-2017 to April, 2020). it was 1.84%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 0.82% (1.84%-1.02%) of his turnover and the same is required to be passed on by him to the recipients of supply, including the Applicant No. 1. The Authority finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs.3,87,94,4931/-. The Authority finds that the Respondent has profiteered by an amount of Rs.3,87,94.493/- during the period of investigation i.e. 01.07.2017 to 30.04.2020 and determined the said amount under Rule 133 (1) of the CGST Rules, 2017, the benefit of which has not been passed on to the recipients - This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017.
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Income Tax
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2022 (5) TMI 840
Reopening of assessment u/s 147 - department would submit that except for the details on merger, the assessee has not submitted documents satisfactorily explaining the above transactions has escaped assessment - HELD THAT:- This Court is inclined to direct the petitioner herein to give proper explanation before the authorities concerned to the notices received under Section 148 of the Income Tax Act. The petitioner is also given liberty to raise objection, if any before the authorities concerned to the impugned notices.
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2022 (5) TMI 839
Reopening of assessment u/s 147 - eligibility of reasons to believe - tangible material and reasons must have a live link with the formation of the belief - unexplained cash deposits in bank account - HELD THAT:- After the assessing officer had earlier made assessment for the same assessment year and accepted the explanation of the petitioner regarding cash deposits in bank, reassessment proceedings for the alleged escapement of the income from assessment to tax on the ground of cash deposits in bank which were earlier considered by the assessing officer in regular assessment proceedings, would amount to change of opinion . Since the assessing officer, during the course of the regular assessment proceedings, consciously applied his mind to the cash deposits in bank by the petitioner, then initiation of the reassessment proceedings on the same set of facts would tantamount to change of opinion . Therefore, the assessing officer could not assume jurisdiction to initiate reassessment proceeding in the facts and circumstances of the present case. Apart from above, reason to believe recorded by the assessing officer was neither bonafide nor based upon reasonable ground. It was based on vague feeling that there might have been some escapement of income from assessment. Therefore, reason to believe recorded by the Assessing Officer could not give jurisdiction to the assessing officer to issue notice u/s 148. The stand taken by the respondents in the counter affidavit dated 25.04.2022 reveals that the case of the petitioner was selected for reassessment under Section 147/148 on the basis of CBDT Circular dated 04.03.2021 being potential case for taking action under Section 148 - AO has blindly applied the aforesaid Circular of the CBDT, without looking into the facts of the present case and in complete ignorance of the direction of the CBDT in paragraph 3 of the said Circular. In paragraph 3 of aforesaid Circular the CBDT has clarified that action under Section 148 of the Act shall be taken by the assessing Officer in respect of the specified categories of cases after forming a reasonable belief that income chargeable to tax has escaped assessment. Thus reason to believe recorded by the AO for issuing the impugned notice under section 148 blindly applying the Circular of CBDT dated 04.03.2021 and without forming reasonable belief that income chargeable to tax has escaped assessment, cannot authorise the AO to assume jurisdiction to issue notice to the petitioner under Section 148. There was no material before the AO to hold that the cash deposited by the petitioner in Bank during the Assessment Year in question has escaped assessment to tax, inasmuch as , AO has abruptly and without recording any reason has held Rs. 38,83,000/- as undisclosed income for Assessment Year 2017-18. There is no whisper in the impugned reassessment order as to how the AO has arrived at the aforesaid amount as undisclosed income and that how the aforesaid amount represents undisclosed income of the petitioner/assessee. Thus the reassessment proceeding initiated by the AO against the petitioner for the AY 2017-18 was not only without jurisdiction but also it was abuse of power - Decided in favour of assessee.
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2022 (5) TMI 838
Penalty u/s. 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - HELD THAT:- Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT ] held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. In the present case since the AO has not been specified u/s. 274 as to whether penalty is proposed for alleged 'concealment of income' OR 'furnishing of inaccurate particulars of such income', the penalty levied is hereby obliterated. - Decided in favour of assessee.
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2022 (5) TMI 837
Addition made u/s 69C on account of bogus purchases - AO after recording reasons that the assessee is one of the beneficiary of the accommodation entry received from Bhanwar lal Jain proceeded for assessment. The assessing officer made the disallowance of the entire purchase shown from the entity managed by Bhanwar Lal Jain and his Group - HELD THAT:- Disallowance of 100% of the purchases are not justified when the sales of the assessee is not disputed. No doubt, the assessee is engaged in export of cut and polished diamonds and entire profit of the assessee from eligible export is exempt. Yet, the assessee has not fully established, the fact that entire purchases from the concern managed by Bhanwarlal Jain Group is genuine. The purchases from such hawala traders are mainly made to inflate the expenses. Assessing Officer has clearly recorded the modus operandi disclosed by Bhanwarlal Jain and his associates during the search action. The payments in such transaction is made through banking transaction to show the sham transaction as genuine transaction. The combination of this bench in other similar cases wherein the purchases are shown from Bhanwarlal Jain or Rajendra Jain or Gautam Jain group have restricted or enhanced the addition to the extent of 6% of such amount or disputed purchases. Order of Ld. CIT(A) is modified and the Assessing Officer is directed to restrict the disallowance of bogus purchases to the extent of 6% of aggregate purchases shown from four parties of Rs.3.09 crores. AO is further directed to work out the eligibility of exemption under section 10AA. In the result, grounds of appeal raised by Revenue are partly allowed.
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2022 (5) TMI 836
Assessment under Tonnage Tax Scheme - Excess provision written back and allowed - excluding receipts comprising of overheads for managed vessel and excess provision written back while calculating total turnover from core activities - HELD THAT:- The issue-in-dispute before us, being identical to issue in AY 2005-06 2006-07, respectfully following the finding of the Tribunal (supra), the Assessing Officer is directed to include the amount of excess provision written back for the purpose of the turnover of the core activity and the issue of inclusion of reimbursement from managed vessels for the purpose of the turnover of core activity is restored back to the file of the Assessing Officer for verifying the claim of the assessee and decide in view of the Tribunal for AY 2005-06 2006-07[ 2015 (3) TMI 751 - ITAT MUMBAI] - The ground No. 1 of the appeal is accordingly allowed to the extent of excess provision written back and allowed for statistical purpose in respect of reimbursement of overhead expenses for managed vessels. Disallowance of deduction of administrative expenses against the income from other sources - HELD THAT:- We find that identical issue of disallowance of administrative expenses against interest income under the head income from other sources has been held against the assessee in [ 2015 (3) TMI 751 - ITAT MUMBAI] . Granting credit u/s 115JAA for the taxes paid in earlier years - HELD THAT:- Before us, the parties agreed that payment of the taxes and allowing of credit thereon is matter for verification by the Assessing Officer and therefore, accordingly the issue is retored back to the file of the Assessing Officer for verification and if the assessee is eligible for credit of taxes in year under consideration for the taxes paid under MAT in earlier years, the claim of the assessee shall be considered in accordance with law. The ground No. 3 is accordingly allowed for statistical purposes.
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2022 (5) TMI 835
Addition u/s 69 - difference between opening stock of relevant year closing stock of preceding financial year - NP estimation - arguments against addition overlooking that both the years i.e. impugned year preceding year books of accounts of assessee were audited u/s. 44AB - HELD THAT:- As during the assessment proceedings, at the very first instance, the assessee explained the cause of said inflation of opening stock and submitted that the assessee wanted to take loans from banks to repay the loan amount taken from SIDBI and just to satisfy the bank officials, he made such inflation in the opening stock without any malfunction. Therefore, we are satisfied that the assessee at the very first instance, told truth to the Revenue Authorities without any agitation or resistance. During the first appeal proceedings, the assessee submitted a detailed submission explaining the facts and circumstances and compelling situation to show higher figure of opening stock as on 01.04.2013. The assessee also submitted a chart there under showing GP and NP rates. On perusal of said submissions and the chart showing sales, GP and NP clearly observe that the net profit shown by the assessee is 1.44% of turnover which is lesser than the average NP rate of immediately preceding two years No addition has been made by the Assessing Officer on account of low NP rate, but he took up the amount of difference between the closing stock as on 31.03.2013 and opening stock as on 01.04.2013 to invoke the provisions of section 69 - merely because the assessee has shown higher figure of opening stock in comparison to the closing stock shown at the end of immediately preceding financial year, the Assessing Officer is not entitled to make any addition only on the basis of two figures without bringing out any adverse or positive material on record to show that the assessee actually made investment in the stock which was not shown as on 31.03.2013 including the closing stock but shown inclusive of opening stock as on 01.04.2013 - Assessee has shown low NP rate in comparison to immediately preceding assessment year which raises a situation of leakage of revenue. We reach to a logical conclusion that the Assessing Officer was not correct and justified in making addition in the hands of assessee merely on the basis of difference in the two figures, i.e., closing stock as on 31.03.2013 and opening stock as on 01.04.2013 - addition is required to be made in the hands of assessee on account of low NP rate. Therefore, the Assessing Officer is directed to make addition in the hands of assessee taking NP rate of total sale turnover as 2% of sales/turnover. The Assessing Officer is directed to recalculate the addition accordingly.
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2022 (5) TMI 834
Revision u/s 263 - assessee s case was selected for limited scrutiny for verifying large commission expenses and low net profit and mismatch in sales turnover - as per DR no enquiry worth its name was conducted by the Assessing Officer on the issues on which assessee s case was selected for limited scrutiny - HELD THAT:- As in the body of the assessment order the Assessing Officer has not discussed in detail the nature of enquiry conducted by him and the evidences produced by the assessee, however, he nevertheless has mentioned that in response to statutory notices issued from time to time and various order sheet entries, the counsel of the assessee has attended and furnished written replies along with supporting documentary evidences. In fact, in the Office Note appended to the assessment order, a copy of which was obtained by the assessee under Right to Information Act, 2005, the Assessing Officer has clearly and categorically mentioned that he has examined both the issues of large commission expenses and low net profit and mismatch in sales turnover reported in Audit Report and ITR by verifying the submissions and supporting evidences furnished by the assessee and has found nothing adverse in them. Thus, the aforesaid observations of the Assessing Officer in the assessment order and the Office Note coupled with submissions made by the assessee and supporting evidences furnished, which forms part of the record, would clearly reveal that the Assessing Officer has not only made proper enquiry on the issues for which the case was selected for limited scrutiny but being satisfied with the genuineness of the expenses which was established through the supporting evidences, accepted the returned income. Reading of the impugned order of learned PCIT would reveal that he has considered the assessment order to be erroneous and prejudicial to the interest of Revenue only for the reason that the Assessing Officer has not made proper enquiry on the issues, on which, the case was selected for limited scrutiny - facts on record are contrary to the allegation made by learned PCIT. Further, while holding the assessment order to be erroneous and prejudicial to the interest of Revenue, learned PCIT has directed the AO to conduct detailed enquiries on the limited scrutiny issues by examining documentary evidences in respect of huge expenses shown by the assessee. When in course of assessment proceeding, the Assessing Officer has called for the documentary evidences relating to the commission expenses and the assessee has furnished them, it is not understood what more documentary evidences learned PCIT wanted the assessee to furnish. It is very much evident, learned PCIT has not mentioned the nature of evidences to be furnished by the assessee. Therefore, the direction to the Assessing Officer appears to be in vacuum and without any substance. When all the evidences relating to commission/brokerage paid by assessee both to domestic as well as overseas agents are available on record, what more evidences are required to be furnished by the assessee is beyond comprehension. When the facts on record reveal that the Assessing Officer has made proper enquiry on the issues, on which limited scrutiny was directed, by merely referring to Explanation 2(a) to section 263 of the Act, the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue by making a general observation that proper enquiry, which the Assessing Officer ought to have made was not made. When the Assessing Officer has conducted proper enquiry and the assessee has furnished all documentary evidences and has offered proper explanation for the low net profit shown, merely because, the assessment order is cryptic one without discussing in detail the nature of enquiry conducted and the evidences furnished by the assessee, it cannot be said that the order is erroneous and prejudicial to the interest of Revenue. Certainly, the assessee is expected to have any control over the mode and manner in which the Assessing Officer drafts the assessment order. We are of the view that the Assessing Officer having passed the assessment order after proper enquiry and application of mind, the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue, so as to, empower learned PCIT to revise it under section 263 of the Act. Appeal of assessee allowed.
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2022 (5) TMI 833
Reopening of assessment u/s 147 - Unexplained cash deposits - HELD THAT:- Assessee has not filed return of income under section 139(1) of the Act. However, based on the AIR, the AO has found cash deposits in the bank account by the assessee, and non-filing of return by the assessee made the AO to invoke section 147 of the Act by issuance of notice under section 148 of the Act. As rightly stated by the ld.DR, we do not find any infirmity in the reason recorded by the AO in the issuance of notice under section 148 of the Act Valid service of 148 notice - The assessee in its written submissions has clearly admitted that assessee had received notice from Income Tax Officer, Ward-2, Patna . Further, copy of the notice produced in the additional documents clearly showed that this notice has been received by the assessee s wife by subscribing her signature as well as cell-phone number. Further, 148-notice was issued on the same address as shown in the Form no.35 and 36 filed by the assessee. Therefore, the assesee s claim that notice remained unserved on him is without any basis, and the same is rejected and the additional ground raised by the assessee, in this regard, are hereby dismissed. Unexplained cash deposits in the bank account - contention of the assessee that two saving bank accounts in HDFC bank did not belong to the assessee is not acceptable. Two accounts found to be jointly held by the assessee and his wife. In response to the summons, the Bank Manager furnished visible photo of the account holder, which prima facie establish that account holder was present at the time of opening of the bank account, and it is crystal clear that the assessee is the same person, who is holding two bank accounts jointly with his wife. Furthermore, even assuming for a moment that SB account does not belong to the assessee, the assessee has not filed any FIR against the so-called forged bank account. Further, in the order-sheet dated 16.12.2015, the assessee s representative has accepted that the bank accounts wherein cash deposited, which are nothing but belongs to the assessee only. Therefore, the contention of the assessee that the bank account are not belongs to him is not proved with proper evidence. Therefore, this ground is also required to be rejected. Assessee appeal dismissed.
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2022 (5) TMI 832
Reopening of assessment u/s 147 - Notice to non existing entity/company merged - HELD THAT:- M/s Saurabh Overseas Pvt. Ltd. ceased to be exist w.e.f. 07/05/2011 on which date the said Company has merged with DBG Leasing and Housing Ltd. pursuant to the order of Hon ble High Court of Delhi dated 21/01/2011. The said fact has been conveyed to the Assessing Officer vide letter dated 18/07/2011 by DBG Leasing and Housing Ltd. which has been acknowledged on 27/07/2011 by the A.O. Despite of the said information of merger of the Company, the Assessing Officer has issued notice u/s 148 on 25/03/2013 and the show cause notice u/s 142(1) of the Act in the name of M/s Saurabh Overseas Pvt. Ltd., The assessment order has been passed u/s on 147/143(3) on 30/03/2014 against M/s Saurabh Overseas Pvt. Ltd., on the which dates M/s Saurabh Overseas Pvt. Ltd. was non existing entity. Therefore, in our considered opinion, passing the assessment order against non existing entity is not sustainable in the eyes of law and the same is void ab initio. Appeal of assessee allowed.
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2022 (5) TMI 831
Cash deposit of during demonetization period - HELD THAT:- DR could not controvert that the assessee is an Individual earning income from salary and regularly filing return of income and paying due tax thereon. The ld. DR also could not controvert that the total deposits made by the assessee to his bank account was Rs.2,30,000/- and as per CBDT Instruction No. 1.1 (supra) no further verification is required in a case where an Individual earning income from salary has deposited an amount up to Rs.2,50,000/- during demonetization period. Instruction No. 1.1 to a logical conclusion that when the CBDT Circulars clearly provide, no further clarification and verification is required to be made in the case of an Individual who is earning income from salary filing return of income has deposited during demonetization period. Therefore, addition made by the Assessing Officer and confirmed by the ld. CIT (Appeals) cannot be held as sustainable as the same is clearly against the Instruction issued by the CBDT. Therefore, sale ground of appeal of the assessee is allowed.
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2022 (5) TMI 830
Unexplained cash credit/unexplained income - CIT-A confirming the addition made by the AO on account of cash deposited by the assessee in the bank account - HELD THAT:- Admittedly, there was no doubt raised by the authorities below with respect to the lands held by the assessee in his individual capacity and as joint ownership. Therefore, the possibility of agricultural income cannot be ruled out in entirety merely on the reasoning as pointed out by the CIT-A, which have been reproduced somewhere in the preceding paragraph. Though, the reasons given by the learned CIT-A appears to be valid for not having agricultural income in the hands of the assessee, but such reasoning cannot overlook the fact of the land held by the assessee in his individual and joint owner capacity. Thus entire amount of cash deposit of ₹9.22 lakhs cannot be treated as income from other sources. In our considered opinion, justice shall be served to the assessee as well as to the revenue if the sum of ₹5 lakhs out of the total cash deposit of Rs. 9.22 lakhs is treated as income from agricultural operations and the remaining amount as income from other sources. Hence the 1st ground of appeal of the assessee is partly allowed. With respect to the addition of ₹ 26,59,255.00, we note that the assessee has filed the additional evidences before us which are available on record. We have perused the additional evidences and note that the consideration of these additional evidences at the level of the AO is essential. Accordingly, we exercise our power granted under rule 29 of ITAT rules and admit the additional evidence filed by the assessee. Thus in the interest of justice and fair play, we remit the issue to the file of the AO for fresh adjudication as per the provisions of law and after considering the additional evidences filed by the assessee. Hence the 2nd ground of appeal of the assessee is allowed for the statistical purposes.
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2022 (5) TMI 829
Disallowances u/s.40A(3) - payment of expenses was made in cash exceeding the stipulated amount - HELD THAT:- Disallowance on the basis of the genuineness of the transactions while others sustaining the disallowance - what matters for the Tribunal is to follow the binding precedent, being, the judgment of Hon ble jurisdictional High Court. That being the position, the Pune Tribunal is bound by the judgment of the Hon ble jurisdictional High Court in Madhav Govind Dulshete [ 2018 (10) TMI 869 - BOMBAY HIGH COURT] sustaining the disallowance in case of cash payments exceeding the stipulated limit notwithstanding the fact that the transactions were genuine and the parties were identifiable. Respectfully following the judgment, we uphold the disallowance sustained in the first appeal. This ground fails. Addition u/s 40A(3) - assessee contended that the payment was covered under Rule 6DD(k) being payment made to an agent. The AO rejected this contention, which got affirmed in the first appeal - HELD THAT:- Instant case, it is seen that the assessee made payment to contractors and such payments were as such recorded as expenditure in the books of account of the assessee. In such circumstances, it cannot be said that the contractors were agents of the assessee for the provision of labour. Had the payments been made by the assessee to contractor and then, in turn, to the labourers and the transaction of payments to labourers had been considered as expenditure of the assessee, then the case would have been covered by clause (k) of Rule 6DD. Here is a case in which the assessee paid to the contractors on principal-to-principal basis and no agency of any sort was involved in this transaction. We, therefore, hold that the authorities below were justified in coming to the conclusion that clause (k) of Rule 6DD was not attracted. If Rule 6DD is taken out of purview, then the payment is otherwise in violation of section 40A(3) of the Act. As such payments were made in violation of the provision, we hold that the disallowance u/s.40A(3) has been rightly confirmed in the first appeal.
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2022 (5) TMI 828
Exemption u/s 11 and 12 - CIT(E) rejected the application under Section 80G of the Act for want of necessary evidence on the activities carried by the assessee-trust - HELD THAT:- The assessee failed to file the details genuineness of activities and the audited accounts for financial year (F.Y.) 2018-19 and provisional accounts for the period from 01/4/2019 to till filing the application for registration/approval. Before us, neither the officer bearer of the assessee-trust has come forward to explain and substantiate nor filed any written submission. In the statement of fact, the assessee submitted that the assessee was granted certificate u/s 12AA decades ago and assessee is not having any record of physical copy. The assessee is claiming exemption u/s 11 and 12 on the basis of registration under Section 12A of the Act, thus, there was no question of rejection of 80G application. It is also stated that Form 10G is complete and that all information were furnished within due time. We do not find any merit in the statement of fact in absence of any supporting evidence as required by ld. CIT(E) in its various show cause notices as recorded of the impugned order. Therefore, we do not find any merit in the grounds of appeal raised by the assessee and the same is dismissed.
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2022 (5) TMI 827
Eligibility for Tonnage Tax Scheme - AO denied tonnage tax benefit claimed by the assessee u/s.115VC of the Act, on the ground that the assessee is only a fractional owner in the qualifying ship M.V.Gem of Ennore and thus, ship operated by the assessee cannot be considered as qualifying ship as per provisions of section 115VC - also AO further observed that the assessee does not satisfy conditions prescribed u/s.115VD to be eligible for claiming benefit of tonnage tax - HELD THAT:- As in assessee s own case right from assessment year 2005-06 onwards, where the Tribunal after considering relevant facts and also provisions of section 115VC, 115VD, 115VP of the Income Tax Act, 1961, had very clearly observed that the assessee had satisfied conditions prescribed under Chapter XII-G of the Income Tax Act, 1961, to be qualified for benefit of tonnage tax as per provisions of the section 115VC of the Income Tax Act, 1961. We further noted that the Tribunal [ 2017 (10) TMI 1604 - ITAT CHENNAI] relevant to assessment years 2012-13 2016-17 had considered an identical issue and by following decision of the Tribunal in assessee s own case for earlier assessment years, had held that the assessee is entitled for benefit of tonnage tax. We further noted that the Tribunal had also considered case of other co-owners of qualifying ship M.V.Gem of Ennore and after considering relevant facts has rightly held that the assessee has rightly claimed benefit of tonnage tax as per provisions of section 115VC of the Income Tax Act, 1961. As regards observations of the Assessing Officer with regard to operation of the ship by M/s. West Asia Maritime Ltd., we find that as per provisions of section 115VH where a qualifying ship is operated by two or more companies by way of joint interest in the ship or by way of an agreement for the use of ship and their respective shares are definite and ascertainable, the tonnage income of each such company shall be an amount equal to a share of income proportionate to its share of that interest. In this case, the claim of the learned AR for the assessee was that the assessee had claimed benefit of tonnage tax, as per definite and ascertainable share of the assessee in terms of agreement with other co-owners. Therefore, we are of the considered view that there is no merit in the observations of the Assessing Officer that operation of the ship was done by M/s. West Asia Maritime Ltd. and thus, the assessee is not entitled for benefit of tonnage tax. Thus we are of the considered view that the assessee is entitled for benefit of tonnage tax as per provisions of section 115VC - Decided in favour of assessee.
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2022 (5) TMI 826
Belated payment of employees' contribution to ESI and PF - Scope of amendment - HELD THAT:- As amendment brought in by Finance Act, 2021 is effective from 1.04.2021 and no disallowance is called for, on belated payment of employees' contribution to ESI and PF in case the assessee deposited the said contribution before due date for filing of return of income under Income Tax Act. See RAJ KUMAR [ 2022 (2) TMI 1224 - ITAT DELHI] - Decided in favour of assessee.
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2022 (5) TMI 825
Disallowance u/s. 36(1)(va) in respect of Contribution made to PF ESI - contribution before due date of filing the return u/s. 139(1) - HELD THAT:- Similar view has been taken by the Tribunal recently in a batch of appeals in the cases of Raj Kumar vs. ITO(CPC), Bengaluru [ 2022 (2) TMI 1224 - ITAT DELHI] after considering various case laws on the issue. Respectfully following the said above decisions thus hold that the Employees Contribution towards PF ESI made before due date of filing the return u/s. 139(1) have to be allowed as deduction. Accordingly, we direct the Assessing Officer. - Decided in favour of assessee.
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2022 (5) TMI 824
Addition of amount paid towards ESIC and EPF of the employees - whether amount being ESIC and EPF, being a business expenditure incurred for the purpose of business having been paid before the filing of the return of income, the same being an allowable business expenditure - HELD THAT:- As there is no dispute between the parties regarding the date of deposit of PF ESI, which clearly is beyond the prescribed date of deposit as applicable under the relevant section of the I.T. Act. Further, there is no dispute between the parties that the deposits were made before the filing of return of income for the relevant assessment year. The Hon'ble Allahabad High Court, in the case of 'Sagun Foundry (P.) Ltd.[ 2016 (12) TMI 1479 - ALLAHABAD HIGH COURT] has dealt with a similar issue and after taking into account the judgment of the Hon'ble Supreme Court in the case of 'CIT vs. Alom Extrusion Ltd.' [ 2009 (11) TMI 27 - SUPREME COURT] has decided the issue in favour of the assessee. Also amendment brought in by the Finance Act, 2021, has decided the issue in favour of the assessee by holding the amendment to be applicable from April 2021 only. Appeal of the assessee stands allowed.
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2022 (5) TMI 823
Cash deposits in bank accounts - Submission of additional evidences - HELD THAT:- As gone through the orders of the authorities below. Before authorities below, the assessee had filed certain evidences which were summarily rejected by the CIT(A) without considering or verifying the veracity of the same. Therefore, the action of the CIT(A) in rejecting the application for additional evidences under Rule 46A of the Income Tax Rules, 1962, do not conform the requirement of principle of natural justice - we deem it proper and in the interest of natural justice, admit the additional evidences and restore this issue to the file of AO to verify the correctness of the evidences filed by the assessee and decide the issue afresh. Thus, Ground No. 2 raised by the assessee is allowed for statistical purposes. Addition on account of alleged saving bank interest - HELD THAT:- As perused the material available on record and gone through the orders of the authorities below. Ld. Counsel for the assessee could not controvert the findings of the AO that the interest income was not disclosed in the return of income. Therefore, we do not see any reason to interfere in the finding of the authorities below, the same is hereby rejected. Agricultural income - The contention of the assessee is that the income was wrongly disclosed in the return of income of the assessee as his income however, belonged to HUF - HELD THAT:- As stated that the agricultural land belong to HUF. This contention of the assessee that the agricultural income was wrongly included in the return of income and the land belongs to HUF requires verification at the end of the AO. Therefore, this issue is restored to the file of AO for verifying the correctness of the contention of the assessee that this income belongs to HUF. Ground No. 4 raised by the assessee is thus, allowed for statistical purposes.
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2022 (5) TMI 822
Capital gain computation - Short term capital - claim of proportionate cost of acquisition as well as cost of construction - AO disallowed the claim of cost of construction on the ground that the assessee has not produced any documentary evidence like purchase of construction material and other expenses except producing the valuation report which is also not based on any evidence indicating any improvement taken place in the property - AO doubted the claim of cost of construction of the second floor of the property in view of the fact that the assessee has sold the property within a period of two and a half months after it was purchased and therefore, how the property was constructed within such a short spam of time - HELD THAT:- When the second floor of the property in question came into existence after the property was purchased by the assessee then the AO was required to get the fair cost of construction through the reference to the Valuation Officer. In the absence of such an exercise on the part of the AO, the cost of construction as determined by the registered valuer in the valuation report cannot be rejected - AO has also not given its finding about the proportionate cost of acquisition being cost of land attributable to the second floor and simply rejected the claim on the ground that the assessee has failed to support the claim by submitting documentary evidence. The determination of cost of land is not a complicated issue as prevailing rate of land as per the Government circulation or the valuation of the land by the Stamp Duty authority can be taken as cost of the total land on which the second floor is constructed. AO has not even attempted to verify the correctness of the cost of land and construction claimed by the assessee. Hence, in the absence of any proper verification and enquiry by the AO, the claim of proportionate cost of acquisition as well as cost of construction based on the valuation report cannot be denied. Accordingly, the addition made by the AO is deleted. - Decided in favour of assessee.
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2022 (5) TMI 821
TDS u/s 194C - determination of job work charges / miller cost - procurement agency and the miller, by-products to the tune of 33% of the paddy milled are being retained by the miller free of cost, whereon no TDS has been deducted by the appellant deductor - As per AO milling costs paid by the appellant are discounted costs and need to be increased by the cost of by-products (as determined by the A.O.) for the purpose of deduction of tax at source - HELD THAT:- The matter is squarely covered in favour of the assessee and against the revenue by the consolidated order passed by the Chandigarh Benches of the Tribunal [ 2018 (12) TMI 398 - ITAT CHANDIGARH] as held property in the by-products comes into ownership of the millers from the very point of coming of it into existence, hence, in this case the assessee were not the owners of the by-products. Another factor for consideration is that the property passed 'in kind' should have some ascertainable and determinable value, which can be taken as part of the consideration paid for the work done. Further, it is the nature of the contract, term of the agreement, the intention of the parties and overall facts and circumstances of the case which are required to be analyzed and considered for determining whether the provisions of section 194C or other similar provisions of the Chapter would be attracted or not in a particular case. As discussed above in detail, since we have held that the property in the by-product was not passed on by the assessee / Procurement Agencies as milling charges, hence, it is held that TDS provisions of section 194C are not attracted in this case. This issue is decided in favour of the assessee / Procurement Agencies.
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2022 (5) TMI 820
Claim before the Insolvency Resolution Professional basing on the demand notice/competition sheet and outstanding demand taken - crystalized liabilities and unclaimed liabilities of the Corporate Debtor - HELD THAT:- We are of the considered opinion that the Revenue is also bound by the Resolution plan as accepted by the NCLT and not entitled to anything more than what is provided therein. It is submitted across the Bar by the Ld. AR that the Revenue did not prefer any appeal against the order passed by the NCLT. Amount provided under the resolution plan is only Rs. 22 Lakhs as against the claim of the Revenue to the tune of Rs. 5.93 Crores and therefore, the assessee cannot have any grievance in disposing-of these appeals in tune with the orders of the NCLT. Appeals are disposed-of accordingly.
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2022 (5) TMI 819
TP Adjustment - loan advanced to the Associated Enterprise [AE] should have been bench marked with interest rate to its AE with SBI PLR as the loan has been advanced from India in Indian currency of the recipient AE in US dollars - CIT-A deleted the addition - HELD THAT:- Considering the past history of the assessee wherein the appellate authorities have followed the decision of the Hon'ble Jurisdictional High Court in the case of Cotton Natural 2015 (3) TMI 1031 - DELHI HIGH COURT we do not find any reason to interfere with the findings of the ld. CIT(A). The captioned appeals by the revenue are, accordingly, dismissed.
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Customs
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2022 (5) TMI 818
Classification of goods - mill processed non-allow ferrous waste metal goods wound in a coil - goods has been treated as waste material under the Tariff item 72044900 of the First Schedule to the Customs Tariff Act, 1975 or not - Section 28 KA of the Customs Act, 1962 - HELD THAT:- The appellant being an importer intends to import mill processed non-alloy ferrous waste metal goods wound in coil from South Africa and placed a purchase order for a supply of 200 MT of the product in an 8x20 feet container. According to the appellant, it is a ''RE-ROLLABLE WASTE'' unavoidably obtained as a result of the manufacturing of '' Cold Rolled Coils'' from '' Hot Rolled Coils''. Such a coil which is neither a Hot rolled nor a cold-rolled is having multiple thicknesses, tensile strength etc. These coils are thus generated at the initial stage, and are cut out at ends and would in coil form, which is nothing but mill waste and does not serve the purpose for which they are meant. The thickness is between 0.30 mm to 4 mm which is a non-uniform thickness likewise the width is from 900 mm to 1400 mm. Accordingly, weight ranges from 200- 800 kgs and length are 15 to 20 meters. The goods in question are having a thickness between 0.30 mm to 4 mm, width is from 900 mm to 1400 mm with weight ranging from 200-800 kgs and lengths between 15 to 20 meters has rightly been categorized as flat-rolled products not waste and scrap. As per item No.7204, Ferrous waste and scrap; remelting scrap ingots of iron or steel and the appellant is claiming under the item No.7204 49 00 i.e. other because same is not falling in any of the items from 7204 10 00 to 7204 50 00 - As per the appellant, the goods in question are not used for recovery of metal by re-melting by way of repair, renovating or re-rolling these goods can be adapted for other use, hence, it is not wholly metal waste and scrap and is not liable to be classified under subheading 7204. Even otherwise the appellant is an importer and does not intend to use the product for himself, the appellant will sell the product after import to various other manufacturers, therefore, it can not be decided on an application by the importer that the goods in question are being purchased as waste and scrape. As per section 28J (2) of the Customs Act, if there is any change in the facts the ruling would not apply but it would be an issue for adjudication by the competent authority. The metal waste is invariably subject to physical examination, as there are various factors to be considered to conclude that particular good is a waste product or not, it depends on who is purchasing and how it would be used therefore, an advanced ruling cannot be treated as blanket permission to the importers to import the goods of all kinds of waste and scrap. Appeal dismissed.
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2022 (5) TMI 817
Interpretation of statute - smuggling of Gold - Whether Section 15(1)(a)(iiia) of the UA(P)A, which was inserted in the year 2012, was meant to include the smuggling of gold in the category of other material as mentioned in Section 15(1)(a)(iiia) of the UA(P)A or not? - HELD THAT:- Single Bench of MOHAMMED ASLAM SON OF ABDUL RASHID VERSUS UNION OF INDIA, NATIONAL INVESTIGATION AGENCY [ 2021 (2) TMI 124 - RAJASTHAN HIGH COURT] held that gold is a valuable material, smuggling of which can be done with intent to threaten or likely to threaten the economic security of the country and was thus considered to be a terrorist act . However, in MOHAMMED SHAFI P., JALAL A.M., RABINS KARIKKANAKUDIYIL HAMEED, RAMEES K.T., SARITH. P.S., SWAPNA PRABHA SURESH, SHARAFUDEEN K.T., MOHAMMED ALI VERSUS NATIONAL INVESTIGATION AGENCY, KOCHI, UNION OF INDIA, STATE OF KERALA, [ 2021 (11) TMI 288 - KERALA HIGH COURT] , Division Bench of Kerala High Court held that Section 15(1)(a) (iiia) of the UA(P)A is not attracted when gold is smuggled in the country. Evidence of conspiracy and smuggling of gold does not prima facie give credence to an allegation of threat to economic security or irreparable damage to economic security of the country and thus cannot be deemed to be a terrorist act. The Court observed that counterfeiting, that too of high quality currency notes or coins and any material so to do is the only specie included under Section 15(1)(a)(iiia) of the UA(P)A. From the discussion, which took place before the Standing Committee, it is evident that no deliberation took place for considering gold as a material under Section 15(1)(a)(iiia) of the UA(P)A. From the relevant record as produced on behalf of the N.I.A., it is evident that except accused appellant Amzad Ali, all the accused had gone to earn their livelihood and due to COVID, they were not able to continue to work at Saudi Arabia and therefore, were waiting to return back to India. As per the prosecution case, they were approached by some persons and they were made carriers for carrying the gold and free tickets were provided to them for smuggling gold into India. There is no material to suggest that the accused appellants intended to threaten the economic security of India. No material was seized from Amzad Ali, his name did not appear in the statements of the co-accused during investigation by Custom Officers and for the first time appeared in statements recorded by N.I.A. Prima facie there is no material against Amzad Ali. The other accused persons, who as per the investigation, were labourers and lost their employment due to COVID, were asked to carry gold in lieu of the tickets. There is no material whatsoever to come to the conclusion that they intended to commit any terrorist act so as to damage the economic security of the country Appeal allowed.
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2022 (5) TMI 816
Seeking release of consignment - Hexane Liquid Chemical - argument is that once the Hexane Liquid Chemical is imported for Industrial purpose, it shall be utilized for Industrial purpose only - HELD THAT:- An interim order is passed for release of the consignment subject to the certain terms and conditions - The writ applicants shall ensure that the Hexane, which they have imported shall be used only for the industrial purpose. The writ applicants shall undertake to allow the Customs Department to inspect the books and records as well as the actual use of the Hexane as and when required. The respondents Nos.2 and 3 respectively are directed to assess the bills of entry for import of Hexane and permit clearance for home consumption of Hexane or for warehousing, as the case may be, subject to the aforesaid terms and conditions. It goes without saying that this interim arrangement shall be subject to the final outcome of the writ applications - Post this matter on 03.08.2022.
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2022 (5) TMI 815
Enhancement of penalty without given a reasonable opportunity of hearing - power of the commissioner of customs (appeals) - Violation of principles of natural justice - violation of Section 128-A of the Customs Act, 1962 - HELD THAT:- The 1st respondent/the Commissioner in appeal has enhanced the penalty imposed by the original authority contrary to the provisions of Section 128-A of the Customs Act, 1962. The impugned order stands quashed and the case is remitted back to the 2nd respondent to pass appropriate orders on merits and in accordance with law afresh, within a period of 3 months from the date of receipt of a copy of this order - Petition allowed by way of remand.
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2022 (5) TMI 814
Condonation of delay in filing appeal - writ petition has been filed long after the expiry of limitation - Penalty u/s 114(i) - illegal activities with the tenants - tenant was using the property, which was rented out by the petitioner for storing turtles and tortoises. - smuggling and export of tortoises from India - levy of penalty u/s 114(i) of the Customs Act, 1962 - HELD THAT:- No doubt the petitioner has missed the statutory period of limitation prescribed under Section 128 of the Act. As per Section 128 of the Act, a statutory appeal has to be filed within a period of 60 days from the date of receipt of the order before the Appellate Commissioner. As per the proviso to Section 128(1) of the Act, a further grace period of 30 days is given to an assessee or a person aggrieved by the decision passed under the Act to file such appeal with an application to condone the delay. The power to condone the delay is now circumscribed under Section 128 of the Act. Therefore, the petitioner cannot file an appeal before the Appellate Commissioner beyond the statutory period of limitation. Even if such an appeal is filed, such appeal will be rejected - However, a reading of the impugned order and the statement of the petitioner make it clear that there is no admission of liability by the petitioner that the petitioner was conniving with the said Kishore and other exporters, who were engaged in export of turtles/tortoises contrary to the provisions of the Customs Act, 1962 and other enactments and Wildlife Protection Act, 1972 and CITES. The impugned order nowhere discloses that the petitioner was actively engaged in along with the other co-noticees to export turtles and tortoises in violation of Customs Act, 1962 and other enactments and Wildlife Protection Act, 1972 and cites. The imposition of penalty of Rs.4,50,00,000/- under Section 114(i) of the Customs Act, 1962 makes an appellate remedy illusory for a small time agriculturist, who may or may not be directly involved in the alleged smuggling of turtles and tortoises contrary to the provisions of the Customs Act, 1962, Wildlife Protection Act, 1972 and cites. Penalty under Section 114(i) of the Customs Act, 1962 will apply where a person by his act or omission renders the goods liable for confiscation under Section 113 or abets the doing or omission of such an act. Merely because the petitioner had rented out the godown to the other co-noticees, ipso facto would not mean that the petitioner was actively abetted in the commission of the Act, it would have rendered in the goods liable for confiscation. It is quite possible that the tenant was engaged in illegal activities, which would be violation of the Customs Act, 1962, Wildlife Protection Act, 1972, CITES and any other enactments. Imposition of penalty of Rs.4,50,00,000/- makes the appellate remedy illusory for a small time agriculturist, who had the misfortune of renting out the property to a person, who had actually indulged in illegal export - case remitted back to the 2nd respondent to pass fresh orders on merits and in accordance with law after ascertaining clearly as to whether the petitioner had indeed actively abetted in the commission of the offence, which attracted the provisions of the Customs Act, 1962, so as to attract penalty under Section 114(i) of the Customs Act, 1962. The writ petition stands partly allowed.
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Securities / SEBI
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2022 (5) TMI 813
Pledge of shares - Pawnor and the pawnee s right to sue for recovery and sell the pawned goods - Accretion on pawned goods - Pledge or hypothecation of securities held in a depository - legal jurisprudence relating to law of pledge - rights of depository Participant - right of redemption given to the pawnor vide Section 177 of the Contract Act - whether the Depositories Act, 1996 read with the Regulation 58 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, For short, 1996 Regulations has the legal effect of overwriting the provisions relating to the contracts of pledge under the Indian Contract Act, 1872 - Relevant provisions of the Contract Act - HELD THAT:- We do not find any derogation or conflict between Section 176 of the Contract Act and sub-regulations (8) and (9) of Regulation 58. Regulation 58(8) entitles the pawnee to record himself as a beneficial owner in place of the pawnor. This does not result in an actual sale . The pawnee does not receive any money from such registration which he can adjust against the debt due. The pledge creates special rights including the right to sell the pawn to a third party and adjust the sale proceeds towards the debt in terms of Section 176 of the Contract Act. The reasoning that prior notice under Section 176 of the Contract Act would interfere with transparency and certainty in the securities market and render fatal blow to the Depositories Act and the 1996 Regulations is farfetched as it fails to notice that the right of the pawnee is to realise money on sale of the security. The objective of the pledge is not to purchase the security. Purchase by self, as held above, is conversion and does not extinguish the pledge or right of the pawnor to redeem the pledge. Equally, it may be a disincentive for both the pawnor and the pawnee in many cases, if we accept this interpretation and ratio, which would inhibit them from entering into a transaction creating a pledge. Difficulties and disputes regarding price, valuation, right to redemption etc. could invariably arise. There would also be difficulties in case the dematerialised securities are not traded as in the present case. If the case pleaded by MHPL is to be accepted, the entire dues of PIFSL stand paid without in fact a single penny coming to the coffer of PIFSL. Whether or not PIFSL will be able to find a willing buyer and sell the shares is unknown given the fact that the shares are unlisted and MHPL continues to be the holding company of NEVPL. In the context of the present case, the contract of pledge envisages that PIFSL is entitled to get itself recorded as beneficial owner without forfeiting its right in terms of Clause 6.2 to sell the shares. The contention of MHPL that Clauses 6.1 and 6.2 are in the alternative and once PIFSL has exercised option under Clause 6.1, the option under Clause 6.2 is closed must be rejected as absolutely untannable. We do not find any such condition in the two clauses. As noticed above, PIFSL could not have exercised the right under Clause 6.2 unless the pledge shares were registered in its name as beneficial owner . This step was necessary to enable PIFSL to exercise its right and enforce the sale of pledge shares. Whether or not it would be successful in selling the pledge shares is unknown and uncertain even today. The amount of money that would be received is also unknown and uncertain. As per Clause 5.1(m), the pawnor agrees that throughout the continuance of the pledge created pursuant to the pledge deed and until the repayment of the amount outstanding in full under the transaction document, that is, the Bridge Loan Agreement, the pawnor shall remain the beneficial owner of the shares pledged at all times, except on the sale made by the pawnee as the bridge loan lender. Further, vide Clause 5.1(k), the pawnor has irrevocably waived any right it may have under the Depositories Act, the 1996 Regulations, or any other applicable law to the extent it is inconsistent with the provisions of the Pledge Deed. Clause 5.1(k) would only apply if the Depositories Act, the 1996 Regulations, or any other law permits the parties to contract out of the regulations by mutual agreement. It is a settled position of law and as discussed above, a contract cannot be inconsistent with the provisions of any existing law, including regulations, unless the said law permits the parties to enter into a contract inconsistent with the provision. PIFSL by the letter dated 23rd January 2018 had informed MHPL in terms of Clause 6.1 that there has been an occurrence of default, which has continued and, therefore, they, on 16th January 2018, in exercise of its right under Clause 6.1 of the pledge deed, have applied for transfer of the pledged shares in its name. Consequently, all the rights in the pledged shares, including but not limited to the right of attending general body meetings, voting rights, and rights to receive dividends and other distributions, now vests with them as per Clause 2.3(A)(ii)(b), This intimation to MHPL is without prejudice to any rights or remedies PIFSL has in terms of the pledge deed or security documents executed in pursuance of the bridge loan agreement. PIFSL expressly reserved its right to transfer and sell pawned shares for value providing five days notice as required under Clause 6.2 of the pledge deed and Section 176 of the Contract Act. We would, without hesitation, therefore hold that on becoming the beneficial owner in the records of the depository , the pawnee had complied with the procedural requirement of Regulation 58(8) to enforce the right to sell the shares. Thereafter, such a sale should be made according to Sections 176 and 177 of the Contract Act. Violation of the said provisions, if made by PIFSL, would have its consequences as per the law. Pawn has not been sold and there is no violation of the Contract Act or for that matter the Depositories Act and the 1996 Regulations. PIFSL has not overlooked its obligations under Sections 176 and 177 of the Contract Act by relying upon sub-regulation (8) to Regulation 58, which has an entirely different object and purpose. Recording change in the register of the depository , whereby PIFSL as the pawnee has become the beneficial owner , is only to enable the pawnee to sell and transfer the shares in accordance with the Depositories Act and the 1996 Regulations. The object and purpose of sub-regulation (8) to Regulation 58 is not to nullify the obligation of MHPL i.e., the pawnor, and PIFSL i.e., the pawnee, under the Contract Act but to enable PIFSL to exercise its rights under Section 176. It also follows that MHPL is entitled to redeem the pledge before the sale to a third party is made. As to be held that registration of the pawn, that is the dematerialised shares, in favour of PIFSL as the beneficial owner does not have the effect of sale of shares by the pawnee. The pledge has not been discharged or satisfied either in full or in part. PIFSL is not required to account for any sale proceeds which are to be applied to the debt on the actual sale . The two options available to PIFSL as the pawnee under Section 176 of the Contract Act remain and are not exhausted. For the aforesaid reasons, the present appeal must be allowed and the impugned order passed by the Appellate Authority dated 20th June 2019 upholding the orders of the Adjudicating Authority dated 6th July 2018 and the emails of the IRP dated 19th February 2018 are set aside. It is held that MHPL is not a secured creditor of the Corporate Debtor, namely NNPIL, to the extent of the value of the 31,80,678 shares. PIFSL has rightly made a claim as financial creditor of the Corporate Debtor without accounting for the value of 31,80,678 shares of NEVPL in its claim petition. Insolvency proceedings against the Corporate Debtor, namely NNPIL, will proceed accordingly.
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Insolvency & Bankruptcy
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2022 (5) TMI 812
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 evident that the Income Tax Authority in a search action under section 132 of the Income Tax Act on Banka Group had come to a conclusion that the accounts of the Banka Group reflects an accommodation entry of worth Rs.25,00,000/- to the Corporate Debtor from the A/C no. 01900210012390 maintained with the UCO Bank by the Financial Creditor, one of the group companies of the Banka Group. As per the Assessment Order dated 30 March, 2022 (para 5) the Income Tax Authority has categorically stated that the transaction received from the Financial Creditor is nothing but the Corporate Debtors own fund which was routed through the account of the lender i.e., the Financial Creditor. Further, the Corporate Debtor also failed to establish the business utility of unsecured loan and even failed to establish the genuineness of the credit worthiness of the Financial Creditor. On the other hand, the Authority noticed from the post search enquiries that the Financial Creditor is engaged in providing accommodation entries by way of bogus unsecured loan entries and is a shell company. A company petition under section 7 of the Code cannot be maintained and deserves to be dismissed.
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2022 (5) TMI 811
Seeking liquidation of the Corporate Debtor - CIRP period has expired and no resolution plan was approved by the Committee of Creditors - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-six percent of voting share to liquidate the corporate debtor The Corporate Debtor is ordered to be liquidated - application allowed.
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2022 (5) TMI 810
Seeking direction upon Respondent No. 1 to hand over the possession of Birpara Tea Estate (Tea Estate) to the Resolution Professional - HELD THAT:- Similar applications have now been filed by the Resolution Professional for possession of Tea Estates. The only concern is that the Corporate Debtor is in financial stress and whether the Resolution Professional would be able to run these Tea Estates. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence; it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership. Application dismissed.
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2022 (5) TMI 809
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- It is noted that the Operational Creditor has supplied the goods to the Corporate Debtor and raised the invoices of Rs. 15,20,526/-. It is also noted that the demand notice under Section 8 of IBC was also sent to the Corporate Debtor, the Corporate Debtor replied to the demand notice but did not clear the claim amount to the Operational Creditor. The corporate Debtor in its reply dated 12.03.2020 has clearly admitted the amount of Rs. 15,20,526/- and also admitted that there is no previous dispute in respect to the service of goods. The instant petition is otherwise defect free and meets the threshold limit as prescribed under Section 4 of IBC as in this petition the claim amount is Rs. 15,20,526/- and the present petition was filed on 10.01.2020 i.e. prior to the Notification of the Ministry of Corporate Affairs, New Delhi, dated 24th March, 2020, whereby the default amount is raised up to Rs. 1,00,00,000/- from Rs. 1,00,000/- as per Section 4 of the IBC. In view of the discussion, it is found that the present IB Petition is complete and fit for triggering the Insolvency Resolution Process in respect of Corporate Debtor. Therefore, the present IB Petition, filed under Section 9 of the Code, deserves admission - petition admitted - moratorium declared.
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2022 (5) TMI 808
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - breach of contract - HELD THAT:- It is noted under section 128 of Indian Contract Act, 1872 that when a default is committed, the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously. In this application filed by the Financial Creditor, a Deed of Guarantee dated 25.04.2014 is executed between the SBI led Consortium and the Personal Guarantor. Clause 24 of the Deed of Guarantee states that this Guarantee shall be irrevocable and the obligations of the Guarantors hereunder shall be discharged except by performance and then only to the extent of such performance, such obligation shall not be conditional on the receipt of any prior notice by the Guarantors or by the Borrower and the demand notice by the Lenders shall be sufficient notice to or demand on the Guarantors - CIRP can be proceeded against the Personal Guarantor as an irrevocable Deed of Guarantee has been signed between the SBI led Consortium and the Personal Guarantor. The liability of the Personal Guarantor continues and the Financial Creditor is in condition to realize the default amount from the Personal Guarantor. On-going through the averments in the IBA, the reply of Respondents after the report of the Resolution Professional as also the report of Resolution Professional, it is opined that this is a fit case for admission and proceed against the Personal Guarantor/Respondent and initiate Corporate Insolvency Resolution Process. It is also seen from the report of Resolution Professional that he has not recommended for a negotiation between the parties for arriving at an amicable settlement for repayment - Petition admitted - moratorium declared.
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2022 (5) TMI 807
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:- The transaction in between the parties was a sub contract in between the Applicant and the Corporate Debtor. The Corporate Debtor though receives some bill amount from IOCL did not part with the Applicant its due share. Hence the dispute arose and it was settled by meeting dated 16.03.2018. As per minutes of meeting dated 16.03.2018, the Corporate Debtor agreed to pay some amount to the Applicant but very nature of transaction under which the amount was agreed to pay, was the amount payable toward services provided by the Applicant to the Corporate Debtor by way of sub contract. Such amount does not fall in category of the financial debt - There are no opinion whether the amount claim could be the operational debt or not or it was a joint venture in between both the parties, it is held that the amount as claimed herein cannot be a financial debt and hence this application filed under Section 7 of IBC for initiation of CIRP of the Corporate Debtor is not maintainable and the same stands rejected. Application is not maintainable and stands rejected.
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2022 (5) TMI 806
Dissolution of Corporate Debtor - Section 59 of Insolvency and Bankruptcy Code, 2016 (IBC, 2016) read with Regulation 38 of Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- It is noted that the Board of Directors of the Corporate Person has taken a conscious decision for closing down the Corporate Person because the shareholders of the Corporate Person do not want to continue with the business as they do not see any business opportunity in upcoming years. Hence, the Board of Directors vide its Extra Ordinary General Meeting dated 15.12.2020 passed a Special Resolution to voluntarily liquidate the Company and to appoint Mr. Bhupendra Singh Narayan Singh Rajput as liquidator. It also appears that the liquidator, after his appointment, has duly performed his duties and completed the necessary formalities to complete the liquidation process of the Corporate Person -Applicant. It also appears that the realized amount has been duly distributed between the shareholders as per their claims. Since there are no Creditors in the Corporate Person, no claims is received. It also appears that no objection is received from any person opposing the proposed voluntary liquidation either from the side of the shareholders or from creditors nor any adverse comment is received from the public at large against such liquidation - After distributing the proceeds of the Corporate Person, the liquidator files its final report wherein it is clearly stated that nothing remains to be realized in the Corporate Person. This Adjudicating Authority in exercise of power conferred to it under Section 59(8) of the IBC, 2016 orders that the Corporate Person (Applicant Company) M/s. Sohangiri Metals and Alloys Private Limited shall stand dissolved from the date of this order - Application allowed.
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2022 (5) TMI 805
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - irrevocable Deed of Guarantee signed between the SBI led Consortium and the Personal Guarantor - existence of debt and dispute or not - HELD THAT:- In this application filed by the Financial Creditor, a Deed of Guarantee dated 25.04.2014 is executed between the SBI led Consortium and the Personal Guarantor. Clause 24 of the Deed of Guarantee states that this Guarantee shall be irrevocable and the obligations of the Guarantors hereunder shall be discharged except by performance and then only to the extent of such performance, such obligation shall not be conditional on the receipt of any prior notice by the Guarantors or by the Borrower and the demand notice by the Lenders shall be sufficient notice to or demand on the Guarantors. Therefore, CIRP can be proceeded against the Personal Guarantor as an irrevocable Deed of Guarantee has been signed between the SBI led Consortium and the Personal Guarantor. Based on the judgment of Hon'ble Supreme Court in Lalit Kumar Jain vs. Union of India Ors. [ 2021 (5) TMI 743 - SUPREME COURT ], the Personal Guarantor cannot be discharged from his liability upon the approval of Resolution Plan under section 31 of IBC, 2016. Therefore, the liability of the Personal Guarantor continues and the Financial Creditor is in condition to realize the default amount from the Personal Guarantor. This is a fit case for admission and proceed against the Personal Guarantor/Respondent and initiate Corporate Insolvency Resolution Process - Petition admitted - moratorium declared.
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2022 (5) TMI 804
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- It is clearly shown that the Operational Creditor has adjusted the amount for 15 invoices for the year 2016 however, as per the record only 11 invoices were raised in the year 2016. It is also noted that in the petition the Operational Creditor has alleged that the outstanding amount of a total of 11 invoices (04.01.2017 to 31.10.2017) is pending but in an e-mail dated 21.11.2018 sent by the Operational Creditor to the Corporate Debtor for paying the outstanding amount to the Corporate Debtor, the Operational Creditor has sent the claim of 9 invoices only and the principal amount claimed is Rs. 4,33,086/- but in the petition, the principal claim amount is Rs. 5,01,999/-. - no amount is due to be paid to the Operational Creditor, as the statement of Bank Account of Corporate Debtor, shows that the outstanding amount has been paid. Moreover, there is inconsistency in the details of invoices and adjustment of payments provided by the Operational Creditor. Hence, the present petition is rejected. The present petition is dismissed.
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2022 (5) TMI 803
Maintainability of appeal - submission of resolution plan for the Corporate Debtor - Whether the Applicant be allowed to submit a resolution plan at this stage considering the timelines specified under IBC? - HELD THAT:- In the instant Application relief is sought to permit the Applicant alone to submit a resolution plan. However, when the Respondents has contented in their reply that as the net worth of the Applicant alone is below Rs. 5 crore, the Applicant does not fulfill the criteria specified by CoC as per Section 25 (2) (h), thereafter the Applicant in its rejoinder submits that she is willing to submit the Resolution plan along with her husband and the net worth of applicant along with her husband is more than Rs. 5 crore. Making such a contention much later to request to file plan and before this Adjudicating Authority without amending the Application also does not qualify the Applicant to submit a resolution plan. It is an undeniable fact that the Applicant had wasted the time of this Adjudicating Authority by withdrawing IA No. 552/2020 at such a belated stage by filing a fresh application with same issues against the same parties with an additional ground that Applicant and Respondent No. 3 Jay overseas Pvt. Ltd. be treated at par. It is noted that the Hon'ble NCLAT has nowhere directed the CoC or the Resolution Professional to consider the resolution plan of any other prospective resolution applicant other than Respondent No. 3. The CoC had approved the resolution plan of Respondent No. 3 in its 12th meeting held on 28.12.2020 and accordingly, Resolution Professional had filed an application for approval of same before this Adjudicating Authority on 03.01.2021 vide IA No. 36/2021 and thereafter this Application is filed by the Applicant on 11.01.2021. Application rejected.
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2022 (5) TMI 802
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- In the instant matter, the Corporate Debtor had time and again acknowledged the debt within limitation period in their financial statements for 2018-19 and again 2019-20 and their last offer letter of compromise/one time settlement for outstanding dues dated 30.08.2021 to the State Bank of India through their deputy general manager. Present application is filed on 02.11.2021, therefore, the present Application is within the period of limitation and not barred by law - The Registered Office of the Corporate Debtor is situated in Union Territory of Dadra Nagar Haveli and therefore this Adjudicating Authority has jurisdiction to entertain and try this Application. The present Application being complete in terms of Section 7(5) of the Code we admit the application and initiate Corporate Insolvency Resolution Process of the Corporate Debtor - Application admitted - moratorium declared.
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2022 (5) TMI 801
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It can be seen from the records that in the present case, the occurrence of default is evidenced by the copy of the undertaking by the corporate debtor and the account statement of the Petitioner/Applicant and the same are attached as Annexure-11 and Annexure-19 20 respectively of the petition. Therefore, the present petition is filed within limitation. It is observed from the record the name of the Applicant is also being reflected in the latest Balance Sheet of the Corporate Debtor for the year ending on 31.03.2019 under the head of Secured Loans i.e. at page 190 of the petition. Also, the Index of charges available on the MCA portal reflects the name of the Applicant as the charge holder which is at page 210 of the petition. The respondent-corporate debtor has also filed a reply wherein it has been admitted that the default mentioned in the petition is due towards the petitioner due to its incapacity to pay the liability. The application filed in the prescribed Form No. 1 is found to be complete. Another condition is that there are no disciplinary proceedings pending against proposed Resolution Professional. In the present case, in Part III of Form 1, Mr. Prem Kumar Garg has been proposed as Interim Resolution Professional. The petitioner proved the debt and the default, which is more than threshold limit of one crore - the present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. Petition admitted - moratorium declared.
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Service Tax
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2022 (5) TMI 800
Juristic person - separate identity - mutuality of services - sharing of profit - whether a Partner in the Firm can be said to be rendering services to the Partnership Firm so as to fall within the ambit of services as per the Finance Act, 1994? - HELD THAT:- For the period prior to 01.07.2012, there is no definition of a person in the Finance Act, 1994 - the term person was defined for the first time with effect from 1.7.2012 vide Section 65B (37) of the Finance Act. The period of dispute in all these appeals is prior to 01.07.2012 - Prior to 01.07.2012, there was no definition of the term person in the Finance Act, 1994. Only with effect from 01.07.2012, vide Section 65B (37) of the Finance Act, 1994, a person was defined for the first time. This definition, inter alia, included a firm. The partnership firm, M/s Zydus Healthcare cannot be considered as a person distinct from the Respondent partner. Therefore, there cannot be a service provider service recipient relationship between a partner and the partnership firm when a partner discharges his duties as a partner pursuant to deed of partnership. Hence no service tax is payable on the activities performed by the respondent in the capacity of partner to the firm - Section-65(105)(zzb) applies to service provided to a client by a person in relation to business auxiliary service. Hence, two distinct persons are required to attract this levy. Partner s capital to a firm can be in the form of cash/asset. It can also be in the form of contribution of skill and labour alone without contribution in cash sweat equity . The substantial questions of law are answered in favour of the respondents and against the revenue - appeal dismissed - decided against Revenue.
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2022 (5) TMI 799
Short payment of service tax - outdoor catering service - abatment of 30% (for goods component), as per notification no. 30/2012-ST - HELD THAT:- There was no dispute with regard to the gross bill raised by the appellant-assessee, as proposed in the SCN. The Appellant had taken a point of law that being eligible under the notification, they have availed abatement of 30% with respect to outdoor catering services under Notification no. 30/2012-ST, which has not been found to be wrong. Accordingly, this demand is set aside and the ground is allowed in favour of the appellant-assessee. Short payment of service tax - renting of immovable property - availment of abatement of 40% erroneously - HELD THAT:- The mistake is bona fide as it is not the case that appellant have collected more tax but have deposited less tax. The learned Counsel admits that the liability of Rs. 22,824 and undertakes to pay the same, if not paid alongwith interest as applicable. Levy of penalty u/s 70 r/w Rule 7C of Service Tax Rules - late filing of returns, during period 2014-15 to 2017-18 (up to June 2017) - HELD THAT:- As per para 15 of the order-in-original, the delay is computed wherein it is from 4 days to 256 days, the penalty have been imposed penalty at varying rates from Rs. 300 to Rs. 20,000/-. Learned Counsel states that the delay has been caused due to the circumstances beyond the control and there is no deliberate default. Relying on the ruling of this Tribunal in the case of M/S VIM COATS VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (8) TMI 365 - CESTAT AHMEDABAD] , urges that the penalty may be reduced appropriately - the amount of penalty for the return period October 2016 to March 2017, is reduced from Rs. 20,000/- to Rs. 2000/- and for the period April 2017 to June 2017 from Rs. 14,900/- to Rs. 1,400/-. Further, penalty under Section 70 for other returns is not interfered with. Levy of interest for short payment of service tax - Section 75 of the Finance Act - HELD THAT:- The said amount is set aside by way of remand with direction to the adjudicating authority to re-compute the amount of interest payable, after adjustment of any amount lying to the credit. If any balance is payable, the same shall be paid by the appellant-assessee. In case, any amount is found to be paid excess, the appellant have been entitled to refund as per rules. Penalty under Section 78 is set aside under the facts and circumstances there being no deliberate avoidance of tax or contumacious conduct, the penalty under Section 78 is set aside. Appeal allowed in part and part matter on remand.
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Central Excise
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2022 (5) TMI 798
Non-appointment Member in the various Benches of the Settlement Commission - Section 32 of the Central Excise Act, 1944 - HELD THAT:- The process of appointment of Chairman and one Member for the Principal Bench at Delhi and appointment of Vice-Chairman and one Member for the Additional Bench at Mumbai be completed within six weeks. The respondents are directed to examine the aspect of appointment of Vice-Chairman and other Members for the Benches at Chennai and Kolkata. We hope and expect the respondent/Government to act in time so that, at the end of one year, we are not faced with the same situation again, when the tenure of the new Appointees expires in terms of the decision communicated vide letter dated 29.04.2022 taken note of. List on 20th July, 2022.
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2022 (5) TMI 797
CENVAT Credit - inputs - capital goods - input services - main ground for denying the credit is that the Appellant failed to furnish sufficient documentary evidence that the impugned items were used in fabrication of capital goods/accessories/parts/components - HELD THAT:- The first and foremost point is when the Chartered Engineer s Certificate was produced before the Adjudicating authority, it was incumbent on the authorities to either contradict the Chartered Engineer s Certificate or accept the same. In the absence of any contradictory Certificates on record holding otherwise that the inputs were used for fabrication of machinery, the non-consideration of the Certificate issued by the Chartered Engineer by the Adjudicating authority seems to be not in consonance with law. Further, receipt of goods and thereafter use for fabrication as per Chartered Engineer s Certificate is not contested, but contested only on a point that the inputs do not fall under the category of capital goods and hence not eligible for Cenvat credit, will not support the case of the Revenue. Since the issue is no more res integra and is decided by the higher Courts, the impugned order is unsustainable and is liable to be set aside. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 796
Imposition of penalty under Rule 12 (6) of Central Excise Rules - late filing of Returns (ER-1) - period July, 2017 to April, 2018 - HELD THAT:- It is not disputed that the appellant have filed the returns uptil the period ended 30/06/2017 under the repealed Act. They further stated that as the appellant was filing their returns under the GST provisions w.e.f. 01/07/2017, they were under bona fide belief that they are no longer required to file returns under the erstwhile Central Excise Act. I find that this cogent explanation was given before the learned Commissioner (Appeals), but the Commissioner (Appeals) failed to record any findings on the said contention. The Court below have passed the order with reference to Section 174 of the CGST Act, which provides for repeal and savings. There is no saving Clause in the said Section, for initiating and imposing penalty for none filing of the returns (ER-1), once the provisions of GST have been imposed w.e.f. 1st July, 2017. Accordingly, it is found that the show cause notice in misconceived and the impugned order have been erroneously passed, having no sanctity in law - the imposition of penalty for non-filing of returns for the period under dispute, July 2017 to April 2018, is bad and not called for. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 795
Refund alongwith interest - relevant date for calculation of interest - the entitlement of claiming the said amount along with the interest shall reckon from the date of said Final Order or from the date of deposit? - HELD THAT:- It is observed that admittedly the amount, the refund whereof was claimed, was deposited at the time when audit of the appellant was got conducted by the department. Admittedly, even the show cause notice was not issued to the appellant. The impugned Final order has discussed the findings of Hon ble Delhi High Court in the case of DIGIPRO IMPORT EXPORT PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2017 (5) TMI 759 - DELHI HIGH COURT] wherein the conduct of audit team to collect duty at the initial stage is not authorised by any law in force and hence is held illegal. The appellant is entitled for the refund claim of the amount deposited on 09.07.2018 during investigation along with interest @12% on the aforesaid demand to be calculated from the said date of deposit - application allowed.
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2022 (5) TMI 794
Refund claim - deposit/amount paid under protest - unjust enrichment - presumption could be drawn against an appellant or not - HELD THAT:- The reasons attributed for rejecting the refund are not sustainable since, as held by the Hon ble Bombay High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE 1 COMMISSIONERATE VERSUS M/S SANDVIK ASIA LTD. [ 2015 (10) TMI 719 - BOMBAY HIGH COURT] , the entries in the Books of Accounts are immaterial and irrelevant and no presumption could be drawn against an appellant if it is shown on the expense side. It is the well settled position of law that unless the Revenue has any documentary evidence, the statute does not permit any action to be taken based only on assumptions and presumptions. Moreover, the appellant has filed a certificate issued by a Chartered Accountant to the effect that the appellant had not passed on the incidence of CENVAT Credit to its customers/any other person, which the Revenue has nowhere disputed nor is there any attempt made to dislodge the veracity of the said certificate by any concrete evidence. It is also a matter of record that the appellant had reversed the same subsequently after removal of goods and hence, there is no scope to even allege that the same was charged or collected from the appellant s customers. The reasons attributed and the denial thereof are without any basis and hence, unsustainable - Appeal allowed - decided in favor of appellant.
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Indian Laws
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2022 (5) TMI 793
Maintainability of petition - appropriate forum - whether, against the order passed by the National Commission in an appeal under Section 58 (1)(a)(iii) of the 2019 Act, a writ petition before the concerned High Court under Article 227 of the Constitution of India would be maintainable? - HELD THAT:- It is not in dispute that in the present case, the appeal before the National Commission was against the order passed by the State Commission under Section 47(1)(a) of the 2019 Act. Therefore, against the order passed by the State Commission passed in a complaint in exercise of its powers conferred under Section 47(1)(a) of the 2019 Act, an appeal to the National Commission was maintainable, as provided under Section 58(1)(a)(iii) of the 2019 Act. As per Section 67 of the 2019 Act, any person, aggrieved by an order made by the National Commission of its powers conferred by sub-clause (i) or (ii) of clause (a) of sub-section (1) of Section 58, may prefer an appeal against such order to the Supreme Court. Therefore, an appeal against the order passed by the National Commission to this Court would be maintainable only in case the order is passed by the National Commission in exercise of its powers conferred under Section 58(1)(a)(i) or under Section 58(1)(a)(ii) of the 2019 Act. The remedy which may be available to the aggrieved party against the order passed by the National Commission in an appeal under Section 58(1)(a)(iii) or Section 58(1)(a) (iv) would be to approach the concerned High Court having jurisdiction under Article 227 of the Constitution of India. The scope and ambit of jurisdiction of Article 227 of the Constitution has been explained by this Court in the case of M/S. ESTRALLA RUBBER VERSUS DASS ESTATE (PRIVATE) LTD [ 2001 (9) TMI 1144 - SUPREME COURT ], which has been consistently followed by this Court. Therefore, while exercising the powers under Article 227 of the Constitution, the High Court has to act within the parameters to exercise the powers under Article 227 of the Constitution. It goes without saying that even while considering the grant of interim stay/relief in a writ petition under Article 227 of the Constitution of India, the High Court has to bear in mind the limited jurisdiction of superintendence under Article 227 of the Constitution. Therefore, while granting any interim stay/relief in a writ petition under Article 227 of the Constitution against an order passed by the National Commission, the same shall always be subject to the rigour of the powers to be exercised under Article 227 of the Constitution of India. It cannot be said that a writ petition under Article 227 of the Constitution of India before the concerned High Court against the order passed by the National Commission in an appeal under Section 58(1)(a)(iii) of the 2019 Act was not maintainable. The view taken by the High Court is agreed upon - appeal dismissed.
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