Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 24, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Notifications
GST - States
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19/GST-2 - dated
21-5-2021
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Haryana SGST
Notification under section 168A to extend specified compliances falling between 15.04.2021 to 30.05.2021 till 31.05.2021 in exercise of powers under the HGST Act, 2017
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17/GST-2 - dated
21-5-2021
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Haryana SGST
Notification to extend the due date of furnishing FORM GSTR-1 for April, 2021 under the HGST Act, 2017
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16/GST-2 - dated
21-5-2021
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Haryana SGST
Amendment of notification no.57/GST-2, dated 26.04.2019 to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.05.2021 under the HGST Act, 2017
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15/GST-2 - dated
21-5-2021
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Haryana SGST
Amendment of notification no.12/GST-2, dated 01.01.2019 in order to provide waiver of late fees for specified taxpayers and specified tax periods under the HGST Act, 2017
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14/GST-2 - dated
21-5-2021
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Haryana SGST
Amendment of notification no.45/ST-2, dated 30.06.2017 to provide relief by lowering of interest rate for the month of March and April, 2021 under the HGST Act, 2017
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FIN/REV-3/GST/1/08(Pt-1) (Vol.II)/50 - dated
1-5-2021
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Nagaland SGST
Seeks to amend Notification F. No. FIN/REV-3/GST/1/08(Pt-1)(Vol. 1)/14 dated the 31st December 2018
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FIN/REV-3/GST/1/08(Pt-1) (Vol.II)/49 - dated
1-5-2021
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Nagaland SGST
Seeks to provide relief by lowering of interest rate for the month of March and April, 2021
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G.O. (Ms) No. 78 - dated
11-5-2021
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Tamil Nadu SGST
Seeks to extend specified compliances falling between 15.04.2021 to 30.05.2021
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G.O. (Ms) No. 77 - dated
11-5-2021
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Tamil Nadu SGST
Tamil Nadu Goods and Services Tax (Third Amendment) Rules. 2021.
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G.O. (Ms) No. 76 - dated
11-5-2021
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Tamil Nadu SGST
Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-2021 to 31.05.2021
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G.O. (Ms) No. 75 - dated
11-5-2021
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Tamil Nadu SGST
Amendment in Notification No. II(2)/CTR/1099(e-4)/2018 dated 31st December, 2018
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G.O. (Ms) No. 74 - dated
11-5-2021
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Tamil Nadu SGST
Amendment in Notification No. II(2)/CTR/532(d-3)/2017 dated 29th June, 2017
Highlights / Catch Notes
GST
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Grant of Bail - GST evasion - involvment of CA - availment by passing of ITC wrongfully by creating 38 fake firms - This bail application filed on behalf of the petitioner deserves to be dismissed; for the reasons, firstly, the petitioner failed to appear before the Department while notices were issued to him, secondly, even after filing of complaint before the learned Trial court, he remained absconded for about one year and thirdly, the petitioner is a chartered accountant, who is master mind of the crime and he has created 38 fake firms - HC
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Grant of Bail - GST evasion - petitioner being CA was instrumental in registration of 11 fake firms and these firms have availed fraudulent input tax credit - The petitioner has remained in custody for a period of one year and five months and that petitioner is also having a child and also considering the contentions put forth by counsel for the petitioner, it is deemed proper to allow the bail application. - Conditional bail granted - HC
Income Tax
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Validity of assessment - show cause notice has been issued manually - The petitioner refers to a snap shot of the E-portal contending that does not refer to show cause notice dated 20.05.2019. This would, at best, amount to a technical error and will not vitiate the assessment itself for the reason that the show cause notice has been manually issued and proof of service of the same is also available on record. - The challenge to the assessment thus fails - HC
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Reopening of assessment u/s 147 - Penny stock transaction of assessee - the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. - HC
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Reopening of assessment u/s 147 - the assessee was aware that the transaction with M/s. Kalyan Exports Pvt Ltd was not business transaction but in the form of bogus purchase, it was only an accommodation entries and the company was one of the beneficiaries of the transactions, despite of this, the assessee failed to disclose true and correct facts at the relevant time - It cannot be said that there was no tangible material before the Assessing Officer and that he proceeded mechanically based on the sole information and the impugned notice is without jurisdiction and contrary to Section 147 of the Act. - HC
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Undisclosed investment - Addition u/s 69 - We observe that the AO failed to discharge his duty by making the addition without undertaking any independent enquiry as to whether the property belonged to assessee or M/s SMV Agencies, he could have made an enquiry to establish that who is the owner of the land. He could have further enquired with the vendors regarding sale consideration. He failed to do so. - Additions deleted - AT
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Addition towards provision for premium on redemption of debentures to book profit u/s 115JB - adjustments to book profit - provision created for premium payable on redemption of debentures is ascertained liability and hence, it cannot be added to book profit u/s 115JB of the Income Tax Act, 1961. - AT
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Chargeability of interest u/s. 234D - Refund was susdquently withdrawn after rectification u/s 154 - the section 154 order dated 11/12/2009 was only rectification of intimation u/s. 143(1) of the Act. Hence, effectively refund is granted to the assessee only u/s. 143(1). Hence, we hold that interest u/s. 234D of the Act is leviable. - AT
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Reopening of assessment u/s 147 - Disallowance u/s. 40(a)(ia) - TDS on rent - Normally whenever any irregularity crept in the proceedings, then after removing the irregularities, proceedings is to be initiated from that stage but by remitting the issue to the ld. first appellate authority we would be multiplying the litigation, because the ld. CIT(A) would call for a remand report from the Assessing Officer and proceedings would commence on two stages in order to avoid that situation we would deem it proper to set aside order of both the revenue authorities and remit all the issues to the Assessing Officer. - AT
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Business loss u/s 28/37(1) - write off/bad debt - advances /bad debt written off in respect of 22 parties - In view of the discussion and relying on the decisions cited (supra), we are of the considered opinion that the claim of the assessee has to be allowed as business loss u/s 28/37(1) of the IT Act. - AT
VAT
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Fraud in depriving the respondents of their due revenue or not - When the impugned notice did not allege fraud and no such finding of fraud being discernible in the order of audit, it is not open to the respondents to make such sweeping allegation of fraud in the oral hearing which is not backed up by adequate pleadings. - HC
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Levy of penalty u/s 9-B (3) of the OST Act - The fact of the matter is that as far as the installed capacity was concerned, with the exemption on payment of sales tax on the finished product having come to end on 1st December 1993, the Petitioner was bound to collect the sales tax on the finished product which in fact it did. It was this tax that the Petitioner deposited with the Department - the explanation offered by the Petitioner that it was bound to collect the sales tax for this period is both logical and correct. If that is the position, then there is no justification in imposing any penalty on the Petitioner for these two years on the ground that it had illegally collected sales tax. - HC
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Classification of goods - rate of tax - gunny bags sold along with rice to Food Corporation of India - taxable @4% or @8%? - Factually, since it has been shown by the Department, on perusing the books of account of the Petitioner that the new gunny bags were separately sold and paid for by the FCI, the question framed by this Court is required to be answered in favour of the Department by holding that in the facts and circumstances of the case, the gunny bags sold along with the rice to the FCI is exigible to tax @ 8% as held by the Tribunal. - HC
Case Laws:
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GST
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2021 (5) TMI 705
Grant of Bail - GST evasion - petitioner has remained in custody for a period of about one year and seven months - HELD THAT:- It is directed that accused-petitioner shall be released on bail provided he furnishes a personal bond in the sum of ₹ 1,00,000/- together with two sureties in the sum of ₹ 50,000/- - Bail application allowed.
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2021 (5) TMI 704
Grant of Bail - GST evasion - involvment of CA - availment by passing of ITC wrongfully by creating 38 fake firms - HELD THAT:- This bail application filed on behalf of the petitioner deserves to be dismissed; for the reasons, firstly, the petitioner failed to appear before the Department while notices were issued to him, secondly, even after filing of complaint before the learned Trial court, he remained absconded for about one year and thirdly, the petitioner is a chartered accountant, who is master mind of the crime and he has created 38 fake firms and availed ITC wrongfully to the tune of ₹ 6,36,32,492/-. No case is made out to release the petitioner on bail under Section 439 Cr.P.C. - Bail application dismissed.
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2021 (5) TMI 701
Grant of Bail - GST evasion - petitioner being CA was instrumental in registration of 11 fake firms and these firms have availed fraudulent input tax credit - HELD THAT:- Taking note of the fact that Chartered Accountant has remained in custody for a period of one year and five months and that petitioner is also having a child and also considering the contentions put forth by counsel for the petitioner, it is deemed proper to allow the bail application. It is directed that accused petitioner shall be released on bail provided he furnishes a personal bond in the sum of ₹ 1,00,000/- together with two sureties in the sum of ₹ 50,000/- each - Bail application allowed.
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Income Tax
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2021 (5) TMI 703
Reopening of assessment u/s 147 - penny stock transaction made by assessee - HELD THAT:- Assessing officer was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Tuni Textiles Ltd., and the Assessing Officer had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the Assessing Officer to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the Assessing Officer has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the Assessing Officer and the assumption of jurisdiction on the part of the Assessing Officer under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case.
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2021 (5) TMI 702
Reopening of assessment u/s 147 - non disposing of objections properly - HELD THAT:- AO while disposing off the preliminary objections filed by the writ applicant against the reasons recorded for reassessment, has not properly dealt with the objections. We take notice of the fact that, while disposing the objections, the AO has concluded that the objections made by the assessee are duly considered and not acceptable. AO has observed that the transactions made by the assessee company with Rashmi Diamond were bogus entries and the fact of difference in respect of credit entries in the bank account were not brought into knowledge of the AO during the course of assessment proceedings. AO failed to take note of various objections filed against the reasons recorded. No proper application of mind to the objections raised by the applicant and it could not be said that the objections having been disposed of by passing reason order. In the case of GKN Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] as laid down the procedure as to the manner of dealing with the objections raised against the notice under Section 148 of the Act. The Supreme Court has held that when a notice under Section 148 of the Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notice. It was further held that the AO is bound to furnish reasons within a reasonable time and upon receipt of reasons, the noticee is entitled to file an objection to issuance of notice and AO is bound to dispose of the same by speaking order. In the case of SABH Infrastructure Ltd [ 2017 (9) TMI 1589 - DELHI HIGH COURT] has held that the exercise of considering the assessee s objections to the reopening of the assessment is not a mechanical ritual. It is a quasi judicial function. The order disposing of the objection should deal with each objection and give proper reason for conclusion. The order should reflect proper application of mind. Applying the dictum as laid down by the Supreme Court in the case of GVK Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] we are of the view that disposing of the objections raised by the assessee against the reasons recorded before issuance of notice u/s 148 though not part of the statutory requirement, as prescribed under the Act, however, same is guided by the directions issued by the Apex Court. The specific objections raised by the writ applicant, produced on record at page-33 to 45 to this writ application, have not been properly dealt with by the AO. The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind and not in a meaningful manner. Writ application succeeds in part. The order disposing of the objections filed by the assessee dated 18.11.2019 at Annexure A, page-18 to this petition is hereby set aside and the matter is remitted to the AO. The AO shall take into consideration the objections raised by the assessee and pass a fresh speaking order in accordance with law.
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2021 (5) TMI 699
Validity of assessment - show cause notice has been issued manually - Violation of principles of natural justice - denial of any opportunity having been given to the petitioner prior to framing of assessment - contention of the petitioner to the effect that no show cause notice was issued prior to completion of assessment - HELD THAT:- The petitioner has not filed a return of income in this matter within time. Thus, a notice under Section 142(1) of the Act has been issued which, as per paragraph-3 of the affidavit filed in support of the writ petition, has been uploaded in the income tax portal and has been duly noticed by the petitioner. The notice dated 30.11.2017 called for a return of income to be filed on or before 30.12.2017. Despite noticing the communication dated 30.11.2017, the return was filed by the petitioner only on 13.08.2019, belatedly. Thereafter, summons under Section 131 appears to have been issued in response to which the petitioner has appeared and deposed before the officer on 16.09.2019. A show cause notice was issued on 20.05.2019. According to counter, the aforesaid show cause notice has been issued by Registered post with acknowledgment due, received and acknowledged by one Lalitha on 25.05.2019. Records of assessments were called for to establish the veracity of service of notice. The records are in possession of the learned Standing Counsel at the time of hearing of this matter. The contention of the petitioner to the effect that no show cause notice was issued prior to completion of assessment is thus found to be factually incorrect. The petitioner refers to a snap shot of the E-portal contending that does not refer to show cause notice dated 20.05.2019. This would, at best, amount to a technical error and will not vitiate the assessment itself for the reason that the show cause notice has been manually issued and proof of service of the same is also available on record. The challenge to the assessment thus fails.
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2021 (5) TMI 695
Reopening of assessment u/s 147 - penny stock transaction by the assessee - new ground v/s new reasons - respondent seeks to supplement the reasons recorded by the Assessing Officer, which is not permissible in law - HELD THAT:- Applying the principle of law, in the case of Aayojan Developers [ 2011 (2) TMI 738 - GUJARAT HIGH COURT] to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as new ground or new reasons to supplement the reasons recorded by the Assessing Officer. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. Assessing Officer failed to record an independent finding as to how the income has escaped assessment - Assessing Officer was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment - when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd. and the Assessing Officer had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the Assessing Officer to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the Assessing Officer has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant - the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the Assessing Officer and the assumption of jurisdiction on the part of the Assessing Officer under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case. - Decided against assessee.
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2021 (5) TMI 694
Reopening of assessment u/s 147 - penny stock transaction by the assessee - new ground v/s new reasons - respondent seeks to supplement the reasons recorded by the Assessing Officer, which is not permissible in law - HELD THAT:- Applying the principle of law, in the case of Aayojan Developers [ 2011 (2) TMI 738 - GUJARAT HIGH COURT] to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as new ground or new reasons to supplement the reasons recorded by the Assessing Officer. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. Assessing Officer failed to record an independent finding as to how the income has escaped assessment - Assessing Officer was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment - when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd. and the Assessing Officer had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the Assessing Officer to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the Assessing Officer has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant - the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the Assessing Officer and the assumption of jurisdiction on the part of the Assessing Officer under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case. - Decided against assessee.
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2021 (5) TMI 693
Reopening of assessment u/s 147 - penny stock transaction made by assessee - HELD THAT:- Assessing officer was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Tuni Textiles Ltd., and the Assessing Officer had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the Assessing Officer to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the Assessing Officer has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the Assessing Officer and the assumption of jurisdiction on the part of the Assessing Officer under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case.
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2021 (5) TMI 692
Reopening of assessment u/s 147 - information received from ITO (CIB1), Mumbai, that as per the penny stock transaction data, the assessee had sold 30000 shares - respondent seeks to supplement the reasons recorded by the Assessing Officer, which is not permissible in law - HELD THAT:- Applying the principle of law, in the case of Aayojan Developers [ 2011 (2) TMI 738 - GUJARAT HIGH COURT] to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as new ground or new reasons to supplement the reasons recorded by the Assessing Officer. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. Assessing Officer failed to record an independent finding as to how the income has escaped assessment - Assessing Officer was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment - when the information was specific with regard to transactions of penny stock entered into by the assessee with the Tuni Textiles Ltd., and the Assessing Officer had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the Assessing Officer to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the Assessing Officer has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant - the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the Assessing Officer and the assumption of jurisdiction on the part of the Assessing Officer under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case. - Decided against assessee.
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2021 (5) TMI 691
Reopening of assessment u/s 147 - Penny stock transaction of assessee - proof of independent application of mind by AO - Whether AO has recorded the reasons on the basis of borrowed satisfaction? - HELD THAT:- As assessing officer himself was satisfied with regard to the information and other material on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. Thus no hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render the notice unsustainable. Therefore, the assessee failed to make out a case.
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2021 (5) TMI 690
Reopening of assessment u/s 147 - reassessment after expiry of 4 years - Bogus purchases - as per assessee reassessment proceedings could be said to have been initiated mechanically on the basis of third party information - HELD THAT:- We are of the view that, the assessee was aware that the transaction with M/s. Kalyan Exports Pvt Ltd was not business transaction but in the form of bogus purchase, it was only an accommodation entries and the company was one of the beneficiaries of the transactions, despite of this, the assessee failed to disclose true and correct facts at the relevant time and therefore, the Assessing Officer is entitled to initiate reassessment proceedings on the basis of tangible material came in his hand, which stands to expose the untruthfulness of the entry of purchase made in the books of accounts. In this context, we may refer the observation of the Apex Court in the case of Honda Siel Power Products Vs. Dy. CIT, [ 2011 (7) TMI 275 - SC ORDER] wherein, it is held that assessee having not pointed out during assessment proceedings about exprenses incurred relatable to tax free income u/s. 14A, there was an omission and failure on its part to disclose fully and truly material facts, hence, reopening was justified. As examined the reasons as indicated above, and we are of the view that the Assessing Officer has verified the information and after application of mind and upon due satisfaction, he formed an opinion that income has escaped assessment. See GOKUL CERAMICS [ 2016 (7) TMI 214 - GUJARAT HIGH COURT] Eligible sanction under Section 151 - As perused the papers of the sanction which would show that Assessing Officer presented the reasons recorded for approval of Principal Commissioner in prescribed format on 29.03.2019 through Additional Commissioner of Income Tax. Both the officers have perused the reasons recorded and opined that it is a fit case to issue notice under Section 148 of the Act. The Additional Commissioner of the Income Tax has expressed his satisfaction with regard to reasons recorded by the AO and found that it is a fit case to issue notice. The Principal Commissioner of Income Tax was also satisfied with the reasons recorded and put his remarks of his own handwriting that on the basis of the reasons recorded, I am satisfied that it is a fit case for issue of notice under Section 148 of the Act. On 29.03.2019, the Additional Commissioner of Income Tax has expressed his opinion, whereas, on 30.03.2019, the Principal Commissioner has expressed his satisfaction with regard to reasons recorded and accord the sanction to issue the impugned notice dated 31.03.2019. Thus, the sanction for reassessment was granted on 31.03.2019 on the date on which the impugned notice was issued. In this circumstances, it is evident that before issuing the notice, there was compliance of Section 151 of the Act and the authority concerned had expressed their satisfaction with regard to reasons recorded and accordingly, accorded the sanction. Therefore, the contention raised by the learned advocate for the writ applicant that sanction was not obtained before issuance of the notice cannot be accepted. It cannot be said that there was no tangible material before the Assessing Officer and that he proceeded mechanically based on the sole information and the impugned notice is without jurisdiction and contrary to Section 147 of the Act. - Decided against assessee.
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2021 (5) TMI 689
Reopening of assessment u/s 147 - whether the case is one of failure on the part of the writapplicant as to full and true disclosure of all the material facts for the year under consideration? - HELD THAT:- Having regard to the materials on record, more particularly, the reasons for reopening, we are of the view that the case is one of reopening based on change of opinion. It is settled position of law that when claim has already been examined at the original assessment stage, then in such circumstances, the Assessing Officer cannot resort to reopening, more particularly, to reexamine other facts on the very same claim. We are convinced that the impugned notice under Section 148 of the Act is not sustainable in law. - Decided in favour of assessee.
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2021 (5) TMI 688
Undisclosed investment - Addition u/s 69 treating the same as income from other sources - survey u/s 133A - addition based on loose documents found - CIT(A) confirmed the addition made by the AO by holding that the evidence is compelling that the land deal was actually done by the assessee and the on money was also paid by the assessee and only the name of M/s SMV agencies was placed - HELD THAT:- In the case under consideration, the AO has relied on only dumb documents, which are not having any evidentiary value as per the ratio laid down in the said judgment. The registered sale deed pertaining to the land purchase is not in the name of the assessee, but, the AO alleged that the name on the sale deed is wrongly mentioned as M/s SMV Agencies Pvt. Ltd., the observations of the Assessing Officer are not believable/ acceptable as there is no material brought on record to establish the same by the AO. We observe that the AO failed to discharge his duty by making the addition without undertaking any independent enquiry as to whether the property belonged to assessee or M/s SMV Agencies, he could have made an enquiry to establish that who is the owner of the land. He could have further enquired with the vendors regarding sale consideration. He failed to do so. We set aside the order of the CIT(A) and direct the AO to delete the addition made on this count. Accordingly, the ground raised by the assessee on this issue is allowed.
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2021 (5) TMI 687
Penalty u/s 271(1)(c) - defective notice u/s 274 - AO did not strike off either of the two limbs viz., concealed the particulars of income or furnished inaccurate particulars of such income, albeit it was a case of furnishing of inaccurate particulars of income - HELD THAT:- A copy of the notice issued u/s. 274 of the Act has been placed in the appeal folder, from which it is discernible that the AO did not strike off either of the two limbs viz., concealed the particulars of income or furnished inaccurate particulars of such income, albeit it was a case of furnishing of inaccurate particulars of income. The penalty order also came to be passed by holding in para 6.5 that: 'the amount added or disallowed in computing the total income of the assessee as a result thereof shall, for the purposes of clause (c) of this sub- section (1) of section 271, be deemed to represent the income in respect of which particulars have been concealed or inaccurate particulars have been furnished.' It is clear that where the charge is not properly set out in the notice u/s. 274 viz., both the limbs stand therein without striking off of the inapplicable limb, but the penalty has been, in fact, levied for one of the two, such a penalty order gets vitiated. We find from the notice u/s. 274 of the Act that the AO did not strike out one of the two limbs. Not only that, the penalty was also imposed in the same way by referring to both the limbs in the penalty order. As against that, the penalty was leviable only on one limb, namely, furnishing of inaccurate particulars of income. In such a situation, the penalty order gets vitiated. Respectfully following MR. MOHD. FARHAN A. SHAIKH [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] we overturn the impugned order and direct to delete the penalty. - Decided in favour of assessee.
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2021 (5) TMI 686
Rectification of mistake - Addition of peak balance - HELD THAT:- Peak balance of the said bank account number has not been discussed by the ld. CIT(A) in his order. On further appeal, the Tribunal has adjudicated the fact which is being generated from the assessment order. Since the object is to adjudicate the investment made in the impugned bank accounts. Therefore, the Tribunal as a fact finding authority noted that there was a mistake committed by the Assessing Officer in making the total of these figures. Tribunal is a fact finding authority and when the Tribunal came to know this fact that the amount of ₹ 2,02,067/- has escaped in the total sum computed by the Assessing Officer, the addition was made by Tribunal. We note that the ld. CIT(A) did not take any effort to make the total of these four figures of these four bank accounts and only adjudicate the sum of total determined by the Assessing Officer at ₹ 20,57,654/-. The real fact is that sum of these four figures comes to ₹ 22,57,654/- whereas Assessing Officer has taken wrongly at ₹ 20,57,654/-, hence the said issue was therefore before the Assessing Officer as well as ld. CIT(A). Therefore, we note that Tribunal is right in adjudicating the issue of the peak amount of ₹ 2,02,067/-, hence we do not find any error in the order of the Tribunal. This mistake was committed by the Assessing Officer while doing totaling of these figures at ₹ 20,57,654/- and the (correct total comes at ₹ 22,57,654/-) said mistake was carried forward up to CIT(A) and then before this Tribunal. Therefore, the contention of ld. Counsel that the issue of the peak amount of ₹ 2,02,067/- was not before this Tribunal, is not acceptable; hence we dismiss the Miscellaneous Application filed by the assessee.
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2021 (5) TMI 685
Taxability of capital gain on transfer of shares - income on sale of share accrued before amalgamation / slump sale - HELD THAT:- In the instant case, since it is an undisputed fact that income on sale of share accrued before amalgamation / slump sale, therefore, this income has to be taxable in the hands of ITI Limited (old) only. So far as S. 170(2) is concerned, this section will apply when the predecessor cannot be found. But in this case ITI Limited (old) very much exists even as on today as per the records of the various government authorities. Hence the contention of the AO does not make any sense. The entire confusion emanated from misunderstanding, as admitted by the AO himself in the remand report that ITI Limited (old) amalgamated with HFCL Infotel Limited due to which the AO invoked succession theory under the impression that ITI Limited (old) no more exist while the fact is other way round. It is HFCL Infotel Limited which merged with ITI Limited (old) which is amalgamated company today and HFCL Infotel Limited was amalgamating company. Therefore, on this count also the finding of the AO is incorrect. We are of the considered view that capital gain arising out of sale of shares of Kothari Pioneer AMC Limited by ITI Limited (old) is taxable only in the hands of ITI Limited (old) now renamed as HFCL Infotel Limited (new). Although, the ld. AO of ITI Limited (old) now renamed as HFCL Infotel Limited (new) assessed the income on protective basis, but the ld. CIT(A), Chandigarh after considering relevant facts has rightly assessed capital gain arising out of sale of shares on substantive basis in the hands of ITI Limited (old). Similarly, although the ld. AO of Rajam Finance and Investment (India) Limited now renamed as ITI Limited (New) assessed capital gain on sale of shares in the hands of ITI Limited (new), but the ld. CIT(A), after considering relevant facts has rightly held that capital gain on sale of shares is taxable only in the hands of ITI Limited (old), but not in the hands of ITI Limited (new). We are inclined to uphold findings of ld. CIT(A) s and reject grounds taken by the Revenue on this issue in both appeals. Provisions for premium on Redemption of Debentures - HELD THAT:- At the time of hearing, ld. AR for the assessee submitted that the issue is squarely covered in favour of the assessee by the decision of ITAT, Chennai bench in assessee own case for Asst. year 2008-09,for which the ld. Sr. standing counsel has agreed. Following the decision of Hon ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd vs. CIT [ 1997 (4) TMI 5 - SUPREME COURT] , held that premium payable on redemption of debentures has to be spread over the period and further, amount pertains to relevant period is deductible u/s 37 of the Income Tax Act, 1961, even though same is paid on redemption. Facts remain unchanged. The revenue fails to bring on record any contrary decisions against the decision of Hon ble Supreme court to support its arguments. Therefore, we are of the considered view that there is no error in the findings of the ld. CIT(A) to delete additions made towards disallowance of provision made for premium payable on redemption of debentures and hence, we are inclined to uphold findings of the ld. CIT(A) and reject grounds taken by the revenue. Addition towards provision for premium on redemption of debentures to book profit u/s 115JB - HELD THAT:- AO has made addition to book profit towards premium on redemption of debentures on the ground that it is an unascertained liability. The ld. CIT(A) by following the decision in case of Madras Industrial Investment Corporation Ltd [ 1997 (4) TMI 5 - SUPREME COURT] held that it is ascertained liability and further deductible u/s 37 of the Act. The ld. CIT(A) further held that it cannot be added back to book profit computed u/s 115JB(2)(c) of the Act. Facts remain unchanged. The revenue has failed to counter findings of facts recorded by ld. CIT(A) with any contrary decision. Therefore, we are of the considered view that provision created for premium payable on redemption of debentures is ascertained liability and hence, it cannot be added to book profit u/s 115JB of the Income Tax Act, 1961. The CIT (A) has rightly deleted addition to book profit and hence, we are inclined to uphold findings of the ld. CIT(A) and reject ground taken by the revenue. Addition made towards amount received from Escrow account - HELD THAT:- As for as interest income is concerned, both parties have accepted findings of the ld. CIT(A) and hence, it is final. As regards amount received from Escrow account, the revenue has challenged findings of the ld. CIT(A) on the ground that it is taxable in the hands of the assessee, i.e. ITI Limited (new). We have carefully considered facts and arguments of both sides and find that full consideration received on account of sale of shares of Kothari Pioneer AMC Limited is taxed in the hands of ITI Limited (old) and hence, amount received from Escrow account being part of sale consideration which is already suffered tax in the hands of ITI Limited (old) cannot be once again taxed in the hands of the assessee, i.e. ITI Limited (New). The ld. CIT(A) after considering relevant facts has rightly deleted addition made by the AO. Hence, we are inclined to uphold findings of the ld. CIT(A) and reject grounds taken by the revenue. Disallowance u/s 14A r.w.r 8D - HELD THAT:- We find that the AO has erred in computing disallowances of interest u/r 8D(2)(ii), because for the impugned year the assessee has not incurred any interest on loans, except bank charges which is not at all related to exempt income. Therefore, we are of the considered view that no disallowance could be made u/r 8D(2)(ii) and hence, we direct the AO to delete disallowances made towards interest u/r 8D(ii) of Income Tax Rules, 1962. As regards other expenses u/r 8D(2)(iii), it is a well settled principles of law that only those investments which earned exempt income needs to be considered for computing average value of investments, as held by ITAT, Special Bench Delhi, in the case of ACIT vs. Vireet Investments Pvt Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] We, are therefore of the opinion that the AO is erred in considering those investments which does not earned any exempt income for the year. Hence, we direct the AO to consider only those investments which earned exempt income for the year for computing disallowances of other expenses @0.5% of average value of investments. Premium payable on redemption of debentures has to be spread over the period and further, amount pertains to relevant period is deductible u/s 37 of the Income Tax Act, 1961, even though same is paid on redemption.
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2021 (5) TMI 684
Disallowance made u/s.14A of the Act r.w.r. 8D(2) - assessee had made suo-moto disallowance - HELD THAT:- As expenses should also be considered in the total expenditure considered by the assessee for working out the disallowance in the ratio of exempt income to total income. We hold that the computation mechanism provided in Rule 8D(2) of the Rules results in absurdity in the peculiar facts of the instant case. Accordingly, we direct the ld. AO to recompute the disallowance by taking suo-moto disallowance made by the assessee and include the aforesaid six expenses (Sr. Nos. A to F above) in the ratio of exempt income to total income and workout the disallowance u/s. 14A of the Act accordingly under normal provisions of the Act. Accordingly, the ground Nos. 1(a) to 1(e) raised by the assessee are partly allowed for statistical purposes. Chargeability of interest u/s. 234D - Refund was susdquently withdrawn after rectification u/s 154 - AR before us argued that interest u/s. 234D of the Act could be charged only when refund has been granted to the assessee u/s. 143(1) - HELD THAT:- We are unable to accept to this proposition made by the ld. AR for the reason that the section 154 order dated 11/12/2009 was only rectification of intimation u/s. 143(1) of the Act. Hence, effectively refund is granted to the assessee only u/s. 143(1). Hence, we hold that interest u/s. 234D of the Act is leviable. In our opinion, the order passed u/s. 143(1) and 154 of the Act are to be read together. Accordingly, the ground No. 2 raised by the assessee is dismissed. Disallowance u/s. 14A of the Act r.w.r. 8D(2) of the Rules while computing book profits u/s. 115JB of the Act - HELD THAT:- Since, we have tinkered with the identification of actual expenses incurred by the assessee for the purpose of earning exempt income by including few more expenses, while giving directions to ld. AO to recompute disallowance under normal provisions of the Act, the same disallowance so re-computed should be made under Clause(f) of Explanation 1 to Section 115JB(2) of the Act. Accordingly, the additional ground No. 1 raised by the assessee vide letter dated 09/08/2017 is partly allowed for statistical purposes. Claim of deduction u/s. 35DD - AR argued that demerger took in A.Y. 2008-09 but expenditure on demerger took place in A.Y. 2009-10 - HELD THAT:- Quantum of allowability of expenses u/s. 35DD need to be determined factually by the ld. AO. Infact, the ld. CIT(A) had also recorded the fact that assessee had incurred expenditure towards demerger and had disallowed the same voluntarily in the return of income. Hence, this goes to prove that facts are already in record. Hence, with the consent of both the parties, we deem it fit to remand this issue to the file of the ld. AO to determine the quantum of expenses eligible for deduction u/s. 35DD of the Act in the year under consideration. At the cost of repetition, we hold in principle that assessee is eligible for deduction u/s. 35DD of the Act commencing from the A.Y. 2008-09 for a total period of five assessment years. Accordingly, the additional ground No. 2 raised by the assessee vide letter dated 09/08/2017 is allowed for statistical purposes.
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2021 (5) TMI 683
Disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) - Employees' Contribution of PF and ESI beyond the time allowed under the relevant act - HELD THAT:- This ground of appeal is against the assessee in view of the Jurisdictional High Court in the case of Gujarat State Road Transport Corporation 2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it has been held where assessee deposit Employees' Contribution of PF and ESI beyond the time allowed under the relevant act. In that case, disallowances can be justified. Addition as suppressed revenue on account of difference in books of account and Form 26AS - assessee submission that said income never really accrued to the appellant and thus the same should be assessee in the hands of the correct person and the credit of TDS should also be given in the hands of the correct person - HELD THAT:- Matter should be set aside to the file of the Assessing Officer in order to ascertain to find out who is the real recipient of the income wherein TDS was deducted and he will ascertain after summoning or making necessary inquiry the Lafarge Aggregates Concrete India Pvt. Ltd. and thereafter will decide the matter as per law.
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2021 (5) TMI 682
Reopening of assessment u/s 147 - Disallowance u/s. 40(a)(ia) - assessee not deducting tax on transport rent expenses as prescribed in the provision of section 194I - CIT-A deleted the addition - HELD THAT:- As noticed that ld. CIT(A) has deleted the disallowance holding that assessee has not taken the trucks on rent and all the payees were having PAN No. In this regard, the ld. CIT(A) has also not admitted any evidences under rule 46A since assessee has not made any compliance before the AO. CIT(A) has also not called any remand report from the Assessing Officer in respect of the evidences produced by the assessee. Section 250(6) of the Act contemplates that first appellate authority would state, the points in dispute and thereafter record reasons in support of his finding on these points in dispute. Normally whenever any irregularity crept in the proceedings, then after removing the irregularities, proceedings is to be initiated from that stage but by remitting the issue to the ld. first appellate authority we would be multiplying the litigation, because the ld. CIT(A) would call for a remand report from the Assessing Officer and proceedings would commence on two stages in order to avoid that situation we would deem it proper to set aside order of both the revenue authorities and remit all the issues to the Assessing Officer. It is needless to say that observation made by us will not injure or impair the case of the Assessing Officer and will not cause any prejudice to the defense/explanation of the assessee. Therefore, we refer this issue to the file of Assessing Officer deciding afresh after examination and verification of the relevant supporting material on this issue. Accordingly, this appeal of the revenue is allowed for statistical purpose.
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2021 (5) TMI 677
Business loss u/s 28/37(1) - write off/bad debt - advances /bad debt written off in respect of 22 parties - As assessee could not give justification for the write off and that the genuineness of the transaction and nature of advance is not clear, the AO disallowed an amount - HELD THAT:- We find in the case of Kalpataru Power Transmission Ltd.. [ 2016 (8) TMI 209 - ITAT AHMEDABAD] has held that irrecoverable advances given to job work contractors for supply of material and labour in regular course of business would be a business loss and, therefore, amount written off would be allowable as business expenditure. Rajkot Bench of the Tribunal in the case of Hiravati Marine Products (P) Ltd. [ 2019 (5) TMI 10 - ITAT RAJKOT] while deciding an identical issue noted that the assessee company was engaged in the business of processing and exports of marine products, claimed deduction of certain amount which represented advances written off. In view of fact that advances given by assessee were duly disclosed in financial statements and, moreover, it was also undisputed that there was downfall in business of fishermen to whom advances were made due to cyclone and earthquake, assessee's claim for deduction was held to be allowed. In the case of Dr. T.A. Qureshi, [ 2006 (12) TMI 91 - SUPREME COURT] held that the Explanation to section 37 has really nothing to do with the instant case as it was not a case of a business expenditure, but of business loss. Business losses are allowable on ordinary commercial principles in computing profits. Once it was found that the heroin seized formed part of the stock-in-trade of the assessee, it followed that the seizure and confiscation of such stock-in-trade had to be allowed as a business loss. Loss of stock-in-trade has to be considered as a trading loss. The Delhi Bench of the Tribunal in the case of Swastik Pipes Ltd. [ 2018 (4) TMI 985 - ITAT DELHI] while deciding the identical issue had noted that the assessee paid advance to one, SG for acquisition of a capital asset. SG did not carry out his obligation. Thus, assessee written off amount paid to SG as bad debt. Assessing Officer disallowed same. Commissioner (Appeals) noted that amount did not qualify as bad debt because it was an advance paid for acquisition of capital asset. Amount was a loss to assessee and would be an allowable expenditure under section 37(1). The Tribunal held that since it was clear that loss was incidental to business of assessee which were written off in books of account as irrecoverable, it was correctly allowed as business loss by Commissioner (Appeals). We are of the considered opinion that the claim of the assessee has to be allowed as business loss u/s 28/37(1) of the IT Act. We, therefore, set aside the order of the CIT(A) and the grounds raised by the assessee are allowed.
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Corporate Laws
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2021 (5) TMI 681
Seeking restoration of the name of Respondent in the Register of the Companies maintained by the ROC - Section 252(3) of the Companies Act, 2013 - HELD THAT:- Order IX Rule 13 is also not attracted in any manner, in as much as no sufficient cause for non-appearance was shown. That apart, even if there is 'sufficient cause', in that event there cannot be a fresh memo of appeal, so filed by the Appellant. The very arguments so advance by the learned lawyer of the Appellant is not maintainable in any manner under facts and law. That apart, it is a matter of record that one Gopal Polymer and Impex Limited along with 2 ors. have filed a case before the Hon'ble VIII Additional District Judge Indore 67A of 2015, which corroborate the objection so made by the objector - on perusal of the sale deed so relied by the Appellant executed on 17.02.1976 in favour of M/s. Bhandari Crosfields Limited, Manglia Gram, Indore, a Company incorporated under the Indian Companies Act, having its registered office at Manglia Gram, Indore. It prima facie reflects that the sale deed was executed in favour of the company out of the proceeds receipt by the Company from its shareholders or other stakeholders, and not in favour of any individual/director/shareholder. The instant appeal is bad in the eye of law and is hereby rejected with a cost of ₹ 10,000 for suppression of material facts to be deposited in the Army Welfare Fund.
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2021 (5) TMI 680
Seeking to grant exclusion period from 25.03.2020 to 22.07.2020 i.e., period of 120 days from the liquidation process period etc. - Section 60 (5) of the I B Code, 2017 R/w Regulation 47A of IBBI (Liquidation Process) Regulations 2016, and Rule 11 of NCLT, Rules 2016 - HELD THAT:- The material facts of the issue are not in dispute, and the Applicant could not conclude the Liquidation in question, within stipulate time, due to the lockdown and partial lockdown imposed in the wake of Covid-19 outbreak and also non response to e-auction issued. It is settled position of Law that Adjudicating Authority is empowered to exclude certain period of time subject suitable reasons cited, for Liquidation process. Application allowed.
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Insolvency & Bankruptcy
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2021 (5) TMI 679
Corporate Debtor under liquidation - Liquidator seeking to direct the Respondent No. 1 to deposit the GST along with applicable penalty/late fee and interest from the date of taking over of custody until date of payment to the account of the Corporate Debtor - HELD THAT:- Mr. Shivarama Krishnan, Ld. Counsel for the Respondent 1, State Bank of India informed that the GST collected on account of the sale of various assets, as mentioned in the Application and whose transfer to the account of Corporate Debtor has been sought by the Applicant Liquidator, has already been transferred to the account of the Corporate Debtor which is being managed by the Liquidator. It has been stated that the SBI had made a payment of ₹ 32,54,53,666 on 20.04.2019 which included the amount of ₹ 4,60,24,276 which was attributable to the assets of the Applicant Company and the same was intimated by way of letter dated 02.01.2021. A copy of the letter has been attached. Hence, the grievance of the Applicant Liquidator as mentioned in the Petition has been redressed, and hence this Application becomes infructuous. Petition is dismissed as infructuous.
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2021 (5) TMI 678
Seeking direction to Respondent to provide the Applicant with Accounting data from financial years 2013-14, 2014-15 - seeking to provide free and complete access to all the financial records of the Corporate Debtor, equipments and other assets without any hindrances from any one to protect the assets of the Corporate Debtor etc. - HELD THAT:- It is settled position of law that once CIRP is initiated, all the personnel including Directors/MD of Corporate Debtor, have to extend necessary co-operation to IRP/RP in carrying out their duties. Since the Adjudicating Authority has already directed all the personnel of CD to extend full co-operation to the Applicant and the law is also clear on the issue, it is for the Applicant to discharge his duties effectively at the ground level, instead of rushing to the Tribunal raising all those issues which ought to be settled by himself, being experience Resolution professional. Therefore, the instant Application can be disposed of by directing the Respondent to extend necessary cooperation to the Applicant. Application is disposed of by the directing the Respondent to extend necessary co-operation to the Applicant in respect of CIRP of Corporate Debtor.
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Central Excise
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2021 (5) TMI 676
CENVAT Credit - input service - sales commission - HELD THAT:- The sales commission is directly attributable to sales of the products. Any activity which amounts to sale of the products is deemed to be sales promotion activity in the normal trade parlance - If there is no sale, there would not be any need to manufacture the products. Be that so as it may, to increase the manufacturing activity an encouragement is being given by way of sales commission for achieving increased sales. Hon ble High Court of Punjab Haryana in the case of COMMISSIONER OF CENTRAL EXCISE, LUDHIANA VERSUS AMBIKA OVERSEAS [ 2011 (7) TMI 980 - PUNJAB HARYANA HIGH COURT] , had clearly held that the sale and manufacture are directed inter-related and the commission paid on sales needs to be accounted for as services related to sales promotion. The impugned order cannot be sustained and is, therefore, set aside - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (5) TMI 706
Maintainability of petition - availability of efficacious remedy of appeal - fraud in depriving the respondents of their due revenue or not - invocation of jurisdiction under section 58 of the VAT Regulations - Validity of orders and audit reports - time limitation - challenge has been made primarily on the ground that such audit report / order is basically re-assessment but the time limit for assessment and re-assessment is four years as per section 34 of the VAT Regulations. Whether the petitioners committed fraud in depriving the respondents of their due revenue thereby enabling the respondents to invoke the jurisdiction under section 58 of the VAT Regulations unfettered by any limitation? - HELD THAT:- This Court referred to the decision of the Supreme Court in HARJAS RAI MAKHIJA (D) THR. L. RS. VERSUS PUSHPARANI JAIN AND ORS. [ 2017 (1) TMI 1736 - SUPREME COURT] which decision highlighted that there must be a specific allegation of fraud. When there is an allegation of fraud, it must be enquired into. It is only after evidence is led coupled with intent to deceive that a conclusion of fraud can be arrived at. A mere concealment or non-disclosure without intent to deceive or a bald allegation of fraud without proof and intent to deceive would not render a decree obtained by a party fraudulent. Fraud has a definite meaning in law. It must be proved and not merely alleged and inferred - this Court held that to constitute fraud there must be an intent to deceive. When an allegation of fraud is made, it must be enquired into. Enquiry would necessarily mean granting reasonable opportunity of hearing to the party accused of committing fraud. Evidence must be led and thereafter fraud must be proved. No conclusion of fraud can be drawn on mere allegation and by way of inference. Takeaway from the above decision is that to constitute fraud there must be an intent to deceive. When an allegation of fraud is made, it must be enquired into. Enquiry would necessarily mean granting reasonable opportunity of hearing to the party accused of committing fraud. Evidence must be led and thereafter fraud must be proved. No conclusion of fraud can be drawn on mere allegation and by way of inference. From a careful perusal of the audit report / order of audit, we find that though the Deputy Commissioner stated that there were differences in the data received from the refineries and returns filed by the retailers leading to tax deficiency, no allegation of fraud is discernible; not to speak of any finding that petitioner had committed fraud thereby causing loss to Government revenue - When the impugned notice did not allege fraud and no such finding of fraud being discernible in the order of audit, it is not open to the respondents to make such sweeping allegation of fraud in the oral hearing which is not backed up by adequate pleadings. Violation of principles of natural justice - HELD THAT:- It is evident from a perusal of the impugned order of audit that it was based on the information furnished by the oil companies through email dated 11.08.2020. Therefore, it was imperative on the part of the Deputy Commissioner to have furnished copy of the said email to the petitioner or at least the material information which would have enabled the petitioner to have properly defended its case. Failure to do so has resulted in violation of the principles of natural justice. Time limitation - HELD THAT:- There is a clear bar of limitation in making assessment or re-assessment. No assessment or re-assessment shall be made after expiry of four years from the date on which the return is furnished by the registered dealer under section 26 or under sub-section (1) of section 28 or the date of making of assessment under section 32, whichever is earlier. As per the proviso, where the Commissioner has reason to believe that tax was not paid by reason of concealment, omission or failure to disclose material particulars on the part of the concerned person, the assessment or re-assessment may be made within six years from the dates as specified in sub-section (1). Therefore, what the proviso says is that in a case of concealment or omission or failure to disclose material particulars on the part of the concerned person, the limitation of four years gets extended by another two years, to six years. In the instant case, the notice of audit pertains to three years i.e., 2010-11, 2011-12 and 2012-13. We find that for these years the assessments were already made on 25.10.2013. As per section 34, limitation period is four years from the date of filing the return or from the date of assessment, whichever is earlier, which is extendable for a further period of two years in a case of concealment or omission or failure to disclose material particulars. Since the assessments were made on 25.10.2013, certainly the returns were filed much before this date, and it is the earlier date, which is to be taken into consideration for determination of limitation - The impugned notice of audit under section 58 of the VAT Regulations is dated 25.09.2020 which is certainly beyond the period of limitation. It goes without saying that when the notice is barred by limitation, any proceeding or order pursuant to such time barred notice would also be barred by limitation. The impugned notices dated 25.09.2020 and the consequential orders of audit dated 12.10.2020 and 13.10.2020 are beyond the period of limitation and are thus without jurisdiction. Alternative remedy - HELD THAT:- The impugned orders of audit were passed in violation of the principles of natural justice. The impugned notices and the consequential orders of audit are barred by limitation and thus without jurisdiction. In such circumstances, question of relegating the petitioners to the appellate remedy simply does not arise. This issue is answered accordingly. Petition allowed.
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2021 (5) TMI 700
Principles of Natural justice - opportunity of hearing not provided to petitioner - no pre-assessment proposal was received - HELD THAT:- There is thus apparently violation of principles of natural justice and the impugned order is set aside. Let the petitioner appear before the Officer on Monday, the 17th of May, 2021, without anticipating any further notice in this regard, after hearing the petitioner either over video conference or by way of physical hearing, as may be mutually convenient and consideration of material that may be filed by the petitioner, pass an order of assessment, de novo, within a period of four (4) weeks thereafter, in accordance with the law. Petition disposed off.
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2021 (5) TMI 697
Levy of penalty u/s 9-B (3) of the OST Act - levy of sales tax in respect of the installed capacity cement with effect from 1st December, 1993 - HELD THAT:- For the period 1994-95, the STO imposed a penalty on the basis that while effecting sales of cement to the tune of ₹ 47,49,093.64, the Petitioner had collected tax to the tune of ₹ 5,08,831.46. For the period 1995-96, he held that while effecting sale of cement to Government Departments in the sum of ₹ 45,70,555.30, the Petitioner had unauthorizedly collected sales tax to the tune of ₹ 4,89,702.35. The STO held that the Petitioner was not authorized to collect the tax on the sale of its finished product while enjoying the exemption under Entry-30-FFF of the tax free schedule under the OST Act. In similar manner, the penalty was imposed for the years 1992-93, 1993-94 and 1995-96. The Court at the outset notes that the approach for the period up to 1st December, 1993 when the sales tax exemption was available in respect of the cement from the installed capacity of 13500MTs, had to be different from the approach in respect of the sales tax payable by the Petitioner on cement for the period subsequent thereto. Likewise for the additional capacity of 22500MTs, the approach in respect of the issue of the exemption with effect from 16th July 1992, had to be separately dealt with - It is interesting that the ACST while partly allowing the Petitioner s appeals came to the conclusion that even for 1992-93 and 1993-94, the penalty imposed by the STO was very high and excessive and that there was no direct proof of collection of sales tax by the Petitioner. With regard to the period 1994-95 and 1995-96, the ACST, in the appellate order waived the penalty imposed on the Petitioner on the ground that it had deposited the amount of sales tax realized. The fact of the matter is that as far as the installed capacity was concerned, with the exemption on payment of sales tax on the finished product having come to end on 1st December 1993, the Petitioner was bound to collect the sales tax on the finished product which in fact it did. It was this tax that the Petitioner deposited with the Department - the explanation offered by the Petitioner that it was bound to collect the sales tax for this period is both logical and correct. If that is the position, then there is no justification in imposing any penalty on the Petitioner for these two years on the ground that it had illegally collected sales tax. The imposition of penalty on the Petitioner under Section 9-B(3) of the OST Act for 1994-95 and 1995-96 cannot be said to be legally justified - the finding of the Tribunal that the Petitioner had illegally collected the sales tax in respect of the installed capacity cement with effect from 1st December, 1993 is incorrect and not sustainable in law - the Tribunal s order is vitiated as it considered together both the relevant and irrelevant materials in arriving at its conclusions. Revision petition disposed off.
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2021 (5) TMI 696
Classification of goods - rate of tax - gunny bags sold along with rice to Food Corporation of India - taxable @4% or @8%? - HELD THAT:- The Tribunal was right in applying the law explained by the Supreme Court in RAJ SHEEL AND OTHERS VERSUS STATE OF ANDHRA PRADESH AND OTHERS (AND OTHER APPEALS, WRIT PETITIONS AND SPECIAL LEAVE PETITIONS) [ 1989 (5) TMI 292 - SUPREME COURT] , and concluding that the question had to be answered against the assessee and in favour of the Department. Factually, since it has been shown by the Department, on perusing the books of account of the Petitioner that the new gunny bags were separately sold and paid for by the FCI, the question framed by this Court is required to be answered in favour of the Department by holding that in the facts and circumstances of the case, the gunny bags sold along with the rice to the FCI is exigible to tax @ 8% as held by the Tribunal. Revision petition dismissed.
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Indian Laws
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2021 (5) TMI 698
Grant of Bail - Smuggling - illegal transport of 65 bottles of Welcyrex cough syrup of 100 ml each - whether the drug was within the permissible limit under Section 8 of the Act of 1985 or not - HELD THAT:- The seized drug 'Welcyrex Cough Syrup containing 'Codeine' which is an opium derivative is a Manufactured drug/ Narcotic Drug - From the bare perusal of provisions of the NDPS Act, Notifications Dated 14.11.1985 and 5th May 2015 and the provisions of rule 53A, it is clear that a compound contains not more than 100 milligrams of Codeine per dosage unit and with a concentration of not more than 2.5 per cent in undivided preparations of the compound, it would neither be a Manufactured Drug under Section 2(xi)(b) of the N.D.P.S.Act nor Essential Narcotic Drugs under clause (viiia) of Section 2 of the N.D.P.S.Act. Subject to If it is kept for therapeutic practice - However, the Government of India has issued a notification No. S.O.2941(E) dated 18/11/2009 in this regard. As per note 4 appended at the end of this notification, it is made clear that for the purpose of determining the quantity, the gross weight of the drug recovered and not the pure content of the psychotropic substance shall be taken into consideration. By making the percentage content of the drug irrelevant, the impugned notification has the effect of bringing pharmaceutical preparations that are exempt from the NDPS Act, under the fold of the law. So the argument of learned counsel of the applicant that the seized cough syrup is a Essential Narcotic Drugs and Section 8 of NDPS Act only prohibits the possession, sale, purchase, transport and use of any narcotic drug or psychotropic substance and not of the Essential Narcotic Drugs and the provisions of the section 8 read with 17 to 22 of N.D.P.S. Act are not attracted in the instant case has no force. According to Notifications Dated 14.11.1985, every drug containing codeine would come under manufactured drugs if it is kept against the provisions of the NDPS Act or Rules. Even those drugs which are compounded with one or more other ingredients containing not more than 100 milligrams of the codeine per dosage unit and with a concentration not more than 2.5 percent in undivided preparations will also come under the purview of manufactured drugs unless it is kept for therapeutic practice. Henceforth, if anyone is found in possession of cough syrup or any other medicine containing Codeine against the provisions of the NDPS Act or Rules then the case will come under the stringent provisions of the NDPS Act. According to Notifications dated 14.11.1985 every drug containing codeine would come under manufactured drugs if it is kept or transported other than medical or scientific purpose, in violation of the provisions of any Narcotic Drugs and Psychotropic Substances Rule, 1985 Even those drugs which are compounded with one or more other ingredients containing not more than 100 milligrams of the codeine per dosage unit and with a concentration not more than 2.5 percent in undivided preparations will also come under the purview of manufactured drugs unless it is kept for therapeutic practice. So, looking to the facts and circumstances of the case and the strength of the evidence collected by the Police against the present applicant during investigation of the crime, prima facie it cannot be said that there is a reasonable ground to hold that the applicants have committed any offence punishable under the N.D.P.S. Act and also there is no material to infer that if he is released on bail then he will indulge in the crime punishable under the N.D.P.S. Act - the applicant is directed to be released on bail upon his furnishing personal bond in the sum of ₹ 50,000/- with one surety in the like amount to the satisfaction of the concerned C.J.M/trial Court for his appearance before the trial Court on all such dates as may be fixed in this behalf by the trial Court during the pendency of trial. Bail application allowed.
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