Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 25, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of IGST - A separate application for refund was not required to be filed. - the shipping bills would operate as a refund application as envisaged under Section 54 of the CGST Act read with Section 16 of the IGST Act, as also Rule 96(1) of the CGST Rules. - interest should accrue to the petitioner at the statutory rate i.e., 6% (simple) from the date on which notice in this petition was issued on 01.10.2021- HC
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Validity of SCN - mandatory requirement of pre-show cause notice consultation - W.E.F 15.10.2020 i.e., after the impugned SCN was issued, Rule 142(1A) has undergone a change, inasmuch as the word ‘shall’ has been replaced with ‘may’. - pre-show cause notice consultation was mandatory under the unamended Rule 142(1A) - A voluntary statement cannot substitute a statutory notice, which is contemplated under Rule 142(1A) of the 2017 Rules - impugned show cause notice dated 21.05.2020 is set aside - HC
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Refund on the exports made by the petitioner - Prescribed procedure for filing of correct GSTR-1 and GSTR-3B returns - details itself have not been received from GSTN portal to the designated system of the customs - The procedures under Rule 96 of CGST Rules, 2017 cannot be applied strictly to deny legitimate export incentives that are available to an exporters - the procedures prescribed under the aforesaid Rules should not be applied strictly so as to defeat the legitimate export incentives, which an exporter otherwise would have been entitled to but for the technicality involved in the system. - HC
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Benefit of exemption from GST - Supply or not - definition of business u/s 2(17) - activities carried out by the appellant to the plot holders in terms of provisions of GIDC Act, 1962 - the appellant does not fall under the category of ‘State Government’ and also their functions are not covered under Twelfth Schedule of Article 243W of the Constitution. They are therefore not eligible for exemption benefit - AAAR
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Input Tax Credit - Plant and Machinery or not - whether LNG jetties proposed to be built - The LNG Jetties being built by the appellant are not in the nature of ‘plant and machinery’ being foundation for equipment, apparatus, machinery for re-gasification to be installed thereon. Therefore input tax credit on inputs, input services and capital goods for the purpose of building these LNG Jetties are not admissible - AAAR
Income Tax
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Taxpayer's grievance from High pitched scrutiny assessment - Conflicting orders passed by National Faceless Assessment Centre - High-pitched and unreasonable assessment orders - Tax payers are one of the important pillars of economy of the country. Their harassment not only causes jolt to the economy of the country and employment but also comes in the way of economic policy of the government including the policy “Ease of Doing Business”. - HC
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Disallowance of sales tax (CGST and SGST) u/s. 43B - CGST and SGST has not been paid before the due date of filing Income Tax return u/s. 139(1) since the assessee has not claimed the alleged amount as an expenditure in the profit and loss a/c, no disallowance could be made u/s. 43B of the Act. - Additions deleted - AT
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TP Adjustment - MAP Settlement - the provisions of the amended Rule 44G(5) stipulate that there shall not be a decrease in the income or increase in the loss of an assessee in the return of income of a given year, if the MAP is invoked on account of action taken by any income tax authority in India. - The petitioner in this case, for the reasons discussed and the provisions of amended Rule 44G(5), would be entitled to seek precedence to the MAP Settlement. This is also so because of article 27(2) of the DTAA - HC
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Disallowing commission expenses u/s 37 - As all the persons to whom commission was paid were either Directors of the Company or their relatives. None of them is shown to have any expertise in procuring IOF from the Indian markets for enabling the Appellant to meet the purchase order placed on it for IOF. The amounts paid as commission were also not insubstantial. In the facts of the case, it cannot be said that the AO’s decision to disallow part of the payment towards commission was unreasonably arrived at. - HC
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Assessment under Faceless Assessment Scheme u/s 144B - Assuming that the web portal started functioning from September 2021, from which date exactly it started working without any glitches could not be ascertained now and moreover, in the meanwhile since the order of assessment has been passed on 14.07.2021, without waiting for the reply to be submitted by the petitioner after the web portal started functioning, the said order which is now impugned herein, in the considered opinion of this Court, is certainly vitiated - HC
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Nature of receipt - subsidy received in the form of octroi refund as revenue receipts invoking the provisions of section 28(iv) - Revenue or capital receipt - Since the amended provision of section 2(24)(xviii) is not applicable to the year under consideration, the sequitur is that the subsidy received by the assessee would not form part of its total income - AT
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Addition u/s 68 - Bogus unsecured loan - The assessee no doubt has produced bank statement/confirmation of the entities from which the money found its place in the bank account of the assessee to be further used in its business but the genuineness of these transactions could not be proved as the assessee did not bring on record cogent evidences to substantiate the unsecured loans taken. Merely bringing confirmations and showing that the payments were made through banking channel is not sufficient. - AT
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Penalty u/s 271(1)(c) - accrual of income for assessee society - In assessee`s appeal assessing officer treated contribution towards welfare Fund and Hospital Fund as income of the assessee and added to the total income of the assessee and then initiated penalty proceedings under section 271(1) (c ) of the Act. We note that these are non-refundable and refundable deposits hence cannot be treated as the income of the Assessee-Societies. - No penalty - AT
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Disallowance u/s 40A(3) - Cash purchase of paddy - Purchase from the farmer or trader - The status of the seller as farmer or trader is determined by the Mandi Samiti at the time of his entry and the assessee undertakes transactions on the basis of said determination. It is also clear from the provisions of Mandi Act that the authority to decide whether the seller is a farmer or not is solely in the domain of Director of the Mandi Samiti as per the relevant Act and not the Assessing Officer. - AT
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JDA - Proof of conversion of land into stock-in-trade - though the sale is more than One Crore, no Audit Report is filed by the assessee. No Balance Sheet has been filed by the assessee for the A.Y. 2012-13. Thus, the assessee has not filed any evidence to substantiate his claim that the impugned land was converted as stock-in-trade before entering into Joint Venture Agreement. Therefore, assessee’s claim that land was converted as stock-in-trade before entering into Joint Venture Agreement is hereby rejected. - AT
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Exemption u/s 11 / 10(23C)(vi) - Condonation of delay - There is no such provision nor there is any power to condone the delay after considering the reasonable reasons. A reasonable cause can be taken into cognizance for condoning the delay, if such provision is provided in the Act while considering any issue for adjudication. Therefore, considering the above proposition, we are of the view that ld. CIT(Exemption) has rightly rejected the application of the assessee for grant of approval under section 10(23C)(vi) of the Income Tax Act. - AT
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Addition u/s 68 - Bogus share transactions - accommodation entries receipt - all these shares in the preceding as well as in the current year were purchased from various companies at Rs. 250/- per share and were sold at the same price. - these are not the accommodation entries but shares were sold at the same price at which these were purchased and thereby no pecuniary gain has accrued to the assessee. - AT
Indian Laws
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Dishonor of cheque - suit promissory notes - fill up the blanks - There is no mandatory provision under the Negotiable Instruments Act that both the signature and thump impression has to be obtained for a pro-note and the lower Appellate Judge has totally misguided and misused the provision of the Negotiable Instruments Act, regarding burden of proof and not even followed basic rudimentary of Section 20 of the Negotiable Instruments Act. - HC
IBC
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Impact of Section 60(6) of the IBC - Exclusion of moratorium period for initiation of proceedings of suit - Interpreting the statute in the manner which the appellant seeks would result in our denying the benefit of extending the period of limitation to the corporate debtor, a result, which we think, would not be warranted by the clear words used in the statute. - Section 60(6) of the IBC does contemplate exclusion of the entire period during which the moratorium was in force in respect of corporate debtor in regard to a proceeding as contemplated therein at the hands of the corporate debtor. - SC
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Liability of respondents to pay its share of the Cash Calls - Appointment of nominee arbitrator - adjudication of the disputes that have arisen between the parties in relation to the Joint Operating Agreement - It is apparent from the above that NCLAT was of the view that BPRL’s appeal was in respect of claims arising post the ICD and could not be accepted by the Resolution Professional. Therefore, its grievance that the same had not been considered was not sustainable. - HC
Service Tax
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CENVAT Credit - duty paying invoices - While holding that credit of Service Tax cannot be availed just because M/s IGSSTPL had raised a debit note on the appellants without rendering any particular service and without raising any invoice on the appellants indicating categorically the details of the service provider, service recipient, the service provided and the remuneration thereof - the ends of justice will be met only if all the relevant issues are considered afresh by the adjudicating authority taking into account all the facts involved in the case. - AT
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CENVAT Credit - input services - Construction/ Works Contract Service for re-carpeting of road in their industrial estate - any construction and works contract if used for repair and renovation of existing factory, the same falls under inclusion clause of definition of Input Service, accordingly, the Cenvat credit is admissible - AT
Central Excise
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Refund of CENVAT Credit - the decision of the tribunal in the case of Nirma LTD. relied upon by the appellant is of no help to the appellant for the reason that the same related to demand of recovery of wrongly availed the cenvat credit. Whereas in the present case appellant have filed the refund claim and the refund was rightly decided on the merit that whether the appellant is entitled for cenvat credit or not. - AT
Case Laws:
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GST
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2022 (5) TMI 1138
Refund of IGST - Separate application was not filed - treatment of shipping bill as refund application - export of goods - whether Circular No. 37/018-Cus dated 09.10.2018 is ultra virus the provisions of CGST Act, 2017 or not - Section 16(3)(b) of the IGST Act read with Section 54 of the CGST Act and Rule 96 of the CGST Rules - HELD THAT:- A separate application for refund was not required to be filed. - the shipping bills would operate as a refund application as envisaged under Section 54 of the CGST Act read with Section 16 of the IGST Act, as also Rule 96(1) of the CGST Rules. Interest on Delayed Refund - HELD THAT:- Once the petitioner had taken steps to move the Court and notice was issued in the writ petition, the respondents were, in a sense, forewarned that statutory interest would kick-in - notice in this petition was issued on 01.10.2021, when the revenue was represented by counsel. In the given facts, in the very least, interest should accrue to the petitioner at the statutory rate i.e., 6% (simple) from 01.10.2021 - Petition allowed.
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2022 (5) TMI 1137
Validity of SCN - show cause notice challenged on the ground that the mandatory requirement of pre-show cause notice consultation - Rule 142 (1A) of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- The Court ruled that the requirement of pre-show cause notice consultation, as set forth in paragraph 5.0 of the master circular, was mandatory, as it was also in line with an earlier instruction dated 21.12.2015. It is noted that with effect from 15.10.2020 i.e., after the impugned show cause notice was issued, Rule 142(1A) has undergone a change, inasmuch as the word shall has been replaced with may . As to what would be the impact of the amendment need not be considered by us in this case, as admittedly the show cause notice was issued prior to 15.10.2020 i.e., on 21.05.2020 - having regard to the position which obtained prior to 15.10.2020, we would have to hold that pre-show cause notice consultation was mandatory under the unamended Rule 142 (1A). A voluntary statement cannot substitute a statutory notice, which is contemplated under Rule 142(1A) of the 2017 Rules - impugned show cause notice dated 21.05.2020 is set aside - petition allowed.
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2022 (5) TMI 1136
Refund on the exports made by the petitioner - Prescribed procedure - Mistake in GSTR-3B returns - details itself have not been received from GSTN portal to the designated system of the customs - input tax credit - zero rated supply - It is the specific case of the petitioner that though the petitioner had correctly declared the details in the monthly returns in Form GSTR-1 regarding the exports made by the petitioner on payment of tax by debiting the input tax credit, a mistake was committed by the petitioner in GSTR-3B under Rule 61(5) of the CGST Rules, 2017 - HELD THAT:- The refund of tax/duty paid on exports has been long recognized under the provisions of the Central Excise Act, 1944 r/w Central Excise Rules, 1944 and later under the provisions of the Central Excise Rules, 2002. These Rules have been incorporated under the GST regimes, except that under the GST regime, most of the proceedings are system driven as has been stated by the learned Senior Standing Counsel for the respondent. The export incentives have been given to encourage exports, so that there is inward remittance of foreign currency. The procedure prescribed under the aforesaid Rules is not intended to defeat such legitimate export incentives, if indeed on facts there is export on payment of integrated tax under the provisions of IGST Act, 2017 r/w CGST Act, 2017. The procedures under Rule 96 of CGST Rules, 2017 cannot be applied strictly to deny legitimate export incentives that are available to an exporters - the procedures prescribed under the aforesaid Rules should not be applied strictly so as to defeat the legitimate export incentives, which an exporter otherwise would have been entitled to but for the technicality involved in the system. This writ petition is disposed by directing the respondent to get the data directly from the petitioner and from their counterparts in the customs department. If indeed there was an export and a valid debit of tax by the petitioner on the exports made to foreign buyers, the refund shall be granted - petition disposed off.
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2022 (5) TMI 1135
Benefit of exemption from GST - Supply or not - definition of business u/s 2(17) - activities carried out by the appellant to the plot holders in terms of provisions of GIDC Act, 1962 - charges collected for the same as may be notified from time to time amounts to supply under Section 7 of the CGST Act, 2017 or not - Government entity - Sr.No.4 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended) - HELD THAT:- From the definition u/s 2(17) , it is seen that as per provision (a), activities mentioned therein would fall in category of business even if they are not for a pecuniary benefit. A transaction which is incidental or ancillary to sub-clause (a) falls under the scope of sub-clause (b) of Section 2(17) of CGST Act, 2017. Further, provision (i) which states any activity or transaction undertaken by Central Government, State Government or local authorities in which they are engaged as public authorities. The appellant has been established by the Legislature of Gujarat under the act and performs its functions in accordance with provisions contained in the Act. The appellant fulfills the first condition mentioned above. Further, Section 4 of GID Act defines the constitution of the appellant wherein it has been stated that the appellant consists of 12(twelve) directors out of which 3(three) shall be nominated by the State Government. Further, 6(six) directors would be nominated by State Government from amongst persons appearing to it. As per Section 4(2) of GID Act, the State Government shall appoint one director as Chairman and one as Vice-Chairman - the appellant is wholly owned corporation of the State Government and the State Government controls the function of appellant directly or indirectly. Thus, the second condition which is 90% or more participation of Government, by way of equity or control is fulfilled by the appellant. The activities viz. upliftment of oppressed people by providing them proper shelters, easy loans for business, encouraging their children for study by providing them scholarships etc are covered in planning for economic and social development . We are of view that the activity of appellant i.e. establishment, organization and development of industries and industrial areas and estates is not at all related to entry at Sr.No.3 of XII schedule of the Constitution of India. The appellant is not eligible to claim exemption under Sr.No.4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended) as they are not a governmental authority carrying out function entrusted to a municipality under article 243 W of the Constitution - the appellant does not fall under the category of State Government and also their functions are not covered under Twelfth Schedule of Article 243W of the Constitution. They are therefore not eligible for exemption benefit under Notification No.14/2017-Central Tax (Rate) dated 28.06.2017. The appellant does not fall under the category of State Government but is covered under the category Government Entity .
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2022 (5) TMI 1134
Input Tax Credit - Plant and Machinery or not - whether LNG jetties proposed to be built by the applicant can be said to be covered within expression plant and machinery as foundation to equipment, apparatus, machinery to be installed on it? - input tax credit of GST paid on inputs, input services as well as capital goods procured for the purpose of building the LNG jetties - Section 16 read with Section 17 of CGST Act - HELD THAT:- As per Explanation provided under Section 17 of the CGST Act, 2017 plant and machinery means apparatus, equipment and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both. Here the section 17 of CGST Act, 2017 provides for allowing input tax credit in respect of goods or services both received by a taxable person for construction of plant and machinery fixed to earth by foundation or structural supports that are used for making outward supply of goods or services or both. The input tax credit on construction of foundation is allowed if the same is used for fixing on it the plant and machinery and further the said plant and machinery should be used for making outward supply of goods or services or both. The foundation or structural support needs to be exclusively for fixing the plant and machinery on it. Allowing input tax credit on construction of foundation cannot be decided in isolation without deciding as to whether items to be fixed on it falls within the definition of plant and machinery and further the same would be used for making outward supply of goods or services or both. The appellant is not before us seeking ruling on allowing input tax credit on any plant and machinery including its foundation that will be used for making outward supply of goods or services or both - LNG Jetties are nothing but civil structures and civil structures are excluded from the definition of foundation and structural supports. The foundation that is allowed in the definition of plant and machinery is that which fixes the plant and machinery to the earth making it immovable. If certain portion of LNG jetties is used for directly fixing plant and machineries then it will not make jetties foundation for plant and machineries but they are only in the nature of civil structures. The appellant has also not produced any evidence to substantiate their claim that LNG jetties which according to them are foundation of plant and machineries will be used for outward supply of goods or services or both. The LNG Jetties being built by the appellant are not in the nature of plant and machinery being foundation for equipment, apparatus, machinery for re-gasification to be installed thereon. Therefore input tax credit on inputs, input services and capital goods for the purpose of building these LNG Jetties are not admissible.
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Income Tax
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2022 (5) TMI 1133
Taxpayer's grievance from High pitched scrutiny assessment - Conflicting orders passed by National Faceless Assessment Centre - High-pitched and unreasonable assessment orders - initiation of suitable administrative action against the erring officer in case where assessments are found by the local committee to be high-pitched - a personal affidavit on behalf of Union of India has been filed by Sri Tarun Bajaj, Revenue Secretary to the Government of India wherein date of circular in paragraph 10 has been wrongly mentioned as 25.4.2022 instead 23.4.2022 and copy of said circular dated 23.4.2022 has already been filed alongwith the personal affidavit dated 3.5.2022 - HELD THAT:- In instructions/ Circular F.No.225/290/2015-ITA-II, dated 09.11.2015 issued by the Government of India, Ministry of Finance, Department of Revenue (CBDT), the Central Board of Direct Taxes (for short CBDT ) itself has noted that it has been brought to the notice of Board that the tendency to frame high-pitched and unreasonable assessment orders is still persisting due to which grievances are being raised by the taxpayers. Such grievances not only reflect harassment of taxpayers but also lead to generation of unproductive work for Department as well as Appellate Authorities. Under the aforesaid instructions dated 09.11.2015, Local Committees were constituted to resolve quickly the taxpayers' grievances on account of high-pitched and unreasonable additions made by the Assessing Authorities. But it appears that tendency to frame high-pitched and unreasonable assessment orders is still persisting as also acknowledged by the respondents which resulted in issuance of instructions/ Circular dated 23.04.2022 under Section 119 of the Income Tax Act, 1961 so as to give it statutory backing. This Court is also frequently coming across the writ petitions in which impugned orders reflect nor observance of principles of natural justice and even reply submitted by assessee are not being considered by Assessing Officers under the faceless regime as well as non-faceless regime under the Act, 1961. Tax payers are one of the important pillars of economy of the country. Their harassment not only causes jolt to the economy of the country and employment but also comes in the way of economic policy of the government including the policy Ease of Doing Business . The instructions dated 23.04.2022 issued by the CBDT, in exercise of powers conferred under Section 119 of the Act, 1961 and statement made by the respondent No.1 in the aforequoted para-10 of the personal affidavit dated 19.05.2022, needs to be implemented truly and effectively. Therefore, necessary mandamus needs to be issued to the respondents. Writ petition is disposed off giving liberty to the petitioner to avail statutory remedy of appeal or revision under the Act, 1961 as he may be advised. All pending applications are disposed off. The respondent No.1 shall ensure that copies of instructions F.No.225/101/2021-ITA-II, Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes dated 23rd April, 2022 is circulated within a month from today to Tax Bar Associations at District Level, State Level and National Level for information along with the following contents of paragraph-10 of the personal affidavit dated 19.05.2022:- The said instruction also provides for initiation of suitable administrative action against the erring officer in case where assessments are found by the local committee to be high-pitched or where there is non-observance of principles of natural justice, non-application of mind or gross negligence of assessing officer/ Assessment Unit. The respondent No.1 shall ensure that the aforesaid instructions dated 23.04.2022 along with afore-quoted contents of paragraph-10 of the personal affidavit dated 19.05.2022 shall be displayed on the official website of the Income Tax Department for awareness and information of taxpayers and consultants. The constitution of Local Committees, procedure for submissions, receipts and disposal of grievances as provided in the aforesaid instructions dated 23.04.2022 and the above noted contents of the paragraph 10 of the personal affidavit dated 19.05.2022, for the purposes of publicity and awareness amongst taxpayers/ assessees to achieve the mandate of Clause 2.A.(iv) of the aforesaid instructions dated 23.04.2022, shall be published regularly for one year at least once in three months in two National Newspapers (one in English and the other in Hindi) and two State Level Newspapers (one in Hindi or Local Language and the other in English).
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2022 (5) TMI 1132
Ad-hoc disallowance being 75% of the Security Expenses claimed for the year - HELD THAT:- As following the decision of the coordinate bench of ITAT, Kolkata in assessee s own case [ 2016 (11) TMI 1307 - ITAT KOLKATA] we find it fit to delete the addition of ad-hoc disallowance in respect of Security Expenses disallowed for a sum being 75% of the Security Expenses claimed for the year. Appeal of assessee allowed.
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2022 (5) TMI 1131
Revision u/s 263 - As per CIT- A source of cash deposit in savings bank account which are alleged to be more than the assessee s business turnover - HELD THAT:- We find merit in the grounds raised by the assessee and note that the source of cash deposit in the bank account held with IDBI has been examined by the ld. AO and after being satisfied with the details has accepted the source of cash deposits. Even before ld. PCIT, the assessee has given complete details about the frequent withdrawal of cash from different bank accounts and the source of cash deposit in both the bank accounts held with IDBI Bank. Ld. PCIT failed to find any error in the details filed by the assessee. The finding of the ld. PCIT seems to be general even after the assessee has given the complete details and the source of cash deposit. It makes sense that the ld. AO was obligatory to conduct enquiries into the source of deposits by issuing notice u/s 133(6) of the Act. We do not find any merit in such finding of ld. PCIT because ld. AO issued notice u/s 133(6) of the Act, called information from the bank, perused the audited financial statements of both the sole proprietorship concerns and after being satisfied that since the assessee sells the goods to retailers in the small villages, towns and markets of Sambalpur, Jharsuguda, Rourkela, Cuttack etc., the source of cash deposit is from sale of goods and in some cases from withdrawal of cash from one bank account and deposit into another. PCIT erred in assuming jurisdiction u/s 263 of the Act and since proper enquiry have been conducted for the issue raised in the show cause notice and a permissible view has been taken by the ld. AO, the entire proceedings u/s 263 of the Act are bad in law. We, therefore, quash the impugned order passed by ld. PCIT and restore the order of the ld. AO passed u/s 143(3) of the Act dated 22.11.2016. Hence, all the grounds raised by the assessee are allowed.
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2022 (5) TMI 1130
Reopening of assessment u/s 147 - Eligibility of reasons to believe - addition u/s 68 - HELD THAT:- We find that assessee did not contest its grounds before the Ld. CIT(A) seriously as the assessee even did not file a copy of the reasons recorded before the Ld. CIT(A). In view of the above, in our opinion the Ld. CIT(A) is justified in rejecting the contention of the assessee that the Assessing Officer did not have any tangible material to reopen the assessment. Accordingly, we uphold the finding of the CIT(A) in absence of any rebuttal by the assessee. The grounds challengingly legality of the reassessment proceeding are accordingly dismissed. Addition u/s 68 in absence of documentary evidence filed by the assessee - We find that before the Assessing Officer the assessee failed to discharge its onus in terms of section 68 of the Act of filing documentary evidence in support of identity creditworthiness of the unsecured loan parties and genuineness of the transaction, thereafter the CIT(A) provided further opportunity and called for certain documents, however assessee failed in complying the queries raised by the CIT(A). In view of above facts and circumstances, we are of the opinion that Ld. CIT(A) is justified in upholding the addition, in absence of any rebuttal filed by the assessee before us. The grounds challenging the merit of the addition are accordingly dismissed. Appeal of assessee dismissed.
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2022 (5) TMI 1129
Addition of share application money as unexplained credit u/s.68 - Unexplained sources of receipt of share application money from 15 parties - HELD THAT:- As noted from the evidences that the assessee has filed complete ledger copies of share applicants and also filed other details including confirmations. According to us, these additional evidences filed by assessee will go to the root of the matter and it will help in adjudicating the issue and hence, keeping in mind the principles of natural justice, we admit these evidences and remand the matter back to the file of the AO for fresh adjudication. Accordingly, this issue of assessee s appeal is allowed for statistical purposes Addition by invoking the provisions of section 41(1) as against addition made u/s 68 by AO on sundry creditors - HELD THAT:- As assessee requested that the matter can go back to the file of the AO to decide the issue whether the additions are to be made u/s.68 or u/s.41(1) after considering the facts of the case, whether the sundry creditors are arising out of sales or not - we are of the view that in the above given facts and arguments, let the matter go back to the file of the AO for fresh adjudication as argued by both the sides. Hence, we set aside this issue in both the appeals i.e., Revenue as well as assessee, to the file of AO to re-adjudicate. Hence, both the appeals are allowed for statistical purposes.
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2022 (5) TMI 1128
Revision u/s 263 - interest and depreciation is not allowed on the profit estimated u/s.44AD - as per CIT relevance of interest and depreciation in the assessment and also the deletion of penalty by the AO are erroneous to the interest of the revenue - AO proceeded to estimate the income of the assessee as a percentage of gross receipts as per form 26AS in the absence of any evidence furnished by the assessee for expenditure incurred apart from depreciation and interest - AO estimated the income of the assessee at 10% on turnover as per 26AS - AO also initiated the penalty proceedings u/s. 271A on the assessee for not maintain books of accounts but later deleted the same - HELD THAT:- This is not the correct facts of the case, as the assessee has clearly submitted that 44AD is not applicable to him and this fact has been acknowledged by the AO in his order. The PCIT has substituted his view with that of the AO to state that the deduction of interest and depreciation is allowed u/s.44AD by the AO and concluded the order of the AO as erroneous. The learned AR drew our attention to para 4 and 5 of the AO s order where the AO has clearly acknowledged that the assessee has used the % specified in 44AD and that the said section is not applicable in assessee s case. It is because of this reason the AO has adopted a higher % for estimation viz., 10% which fact is not correctly noticed by the PCIT. PCIT has also misinterpreted the reliance placed by the assessee and considered by the AO in the case of Sammurai Techno Trading Co Ltd. [ 2009 (11) TMI 938 - KERALA HIGH COURT] PCIT had stated that when reliance is placed on this decision on the applicability of 44AD then the assessee ought not to have claimed interest and depreciation and the AO should have allowed the claim. This is a gross misconception on the part of the PCIT, since the assessee had relied on the decision only to justify the applicability of 8% as a profit estimate even when section 44AD is not applicable in his case. The AO though accepted the estimation proceeded to enhance the % to 10% after considering the facts and the details furnished. Therefore the conclusion of the PCIT that the order passed by the AO is erroneous is not tenable as the assumption of the PCIT that the AO has estimated the profits by applying the provisions of section 44AD and allowed interest and depreciation on the estimated profit, is not correct interpretation of AO s order. AO dropping the penalty proceedings initiated u/s.271B for non-maintenance of books of accounts being erroneous and prejudicial to the interest of the revenue - As decided in case of Siddappa B.T [ 2022 (4) TMI 535 - ITAT BANGALORE] with regard to the observation of Ld. PCIT that the dropping of penalty u/s 271A of the Act was on wrong appreciation of the judgment of the High Court, the Ld. A.R. contended that the Ld. PCIT should have passed separate order on this issue. However, the Ld. A.R. did not cite any authority in support of his contention. In any case we notice that the Ld. PCIT has given opportunity to the assessee in this regard. Accordingly, we do not find it necessary to interfere with observations made by Ld. PCIT on the second issue We notice that the Hon ble Tribunal has held a similar view in the case of K R Mahesh vs PCIT [ 2022 (1) TMI 682 - ITAT BANGALORE] Respectfully following the decision of the coordinate bench of the tribunal we do not find it necessary to interfere with the observations of the PCIT on the issue of dropping the penalty proceedings initiated u/s.271A by the AO - Appeal of assessee partly allowed.
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2022 (5) TMI 1127
Disallowance of sales tax (CGST and SGST) u/s. 43B - Tax audit report u/s. 44AB along with Form 3CD was filed and under column 26 of this report auditor has mentioned that CGST and SGST has not been paid before the due date of filing Income Tax return u/s. 139(1) - Assessee stated that the alleged sum of GST was not claimed as an expenditure in the profit and loss a/c and therefore, disallowance u/s. 43B is not called for - HELD THAT:- The assessee has consistently claimed that the said sum has not been claimed as an expenditure in the profit and loss a/c and the same is mentioned under the current liabilities head of the balance sheet as on 31.03.2018. This fact is verifiable from the audited profit and loss a/c and balance sheet. The assessee has not routed GST through its profit and loss a/c nor it has claimed as an expenditure on any purchases made during the year in its profit and loss a/c nor any expenditure has been claimed towards any excess GST paid during the year. The audited balance sheet shows that the alleged sum was a current liability which the assessee has to pay with the Government treasury in the due course as per the rules and regulations governing GST. This observation of the Ld. CIT(A) that provisions of section 43B is made to ensure that payment to the Government should be paid in time and the appellant should not use the money due to Government is devoid of merit as the issue in hand relates to computation of income earned by the assessee and claim of certain expenditures as enumerated in section 43B of the Act which can be claimed only on actual payment basis. The liability to pay the outstanding GST and the process of recovery of such amount and other penal provisions for late payment of GST are governed by the respective rules and regulations provided under Goods and Services Tax Act. Under the given facts and circumstances of the case and also respectfully following the consistent view taken by this Tribunal in the case of Kankani construction (P) Ltd. [ 2018 (1) TMI 1684 - ITAT KOLKATA] and M/s. TSG Global Services Pvt. Ltd. [ 2020 (7) TMI 777 - ITAT KOLKATA ] are of the considered view that since the assessee has not claimed the alleged amount as an expenditure in the profit and loss a/c, no disallowance could be made u/s. 43B of the Act. We accordingly reverse the findings of the Ld. CIT(A), delete the disallowance u/s. 43B and allow the grounds of appeal raised by the assessee.
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2022 (5) TMI 1126
Net profit estimation - CIT(A) re-computing the net profit of the assessee - AO in the absence of books of account and documents and required verification etc. re-computed the net profits of the assessee against nil income by disallowing the deduction claimed by the assessee u/s. 80IC - HELD THAT:- We find that the Tribunal in the bunch of appeals with lead case DCIT vs M/s. Parasnath Coke Industries [ 2022 (3) TMI 1375 - ITAT KOLKATA] has restored the matters for de novo assessment. Thus facts and issues involved in the captioned appeals being identical to the aforesaid case and as also requested by both the ld. representatives of the parties, the matter in these appeals is also restored to the file of the AO for de novo assessment in each case.
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2022 (5) TMI 1125
Revision u/s 263 - assessee failed to prove her claim for expenditure incurred so as to claim cost of improvement on the basis of vouchers furnished by the assessee which does not carry signatures and basic details - As per CIT vouchers for cost of improvement were not verified at all by the AO - HELD THAT:- Though the assessee has filed written arguments vide her letter dated 15.05.2018 no material evidence for the claim of cost of improvement, construction, redevelopment expenditure have been placed before us. In the absence of any details, we are not in a position to interfere with the order passed by the ld.CIT, invoking provisions of section 263 of the Act. Thus, the grounds raised by the assessee are hereby rejected.
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2022 (5) TMI 1106
Reopening of assessment u/s 147 - Validity of Order under clause (d) of Section 148A - non consideration of petitioner s response to the initial notice - HELD THAT:- As the impugned order under clause (d) of Section 148A of the Act was issued on April 1, 2022 without taking the petitioner s response to the initial notice into consideration. The same would be apparent from the penultimate paragraph of the impugned notice of April 1, 2022 which records that no reply was furnished by the assessee in response to the notice under Section 148A(b) of the Act. Since there appears to be an error apparent on the face of the impugned order passed under Section 148A(d) of the Act dated April 1, 2022 and the Department failed to consider the assessee s written response that was received by the Department on March 30, 2022, the impugned order of April 1, 2022 cannot be sustained and the same is set aside. As a consequence, the notice under Section 148 of the Act also dated April 1, 2022 is quashed with liberty to the Department to issue a fresh notice in accordance with law, if the Department is so entitled. It will now be open to the Department to consider the matter afresh by taking into account the petitioning assessee s response of March 30, 2022 before taking further steps in the matter in accordance with law.
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2022 (5) TMI 1105
Penalty proceedings issued u/s 274 read with Section 271AAC(1) - No reply to the show cause notice and draft assessment order given - violation of principle of natural justice - difficulties due to Covid-19 pandemic - HELD THAT:- This Court is of the view that there has been violation of principle of natural justice - This Court also takes judicial notice of the difficulties faced by the society, in general, and the Assessee in particular, in filing replies to show cause notices. This Court is further of the view that the filing of earlier replies is of no relevance as the Petitioner had an independent statutory right to file a reply to the show cause notice and draft assessment order. Consequently, in the present case there has been a violation of principle of natural justice. This Court is further of the opinion that an alternative remedy is not a bar to the exercise of the writ jurisdiction of the High Court if the writ petition is filed for enforcement of a fundamental right protected by Part III of the Constitution; where there has been a violation of the principles of natural justice; where the order or the proceedings are wholly without jurisdiction; or when the vires of a legislation is challenged. Accordingly, the present writ petition is maintainable. Consequently, the impugned assessment order, notice of demand and notice for initiating penalty proceedings, all dated 23rd May 2021 for the Assessment Year 2018-19 are set aside. The Petitioner is directed to file its reply to the show cause notice and the draft assessment order dated 22 nd April, 2021 within two weeks - The Respondent/National Faceless Assessment Centre is directed to pass the fresh assessment order within four weeks thereafter, in accordance with law.
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2022 (5) TMI 1104
Disallowing commission expenses u/s 37 - commercial expediency - commission paid were either Directors of the Company or their relatives - allowable business expenditure or not? - HELD THAT:- At the outset, it requires to be noticed that the supply of IOF was not the line of business of the Appellant. It was no doubt required to make the supply, pursuant to an export order, in a short span of time. Nevertheless, claiming that each of the seven persons to whom commission was paid actually had the expertise to help the Appellant procuring the IOF from different sources appears to be stretching things a bit too far. It is not a sheer coincidence that three of the seven persons to whom commission was paid happened to be Directors of the Appellant and the remaining four were relatives of such Directors. Particularly, with the Appellant not being able to demonstrate their special expertise in procuring IOF from the markets in India, the AO appears to be justified in disallowing the commission insofar as it was paid to the said seven persons. The AO has been objective on the issue As all the persons to whom commission was paid were either Directors of the Company or their relatives. None of them is shown to have any expertise in procuring IOF from the Indian markets for enabling the Appellant to meet the purchase order placed on it for IOF. The amounts paid as commission were also not insubstantial. In the facts of the case, it cannot be said that the AO s decision to disallow part of the payment towards commission was unreasonably arrived at. The test of commercial expediency was indeed applied. Even from the point of view of a businessman, it does appear to this Court that the commission amount which was disallowed by the AO cannot be said to be for the purpose of business of the Appellant. Consequently, the question framed by this Court is answered in the affirmative i.e. in favour of the Department and against the Assessee.
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2022 (5) TMI 1103
TP Adjustment - MAP Settlement based on the TP adjustments - whether it is lawful and permissible for the respondents 'Tax authorities' to defer implementation of the MAP Settlement, and to give effect to the terms of such resolution, insofar as the assessment year 2013-14, on the ground that the petitioner did not disclose the Indian TP adjustments for that year? - Whether the respondents must be directed to take measures to refund the amounts based on the correlative relief as per Annexure-D with permissible interest within a certain timeframe? - HELD THAT:- As after the MAP is processed on a reference from US-CA under the provisions of the omitted Rule 44H, the Indian-CA has commenced discussions and negotiations are concluded on the cost base, markup percentage and brand royalty payments on the basis of the US TP adjustments. If the Indian- CA, after the amendment with effect from 06.05.2020, has proceeded with the MAP according to the amended Rules, and if the Communication as per Annexure D is issued, with necessary approvals and conclusion of MA but without calling for details, the respondents cannot now contend that the provisions of unamended Rule 44G must apply and it must defer the implementation of the concluded MAP because the petitioner did not invite the attention of the Indian-CA to the Indian TP adjustments. The cost base, markup percentage and brand royalty payments are discussed and settlement is arrived at after due process. There could be consequential benefit to the Petitioner with loss of Revenue to the Department. However, the provisions of the amended Rule 44G(5) stipulate that there shall not be a decrease in the income or increase in the loss of an assessee in the return of income of a given year, if the MAP is invoked on account of action taken by any income tax authority in India. As rightly, argued by Sri S. Ganesh, this stipulation by converse excludes this rigor when MAP is because of the action taken by an income tax authority of the other contracting country. It is settled law that the terms of DTAA will have precedence even over the provisions of the I-T Act when it is beneficial to an assessee because of the provisions of section 90(2) of the I-T act. An useful reference in this regard could be made to the decisions of division bench of this Court in Wipro Ltd and others v the Deputy Commissioner of Income Tax and others [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] and also in Director of Income Tax v. Infrasoft Ltd [ 2013 (11) TMI 1382 - DELHI HIGH COURT] based on the decision of the Hon ble Supreme Court in Union of India and another v. Azadi Bachao Andolan and another [ 2003 (10) TMI 5 - SUPREME COURT] The petitioner in this case, for the reasons discussed and the provisions of amended Rule 44G(5), would be entitled to seek precedence to the MAP Settlement. This is also so because of article 27(2) of the DTAA. If the petitioner is entitled for correlative benefits, and consequentially refund, as per the communication dated 06.10.2020 [Annexure-D] and the benefits are withheld, even for those undisputed assessment years viz., 2010-11 to 2012-13, the respondents must not only amend the assessment orders but also take necessary measures to refund the appropriate amount in terms of the correlative benefits along with interest permissible, and there would be no justifiable reason for denying the same. The petitioner, despite the MAP settlement and the benefit pursuant thereto, has not been given the same and therefore, the respondents must be directed to take necessary measures within a reasonable time. Hence, the questions framed for consideration is answered in favour of the petitioner and against the respondents. ORDER - The petition is allowed. It is declared that the respondents cannot defer implementing or giving effect to the MAP Settlement as per Annexure D either for the assessment years 2010-11 to 2012-13, which is not contested, or for the subsequent assessment year 2013- 14. The respondents are directed to take necessary measures to amend the assessment orders for the assessment years 2010-11 to 2013-14 in conformity with the MAP settlement and allow refund as aforesaid with permissible interest in accordance with the prescribed procedure therefor.
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2022 (5) TMI 1102
Assessment under Faceless Assessment Scheme u/s 144B - petitioner / assessee has to upload the documents only through the web portal - as submitted sincere attempt has been made by the petitioner to upload the documents, due to some technical glitches in the web portal, the petitioner/assessee could not upload the documents and reply - HELD THAT:- It is the admitted case on the part of the Revenue that, on the last date ie., on 11.06.2021, which was given to the petitioner to reply ie., upto which the web portal of the respondent was not functioning because of technical glitches. This has been admitted by the communication of the Revenue dated 12.06.2021. Subsequently also, though it is stated by the learned Standing Counsel that, sometime in July 2021 it started functioning, it is the case of the petitioner that till September 2021, it was not working. Assuming that the web portal started functioning from September 2021, from which date exactly it started working without any glitches could not be ascertained now and moreover, in the meanwhile since the order of assessment has been passed on 14.07.2021, without waiting for the reply to be submitted by the petitioner after the web portal started functioning, the said order which is now impugned herein, in the considered opinion of this Court, is certainly vitiated because the chance of giving reply by the petitioner since has been denied, or the Revenue has not waited till the technical glitches are resolved, enabling the petitioner to make a reply before which as the Revenue has come forward to pass the order on 14.07.2021, this Court has no hesitation to hold that the said order does not stand in the legal scrutiny. WP allowed. The matter is remitted back to the respondents for reconsideration. While reconsidering the same, the respondents shall give a fresh notice to the petitioner giving time to reply either through E-assessment system under Section 144B.
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2022 (5) TMI 1101
Assessment u/s 153A - unexplained addition u/s 69 - proof of incriminatory material seized during the search - HELD THAT:- In the present case the addition made by the Assessing Officer in the absence of incriminatory material seized during the search, therefore, respectfully following the ratio laid down in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] i.e - in the absence of incriminating material seized during the search from the assessee no addition can be made, we inclined to allow the grounds of appeal and quash the Orders passed by the lower authorities, resultantly, the addition stands deleted. - Decided in favour of assessee.
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2022 (5) TMI 1100
Late fees under 234E - appeal remedy for late fee u/s 234E - assessee had filed belatedly TDS statements in Form No.24Q and 26Q for various quarters - HELD THAT:- AO cannot make any adjustment other than one prescribed in section 200A of the Act. Prior to 01.06.2015, there was no enabling provision in section 200A of the Act for making adjustment in respect of statement filed by the assessee with regard to tax deducted at source by levying fees u/s 234E of the Act. The Parliament for the first time enabled the AO to make adjustment by levying fees u/s 234E of the Act with effect from 01.06.2015. In the case of Olari Little Flower Kuries (P.) Ltd. v. Union of India [ 2022 (2) TMI 1061 - KERALAHIGH COURT] has held that since provision of section 200A was amended to enable computation of fee payable u/s 234E at the time of processing of return and said amendment came into effect from 01.06.2015 (in view of CBDT Circular No.19 of 2015 dated 17.11.2015) intimations issued u/s 200A of the I.T.Act dealing with fee for belated filing of TDS returns for the period prior to 01.06.2015 were invalid and were to be set aside. In the instant case, the assessee submits that he was advised that there is no appeal remedy for late fee u/s 234E of the I.T.Act. It is further stated that the decision in the case of Sri Fateharaj Singhvi v. Union of India Ors. [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] declaring that late fee u/s 234E was bad in law came to the notice of the assessee only in September 2018. The pleae of the assessee that downloading of the intimation and filing an appeal for which he has received legal advise that it is not appealable order cannot be totally brushed aside. The assessee came to know of the judgment of the Hon ble Karnataka High Court in the case of Sri Fateharaj Singhvi v. Union of India Ors. (supra) only in September 2018, and thereafter, he filed appeal before the first appellate authority immediately. Since on merits, the issue is covered in favour of the assessee
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2022 (5) TMI 1099
Disallowance u/s 14A - Expenditure incurred on exempt income earned - HELD THAT:- In the light of the decision rendered by Hon ble Jurisdictional High Court in the case of Nirved Traders (P.) Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] disallowance under section 14A of the IT Act cannot be more than the exempt income earned by the Assessee during the assessment year in question. In this case, there is no dispute that the dividend i.e. the exempt income earned by the Assessee during the relevant Assessment Year, was only Rs. 1,58,998/-. Accordingly, the disallowance in this case could not have exceeded Rs. 1, 58,998/-. It is only because the Assessee voluntarily offered a disallowance to the extent of Rs. 2, 52,536/-, we confirm disallowance to the extent of Rs. 2, 52,536/-. Decided in favour of the Assessee. Loss on account of intra-day trading in the shares - Disallowance of loss treating the same as speculation loss - HELD THAT:- We are in agreement with the findings of AO and Ld. CIT (A) that the loss suffered by the appellant on account of intraday trading in the shares of Indusind Bank (Without Delivery) was speculative in nature because the transactions were settled without actual delivery of the shares. As explained by the appellant BEFORE US In this connection, the assessee specifically relies on the exception created under the proviso to section 43(5), wherein it is provided under clause (b) that a contract in respect of stock and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations is not to be deemed as speculative. Discussion of section 73 is not relevant here, as first of all the nature of transaction has to be ascertained by virtue of section 43(5) and then only question of set-off/ carry forward as defined in section 73 will arise. The provisions of Section 43(5) were amended by the Finance Act, 2005. Prior to the amendment, Section 43(5) defined a 'speculative transaction' to mean a transaction in which a contract for the purchase or the sale of any commodity including stocks and shares is settled otherwise than by the actual delivery or transfer of the commodity or scrip. The impact of the amendment by the Finance Act, 2005 was that an eligible transaction on a recognised stock exchange in respect of trading in derivatives was deemed not to be a speculative transaction. With effect from 1 April 2006, trading in derivatives was by a deeming fiction not regarded as a speculative transaction when it was carried out on a recognized stock exchange. It clearly indicates that the transaction mentioned in section 43(5) (supra) and delivery based trading alone can t be treated as speculative transaction. Where as in the case of assessee neither he entered into the transaction in the nature of F O nor delivery based trading, rather he settled his transaction without delivery by placing the order of purchase and sales. The consequence is that in A.Y. 2010-2011, the loss which occurred to the assessee as a result of its activity of intraday trading in shares, without delivery (a loss arising from the business of speculation) was not eligible of being set off against the profits which it had earned against the business of futures and options/trading in shares with delivery, since the latter did not constitute profits and gains of a speculative business. [Re: Snowtex Investment Ltd. vs. PCIT [ 2019 (5) TMI 1165 - SUPREME COURT ]. - Decided against assessee.
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2022 (5) TMI 1098
Assumption of jurisdiction u/s.153A / 153C - Whether no search material was found or seized during the course of search? - Addition u/s 68 - HELD THAT:- We noted that the assessee before AO as well as before CIT(A) could not explain how the transactions recorded in the hard disk which was seized vide Annexure ANN/SR/RJ/Hard Disc/S representing inconsistency in the pattern of expenditure, additions of cash credit, sundry loan creditors u/s.68 of the Act and bogus purchases. The hard disk containing incomplete tally package and recording of the above mentioned entries was recovered during the course of search throws light on the above additions and these are not rebutted by the assessee before either of the authorities and even now before us. AO has brought on record adequate material that the assessee has not maintained books of account in term of section 44AA of the Act and has not got them audited u/s.44AB of the Act and filed with the AO - this is uncontroverted claim that the hard disk contains incriminating material having bearing on the determination of income on account of unaccounted indirect expenditure, peak cash credits, sundry loan creditors added u/s.68 of the Act, bogus purchases and unexplained investment in property. We find that this is a common feature in all the assessees cases and once this is the fact, we noted that the AO has rightly assumed jurisdiction u/s.153A or 153C - Decided against assessee. Addition of indirect expenditure - AO estimated the expenditure and disallowed 25% of the expenditure - CIT(A) restricted the disallowance at 10% - HELD THAT:- As assessee has made a claim before the AO and before CIT(A) that the accounts of the group concern is statutorily audited and the respective business owners i.e., the assessee, his wife and his mother have duly filed Form No.3CB 3CD, as audited by the auditor. It was claimed that the books of account of the assessee is statutorily audited and duly filed by the assessee. The assessee before CIT(A) claimed that the AO never questioned the statutory audit and disallowance made in regard to indirect expenditure on estimate basis. We noted that the CIT(A) simply estimated the disallowance at 10% as against estimated by AO at 25%. But, now the question arises that the assessee is unable to produce the books of account and even now before us, despite specific opportunities given, no books of account or audited accounts were produced. Even, the assessee on merits has not made any argument or has not made any claim. In such circumstances, we have no hesitation in confirming the action of the AO and that of the CIT(A). Hence, the order of CIT(A) is confirmed and this issue of assessee s appeals is dismissed. Addition of incentives received by assessee in assessment years - HELD THAT:- As noted that the assessee is not maintaining any books of account and the information received is from seized hard disk containing tally details of purchases and sales seized from the business premises of the assessee pursuant to the search u/s.132 of the Act on 22.05.2012. Now, before us assessee has not made any argument in regard to the merits of the case, whereas the ld.CIT-DR relied on the order of CIT(A). Once the assessee has not maintained any books of account nor any bills and vouchers and despite number of opportunities given to him to produce the accounts, he could not do so and hence, we have no alternative except to confirm the findings of the CIT(A). The issue in this appeal of assessee in regard to addition of incentive is confirmed. Addition of peak cash credit of bank statement as unexplained cash credits - HELD THAT:- Before us, assessee has not made any argument except that the cash deposit in South Indian Bank is on account of sale proceeds. But on query from the Bench, could not produce any books of account or evidences or source of cash deposit in the bank. Once there is no books of account, how the assessee can make a claim that the cash deposits are arising out of sale proceeds or he could not link the same with the sales made by producing any evidence. In such circumstances, we have no alternative except to confirm the addition. This issue of assessee s appeal is dismissed. Addition on account of transfer from personal books and loan - HELD THAT:- We noted that the CIT(A) has already deleted the addition made on account of loan from Shri Dharmichand Jain to the extent of Rs.6 lakhs while dealing with the issue of sundry creditors as unexplained cash credit u/s.68 of the Act. The CIT(A) observed in para 16.3 that this Rs.6 lakhs loan has already been confirmed as addition as sundry loan creditor in assessment year 2007-08 and now this was deleted for giving credit to the extent of Rs.6 lakhs as impugned investment of Rs.7.5 lakhs in M/s. Shree Battery House, as there is source to that extent is available with the assessee. CIT(A) in the absence of same confirmed the balance Rs.1.5 lakhs as unexplained investment from unaccounted income. Hence, we find no infirmity in the order of CIT(A) and hence, this issue of assessee s appeal is dismissed. Addition of unexplained credit u/s.68 of the Act received from Shri Dharmichand Jain - HELD THAT:- We noted that this amount of Rs.6 lakhs from Shri Dharmichand Jain claimed by assessee but no details were filed to prove the identity, creditworthiness and genuineness of transaction. Even now before us the assessee could not discharge his onus to prove the transaction and therefore, we uphold the order of CIT(A) confirming the addition of Rs.6 lakhs. It is to be noted that this Rs.6 lakhs is doubly added by AO and we have already considered this issue in para 8 where this addition was deleted by CIT(A) and this deletion was confirmed but we sustain this addition here only. Hence, this is a single addition and not double addition. Disallowance of claim of deduction on the claim of LIC premium paid - AO disallowed the claim of deduction u/s.80C on account of LIC premium paid in the absence of any evidence - HELD THAT:- As assessee could not produce any evidence or no argument was made in this regard and hence, the same is dismissed. This issue of assessee s appeals is dismissed. Estimation of profit@ 10% on sale of old batteries i.e., trading in scrap - assessee before AO contended that the profit margin on sale of old batteries is in the range of 0.5% to 1% and accordingly the estimate should have been made. Apart from this, the assessee has not produced any evidence or has not contested the addition. The CIT(A) reduced the estimation of profit and estimated the profit rate for all the years at 10% - HELD THAT:- Before us, the ld.counsel for the assessee has not argued on merits or plea was made as regards to reduction in profit rate, hence we find no infirmity in the order of CIT(A) and the same is confirmed. The order of CIT(A) is confirmed on this issue. Accordingly, this issue of assessee s appeals for assessment years 2008-09 to 2010-11 is dismissed. Unexplained investment in property - AO noted that the investment made in these properties is out of alleged gift receipt - assessee failed to explain the sources of persons who gifted the amount and also evidences to prove the creditworthiness of the donor, genuineness of transaction and the identity of the donors - HELD THAT:- Now before us assessee has not made any argument on merits and has not tried to file any evidences to prove the genuineness of gift or cash credit. Hence, we find no infirmity in the order of CIT(A) and the same is confirmed. This issue of assessee s appeal is dismissed. Addition of incentives received by assessee - AO during scrutiny assessment called for ledger account of the assessee in the books of Exide Industries and noted that the assessee has received incentives apart from cash discounts while purchasing the batteries from M/s. Exide Industries. But these incentives were not accounted for in its books of account - HELD THAT:- As now before us, the ld.counsel for the assessee has not made any argument or not produced any evidences for deletion of addition of incentives received by assessee.This issue of assessee s appeal is dismissed. Penalty u/s.271A for non-maintenance of books of account - AO levied penalty despite the fact that the assessee contended that the assessee have maintained books of accounts and got them audited u/s.44AB - HELD THAT:- We noted that only seized material found during the course of search is a hard disk i.e., document in the form of incomplete tally package inventories as ANN/SR/RJ/hard disc/S dated 22.5.2012 having bearing on the determination of the total income were recovered. This is incomplete tally package of documents i.e., sales, purchase but no books of account are maintained. Even now before us, the ld.counsel admitted that there is no books of account and assessee could not produce any books of account before us despite specific opportunity given. Hence, we are of the view that the lower authorities have rightly levied penalty for non-maintenance of books of account u/s.271A .
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2022 (5) TMI 1097
Maintainability of appeal - low tax effect - disallowance on account of bogus short term capital loss - applicability of Circular No. 23/2019 dated 06.09.2019 and Office Memorandum No. 279 dated 16.09.2019 to appeals filed by the Department prior to 16.09.2019 - HELD THAT:- There is nothing in the aforesaid circulars to suggest that they shall have retrospective effect. Thus, ultimately, the Hon ble Court concluded that the exceptions to CBDT Circular No.17/2019 dated 08.08.2019 as provided in CBDT Circular No. 23/2019 dated 06.09.2019 read along with Office Memorandum No. 279 dated 16.09.2019 would be applicable to appeals filed by the Revenue on or after 16.09.2019. The view expressed by the Hon ble Court, as aforesaid, was reiterated in the other decisions cited before us by learned counsel for the assessee. DR failed to bring to our notice any decision of any other High Court or Hon ble Supreme Court expressing a view contrary to the view expressed by the Hon ble Gujarat High Court in the aforesaid decision. Since, these decisions are directly on the issue and are the only decisions of any High Court dealing with issue, adhering to the norms of judicial discipline, we respectfully follow the view expressed in these decisions. Therefore, we hold that the present appeal having been filed by the Revenue prior to 16.09.2019, the date on which, Office Memorandum No. 279 dated 16.09.2019 was issued by the Board by way of a special order, the exceptions provided therein would not apply. Thus, assessee s appeal would be covered under CBDT Circular No.17/2019 dated 08.08.2019. Since, the tax effect on the amount disputed by the Revenue in the present appeal is below the monetary limit of Rs.50 lakhs, which learned Departmental Representative accepts, the present appeal of the Revenue is not maintainable, hence, deemed to have been withdrawn. Accordingly, the appeal is dismissed as withdrawn.
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2022 (5) TMI 1096
Nature of receipt - subsidy received in the form of octroi refund as revenue receipts invoking the provisions of section 28(iv) - Revenue or capital receipt - subsidy was received from the Government of Maharashtra under the Package Scheme of Incentives, 2007 - HELD THAT:- The purpose test has been reiterated by the Hon'ble Supreme Court in CIT v. Ponni Sugars Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT] by holding that the relevant consideration should be the purpose of subsidy and not its source or mode or payment. When we apply such a test on the facts and circumstances of the case, it demonstrably emerges that the purpose of subsidy is industrial growth; it is linked with the setting up of industrial units; and the amount of subsidy is linked with the amount of investment made in the eligible unit. Simply because the subsidy has been disbursed in the form of refund of VAT and CST, it will not alter the purpose of granting the subsidy, which is nothing but establishment of new industrial units in less developed areas of the State. The authorities below have been swayed by the fact that the subsidy was granted post commencement and is in the nature of refund of VAT and CST and overlooked the purpose of its granting, which is nothing but momentum in industrial pace in less developed parts of the State. Testing the factual panorama on the touchstone of the ratio laid down by the Hon'ble Supreme Court in the above referred cases, we are of the considered opinion that the subsidy is a capital receipt and not chargeable to tax. At this stage, it is relevant to mention that we are concerned with the A.Y. 2014-15. The Finance Act, 2015 has inserted clause (xviii) to section 2(24) w.e.f. 1-04-2016 providing that the assistance in the form of subsidy or grant of cash incentives etc., other than the subsidy which has been taken into consideration in determining the actual cost of the asset in terms of Explanation 10 to section 43(1), shall be considered as an item of income chargeable to tax. Since the amended provision of section 2(24)(xviii) is not applicable to the year under consideration, the sequitur is that the subsidy received by the assessee would not form part of its total income. Since the subsidy was granted actually as incentives for encouraging the dispersal of industries to the less developed areas of the State of Maharashtra, the subsidy cannot be treated as revenue receipt. As regards to the applicability of provisions of section 28(iv) of the Act, this envisages the value of entire benefit, whether convertible to money or not, which means the benefits have to be in the kind, the monetary benefits are not covered by the said provisions of the Act - Decided in favour of assessee.
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2022 (5) TMI 1095
Addition u/s 68 - onus to prove - addition made on Non discharge of identity of the creditors, genuineness of the transactions and creditworthiness of the creditors - HELD THAT:- In the present case, the assessee has discharged a burden by proving identity of the creditors, genuineness of the transactions and creditworthiness of the creditors. Therefore, the Ld. CIT(A) by considering all the facts and circumstances of the case, the addition is deleted. Recently, the Hon ble Bombay High Court in Income Tax Appeal in the case of PCIT vs. Ami Industries (India) P. Ltd. [ 2020 (2) TMI 269 - BOMBAY HIGH COURT] has considered the decision of the Hon ble Supreme Court in the case of PCIT v. NRA Iron Steel (P) Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] , and observed that the first appellate authority had returned a clear finding of fact that assessee had discharged its onus of proving identity of the creditors, genuineness of the transactions and credit worthiness of the creditors which finding of fact stood affirmed by the Tribunal. There is, thus, concurrent findings of fact by the two lower authorities, we confirmed the order of the Tribunal. In present case, the relevant assessment year is 2012-13, which is pre-amendment period to the first proviso to section 68 of the Act introduced by Finance Act, 2012 w.e.f. 01.04.2013 as well as the assessee has placed on record the name, address, PAN, confirmations and genuineness of the transaction through banking channel, thereby, the ld. CIT(A) has deleted the addition made under section - Decided in favour of assessee.
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2022 (5) TMI 1094
Addition u/s 68 - Bogus unsecured loan - Investigation wing of Kolkata establishes that the loan creditors are accommodation entry provider - onus to prove - paper concerns only for providing accommodation entry for commission - HELD THAT:- In closely held companies/firm where unsecured loan is raised from close knit circles mostly known to partners/owners, onus required under section 68 is very heavy on such firms to prove identity as well as creditworthiness of lenders and genuineness of transaction; mere submission of name and address of creditor, income tax returns, Balance Sheet/statement of affairs of creditor and bank statement of creditor is not sufficient. On perusal of the bank account of the lenders it is revealed that average bank balance maintained by lender in its aforesaid bank account is a very meagre amount. Thus average bank balance maintained by lenders in the aforesaid bank account are very meagre sum, while huge amounts of money suddenly comes into this bank accounts which immediately finds its exit into some other bank accounts, which is another peculiar feature of a shell company engaged in laundering money by providing bogus accommodation entries through a web of shell companies and bank accounts. The orders of the authorities below have been carefully gone through and the assessee is not able to discharge its onus as is casted under section 68 as the assessee could not prove genuineness of the unsecured loan taken and underneath sources for making these investments. The assessee no doubt has produced bank statement/confirmation of the entities from which the money found its place in the bank account of the assessee to be further used in its business but the genuineness of these transactions could not be proved as the assessee did not bring on record cogent evidences to substantiate the unsecured loans taken. Merely bringing confirmations and showing that the payments were made through banking channel is not sufficient. As discussed above about the specifics of lender s financials it can be reasonably concluded that out of three essential ingredients, i.e. Identity of Creditor, Genuineness of the Transaction and Creditworthiness of the lender, only Identity can be assumed to be established. Rest of the 2 essential elements, i.e. Genuineness and Creditworthiness not established. Hence Addition made by AO u/s. 68 of the Act upheld and order of Ld. CIT (A) is set-aside. Accordingly, ground no.1 to 4 of the Revenue is allowed Addition u/s 69A - on-money received on sale of flats by the appellant - estimation of profit - CIT held no undisclosed cash belonging to the appellant was found during course of survey and on considering the statements recorded during course of survey u/s 131 of the working partners Shri Ghanshyam Sompura and Shri. Govind Patel who had stated of having incurred the labour payments, extra work, etc and on considering the other documents related to expenses found during survey, hold that it would be fair and reasonable to estimate the profit.- HELD THAT:- As considering the fact that the appellant s housing project is of re-development project of 14 flats and since no undisclosed cash was found during course of survey and on considering the profit disclosed by the appellant on housing project of 5.47%, Ld. CIT (A) correctly hold that it would be reasonable to estimate the profit @ 10 % on the on-money/undisclosed consideration.
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2022 (5) TMI 1093
Revision u/s 263 by CIT - Case selected for scrutiny through CASS - assessee has made fresh investment in unlisted equity shares of two companies and observed that though the source of fund is out of business receipt, but the officer has not conducted any verification/enquiry to verify the veracity of the claim - HELD THAT:- Assessee was selected for limited scrutiny for two issues namely sales turnover mismatch and investment in unlisted equity shares . In the body of the assessment order there is no discussion about the reasons for selection for limited scrutiny nor there is any discussion of the issues raised before us. Though there is a reply filed by the assessee before the ld. PCIT stating that the required information were filed but they are not sufficient to prove that whether ld. AO raised sufficient enquiry about the investment in unlisted equity shares. In the case of limited scrutiny assessment, AO is duty bound to examine the details minutely which are linked to the reasons for limited scrutiny. Records do not contain the copy of notice issued u/s 142(1) of the Act, replies filed by the assessee, specific questions raised by the ld. AO referring to the investment in unlisted equity shares and the source of such investment. In the impugned order, ld. PCIT has restored the issue to the file of the ld. AO for examining the above referred issue of investment in unlisted equity shares by invoking the powers u/s 263 and restoring the file back to the ld. AO for examining the same in light of the documentary evidences to be filed by the assessee. We, therefore, under the given facts and circumstances of the case are of the considered view that the ld. PCIT has rightly assumed jurisdiction u/s 263 of the Act and restored the issue of examination of investment in unlisted equity shares of two companies to the file of ld. AO. Accordingly, all the grounds raised by the assessee are dismissed.
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2022 (5) TMI 1092
Penalty u/s 271(1)(c) - accrual of income for assessee society - Contribution towards Kalyan Fund, Road Development Fund, Land Development Fund and Charitable Trust Fund - assessee society does not pay full amount to its members but deducts certain amount towards various funds i.e. welfare fund and Hospital fund etc.and these amounts were in the nature of trading receipts and therefore liable to tax and ought to have been shown as income of the assessee - HELD THAT:- It is abundantly clear from the judgment of the Hon`ble Supreme in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd [ 2004 (9) TMI 6 - SUPREME COURT] that if it is found that certain amounts were deducted by assessee society out of price payable to its members who supplied raw material, conclusion does not necessarily follow that all such realizations get impressed with character of revenue receipts, giving rise to taxable income in the hands of the assessee. Therefore,Contribution towards Kalyan Fund, Road Development Fund, Land Development Fund and Charitable Trust Fund are non-refundable and refundable deposits hence cannot be treated as the income of the Assessee- Societies. In assessee`s appeal assessing officer treated contribution towards welfare Fund and Hospital Fund as income of the assessee and added to the total income of the assessee and then initiated penalty proceedings under section 271(1) (c ) of the Act. We note that these are non-refundable and refundable deposits hence cannot be treated as the income of the Assessee-Societies. Therefore, in both the assessee case there is neither the case of furnishing inaccurate particulars of income nor concealment of income, hence penalty under section 271(1) (c) of the Act should not be levied. - we delete the penalty of both the assessee - Decided in favour of assessee.
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2022 (5) TMI 1091
Reopening of assessment u/s 147 - reopening made beyond four years - provision for bad and doubtful debtor shown under the head administration expense in the profit and loss account are to be added to the income beside considering the same for the purpose of computing book profit u/s 115JB and the assessee has wrongly been allowed deduction u/s 80IA(4)(iii) in respect of Salarpuria Touchstone project - HELD THAT:- We note that on the basis of above reasons recorded that all the information were duly disclosed in the books of account, audited financial statement and return of income filed by the assessee and it cannot be construed as in respect of which the assessee has not truly and fully disclosed all the material facts leading to escapement of income. In fact, the assessee has disclosed all the material facts in respect of two items on the basis of which the AO formed his belief u/s 148 of the Act. Under these facts and circumstances, we find merits in the contentions of the Ld. A.R. that the reopening was made in violation to provisions as contained in first proviso to section 147 of the act which stipulates that reopening cannot be made where the assessment was framed u/s 143(3) after a period of four years from the end of relevant assessment year if the escapement of income has occurred due to nondisclosure of material facts by the assessee which led to the escapement of the income. In our considered opinion, the reopening of the assessment has been made incorrectly and in violation to 1st proviso to section 147 of the Act and therefore cannot be sustained. The case of the assessee finds support from the decision of co-ordinate bench in the case of Haldia Petrochemicals Ltd. [ 2021 (4) TMI 383 - ITAT KOLKATA] - Also in cases ORIENT CRAFT LTD. [ 2013 (1) TMI 177 - DELHI HIGH COURT] , SOUND CASTING PVT. LTD [ 2012 (4) TMI 248 - BOMBAY HIGH COURT] , TAO PUBLISHING (P.) LTD. [ 2015 (1) TMI 1162 - BOMBAY HIGH COURT] and HARYANA ACRYLIC MANUFACTURING COMPANY [ 2008 (11) TMI 2 - DELHI HIGH COURT] which held the reopening made beyond four years has to be in accordance with the first proviso to section 147 of the Act failing which the reopening as well as reassessment order are bad in law. We, therefore respectfully following the above legal position , quash the reassessment proceedings u/s 147 as well as the consequent order framed by the AO - Decided in favour of assessee.
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2022 (5) TMI 1090
Revision u/s 263 - assessee company is planning to merge with M/s. Ravilla Aerospace Industries P. Ltd. - whether AO has erred in passing the assessment in the name of company amalgamated - corporate death of an entity upon amalgamation - CIT directing AO to examine the claim of section 54G afresh after giving due opportunity and also examine in whose hands the order needs to be passed now after thoroughly verifying the compliance to the scheme of amalgamation in all aspects as per the scheme and pass orders as per law keeping in view of the provisions section 115JB of the Act also - DR has submitted that the assessee has not filed any return of income and there was a survey under section 133A of the Act and also it was found that there is escapement of income based on the seized materials. Therefore, notice under section 148 of the Act have been issued - HELD THAT:- The assessee is represented before the Assessing Officer before completing the assessment order on 24.03.2016 only as M/s. IRIS Engineering Industries Pvt. Ltd., except in one occasion, it was submitted before the Assessing Officer that the assessee is having plan to merge with M/s. Ravilla Aerospace Industries P. Ltd. through its letter dated 14.03.2016, however, in that letter, no such details were filed, viz., what is the date of order of sanction of amalgamation by the Hon ble High Court, what is the appointed date, what is the effective date and date on which the certified copies of the order of the Hon ble High Court sanctioning the scheme of amalgamation and filing with Registrar of Companies from that date onwards this judgement of Hon ble High Court is effective. Therefore, in our opinion, the Assessing Officer has rightly passed the assessment order dated 24.03.2016 in the name of M/s. IRIS Engineering Industries Pvt. Ltd. though the Hon ble Madras High Court has passed the amalgamation order on 10.03.2016. So far as argument of assessee that the Assessing Officer was aware of the merger is not correct. Merger means and include that the date on which the Hon ble High Court passed the order, appointed date as well as effective date, etc. are not mentioned in its letter dated 14.03.2016. Simply filing a letter before the Assessing Officer that the company is merged without giving the above details, it cannot be said that the Assessing Officer is aware of the merger in true sense and spirit. Therefore, the argument of the ld. Counsel is rejected. As the assessee has represented before the Income Tax Authorities by showing the assessee s name as M/s. IRIS Engineering Industries Pvt. Ltd. The fact of amalgamation, appointed date, effective date, etc. were not submitted before the authorities below, particularly, before the Assessing Officer while doing scrutiny assessments. Under the above facts and circumstances of the case, we are of the opinion that the Assessing Officer has correctly passed the assessment order in the name of the assessee M/s. IRIS Engineering Industries Pvt. Ltd. Thus we are of the opinion that the Assessing Officer has correctly passed the assessment order and the assessment order is valid. Therefore, the ld. PCIT has exercised jurisdiction and passed the revision order under section 263 of the Act dated 27.03.2018 by setting aside the assessment order dated 24.03.2016 and directing to the Assessing Officer to examine the claim of section 54G of the Act afresh is a valid order and therefore, the order passed by the ld. PCIT cannot be said that it is an invalid on the ground that the ld. PCIT exercised power under section 263 of the Act to an invalid assessment order. Exemption under section 54G - In this case, particularly, the Assessing Officer knowingly very well that the case is reopened for the purpose of escapement of income chargeable to tax in respect of sale of immoveable property, without making any enquiry the assessment order was passed by accepting whatever stated by the assessee in its letter. He also accepted the claim of deduction under section 54G of the Act without making any enquiry. The Assessing Officer is ought to have been made enquiry in respect of exemption claimed under section 54G of the Act as per conditions laid down in the Act. The Assessing Officer has not made any enquiry and therefore, the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. The ld. PCIT has passed a detailed order under section 263 of the Act, wherein, the assessee has replied itself by letter dated 23.03.2016 that the assessee company itself closed its business long back and no business is carrying as on the date of claim under section 54G of the Act. It is only having land and old building and old machineries. This being the position, the Assessing Officer without making any enquiry, simply accepted the claim of exemption under section 54G of the Act by accepting copy of agreement for sale between the assessee and M/s. Ravilla Aerospace Industries P. Ltd. is erroneous and prejudicial to the interest of Revenue. PCIT has discussed in detail in his revision order under section 263 of the Act by considering all the facts and pointed out that the assessee is not eligible to claiming exemption under section 54G of the Act, where, without making any detailed enquiry, the Assessing Officer has allowed the same. We find that the order passed by the ld. PCIT under section 263 of the Act is in accordance with law and hence, no interference is warranted. - Decided against assessee.
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2022 (5) TMI 1089
Penalty u/s 271(1)(c ) - Defective notice - non-mentioning of relevant limb - As argued penalty had been initiated for both the offences, which is not permissible under law as it suffers from the vice of non-application of mind - HELD THAT:- We are of the view that non-mentioning of relevant limb in the penalty notice is a substantive defect and infirmity which goes to the root of the matter and is not curable a the later stage. The case of the assessee is squarely covered by the decision of the Hon ble Apex Court case of CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] - In the said decision , the Hon ble Court has dismissed the SLP filed by the Revenue by observing that there is no merit in the petition of the revenue upholding the order of Hon ble High Court [ 2016 (8) TMI 1145 - SC ORDER] wherein the decision of the coordinate division bench in the case of CIT Vs Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] has been followed. In all the above decision it has been held that non mentioning of relevant limb or non striking off of irrelevant limb in the penalty notice is a substantive defect in the imitation of proceedings itself and the consequent penalty levied on the basis of such defective notice can not be sustained. In view of these facts and circumstances of the case, we are inclined to set aside the order passed by the Ld. CIT(A) and direct the AO to delete the penalty. The ground no. 3 is allowed.
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2022 (5) TMI 1088
Addition u/s 68 - Bogus share transactions - accommodation entries receipt - HELD THAT:- We note that the assessee has sold 50800 shares during the year to M/s. Balaji Finance at Rs.250/- per share which fetched Rs.1,27,00,000/-. We note that assessee was holding these shares as stock in trade as apparent from the tally of investments as on 31.03.2009 which showed details of opening stock of shares , purchases , sales and the closing stock in trade held by the assessee. We note that all these shares in the preceding as well as in the current year were purchased from various companies at Rs. 250/- per share and were sold at the same price. Therefore, we are not in agreement with the theory coined and adopted by the AO and its confirmation by the Ld. CIT(A) that these are accommodation entries as the assessee has purchased the shares on various dates and thereafter sold the shares to M/s. Balaji Finance. After perusing the details as placed before us we are of the view that these are not the accommodation entries but shares were sold at the same price at which these were purchased and thereby no pecuniary gain has accrued to the assessee. Under these circumstances, we are inclined to set aside the order of the Ld. CIT(A) and direct the AO to delete the addition - Decided in favour of assessee.
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2022 (5) TMI 1087
Assessment u/s 153A - Addition on difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions - Whether No incriminating material at all was found during the course of search? - HELD THAT:- In A.Y. 2014-15, notice u/s 143(2) was issued before the search on 31.08.2015 and assessment proceedings u/s 143(3) were pending on the date of search i.e. 30.03.2016. In view of these facts, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon ble Delhi High Court in the case of CIT vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] In A.Y. 2015-16, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of search i.e. 30.03.2016. Since the appellant had not filed return of income for A.Y. 2015-16 upto the date of search, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon ble Delhi High Court in the case of CIT vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] In A.Y. 2016-17, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of search i.e. 30.03.2016. Since the appellant had not filed return of income for A.Y. 2016-17 upto the date of search, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon ble Delhi High Court in the case of CIT vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] Assessing Officer was justified in making additions u/s 153A and u/s 143(3) of Income Tax Act in A.Ys. 2014-15 to 2016-17 even in the absence of incriminating material. Hence, we affirmed the order of the ld. CIT(A). Disallowance u/s 40A(3) - CIT(A) held that the factum of purchase has been confirmed by the Mandi Samiti Officials and deleted the addition - HELD THAT:- The assessee is not required to collect any evidence from the seller to show that he is a farmer or producer once paddy has been purchased through Form No. 6. The status of the seller as farmer or trader is determined by the Mandi Samiti at the time of his entry and the assessee undertakes transactions on the basis of said determination. It is also clear from the provisions of Mandi Act that the authority to decide whether the seller is a farmer or not is solely in the domain of Director of the Mandi Samiti as per the relevant Act and not the Assessing Officer. It is also a settled law that when an authority has been designated for the purpose, then none else can decide the said issue. The assessing officer has not brought on record any case where any person claimed as farmer by the assessee has been declared otherwise by the Director of Mandi Samiti. In the absence of the any such adjudication, no adverse cognizance can be taken and the sellers declared as farmers by the assessee and confirmed by the Mandi Samiti officials has to be considered as conclusive proof of the fact that the purchases were made from farmers. Taking into consideration, the undisputed fact of purchases being made from Mandi Samiti, provisions of Mandi Samiti Act, 1964, provisions of Rule 6DD, Circular No. 8 of 2006 of CBDT and the judgments of various Hon ble High Courts on the issue of disallowance u/s 40A(3), applicability of the provisions of Rules 6DD for purchase of paddy, we decline to interfere with the order of the ld. CIT(A) on this issue. Addition of unexplained credits on the basis of seized material - scope of benefit of telescoping - CIT(A) has perused the seized cash book and the chart placed on record and held that some entries were found recorded in the regular books of account whereas some entries were not thus restricted the addition - HELD THAT:- Since the source of the said receipts and payment has not been explained by the assessee during the assessment proceedings or the appellate proceedings, the same cannot be considered as explained and are held as undisclosed income of the appellant. However, the assessing officer has made addition for the entire amount received by the appellant without giving any benefit of telescoping for the payments made. The seized day book was maintained by one person i.e. Shyam Lal and it contained transactions from 01.01.2016 to 31.03.2016. Since there are regular cash deposits and withdrawals during the period, it is logical to conclude that withdrawals were available for subsequent deposits. Hence, benefit of telescoping has to be allowed for undisclosed cash receipts and cash payments and addition can be made only for the peak balance. The assessee was asked by the Ld.CIT(A) to submit the working of the peak balance. The appellant submitted peak balance of cash as per the said chart was computed at Rs. 1,67,95,639/-. However, from perusal of above chart, Ld. CIT(A) held that highest peak cumulative balance on 22.02.2016 was Rs.2,05,94,826/-. Hence, addition on account of peak balance of Rs. 2,05,94,826/- was confirmed and balance addition of Rs.29,00,49,409/- was deleted. Addition on basis of peak balance - HELD THAT:- The assessee submitted that peak balance of the cash as per the chart would be Rs.1.67 Crores. The ld. CIT(A) observed that the peak cumulative balance was Rs.2.05 Crores. While the remission of Rs.29.00 crores is not being interfered by us, we deem it proper to remand the matter to the file of the Assessing Officer for the purpose of re-computation and determine the peak balance. Difference between Purchase/sale-Bogus Bills - commission paid to the parties for arranging bogus purchase/ sale bills of rice - onus to prove - AO held that the cases where the statement of the parties have been recorded by the department where they have accepted that they were not doing genuine business transactions and copies of the same were provided to the appellant for rebuttal and the cases where the Assessing Officer has issued notices u/s 133(6) of the Act and the same were either not served and returned back or were not complied with - HELD THAT:- Since, there is no qualitative, quantitative difference or any difference in the value of the sales purchases, no addition is called for on this account. Stock Difference in rice - as per AO total quantity of 6,180.98 quintals of rice was found excess and therefore the addition of Rs. 1,88,14,912/ was made by applying the rate of Rs. 3,044/- per quintal - We find that the assessee has handled a total quantity of 92,40,810 Quintals and had 33,23,290 Quintals as on 31.03.2016 which is equal to approximately 33,200 truck loads. The excess stock of 6,180 Quintals of excess stock is just little over 1% of the total quantity at the premises. Similarly, the shortage of quantity of 2,768 Quintals was 0.16% of 16,60,600 Quintals of the rice as per the books. While dealing with such high volume, there could be error of computation of quintals/sacks/bags of price. It is also an undisputed fact that no actual weighment was undertaken during the process of stock taking at the time of search. Hence, keeping in view the peculiar facts of the business of the instant case, we hold that no addition on account of stock difference is called for.
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2022 (5) TMI 1086
Deemed income u/s 69A - Disallowance of Indirect Expenses and Interest on Partner s Capital - HELD THAT:- As it is vivid that expenses are duly supported by bills / vouchers/ evidences Indirect Income - Undisclosed income - AO observed that assessee has not offered this income as Business Income or Income from other sources in its Profit and Loss account - Income declared during Survey as Deemed Income not includible under any of the heads of Income prescribed u/s 14 of the Income Tax Act, 1961 - HELD THAT:- Unaccounted amount of Rs.16,65,000/- admitted during survey, is business income, as explained by the assessee twice in his statement. Now, burden is on the assessing officer to disprove it. However, we note that assessing officer has not refuted or discredited these evidences. The assessing officer does not mention why he is not accepting these evidences. Thus, it is abundantly clear that assessing officer has not made any adverse finding in any of these documents even, though all the details were furnished by the assessee before him. The assessing officer ought to have examined all these details and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion and to make the addition. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Therefore, based on this factual position, we direct the assessing officer to treat the amount under the head Income from business and allow Indirect expenses and interest on partner s capital account. Assessee appeal allowed.
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2022 (5) TMI 1085
Bogus purchases of cloth - Addition made as invoices are self-made - CIT(A) upheld the addition to the extent of 50% , by taking view that the assessee failed to explained the mismatch in voucher numbers and their dates - HELD THAT:- Before us, the assessee in its written submission filed, contended that it is a clerical mistake and that the payment were made through cheque and assessee has also filed bank statement showing some purchase through cheques. It is settled law that in absence of corroborative evidence, the payment made through cheque is not sacrosanct. However, keeping in view this settled legal position that even if the purchase is found to be bogus only profit element embedded in such purchase is to be disallowed to avoid possibility of revenue leakage and not the substantial part of transaction. In our view, the disallowance @ 50% of purchase sustained by Ld. CIT(A) is on higher side. Considering the nature of trade, we deem it appropriate to restrict the disallowance @ 20% which in our view will be sufficient to avoid the possibility of revenue leakage. The Assessing Officer is directed to re-compute the same. In the result, ground No.1 is partly allowed. Disallowance of renovation expenses - CIT(A) confirmed the action of Assessing Officer by taking view that there is no debit balance in bank statement of assessee - HELD THAT:- We find that assessee has placed on record the invoice of Shri Hari Corporation, showing the payment of Rs.2,06,401/- vide cheque No.178 drawn in favour of Laxmi Vilas Bank. We find that assessee has also furnished invoice of cement confirmation. The assessee also filed the confirmation of work undertaking by Naklang Construction. We also find that payment of such repair works was made through account payee cheque on 05.12.2015 which is duly reflected in the account statement of assessee. In view of aforesaid facts, we find that assessee has substantiated the expense since the repairs of small modification carried out at the premises are small scale repair which cannot be classified with capital expenditure. Therefore, Ground No.2 of the assessee is allowed. The Assessing Officer is directed to re-compute the same.
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2022 (5) TMI 1084
Deduction u/s 80P(2)(a)(i) - interest earned by the society - HELD THAT:- We find that the issue is squarely covered in favor of the assessee by the decision of Hon'ble Supreme Court in the case of Citizen Cooperative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] - Moreover similar issue was elaborately dealt by a larger bench of Honourable Supreme Court in the case of The Mavilayi Service Cooperative Bank Ltd. Ors. Vs. CIT, Calicut Ors. [ 2021 (1) TMI 488 - SUPREME COURT] and the issue was decided in favour of the assessee.
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2022 (5) TMI 1083
Capital gain computation u/s 45 - JDA - conversion of land into stock-in-trade - Whether capital gain arisen in A.Y.2012-13 with reference to Joint-Venture agreement dated 28.09.2011? - assessee along with other co-owners had entered into Joint Venture Agreement - For calculating Long Term Capital Gain (LTCG), assessee considered value as total consideration, which is the value considered for stamp duty valuation, by the Stamp duty authorities - Assessee claimed that his share is 1/3rd and calculated the LTCG accordingly - HELD THAT:- The Appellant assessee has filed copy of JDA including English translation. As per clause k of the said JDA , the owner has agreed to transfer the impugned property by sale deed in the name of proposed Co-Operative society and/ or in the name of individual prospective buyers. As per the said JDA the owner has only granted right to Developer to enter the impugned property for the purpose of development. As per JDA, the developer has given Rs.1 crore as deposit. No other consideration paid. It transpires from the JDA that there is no actual transfer of land and assessee has not received any consideration also. It is also observed from the copies of the returns of Income filed by the assessee in the paper book, that the assessee has shown Long Term Capital Gain from sale of the impugned land in subsequent years as and when the assessee has received consideration. Assessee has also paid Tax on the said Long term capital gain. Therefore, in the facts and circumstances of this case it is held that there is no capital gain chargeable in AY 2012-13 on the impugned Joint Development agreement. Thus ground number 1 is allowed. Whether the appellant has converted the land into stock-in-trade as claimed? - It is an admitted fact that assessee could not demonstrate conversion of land into stock-in-trade by showing entries in the books of accounts. As per accounting, whenever land is converted into stock-in-trade, it shall appear as closing stock at the end of the year in which it was converted into stock-in-trade. In the case of the assessee it should have appeared as closing stock for the A.Y. 2012-13 and 2013-14. However, we have verified from the profit and loss account filed by the assessee in the paper book that it does not appear as closing stock for the A.Y. 2013-14. The assessee has not filed profit and loss account for the A.Y.2012-13. It is also an admitted fact that no Audit Report has been filed means no Audit has been carried out. It is observed that for A.Y. 2014-15, the assessee has shown sales of Rs.1,96,32,700/-, but, though the sale is more than One Crore, no Audit Report is filed by the assessee. No Balance Sheet has been filed by the assessee for the A.Y. 2012-13. Thus, the assessee has not filed any evidence to substantiate his claim that the impugned land was converted as stock-in-trade before entering into Joint Venture Agreement. Therefore, assessee s claim that land was converted as stock-in-trade before entering into Joint Venture Agreement is hereby rejected. Therefore, section 45(2) is not applicable in the case of the assessee. Therefore, this ground raised by the assessee is dismissed. Double taxation if LTCG is taxed in the AY 2012-13 - assessee also claimed that assessee has disclosed capital gains arising in respect of the impugned land given for development under Joint Venture Agreement for A.Y. 2013-14 to 2017-18 and substantiate the claim, assessee filed copies of the Returns of Income for those years - HELD THAT:- We have perused the returns of Income filed by the assessee. It is a fact that the assessee has shown LTCG in subsequent years. However, we have already held that LTCG does not arise in AY 2012-13, hence this ground is academic in nature, hence dismissed
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2022 (5) TMI 1082
Late deposit of ESI/PF - deposits are made before the filing of the return of income i.e. well within the time of filing the return u/s. 139(1) - HELD THAT:- It is a matter of fact that the amendments carried out in section 36(1)(va) and 43B by the Finance Act, 2021 has consistently be held to the prospective in nature. The year under consideration is 2017-18 assessment year. The issue consequently is no longer res integra. addition need to be deleted as deposits are made before the filing of the return of income i.e. well within the time of filing the return u/s.139(1) - Decided in favour of assessee. Addition u/s. 36(1)(va) - Whether CIT(A) has erred in setting aside to the file of the Ld. AO the issue of addition made by the Ld. AO u/s. 36(1)(va) even when such addition in itself deserved to be deleted and at the same time the Worthy CIT(A) lacked powers to set aside the issue to the file of Ld. AO as per the amendment to S. 250(1) by the Finance Act, 2001? - HELD THAT:- The issue has been remanded back to the Assessing Officer by the Ld. CIT(A) for verification on facts. We find that such a direction does not have any statutory support. Section 251(1)(a) clearly circumscribes the powers of the Commissioner Appeals. It specifically lays down unambiguously that in an appeal against an order of assessment, the Commissioner Appeals may confirm, reduce, enhance or annul the assessment. It is not in dispute that the power to set aside the issue back to the Assessing Officer is no longer vested with the said authority. According, we set aside the finding. On a consideration of the facts on record and in the light of the submissions of the parties before the Bench. we substitute the said direction with our direction and deem it appropriate to direct the Assessing Officer to verify the facts and allow necessary relief in accordance with law set out herein above.
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2022 (5) TMI 1081
Assessment u/s 153A - the assessment made u/s. 143(3) held No business activity noticed in the business premise of the assessee - Whether impugned assessment year 2013-14 is the year which is covered within the six years as provided in section 153A of the Act ? - HELD THAT:- Considering the subsequent event of search seizure in case of assessee herself and the impugned assessment year being covered within the six years provided in section 153A of the Act, we find it fit to remit the instant case back to the file of Ld. CIT(A) so as to take a meritorious view by keeping together the findings of the AOs in both the assessments i.e. u/s. 143(3) and u/s. 144 r.w.s. 153A of the Act and dispose them off in accordance with the applicable law and observations made in para 9 above. Needless to say that assessee be given reasonable opportunity of being heard and make any further submission, if desired. Since the matter is restored to the file of Ld. CIT(A) for fresh adjudication in terms of our observations and herein above, we are not expressing any views on the merits of the case so as to limit the appellate procedure before the Ld. CIT(A). The observations herein made by us in remanding the matter back to the file of Ld. CIT(A) will not impair or injure the case of the Revenue nor will it cause any prejudice to the defense/explanation of the assessee. Accordingly, in terms of above, the appeal of the assessee is allowed for statistical purpose.
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2022 (5) TMI 1080
Exemption u/s 11 / 10(23C)(vi) - Condonation of delay in filing application - Period of limitation - application of the assessee for grant of approval under section 10(23C)(vi) rejected - HELD THAT:- Hon'ble Madras High Court in the case of All Angels Educational Society [ 2016 (8) TMI 156 - MADRAS HIGH COURT] while considering the issue whether the ld. CIT(Exemption) has power to condone the delay in filing application for grant of approval under section 10(23C) or not, has considered the judgments of Hon'ble Supreme Court in the case of State of U.P. -vs.- Harish Chandra [ 1996 (4) TMI 121 - SUPREME COURT ] as well as Union of India -vs.- Kirloskar Pneumatic Co. Limited [ 1996 (5) TMI 87 - SUPREME COURT] and held that where there is no provision to empower the statutory authority to condone the delay, than the authority cannot condoned. The adjudicating authorities under the Income Tax Act are quasi judicial authorities. They can grant approval with retrospective effect if such mechanism is provided in the Act. There is no such provision nor there is any power to condone the delay after considering the reasonable reasons. A reasonable cause can be taken into cognizance for condoning the delay, if such provision is provided in the Act while considering any issue for adjudication. Therefore, considering the above proposition, we are of the view that ld. CIT(Exemption) has rightly rejected the application of the assessee for grant of approval under section 10(23C)(vi) of the Income Tax Act. All these three appeals are rejected.
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Customs
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2022 (5) TMI 1124
Levy of parallel penalties on Customs Broker and employees - allegation of abetting the importers - concealment and mis-declaration of goods - main contention raised by the appellant is that there is no allegation in the Show Cause Notice attracting ingredient of Section 112(a) and that the allegation would fall within the purview of the CBLR, 2018 (2013) for which penalty has already been imposed - HELD THAT:- The allegation is in the nature of violations falling under the Customs Brokers Licensing Regulations - it is held that the Department has failed to establish the ingredients under Section 112(a) of the Customs Act, 1962 against the appellant. The penalty imposed under Section 112(a) on the appellant, is not justified and requires to be set aside. Levy of penalty u/s Section 112(a) - appellant falsely introduced himself as the representative of the importer - HELD THAT:- It is brought out from facts that Shri Solomon is the person who had acted as an intermediary for handing over the documents to the Customs Broker. His case is that some Vishal has given him the documents. He has not taken any steps to establish this. He could have cited Vishal as a witness on his side and requested to issue summons for examination of such person - steps for filing the Bill-of-Entry would not have taken place unless the documents were handed over by the appellant herein. The goods are counterfeit and have been confiscated. It is also alleged that he has taken back the documents from the Customs Broker. The findings of the authorities below, that the appellant has acted in relation to improper importation of goods, does not call for interference. However, in the present case, he had no liability to pay duty. The penalty of Rs.7,00,000/- imposed on Shri C. Solomon Selvaraj is on the higher side and requires to be reduced. Appeal allowed in part.
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2022 (5) TMI 1108
Refund of SAD - only ground for rejection of refund given by the adjudicating authority is that the amount of SAD paid by the appellant by way of debiting in MEIS scrip and that no declaration was found on the sale invoice regarding non admissibility of cenvat credit of SAD - HELD THAT:- The issue that whether the refund is admissible when an assessee paid the SAD by debiting MEIS has been settled in the judgment of ALLEN DIESELS INDIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2016 (2) TMI 247 - DELHI HIGH COURT] where it is clear that even if the assessee does not pay the SAD amount in cash but the same is debited in any incentive scrip, in the aforesaid case the same was debited from DEPB, the refund of SAD cannot be denied - The same analogy is applicable in the present case as the amount of SAD was debited in MEIS scrip. Therefore, the issue is clearly covered by the afore said judgment. As regard the issue that whether for not making the declaration of invoice as required in para 2(b) of Notification No. 102/2007-Cus the refund is admissible or otherwise, the Larger Bench judgment of this tribunal in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] has dealt with the same issue where it was held that even if no declaration is made for that reason the refund cannot be denied - The aforesaid judgments on both the issue were placed before the commissioner (Appeals). However, despite refering the said judgments, the matter was once again remanded to the adjudicating authority which was absolutely not warranted on the part of the Commissioner (Appeals). Learned Commissioner (Appeals) should have decided finally as there was nothing left for the adjudicating authority to decide further. The appellant is clearly entitled for the refund - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (5) TMI 1107
Restoration of name of the struck off company in the Registrar of Companies, West Bengal - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The Registrar of Companies, West Bengal has submitted its report. It has been stated in the report that only after complying with the provisions of Section 248 of the Companies Act, 2013, Registrar of Companies, West Bengal has struck off the name of the Company with effect from the Register maintained by the Registrar of Companies, West Bengal. In the Report, the RoC, West Bengal has not objected to this application for restoration of the name of he company. On perusal of the application, it is satisfying that the name of the company should be restored to the register - Accordingly, in exercise of the powers conferred on the Tribunal under Section 252 of the Companies Act, 2013, the petition is allowed.
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Insolvency & Bankruptcy
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2022 (5) TMI 1123
Impact of Section 60(6) of the IBC - Exclusion of moratorium period for initiation of proceedings of suit - whether the provision of Section 60(6) gives rise to a new lease of life to a proceeding at the instance of the corporate debtor on the basis of a moratorium which is put in place by virtue of the order passed under section 14 of the IBC? - whether corporate debtor can take advantage of the same to bring the application in this case filed under Section 11(6) of the Arbitration and Conciliation Act, 1996? HELD THAT:- The principles of interpretation of statutes have been invoked in the varying contexts and are to be applied on the basis of the facts of the case, the nature of the law and a host of principles. Undoubtedly, the golden rule of interpretation is the interpretation which thrives on the ordinary meaning of the words as they are used. This principle of literal interpretation of statutes has over a period of time indeed yielded to an interpretation which is purposive or which seeks to accommodate the object of the law giver. Suffice it to say that if the words of a statute are not ambiguous, the scope of interpretation dwindles. It is not for the Court to rewrite a statute. There may be occasions where the Court may even go to the extent of leaving out a word or not giving effect to certain part in order to give full meaning to the law by way of gleaning and giving effect to the intention of the legislature. Under the IBC, by virtue of the order admitting the application, be it under Sections 7, 9 or 10, and imposing moratorium, proceedings as are contemplated in Section 14 would be tabooed. This undoubtedly does not include an application under Section 11(6) of the 1996 Act by the corporate debtor or for that matter, any other proceeding by the corporate debtor against another party. At least there is no express exclusion of the jurisdiction of the Court or authorities to entertain any such proceeding at the hands of the corporate debtor - The powers of the Board of Directors or the partners of the corporate debtor shall stand suspended and it would be exercised by the interim resolution professional. When the authority changes hands from the interim resolution professional to the resolution professional, the previous management continues to be excluded. As far as understanding the meaning of Section 60(6) is concerned, there cannot be a slightest doubt that the period of Moratorium is excluded even in the case of a suit or application brought by a corporate debtor, viz., in regard to the period of the moratorium. It is true that on the one hand what is tabooed in Section 14 when a Moratorium is put into place is inter alia the institution of suits or continuance of pending suits or proceedings against the corporate debtor including proceeding in execution of inter alia, the decree or order of an arbitration panel - Section 60(6) on the other hand excludes the period during which the Moratorium under Section 14 is in place in computing the period of limitation. An ambiguity is introduced, namely the need to exclude the period of limitation for a suit or an application, at the instance of the corporate debtor when a Moratorium ushered in by an order under Section 14 does not pose any bar against a suit or an application at the instance of the corporate debtor. Notwithstanding the period of limitation under the Limitation Act, the Law Giver has thought it fit to provide that in respect of a corporate debtor if there has been an order of moratorium made in Part II, the period during which such moratorium was in place shall be excluded. For which an order of moratorium cannot bear the interpretation which is sought to be placed by the appellant. The interpretation placed by the appellant is clearly against the plain meaning of the words which have been used - no doubt, from the words by a corporate debtor . Interpreting the statute in the manner which the appellant seeks would result in our denying the benefit of extending the period of limitation to the corporate debtor, a result, which we think, would not be warranted by the clear words used in the statute. Section 60(6) of the IBC does contemplate exclusion of the entire period during which the moratorium was in force in respect of corporate debtor in regard to a proceeding as contemplated therein at the hands of the corporate debtor. Appeal dismissed.
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2022 (5) TMI 1122
Liability of respondents to pay its share of the Cash Calls - Appointment of nominee arbitrator - enabling constitution of an Arbitral Tribunal for adjudication of the disputes that have arisen between the parties in relation to the Joint Operating Agreement - Section 11(6) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- It is well settled that in terms of sub-section (6A) of Section 11 of the A C Act, the scope of examination under Section 11 of the A C Act is limited to the existence of an arbitration agreement between the parties. Notwithstanding the same, in cases where it is ex facie clear that the disputes cannot be entertained, the courts would refrain from entertaining the petition to appoint an arbitrator as the same would be an exercise in futility. It is also trite law that it is only in exceptional cases where it is absolutely clear that the disputes cannot be entertained that the court will decline to entertain a petition under Section 11 of the A C Act. The standards of examination under Section 11 of the A C Act do not permit the court to carry out any adjudicatory exercise in respect of any contentious issue. The question whether the liability sought to be enforced by BPRL against the respondent stands extinguished is a contentious issue. This Court is unable to accept that the controversy involved in the present case falls within the standards of examination under Section 11 of the A C Act. The Supreme Court in its recent decision in MOHAMMED MASROOR SHAIKH VERSUS BHARAT BHUSHAN GUPTA ORS. [ 2022 (2) TMI 134 - SUPREME COURT] while referring to the decision in VIDYA DROLIA AND OTHERS VERSUS DURGA TRADING CORPORATION [ 2020 (12) TMI 1227 - SUPREME COURT] held that the Court by default would refer the matter when contentions relating to nonarbitrability are plainly arguable. This Court is not required to examine and adjudicate any contentious issue and the parties must be relegated to the forum of their choice for adjudication of their disputes - Petition allowed.
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2022 (5) TMI 1121
Utilization of amount for the distribution of assets under Section 53 of the Code - Realization of security interest by secured creditor - HELD THAT:- The Respondent owes a duty to mention the existence of moratorium passed by this Tribunal including the invocation of Bank Guarantee before the concerned Courts. When proceedings of CIRP and Liquidation are pending before this Tribunal, no proceedings can be continued before the Civil Courts without prior approval of this Tribunal. It is seen from the records that the claims were received and a consolidated list of claims of Rs. 78,02,52,535/- was prepared and that the Corporate Debtor does not have any liquidation assets other than the Liquidation Assets i.e., the amount of Rs.25,13,38,078/- and Rs. 5,46,08,871.37/- in relation to the Corporate Debtor under Section 36 of IBC, 2016. There is no asset of the Corporate Debtor available and the only source to be distributed among the claimants to the tune of Rs. 30,59,46,949/- is the Fixed Deposit and interest accrued therein as also the amount retained by the Respondent under the direction of this Tribunal - Application disposed off.
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Service Tax
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2022 (5) TMI 1120
CENVAT Credit - duty paying invoices - whether availment of CENVAT Credit by the appellant on the basis of a debit note availed by M/s IGSSTPL without receiving any service is admissible as per law? - HELD THAT:- As per the agreement, under sub-clause (xxii) of definition under clause (1), the obligation of the Development Manager shall include repayment of loan to Yes Bank together with all cost of services thereof; repayment of Development Manager loan together with all cost of services thereof and repayment of all third party capital together with all cost of services thereof. To appreciate the factual position of the impugned case, it is found appropriate to go through the relevant clauses of the agreement between the appellant and M/s IGSSTPL. On going through the various clauses of the agreement, it is found that the appellants have entered into an agreement with M/s IGSSTPL; as a consideration of the agreement, a sum of Rs.520 Crores, was to be paid to the Development Manager; all the development activities including planning, organizing, designing, construction, marketing of the project were to be done by the Development Manager and also Development Manager was required to repay the loan amount availed by the appellant from the Yes Bank - The learned Commissioner further goes on to find that the said financial service is not used by M/s Neelkamal Realtors Towers Pvt. Ltd for providing any output services and that M/s IGSSTPL are not in the business of providing financial service, but are in the construction service. The said financial services are consumed by the Development Manager i.e. M/s IGSSTPL and, therefore, the availment of CENVAT Credit of the same, by the appellant, is contrary to the provisions of CENVAT Credit Rules, 2004. He further finds that transaction in money is outside the ambit of service. The passing on to the burden by the Development Manager to the appellants as to be seen is only the transaction in money and not a financial service provided by M/s IGSSTPL. While deciding the inadmissibility of CENVAT Credit, one needs to be clear as to what is the service rendered; who is the service provider; who is the service recipient; what is the consideration; whether Service Tax has been paid on the same; what is the output service provided by the input credit receiver i.e. the appellants in this case and whether there exists a nexus between the input service on which credit is taken and the output service provided. It is not clear from the records of the case and rival submissions as to whether all the above criteria is fulfilled - In the instant case, the Development Manager who has undertaken the work of construction and development of free land as per the contract entered into with the appellants. As per the terms of the agreement, M/s IGSSTPL would also avail loan from M/s DHFL and transfer the same to the appellants. It is not possible to come to a categorical conclusion on the basis of the available documents/records, so as to examine the claims of rival parties herein. While holding that credit of Service Tax cannot be availed just because M/s IGSSTPL had raised a debit note on the appellants without rendering any particular service and without raising any invoice on the appellants indicating categorically the details of the service provider, service recipient, the service provided and the remuneration thereof - the ends of justice will be met only if all the relevant issues are considered afresh by the adjudicating authority taking into account all the facts involved in the case. The appeal is allowed by way of remand to the adjudicating authority by keeping all the issues open.
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2022 (5) TMI 1119
CENVAT Credit - input services - Construction/ Works Contract Service for re-carpeting of road in their industrial estate - credit denied on the ground that it is a new construction of road under works contract service which is excluded in the definition of Input Service under Rule 2(l) of Cenvat Credit Rules, 2004 - HELD THAT:- The fact is not under dispute that the industrial estate already existed and for moving around the Industrial Estate the tar roads were also existing. The works contract/ construction was executed for the purpose of re-carpeting of existing road. Therefore, the said services are for the purpose of repair and renovation of the exiting industrial estate. It is observed from the notes of the Board meeting for the purpose of re-carpeting of the road that it is for re-carpeting and not for new construction of road. Therefore, this service is for repair and renovation and not for originating the new construction. This issue has been considered in the decision of this Tribunal in the case of RELIANCE INDUSTRIES LTD. VERSUS C.C.E. S.T. -RAJKOT [ 2022 (4) TMI 729 - CESTAT AHMEDABAD] where it was held that any service relating to modernization, renovation of the existing factory is admissible as input service which is the direct case of the appellant. From the above decision of this Tribunal it is clear that any construction and works contract if used for repair and renovation of existing factory, the same falls under inclusion clause of definition of Input Service, accordingly, the Cenvat credit is admissible - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (5) TMI 1118
Condonation of delay of 411 days in filing appeal - HELD THAT:- The delay ought to be condoned, as the appeal cannot be subjected to a different treatment - the delay is condoned.
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2022 (5) TMI 1117
Clandestine manufacture and removal of tobacco/gutkha without payment of central excise duty and education cess - HELD THAT:- A coordinate bench of this Court in PRABHAT ZARDA FACTORY CO., K.N. MEHROTRA, PURUSHOTTAM KUMAR ARYA VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI [ 2018 (5) TMI 1670 - DELHI HIGH COURT] where it was held that In the present case, the impugned order on all aspects and contentions merely reproduces the order-in-original, without specifically and independently examining and dealing with diverse contentions. Reference and independent and exhaustive elucidation of the factual contentions raised by the appellants and consideration of legal issues based upon the said contentions is conspicuously lacking and missing. The impugned order suffers on this account. The substantial questions of law are answered in favour of the appellants and against the respondent with an order of remand to the Tribunal for fresh decision - appeal allowed.
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2022 (5) TMI 1116
Refund of CENVAT Credit - education cess and secondary higher education cess paid on total custom duty when both the duty were exempted against the CVD - only ground for claim of refund of the appellant is that the period of taking credit as beyond the normal period - N/N. 13/2012-Cus and 14/2012-Cus dated 17.03.2012 - HELD THAT:- In the present case it is not a case of demand but the appellant have paid the amount of cenvat credit accepting their mistake that the cenvat credit in respect of CVD of the custom duty is not admissible. This issue was raised by the audit and consequently the appellant have paid the amount. It is pertinent to note that the issue of non availability of the cenvat credit has been decided by this Tribunal in the case of NIRMA LIMITED, SAURASHTRA CHEMICALS DIVISION OF NIRMA LTD, MAC PAPER MILLS, ACULIFE HEALTHCARE P LTD, NILKANTH SPECIFIC FAMILY TRUST VERSUS C.C.E. S.T. -BHAVNAGAR AND C.C.E. S.T. -VADODARA-I VERSUS THERMAX LTD [ 2018 (2) TMI 476 - CESTAT AHMEDABAD] . As per this judgment the appellant was not entitled for cenvat credit. Therefore as per the merit of the case the appeallant was not entitled for the cenvat credit. Accordingly, they have reversed the credit. It is also important to note that in the present case there is no demand involved the issue of extended period can be decided only in case of demand not in the case of the refund. The refund needs to be decided only on the merit whether the appellant was entitled for cenvat credit or otherwise. The demand notice issued under Section 11A which prescribes the time limit which is not the case hear. Therefore, the decision of the tribunal in the case of Nirma LTD. relied upon by the appellant is of no help to the appellant for the reason that the same related to demand of recovery of wrongly availed the cenvat credit. Whereas in the present case appellant have filed the refund claim and the refund was rightly decided on the merit that whether the appellant is entitled for cenvat credit or not. There are no infirmity in impugned order rejecting the refund - appeal dismissed.
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2022 (5) TMI 1115
Compounded levy scheme - Re-determination of Annual Capacity of Production and monthly duty liability - Pan Masala Packing (Capacity Determination Collection of Duty) Rules, 2008 read with Notification No 30/2008 of the CE(NT) dated 01.07.2008 and Notification No. 42/2008-CE(NT) dated 01.07.2008 - HELD THAT:- The scheme of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008, has been well explained in the impugned order and the during the course of arguments by the appellants. In terms of the said rules the appellant are required to make the declaration in terms of Rule 6 of the said rules, declaring the number of installed packing machines in their factory and the retail sale price of the pouches to be produced by them. On the basis of the declaration made and after causing the verification of the same the Assistant/ Deputy Commissioner passes an order determining the Annual Capacity of production - In terms of Rule 7 and 9, on the basis of the capacity of production so determined the appellant determines and pays the duty every month at the start of month. Subsequently the duty so paid is determined on the actual basis in subsequent month after allowing for any abatement as per Rule 10. Interestingly all the impugned orders are dated 28.10.2011, 24.01.2012, and 13.02.2012, i.e. prior to the amendments made retrospectively in the rule retrospectively with effect from 13th April 2010. Hence these orders need to be reconsidered in terms of the said amendments made by the Finance (No 2) Act, 2014 - Ideally matter needs to be remanded back to the original authority for determination of the Annual Capacity of Production after taking into account the amendments and decisions. Appeal allowed by way of remand.
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2022 (5) TMI 1114
CENVAT Credit - input services - Hotel Accommodation Service - Air Travel Agent Service - HELD THAT:- Hotel Accommodation Service and Air Travel Agent Service are admissible input services. Reliance can be placed in the case of M/S. UNIQUE CHEMICALS VERSUS C.C.E. S.T., VADODRA-II [ 2019 (9) TMI 1137 - CESTAT AHMEDABAD] and INOX INDIA PVT LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2021 (7) TMI 551 - CESTAT AHMEDABAD] where it was held that Hotel Accommodation Service was used by the appellant for hotel stay of staff of the appellants who travelled outside for business purpose - As regard Mandap Keeper service, the same is used for arranging the business conference which is a necessity for running the business. Therefore, both the services are directly used for conducting the business of the appellant. The issue is no longer res-Integra as the same has been decided in the favour of the appellant - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (5) TMI 1113
Concessional rate of tax - issuance of C form, which are required for procurement of Extra Neutral Alcohol (ENA) and Malt Spirit utilized for manufacturing of Indian Made Foreign Liquor (IMFL) used for human consumption - HELD THAT:- The ENA and the Malt Spirit in its original form are not the alcoholic liquor fit for human consumption and would therefore, not come within the amended definition of clause(d) of Section 2 of the CST Act and the respondent authorities have, therefore, rightly refused to issue the C Form, as claimed by the petitioner herein. Based upon the principles laid down by the Constitutional Bench of the Supreme Court in the matter of SYNTHETICS CHEMICALS LTD., ETC. VERSUS STATE OF UP. [ 1989 (10) TMI 214 - SUPREME COURT] , the ENA and Malt Spirit are not the alcoholic liquor, which is fit for human consumption in its original form. Therefore, the provision prescribed under sub-section(1) (2) of Section 9 of the GST Act as tried to be implemented herein by learned counsel for the petitioner, would, however not be applicable. Sub-section(1) of Section 9 states that subject to the provisions of sub-section(2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. Since the ENA and Malt Spirit in its original form are not found to be fit for human consumption, as observed hereinabove, therefore, no reliance could be placed on it - In so far as the applicability of sub-section (2) of the aforesaid provision is concerned, the same is, however, also not applicable as the notification required to be issued under it, is only with regard to the supply of items mentioned in clauses (i to v) of the amended provision of clause(d) of Section 2 of the CST Act and as the ENA and Malt Spirit are not found to be alcoholic liquor fit for human consumption, therefore, it would not fall in any of the said categories and, no notification as such, is therefore, required to be issued. There are no substance in this petition, so as to call for any interference in the alleged communication/letter dated 26-07-2019 (Annexure P-1) declining the petitioner for issuance of C Form under the CST Act for the procurement of ENA and Malt Spirit utilized for manufacturing of IMFL - petition dismissed.
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2022 (5) TMI 1112
Seeking permission for reassessment - power to grant permission for reassessment - Whether section 56(1) of the Act permits the Assessing Officer to refer the case to the Commissioner or Joint Commissioner for assessment/re-assessment? - HELD THAT:- Section 31 of the Act provides rectification of the order on an application of any interested person; whereas, section 29 of the Act empowers on the reason recorded by the assessing authority or the Commissioner on its own after being satisfied that it is just and expedient to do so to grant permission of the closed assessment for reassessment, where the turnover of a dealer for any assessment year or part thereof has escaped assessment to tax or has been under-assessed or has been assessed, but taxed at a lower rate than what at which it is assessable under the Act or any deduction or exemption have wrongly been allowed in respect thereof; meaning thereby, under sections 29 31 of the Act appropriate order can be passed by moving an application or seeking permission by the authority concerned - section 56 of the Act does not provide any power to the Commissioner to grant permission of reassessment on the application of the assessing authority. There is no dispute that the Commissioner, on its own motion, call for and examine the records relating to any order passed by any Officer subordinate to him for the purposes of satisfying himself as to the legality or propriety of such order and thereafter, passed such order in respect thereof as he deems fit. The power of the Commissioner is not in question in the present revision as per section 56(1) of the Act. The issue involved in the present revision is only confined to the initiation of the reassessment proceedings by the assessing authority seeking permission of the Commissioner to reassess the revisionist under section 56(1) of the Act. If this procedure is permitted, then section 29 of the Act provides for reassessment will become redundant. Once there is a specific provision empowering authorities to act as per the procedure, the same must be adhered to. Any deviation from such procedure will cause havoc in the State. Section 56 of the VAT Act would reveal that the section has wide power, but seeking of permission by the assessing authority for making reassessment of the dealer is not conferred under the said provision. For reassessment, different provision has been prescribed under the VAT Act,i.e., section 29 and its sub-sections. It is not the case of the Department that section has wrongly been quoted, but specifically the Joint Commissioner (Executive), in the opening paragraph of the order under section 56(1) of the VAT Act while granting permission, has mentioned the said fact that the permission for reassessment is sought by the assessing authority and the permission has wrongly been granted by the Joint Commissioner (Executive) - The Joint Commissioner (Executive) has exceeded in his jurisdiction, which has been endorsed by the Tribunal without looking into the provisions of the Act, which is very clear. The revision is allowed with cost of Rs. 5,000/-, which shall be deposited within a month from today.
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Indian Laws
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2022 (5) TMI 1111
Dishonor of cheque - acquittal of the accused - complainant under Section 256(1) of the Code of Criminal Procedure - HELD THAT:- It is ascertained that acquittal of the accused on the absence of the complainant under Section 256(1) of the Code of Criminal Procedure is not automatic. The court must apply its judicial discretion to the facts and circumstances of the case where it is expedient for the court to acquit the accused under Section 256(1) of the Code. Having gone through the impugned order, the approach of the learned court was clearly erroneous and not in accordance with law. On the date of passing of the impugned order the accused was represented under Section 205 of the Code and he was physically absent. The learned Magistrate passed the order of dismissal of the case without forming any opinion that there is no good reason to adjourn the hearing of the case to some other date. The learned Magistrate has also not recorded any finding justifying dismissal of the case. The case was dismissed because the complainant failed to submit any application showing cause of his absence on the previous date. Absence of judicial discretion is apparent on the face of record. Because the learned Magistrate did not assign any reason in support of the requirement that it is not proper to adjourn the hearing of the case to some other date. This Court is of the considered opinion that the impugned order dated 10th April, 2018 is liable to be set aside - Appeal allowed.
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2022 (5) TMI 1110
Dishonor of cheque - legal presumptions arising before dismissing the suit by reversing the well considered reasonings of the trial Court - scope of Section 118 of the Negotiable Instruments Act - suit promissory notes under Section 20 of the Negotiable Instruments Act - holder is authorized to fill up the blanks and to negotiate the instrument for a certain amount or not? - defendant has categorically admitted the execution and issuance of Ex.A1 to Ex.A3 in his written statement and in evidence before the Court - HELD THAT:- On perusal of the evidence of PW1 and PW2 and the written statement filed by the defendant and the oral evidence of PW1, it is found that the execution and issuance of the pro-notes, viz., Ex.A1 to Ex.A3 are not in dispute. In fact, the defendant has categorically admitted the same in the written statement as well as in his evidence. However, the first Appellate Court has committed an error in giving findings as to the execution. Once the signature found in the suit documents have been admitted, there is no need or necessity for the plaintiff to give explanation for not obtaining the thump impression in the suit promissory note. There is no such law to get the thump impression in the suit promissory note. There is no such law to get the thump impression also in the promissory note, particularly, when the execution and issuance of Ex.A1 to Ex.A3 were not in dispute. When there was no dispute as to the execution of Ex.A1 to Ex.A3, the first Appellate Court ought not to have compared the suit documents by naked eye, as if, the defendant has denied execution and therefore, based upon the above evidence both in oral and documentary pleaded and evidence of the plaintiff side, it is found that in terms of Section 4 of the Indian Evidence Act, whenever it is provided by the Act that the Court shall presume a fact, it shall record such fact as proved unless and until it is disproved. Applying the said definitions of proved or disproved under Section 5 of the Indian Evidence Act to the principle behind Section 118 (a) of the Negotiable Instruments Act, the Court shall presume that Ex.A1 to Ex.A3 were supported by consideration. Presumption under Section 118 of the Negotiable Instruments Act is one of law, and thereunder, the Court below shall presume inter alia that the promissory notes were made for consideration. Once statutory presumption is raised, onus of proving absence of consideration is on the executant and hence, it is found that the lower Appellate Court has miserably failed to consider the pleading and evidence in the proper prospective and has wrongly thrown the burden of proof on the plaintiff with gross ignorance of legal presumption. The defendant had admitted the execution of Ex.A1 to Ex.A3. There is no mandatory provision under the Negotiable Instruments Act that both the signature and thump impression has to be obtained for a pro-note and the lower Appellate Judge has totally misguided and misused the provision of the Negotiable Instruments Act, regarding burden of proof and not even followed basic rudimentary of Section 20 of the Negotiable Instruments Act. This Court comes to the conclusion that the evidence of DW3 is too inform to discharge onus of proof as stated, the statutory provision under Section 118 of the Negotiable Instruments Act. The approach adopted by the lower Appellate Court is condemnable. The finding rendered by the lower Appellate Court that suit pro-note is not valid in the absence of thumb impression is sustainable in law, more so, when the defendant has not disputed the signature and hence, all the Substantial Questions of Law are answered in affirmative in favour of the appellant/plaintiff against the defendant/respondent - Appeal allowed.
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2022 (5) TMI 1109
Appointment of Arbitrator - condition stipulated under Clause 51 of the Arbitration Agreement dated 12.03.1987 - Section 11(6)(C) of the Act, 1996 - HELD THAT:- The admitted fact, as would appear from the material available on record that the petitioner/applicant has entered into an agreement on 12.03.1987 for construction of Officer's Bungalows at Jubilee Park site and Adityapur Site, Jamshedpur, presently in Jharkhand State - The petitioner/applicant has concluded the work but certain claim pertaining to disbursement of amount has been crept up, as such, recourse available under the contract has been resorted to by making request before the concerned competent authority of the State of Jharkhand for appointment of sole Arbitrator. The Hon'ble Apex Court further in the case of PROJECT DIRECTOR, NATIONAL HIGHWAYS NO. 45 E AND 220 NATIONAL HIGHWAYS AUTHORITY OF INDIA VERSUS M. HAKEEM ANR. [ 2021 (7) TMI 1343 - SUPREME COURT] , has been pleased to hold at paragraph-25 thereof that the application under Section 11(6)(C) of the Act, 1996, is maintainable for appointment of sole Arbitrator once award is being quashed by the competent court of law. This Court, after taking into consideration the aforesaid proposition of law, as has been settled by the Hon'ble Apex Court and after going across the facts of the given case, wherefrom, it is evident that even though the award was pronounced on 20.12.2005 which was affirmed by the Court in exercise of power conferred under Section 34 of the Act, 1996, but, has been quashed and set aside by this Court in exercise of power under Section 37 of the Act, 1996 and subsequent thereto, the Hon'ble Apex Court has also affirmed the order passed by this Court in exercise of power conferred under Section 37 of the Act, 1996, is of the view that the dispute remain unresolved, therefore, if application under Section 11(6)(C) of the Act, 1996 has been filed by the petitioner/applicant, the same cannot be held to be not maintainable. This Court, in view of the aforesaid finding, is of the considered view that a fresh Arbitrator is required to be appointed, so that the claim in question be resolved - Application allowed.
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2022 (5) TMI 1079
Maintainability of writ petition - availability of alternative remedy of appeal - Grant of benefit of Moratorium - Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- In case of M/s Balaji Enterprises and other connected matters [ 2022 (2) TMI 1235 - RAJASTHAN HIGH COURT] involving identical controversy, a co-ordinate Bench of this Court has dismissed the writ petitions on account of availability of remedy to the petitioners under the SARFAESI Act - the issue of availability of an alternative statutory remedy is no more res integra and stands decided against the petitioner. In the backdrop of judgments of the Hon ble Apex Court of India in the cases of M.D. Frozen Foods Exports Pvt. Ltd. [ 2017 (9) TMI 1266 - SUPREME COURT] and Indiabulls Housing Finance Limited [ 2018 (3) TMI 118 - SUPREME COURT] , the contention of learned counsel for the petitioners that in view of availability of arbitration clause and invocation of Section 9 of the Act of 1996, the proceedings under the SARFAESI Act could not have been resorted to, does not merit acceptance. The writ petition is dismissed in view of availability of alternative remedy to the petitioners under the provisions of the SARFAESI Act.
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