Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 27, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Supply of services or deemed supply - Liaison office - applicant connects businesses in India with business partners in Dubai - intermediary - non-profit organization - requirement to obtain registration or not - levy of GST - While on one hand applicant has submitted that it is not undertaking any supply, on the other hand applicant accepts that it connects businesses in India with business partners in Dubai, which is nothing but supply of services. Thus the applicant acts as a conduit between some business partners in Dubai and certain businesses in India. It therefore appears that the applicant is acting as an intermediary in the subject case. - AAR
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Confirmation of demand of GST with interest and penalty - Non filing of reply to Show Cause notice (SCN) - non-compliance of mandatory provisions of sub-section (4) of Section 75 of the CGST Act, 2017 - Opportunity of hearing - In the considered opinion of this Court, is liable to be set aside not only on the ground of deviation from the mandatory provisions under sub-section (4) of Section 75 of the CGST Act, 2017 but also on the ground of violation of principles of natural justice - HC
Income Tax
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Validity of Assessment passed under Section 143(3) read with Section 144B - order was passed prior to the expiration of deadline prescribed for preferring a response - assessment order was passed much before the time to file the response elapsed - Assessment order and demand notice quashed - Revenue at liberty to pass a fresh order - HC
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Rejecting the registration u/s.12AA - CIT(Exemption) has not mentioned in his finding that the objects of the trust were not in order or that the application made for registration was also not in accordance with law. In absence of these findings, just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. - AT
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Penalty proceedings u/s. 221(1) - default as per Section 220 - the AR of the assessee could not explain fund availability position on the due date of payment of advance tax as well as on the date of self-assessment tax i.e. date of filing of return. We also observe form the order of the authorities below, the assessment was completed u/s. 144 by rejecting the books of accounts of the assessee which clearly shows that the intention of the assessee was not in favour of the revenue for the payment of tax. It clearly shows that the assessee was not paying the taxes within the stipulated time. - Levy of penlty confirmed - AT
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Characterization of income - Income by way of winnings from lotteries on unsold lottery tickets - Winnings from lottery is read with the other kinds of winnings included within the ambit of section 2(24)(ix) of the Act, it becomes apparent that it is only attracted to those people who have such winnings by reason of their participation in draw of lottery as part of their hobby or enjoyment or pastime. If these winnings have arisen as part of business of distribution of lottery tickets, then such winnings cannot be regarded as ‘winnings from lotteries‘ u/s 2(24)(ix) of the Act but would be taxable as profits and gains of business of distribution of lottery tickets. - AT
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Revision u/s 263 - the ld PCIT had invoked revision jurisdiction u/s 263 of the Act on the very same point of allowability of LTCL. Hence it could be safely concluded that the revision proceedings has been invoked by the PCIT u/s 263 of the Act based on audit objection, which is nothing but borrowed satisfaction. Hence the said revision proceedings u/s 263 of the Act need to be construed as bad in law. - AT
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MAT - book profit u/s.115JB - Additions towards amount received on sale of Floor Space Index (FSI) - merely because a particular receipt , which is in the capital field, had been offered to tax by the assessee voluntarily in the return of income while computing book profits u/s 115JB of the Act, it cannot be brought to tax merely on that ground. It is very well settled that there is no estoppel against the statute. - AT
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Exercising power of AO by the Addl. CIT - Validity of framing of assessment by the ld. Additional Commissioner of Income Tax - in absence of a valid notification under section 120(4)(b) the Addl. CIT cannot exercise power of an Assessing Officer. - AT
Indian Laws
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Dishonor of Cheque - cheque on presentation was dishonoured for want of sufficient funds - acquittal of the accused - Once signature, execution and handing over of the cheque are satisfactorily proved, the presumption u/s. 139 of the NI Act would come into play and remain in force until the accused discharges the burden. The complainant has successfully established the signature, execution and handing over of the cheque. There is absolutely no evidence adduced to rebut the said presumption available to the complainant u/s. 139 of the NI Act - The impugned judgment of acquittal, thus, cannot be sustained and is liable to be set aside - HC
IBC
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Liability of Purchaser of corporate debtor under liquidation under auction - Certain demand raised by the liquidator - now post the execution of the Sale Certificate, the demand raised by the Liquidator to the Applicant for the Interest as well as TDS is not maintainable. The Liquidator is at liberty to file for refund with the Income Tax department for the refund of TDS, if any, applicable to this case. The Liquidator is also directed to hand over the possession of the Corporate Debtors assets as per Schedule I of the Sale Certificate to the Applicant. - Tri
Service Tax
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Classification of services - Manpower Recruitment Agency Service - conversion of raw material to soap and detergent on behalf of the principal - contract between the appellant and M/s Nirma Limited is of contract manufacturing hence demand under manpower supply cannot be made. - AT
Central Excise
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Reversal of CENVAT Credit - Capital Goods - Lease back of sold out capital goods - Deemed removal of goods from the factory premises of the petitioner - core contention of the petitioner's counsel is that the Central Excise Act does not contemplate any deemed removal - The order impugned in the writ petition is quashed. The matter is remitted to the file of the respondent. The respondent will bear in mind the Circular No. 1063/2/2018-CX - HC
Case Laws:
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GST
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2021 (5) TMI 813
Supply of services or deemed supply - Liaison office - applicant connects businesses in India with business partners in Dubai - intermediary - non-profit organization - requirement to obtain registration or not - levy of GST - HELD THAT:- While on one hand applicant has submitted that it is not undertaking any supply, on the other hand applicant accepts that it connects businesses in India with business partners in Dubai, which is nothing but supply of services. Thus the applicant acts as a conduit between some business partners in Dubai and certain businesses in India. It therefore appears that the applicant is acting as an intermediary in the subject case. Intermediary - HELD THAT:- The applicant is satisfying all the conditions of an intermediary and there are no hesitation in holding that, the applicant is an intermediary. As per the provisions of Section 13 (8) of the IGST Act, 2017, we find that the place of supply in subject case of the applicant as an intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the State of Maharashtra, India. Non-profit organization - HELD THAT:- From the website of Dubai Chamber, UAE, it is seen that they are providing various services for which fees are charged. Thus it is clear that the applicant s Head Office appears to be a profit making organization, in which case the applicant cannot be considered as a non-profit making organization. Supply or not - HELD THAT:- There is definitely, a supply of services by the applicant to various businesses in India and Dubai and such supply is done by the applicant as an intermediary - activities under taken by the DCCI is nothing but Business . The terms Supply and Business are defined under GST Act, in an inclusive manner and have wide connotations. Hence the reply filed by the applicant to cross objection is incorrect. Activities undertaken by the applicant are covered by the scope of word Commerce , Business and also covered under the scope of Supply . The applicant connects businesses in India with business partners in Dubai. In other words applicant is providing services, to various business in India and Dubai. Hence, the facts of both the cited cases are different from the facts of the present case - the applicant is receiving consideration from its Head Office in excess of expenses incurred by it, we agree with the jurisdictional officer s view that, the applicant cannot be treated as a non-profit organization. Also, the application is providing intermediary services for which it is liable to pay GST.
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2021 (5) TMI 811
Correction of mistake in the return - contention of the learned counsel for the petitioner is that certain mistakes have crept in at the time of filing the GSTR-1 in Form B2B, due to which the invoice had been reflected in column B2Chf though the petitioner had paid all taxes as and when they were due - HELD THAT:- Without entering into the merits of the claim of the petitioner, the present petition is being disposed of with a direction that the petitioner may file a fresh representation raising all his grievances before the competent authority which according to Sri Dhananjay Awasthi learned Advocate is Commissioner, CGST Central Excise Jhansi Division, Jhansi.
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2021 (5) TMI 809
Confirmation of demand of GST with interest and penalty - Non filing of reply to Show Cause notice (SCN) - non-compliance of mandatory provisions of sub-section (4) of Section 75 of the CGST Act, 2017 - Opportunity of hearing - HELD THAT:- In the instant case, admittedly, proposing an adverse action, by way of a show cause notice, 1st respondent initiated action under the above provision of law. It is evident from a reading of the impugned order that on the ground that the petitioner herein failed to respond to the show cause notice by way of filing objections, 1st respondent herein confirmed the demand. When such a course of action is adopted by 1st respondent herein prejudicial to the interest of the assessee, the mandatory requirements of law as provided under sub-section (4) of Section 75 of the CGST Act, 2017 are required to be followed scrupulously. In the considered opinion of this Court, is liable to be set aside not only on the ground of deviation from the mandatory provisions under sub-section (4) of Section 75 of the CGST Act, 2017 but also on the ground of violation of principles of natural justice - matter remanded to 1 st respondent for consideration of the issue and for passing appropriate orders afresh after giving notice of hearing to the petitioner indicating the date and time of personal hearing - petition allowed by way of remand.
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Income Tax
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2021 (5) TMI 810
Validity of Assessment passed under Section 143(3) read with Section 144B - order was passed prior to the expiration of deadline prescribed for preferring a response - assessment order was passed much before the time to file the response elapsed - alternative remedy available - demand issued under Section 156 of the Act and the notice for initiation of penalty proceedings issued under Section 274 read with Section 270A - HELD THAT:- The impugned orders cannot be sustained.The reason being that, although, via the show cause notice-cum-draft assessment order dated 18.04.2021, the petitioner was given leave to respond to the same by 23.59 hours on 22.04.2021, the impugned assessment order was passed on 22.04.2021 at 14.11 hours, i.e., much before the time to file the response elapsed. The petitioner has taken the stand, as indicated in our order of 10.05.2021, that it had made attempts on 22.04.2021 to upload the response to the aforementioned show cause notice-cum-draft assessment order, which failed, perhaps, due to the fact that the impugned assessment order had already been passed. We have reached the conclusion that the impugned orders cannot be sustained, as none of these facts, which are stated in our order of 10.05.2021, have been put in issue. The argument that an alternate statutory remedy is available to the petitioner does not find favour with us as it is simply a self-imposed limitation which does not prevent a Court from entertaining a writ petition in a fit case - See CALCUTTA DISCOUNT COMPANY LIMITED [ 1960 (11) TMI 8 - SUPREME COURT] The other argument advanced on behalf of the respondent/revenue that several opportunities were given to the petitioner, before issuance of the show cause notice-cum-draft assessment order, and hence, merely because the impugned assessment order was passed prior to the expiration of deadline prescribed for preferring a response, the same would not result in violation of principles of natural justice is, equally, untenable. The reason is this: once the respondent/revenue issued a show cause notice-cum-draft assessment, as required in law, which proposed a variation in the petitioner s declared income, it was obliged to give an opportunity to the petitioner to file its objections. With the issuance of the show cause notice-cum-draft assessment order, the respondent/revenue firmed up its position as to how it wishes to move further in the matter. Notices issued prior to this stage are inquisitorial in nature. These are issued to ferret information and make inquiries with the object to, inter alia, ensure that there is no understatement of income or a claim of excessive loss, or a case involving under payment of tax; but once a show cause notice-cum-draft assessment order is issued, the noticee s statutory right to file a reply and to seek a personal hearing kicks in, which cannot be curtailed. WP allowed.
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2021 (5) TMI 806
Demand calling upon the petitioner to remit interest u/s 220(2) in regard to the arrears of demand - HELD THAT:- Admittedly, the interest demand has itself attained finality, insofar as the application of the petitioner for waiver of interest u/s 220(2A) of the Act was dismissed by the Principal Commissioner of Customs, Salem as early as on 14.02.2019. As against the aforesaid order of dismissal, the petitioner appears to have gone on appeal before the Income Tax Appellate Tribunal, which dismissed the appeal as not maintainable by order dated 18.12.2019. This order has attained finality as on date. Thus no challenge would lie to a demand for interest under Section 220(2) of the Act and hence, this Writ Petition is dismissed at the admission stage itself.
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2021 (5) TMI 801
Rejecting the registration u/s.12AA - Whether voluntary contributions (towards corpus) received by the charitable trust are not income as defined vide section 2(24)(iia)? - HELD THAT:- In the present case, the objects of the trust are not doubted by the Department and they have also not disputed the charitable nature of the activities conducted by the assessee trust. Meaning thereby, all the relevant records were submitted before the Ld. CIT(Exemption) and he had verified the same and was satisfied on this aspect fulfilling the requirement of Section 12AA of the Act. We are of the considered view that this is not a fit case for rejection of application for registration u/s.12AA of the Act on the reasons mentioned in the order of the Ld. CIT(Exemption). There is no finding on facts that the activities carried out by the assessee are not genuine. CIT(Exemption) has not mentioned in his finding that the objects of the trust were not in order or that the application made for registration was also not in accordance with law. In absence of these findings, just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. These things can be examined by the Department and scrutinized at the assessment stage. When all the requirements of registration u/s.12AA of the Act have been satisfied by the assessee trust, registration therein should be granted - we set aside the order of the Ld. CIT(Exemption) and direct the Department to grant registration u/s. 12AA of the Act to the assessee trust. - Decided in favour of assessee
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2021 (5) TMI 800
Rectification u/s 254 - Assessee contends that Ground No.3 is alternate to Ground Nos.1 2. If the first two grounds i.e. Ground Nos.1 2 are being allowed, Ground Nos. 3 becomes infructuous/academic - HELD THAT:- We don't find any mistake apparent from record necessitating our jurisdiction as envisaged u/s.254(2) What the assessee contends is actually asking review of the entire decision already taken on facts by the Tribunal. Whether the Assessing Officer is giving appeal effect or not, there are other legal recourses available with the assessee. That however, the jurisdiction as envisaged u/s.254(2) of the Act does not entitle such remedy as claimed by the assessee before us. The Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric Trading Company [ 1992 (11) TMI 32 - BOMBAY HIGH COURT ] has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment. We are of considered view that in the guise of rectification, the assessee is seeking review of the order of Tribunal, which is beyond the scope of powers as envisaged u/s. 254(2) of the Act. Miscellaneous Application filed by the assessee is dismissed.
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2021 (5) TMI 799
Assessment u/s 144C(13)/143(3) - Assessment order as barred by limitation - validity of draft assessment order framed by the AO - HELD THAT:- As the facts of the present case are that the original assessment was framed u/s 143(3) of the Act vide order dated 28.03.2006 and when the dispute travelled up to the Tribunal the Tribunal set aside the matter back to the files of the AO to frame denovo assessment. While giving effect to the order of the Tribunal the AO has erroneously framed a draft assessment order following the provisions of section 144C(1) of the Act which was clearly not applicable on the facts of the case in hand. After receiving the directions from the DRP the final assessment order was framed on 19.08.2011 which is definitely barred by limitation in the light of the provisions of section 153(2A) as applicable during the year under consideration. Thus we have no hesitation in holding that the assessment order dated 19.08.2011 is barred by limitation. Decided in favour of assessee.
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2021 (5) TMI 798
Understatement of receipts in respect of the project by following percentage of completion method of accounting - HELD THAT:- Tribunal has decided the issue in favour of the assessee in assessment year 2007-08 [ 2020 (7) TMI 189 - ITAT MUMBAI] and in assessment year 2009-10 [ 2020 (8) TMI 842 - ITAT MUMBAI] . Facts being identical, respectfully following the consistent view of the Tribunal expressed in assessee s own case in preceding assessment years referred to above, we delete the addition made by the assessing officer and sustained by learned Commissioner of Income Tax (Appeals). These grounds are allowed. Addition on account of excess of progress billing over inventories - HELD THAT:- As relying on own case we find that the assessee has accumulated cost as well as revenue under these projects in the Balance Sheet by following completed contract method. The revenue has accepted such accumulation during AYs 2004-05 2005-06 and this is the third year of accumulation under the projects. It is not the case of the revenue that the income under these projects have not been offered to tax in subsequent years. No case of revenue leakage has been established before us. Therefore, the action of revenue in disturbing the consistent method of accounting being followed by the assessee could not be held to be justified. Hence, we delete the impugned additions and allow these grounds of appeal. Deduction of education cess and higher and secondary education cess - HELD THAT:- We find that this issue is squarely covered by the decision of Hon ble jurisdictional High Court in case of Sesa Goa Ltd vs JCIT [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] wherein, the Hon ble Court has held that amount paid towards education cess and higher and secondary education cess on income-tax is an allowable deduction. The same view has been expressed by the co-ordinate bench in case of M/s Baroda Industries Pvt Ltd [ 2020 (11) TMI 943 - ITAT MUMBAI] .Respectfully following the aforesaid decisions, we allow assessee s claim. These grounds are allowed. Depreciation on certain expenditure - HELD THAT:- Admittedly, the assessee is contesting the issue before the Tribunal in assessment year 2008-09 and as submitted, the appeal has been heard. Therefore, assessee s claim of depreciation would depend on the outcome of the decision of the Tribunal regarding assessee s claim of revenue expenditure in assessment year 2008-09. In case, assessee s claim is accepted in assessment year 2008-09, this ground would become infructuous. Otherwise, if the Tribunal agrees with the departmental authorities that the expenditure is capital in nature, the assessee would be entitled to claim depreciation. Accordingly, this ground is restored back to the assessing officer for deciding afresh keeping in view the order of the Tribunal for assessment year 2008-09. This ground is allowed for statistical purposes. Short grant of TDS - HELD THAT:- We direct the assessing officer to verify form 26AS and other materials on record and allow credit for TDS as may be admissible and in accordance with law. This ground is allowed for statistical purpose. Non grant of foreign tax credit - HELD THAT:- It is the contention of the assessee that the entire income earned by the assessee, whether in India or from contracts executed in foreign countries have been offered to tax in India and the assessee has shown positive income. Hence, credit for tax paid in foreign countries should be given. Undisputedly, the aforesaid issue was not a subject matter of dispute before learned DRP. This issue has been raised for the first time before us. All relevant facts relating to assessee s claim have to be examined, as, they were never examined at any stage. Therefore, we restore the issue to the assessing officer for examining assessee s claim and deciding it in accordance with law. We make it clear, we have not expressed any opinion on the merits of assessee s claim which the assessing officer has to decide keeping in view the allowability of assessee s claim vis- -vis the legal position. Of course, the assessing officer has to provide a reasonable opportunity of being heard to the assessee before deciding the issue. Levy of interest under section 234A - HELD THAT:- It is the claim of the assessee that the return of income having been filed within the time limit prescribed under section 139(1) of the Act, no interest under section 234A can be charged. Keeping in view the aforesaid submission of the learned Counsel, we direct the assessing officer to verify the date of filing of return and in case it is found that the return of income was filed within the due date as per section 139(1) of the Act, no interest under section 234A can be charged.
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2021 (5) TMI 797
Ex-party order passed by CIT-A - Penalty levied u/s 271AAB - during the search action assessee accepted unaccounted income in respect of LTCG - HELD THAT:- As assessee did not make any compliance to various show cause notices issued by the ld.CIT(A) as recorded in para 5 of the impugned order. CIT(A) confirmed the action of AO by taking view that there is non-compliance on the part of the assessee. Before, us assessee undertook to be vigilant and to appeal before the ld. CIT(A). We, instead of going into controversy, whether the assessee defaulted in attending the proceedings before the ld.CIT(A). We find that the order of the ld.CIT(A) is not in accordance with mandate of section 250(6) of the Income Tax Act. Section 250(6) of the Act mandates that the Ld. CIT(A) while deciding the appeal is required to pass order on points of determination (grounds of appeals), decision therein on and reasons for such decision. Appeal of the assessee is restored back to the file of the ld.CIT(A) to decide all the grounds of appeal on merit in accordance with law. The assessee is directed to appear before the ld.CIT(A) as and when the date of hearing and to provide all necessary evidence and information without any further delay and not to seek the adjournment without any valid reasons. Accordingly the grounds of appeal by assessee are allowed for statistical purpose.
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2021 (5) TMI 796
Penalty proceedings u/s. 221(1) - default as per Section 220 - Assessee company filed Return of Income without paying self-assessment tax u/s.140A - HELD THAT:- Assessee during the course of hearing stated that the assessee was in financial constraint whereas the business activity carried on by the assessee whole year and Return of Income having been filed much after the end of the year. But the AR of the assessee could not explain fund availability position on the due date of payment of advance tax as well as on the date of self-assessment tax i.e. date of filing of return. We also observe form the order of the authorities below, the assessment was completed u/s. 144 by rejecting the books of accounts of the assessee which clearly shows that the intention of the assessee was not in favour of the revenue for the payment of tax. It clearly shows that the assessee was not paying the taxes within the stipulated time. Hence the Assessing Officer has rightly imposed the penalty u/s. 221(1) of the Income Tax Act after considering that the assessee is in default for payment of tax. We did not find any substance on the submission of the Authorised Representative. The case laws (supra) relied on by the learned Authorised Representative are distinguishable on the facts of the present case on hand. As per our considered opinion, the CIT(A) has rightly confirmed the order of the Assessing Officer for imposing penalty u/s. 221(1) - Decided against assessee.
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2021 (5) TMI 795
Revision u/s 263 by CIT - receipt of unaccounted income of the firm in the form of on-money - PCIT has rejected the contention of the assessee and held that in respect of either non-applicability of sections 68, 69, 69A to 69D or in respect of allowance of claim of expenses u/s 40(b) of the Act is not found to be acceptable and are accordingly rejected, therefore, the assessment order u/s 143(3) was found to be erroneous in so far as it is prejudicial to the interest of Revenue - HELD THAT:- It is undisputed fact in this case that a survey u/s 133A of the Act was carried out at the business premises of the assessee on 04.12.2014. During the survey, certain facts were discovered and statement of Shri Odhavjibhai Shamjibhai Pagdar, one the partners of the firm, was recorded on oath u/s 131 of the Act. In the statement so recorded, an amount was disclosed as 'income over and above regular income of the assessee firm' ( for F.Y. 2014-15 relevant to AY 2015-16). It is also undisputed in this case that the said amount has been disclosed in the profit and loss account under the head 'income disclosed'. However, after claiming deduction u/s 40(b) of the Act towards interest paid to partners net income in the return was declared by the assessee, which was accepted by the AO in the impugned assessment order passed u/s 143(3) of the Act on 11.12.2017. Thus, it is abundantly clear from the order of assessing officer, as noted above, that assessing officer has examined the issue of on-money and applied his mind, therefore, his order should not be subjected to revision proceedings under section 263. As during the assessment stage, the assessee submitted the books of accounts and other documents.. The books of accounts of the assessee are audited by a chartered accountant. The assessing officer examined the books of accounts, survey documents and evidences submitted by the assessee and applied his mind. The assessing officer conducted sufficient inquiry. To gather more information and then prove the claim of the assessee wrong is not the object of section 263 of the Act. The object of section 263 is to examine whether order passed by the AO is erroneous as well as prejudicial to the interest of revenue. Therefore, based on this factual position, the order passed by the AO under section 143(3) should not be erroneous. As decided in the case of Plastic Concern [ 1997 (6) TMI 44 - ITAT CALCUTTA-E] mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings. Therefore, based on the factual position narrated above, we quash the order of ld PCIT under section 263. Appeal of the assessee is allowed.
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2021 (5) TMI 794
Disallowance u/s 80GGA -donation made to Navjivan Charitable Trust agreeing with the AO that the donation was bogus - discharge of anus by assessee - HELD THAT:- As assessee had given donation on 21/06/2004 against valid receipt issued by the Trust. The donation was made through cheque which got cleared from assessee s bank account. The assessee was issued requisite Form No.58A by the trust. The trust had valid registration at the time of making of donation. The approval was withdrawn only subsequently vide notification dated 30/11/2016. Further, it is evident from the assessment order that the deduction has been denied to the assessee only in the basis of allegations that the donations were bogus donations and the amount so donated has flown back to the assessee. Except for statement of trustee of the society, we find that there is no positive evidence on record to substantiate the same. There is nothing on record which would show that on the date of donation, the trust did not have valid registration or its registration stood withdrawn. It was only subsequently that the approval was withdrawn. The deduction could not be denied to the assessee since Ld. AO failed to conduct any inquiry before making disallowance and except for mere allegations, he did not brought on record any fact to establish that donation given by the assessee was subsequently returned back in cash. The assessee, in our opinion, has duly discharged the onus casted upon him and it was incumbent upon Ld. AO to refute the same. As no such inquiry has been conducted and the deduction has been denied more on mere allegations. Therefore, the deduction could not be denied to the assessee - we direct Ld. AO to grant the deduction u/s 80GGA and re-compute assessee s income. - Decided in favour of assessee.
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2021 (5) TMI 793
Revision u/s 263 - Taxability of income by way of winnings from lotteries u/s 115BB of the Act and set off of loss under the head Profits and Gains of Business or Profession - PCIT directing the ld AO to compute the winnings from lottery not as business income but as income within the meaning of section 115BB - whether the assessee firm is entitled for set off of business loss with the income determined u/s 115BB? - HELD THAT:- We find lot of force in the argument advanced by the ld AR on the point that there is no bar on set-off of loss provided in section 115BB of the Act as stated supra. Section 115BB of the Act talks only about taxability of such winnings at a special rate of 30%. Hence only the net winnings is taxable at 30%. The net winnings is to be determined after setting off the business loss of ₹ 40.86 crores as worked out above with the income from other sources. We find that the ld AR had not disputed the rate of taxability of winning from lotteries in terms of section 115BB of the Act. We find that even if the prize winnings from unsold lottery tickets is sought to be taxed under the head Income from Other Sources as pointed out by the ld PCIT in his section 263 order, the business loss is still required to be set off with the prize winnings from unsold lottery tickets u/s 71 of the Act and the net income thereon would be liable for tax at special rate of 30% in terms of section 115BB of the Act. As long as the tax rate under normal provisions of the Act and tax rate prescribed u/s 115BB of the Act are same, the entire issue becomes revenue and tax neutral. Hence there could be no prejudice that could be caused to the interest of the revenue for the Asst Year 2014-15 even if the order of the ld AO is found to be erroneous. We find that the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT ] had categorically held that for the ld PCIT to invoke revision jurisdiction u/s 263 of the Act, the twin conditions should be cumulatively satisfied i.e. the order passed by the ld AO should be erroneous and it should be prejudicial to the interest of the revenue. In the instant case, since the entire issue is revenue and tax neutral, the twin conditions stipulated in section 263 of the Act are not satisfied and hence the section 263 order passed by the ld PCIT is eligible to be quashed thereon. Whether the prize winnings from unsold lottery tickets derived by the assessee dealer could be assessed under the head Income from Business or under the head Income from Other Sources , per se, is clearly a debatable issue. Hence the law is now well settled that a debatable issue cannot be subject matter of revision proceedings u/s 263 . All the requisite details were indeed filed by the assessee before the ld AO in response to the queries raised by the ld AO along with the notice u/s 142(1) of the Act dated 16.8.2016 and thereafter by oral queries raised during assessment proceedings. We find that the assessee had duly replied to those queries before the ld AO in the assessment proceedings vide reply letters dated 22.11.2016 and 29.11.2016 together with all the supporting details and workings for arriving at the profits including prize winnings from unsold lottery tickets Hence it could be safely concluded that this is not a case where no enquiries at all, were carried out by the ld AO in the assessment proceedings. We hold that requisite enquiries were indeed carried out by the ld AO and after duly getting satisfied on the same, he had proceeded to frame the assessment accepting the contentions of the assessee. It is not necessary for the ld AO to deal with each and every matter that had cropped up in the assessment order. He is not expected to write a thesis in the assessment order. He is only required to address the issues on which he is not agreeable with the contentions of the assessee. It could be safely concluded that the ld PCIT grossly erred in invoking revisionary jurisdiction u/s 263 of the Act by trying to substitute his own view against the view already taken by the ld AO and also on a purely debatable issue. Hence we have no hesitation in quashing the revision order passed by the ld PCIT u/s 263 of the Act . Accordingly, the first issue framed hereinabove at the beginning of this order is decided in favour of the assessee. Characterization of income - Income by way of winnings from lotteries on unsold lottery tickets - Winnings from unsold lottery tickets is incidental to the carrying on of business of distribution of lottery tickets and therefore assessable under the head income from business or profession . The income from nature of activities covered within the ambit of section 2(24)(ix) of the Act are such which are carried out, as part of hobby or enjoyment or pastime. However, if a person is engaged in the business of say lottery or organizing horse races, then income earned by such person cannot be brought within the ambit of section 2(24)(ix) of the Act as the same would be chargeable as regular income from business. The words winnings from lottery cannot be read in isolation and would take its colour from the words with which it is associated with. The nature of income covered within its ambit cannot be read in isolation or dissected from each other. A holistic reading of clause (ix) in section 2(24) of the Act would suggest that it is not intended to apply to a person who is engaged in the business of distribution of lotteries or owning and maintaining race horses or a bookmaker with whom a punter places his bets. Winnings from lottery is read with the other kinds of winnings included within the ambit of section 2(24)(ix) of the Act, it becomes apparent that it is only attracted to those people who have such winnings by reason of their participation in draw of lottery as part of their hobby or enjoyment or pastime. If these winnings have arisen as part of business of distribution of lottery tickets, then such winnings cannot be regarded as winnings from lotteries u/s 2(24)(ix) of the Act but would be taxable as profits and gains of business of distribution of lottery tickets. Whether the ld PCIT was justified in directing the ld AO to compute the winnings from lottery not as business income but as income within the meaning of section 115BB? - The interconnected issue involved therein is as to whether the assessee firm is entitled for set off of business loss with the income determined u/s 115BB of the Act in the facts and circumstances of the case? - In the instant case before us, there is absolutely no quarrel regarding the applicability of tax rate u/s 115BB of the Act. The real quarrel is only whether the business loss incurred by the assessee after exclusion of prize money from net profit is eligible for set off against winnings from lotteries u/s 71 of the Act. In the present case before us and in the subject assessment year, the income by way of winnings from lotteries is taxable at 30% u/s. 115BB of the Act whereas the maximum marginal rate of taxation was also 30% for both Individuals and firms In view of the elaborate observations on merits and respectfully following the various judicial precedents relied upon hereinabove, we decide the second issue framed at the beginning of this order in favour of the assessee.
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2021 (5) TMI 792
Deduction u/s 10A - computation of eligible profit for deduction u/s 10 A - allocation of expenditure to the eligible and non-eligible unit - HELD THAT:- As directed the learned assessing officer to compute the eligible profit for deduction u/s 10 A of the act. The assessee has submitted before us that if such a margin is also imputed for this year the common expenditure allocation. This would be over and above the allocation made by the assessee - As we find that order of the ld CIT (A) for subsequent year has reached at correct methodology of allocation of expenditure same can also be applied for the current year. DR did not raise any serious objection to this proposition. Therefore, we direct the learned assessing officer to recompute the allocation of expenditure to the eligible and noneligible unit for this year also by applying the margin of 16%. The AO may verify the working as placed by the assessee and then recalculate the addition on that basis. Thus the orders of lower authorities on this issue are set aside. Deductibility of the education cess under the provisions of Section 37 (1) - HELD THAT:- As the assessee has paid taxes including the education cess along with taxes and the same is claimed now as deduction u/s 37 (1) of the act. This issue is squarely covered in favour of the assessee by the decision of the honourable Rajasthan High Court in case of CIT versus Chambal fertilizers and chemicals Ltd [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] as well as of the decision of Sesa Goa Ltd [ 2016 (2) TMI 308 - BOMBAY HIGH COURT] . In view of the above judicial precedents of the Honourable High Court s we find that the education cess paid on income tax is allowable to the assessee as a deduction u/s 37 (1) of the act. We direct the learned assessing officer to examine the calculation of the education cess and grant assessee deduction accordingly. In view of this additional ground raised by the assessee is allowed. TP Adjustment - direction of the ld CIT (A) for exclusion of the comparable (1) TSR Darshaw Limited and (2) Aptico Limited - HELD THAT:- As in assessee s own case the above two comparables have been excluded by the coordinate bench in different years. No reason has been shown to us to deviate from the same. No change in the functional analysis of the comparable vis-a-vis the assessee was shown with respect to those years. In view of this we respectfully following the decision of the coordinate bench in assessee s own case for exclusion of the about two comparables, we uphold the order of the learned CIT A and dismiss the solitary ground in the appeal of the learned assessing officer. Comparability - Exclusion of companies being functionally different with market support services segment of the assessee. Allocation of the expenditure in working out deduction u/s 10 A - HELD THAT:- CIT A is correct in holding that the allocation should be made between the eligible and noneligible units for the purpose of working out deduction u/s 10 A of the income tax act - -CIT A has asked the assessee to reconcile corporate results along with the transfer pricing transaction shown in form number 3CEB. He also verified the details of the breakup of the receipts of the corporate division which renders the business support services to international associated enterprise. The learned CIT A in para Number 17.6 has further noted that when the assessee is charging a substantial markup for its international transactions there is no reason that why similar margin should not have been charged from its associated enterprise in India for the working out of deduction u/s 10 A of the act. Thus it takes care of the real profit of eligible and non eligible units. On careful perusal of order of the learned CIT A we find that if the allocation of expenditure is made on the basis of the markup charged between the domestic associated enterprises as well as the foreign associated enterprise, in absence of any infirmity in the allocation of the expenditure made by the assessee and application of thumb rule of applying allocation key of turnover by the learned assessing officer, it will meet the end of the justice. In view of this ground number 4 of the appeal of the learned AO is dismissed. Transfer pricing Adjustment - determination of the arm s-length price of the ITeS services of the assessee - comaparable selection - HELD THAT:- Accentia technologies Ltd be excluded from the set of comparables as it is engaged in providing knowledge process outsourcing services Infosys BPO Ltd and TCS E serve - Both these comparable companies have significantly higher turnover compared to the turnover of the assessee and both are enjoying the brand value of respective group companies, thus we direct the learned AO/TPO to exclude the above two comparable companies.
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2021 (5) TMI 791
Revision u/s 263 - allowability of LTCL - HELD THAT:- We find that the assessee had furnished replies before the ld AO in writing from time to time by collating all the queries that were raised in writing by way of questionnaire as well as the queries raised by the ld AO at the time of personal hearing. As audit objection of the Revenue Audit Department goes to prove that the Revenue Audit Department apparently had not agreed with the view taken by the ld AO. Hence there exists two views on the same subject within the Income Tax Department itself. There is absolutely no incorrect assumption of fact or incorrect application of law by the ld AO. Hence it could be safely concluded that the ld AO had taken one of the possible view. Once a possible view has been taken by the ld AO, his order cannot be termed as erroneous warranting revision proceedings u/s 263. In any case, we find that there is no dispute that the Revenue Audit Party had indeed raised an objection on the very same subject of allowability of Long Term Capital loss and that the ld AO had not accepted the same. This is evident from the detailed reply given by the ld AO to the Revenue Audit Party vide his letter dated 3.7.2017. We find that the ld PCIT had invoked revision jurisdiction u/s 263 of the Act on the very same point of allowability of LTCL. Hence it could be safely concluded that the revision proceedings has been invoked by the PCIT u/s 263 of the Act based on audit objection, which is nothing but borrowed satisfaction. Hence the said revision proceedings u/s 263 of the Act need to be construed as bad in law. Appeal of the assessee is allowed.
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2021 (5) TMI 790
Validity of re-assessment proceedings - approval of the ld. Pr. Commissioner of Income Tax (PCIT) u/s.151 of the Act was sought in the instant case in a mechanical manner - assessee had filed additional evidences - HELD THAT:- Additional evidences were filed by the assessee before us for the first time and admittedly these documents were not available before the ld. CIT(A) while adjudicating the ground raised regarding challenging the validity of re-assessment proceedings. We feel that these additional evidences go to the root of the matter for deciding the legal issue of validity of re-assessment proceedings. Hence, we deem it fit and appropriate to admit these additional evidences and since these evidences were not placed before the ld. CIT(A), we deem it fit and appropriate, to remand these appeals to the file of the ld. CIT(A) to decide the issue challenging the validity of reopening of assessment by considering these evidences, in accordance with law - the appeals are remanded back to the file of the ld. CIT(A) only for the limited purpose of adjudication of the legal issue of challenging the validity of re-assessment proceedings. But since, the validity of re-assessment proceedings and challenging the addition on merits are to be considered together for the purpose of better administration and convenience, we deem it fit to remand these appeals to the file of the ld. CIT(A) for denovo adjudication
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2021 (5) TMI 789
MAT - book profit u/s.115JB - Additions towards amount received on sale of Floor Space Index (FSI) - Treated as income from Long Term Capital Gains while computing the income of the assessee under normal provisions of the Act - when there is no cost incurred by the assessee for obtaining any additional benefit of 0.8 by way of additional FSI, then, whether any sum received by the assessee pursuant to a sale of such additional FSI could be brought to tax under the head income from capital gains ? - whether such receipt of sum would be exigible to tax while computing book profit u/s.115JB - HELD THAT:- We hold that assessee could not have pre-empted any change in the Development Control Regulation Rules in the city of Coimbatore at the time of purchase or before the sale. Admittedly no cost was incurred by the assessee for getting such benefit by way of additional FSI. Hence, it could be safely concluded that the additional benefit derived by the assessee by way of getting vested with additional FSI on the land and building owned by the assessee is only a wind fall gain by operation of law, and which had not costed the assessee any money. We find that the entire issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in the case of Kailash Jyoti No.2 CHS Ltd [ 2015 (11) TMI 400 - BOMBAY HIGH COURT ] Thus we hold that the sum received by the assessee on sale of additional FSI, is not exigible for long term capital gains and accordingly the same is hereby directed to be excluded under normal provisions of the Act. Taxability of same sum while computing book profit u/s.115JB - We find that assessee had admittedly offered the said receipt of ₹ 4,76,25,000/- had admittedly offered the said receipt to tax while computing book profits u/s.115JB. There is absolutely no dispute that such receipt is indeed a capital receipt and that the same does not form part of operational working results of the assessee company. Even according to the case of the Revenue, the said receipt is only inseparable from land, building and accordingly it only partakes the character of a capital receipt. We hold that merely because a particular receipt , which is in the capital field, had been offered to tax by the assessee voluntarily in the return of income while computing book profits u/s 115JB of the Act, it cannot be brought to tax merely on that ground. It is very well settled that there is no estoppel against the statute. We hold that the sum being a capital receipt from its inception, is to be excluded while computing book profits u/s.115JB of the Act and also on the ground that it does not form part of operational working results of the company. Accordingly, the additional ground raised by the assessee vide letter dated 19/01/2021 is allowed. Applicability of provisions of Section 115JB - We find that the decision relied upon by the ld AR was rendered in the context of section 143(1A) of the Act. The provisions of Section 115JB of the Act start with a non-obstante clause and is a self contained code by itself. By giving due weightage to the intention behind introduction of provisions of section 115J, 115JA and 115JB of the Act, we are not inclined to agree to the contentions of the ld AR. We find that this issue has already been addressed by this Tribunal elaborately in assessee s own case for the Asst Year 2011-12.These provisions are in force from the year 1987 onwards commencing from Section 115J which had gradually migrated to Section 115JB of the Act without digressing from the true intention behind introduction of these provisions in the Act. Hence, the primary argument that Section 115JB of the Act is not applicable to the assessee company in the instant case is hereby rejected. Accordingly, the ground No.1 raised by the assessee is dismissed.
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2021 (5) TMI 788
Exercising power of AO by the Addl. CIT - Validity of framing of assessment by the ld. Additional Commissioner of Income Tax, Range 2(2) - draft assessment as well as the final assessment orders were framed by the Additional Commissioner of Income Tax, Range-2(2), Mumbai - HELD THAT:- As decided in M/S. TATA COMMUNICATIONS LTD., (FORMERLY VIDESH SANCHAR NIGAM LTD.,) VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-1 (3) , MUMBAI AND VICE-VERSA [ 2019 (8) TMI 1446 - ITAT MUMBAI] wherein held in absence of a valid notification under section 120(4)(b) the Addl. CIT cannot exercise power of an Assessing Officer. We allow the additional grounds raised by the assessee challenging the validity of assessment framed by the ld Addl. CIT and accordingly quash the assessment so framed. - Decided in favour of assessee.
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2021 (5) TMI 787
Disallowing of finance charges - taxpayer as well as its group companies had taken recourse to accommodation entries only - HELD THAT:- We find no merit in Revenue s foregoing arguments challenging lack of bonafides on assessee s part in raising the impugned finance charges claim. It has already come on record that this tribunal s co-ordinate bench s decision(s) in assessee s very group concern s appeals has already declined Revenue s very argument in the order dt.26-11-2014. Learned co-ordinate bench rather gave a categorical finding that the said group entity had duly supported the impugned financial charges by banks and other institutes certificates. We thus find no reason to adopt a different approach in instant lis raising the very aspect of suspicious circumstances. The CIT(A) s action affirming the impugned finance charges disallowance stands reversed therefore. Assessee s appeal is allowed.
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2021 (5) TMI 786
Bogus purchases - AO disallowed the 25% of the purchases merely on the ground that the assessee failed to produce the parties for verification by relying on the decision of Vijay Proteins [ 1996 (1) TMI 144 - ITAT AHMEDABAD-C] - CIT-A deleted the addition - HELD THAT:- As noted that before Ld. CIT(A), as well as before us the Ld. AR of the assessee stated that he has filed sufficient evidences, which includes the confirmations of the parties, copy of the bank statements of the parties at Surat as well as Mumbai. We have seen that no findings on these evidences were given by assessing officer. AO disallowed the 25% of the purchases merely on the ground that the assessee failed to produce the parties for verification by relying on the decision of Vijay Proteins (supra). The assessee filed the copy of bank statement of the parties. AO has not investigated if the amount paid by the assessee was recycled back to the assessee. Assessee has relied on the decision of Tejua Rohit Kumar Kapadia [ 2017 (10) TMI 729 - GUJARAT HIGH COURT] wherein the appeal of revenue was dismissed by High Court. In the said appeal, the revenue assailed the order of Tribunal on deleting the partial disallowances of the purchases. The Hon'ble High Court held that when the assessee is trader and have shown the sales out of the purchases, which have been accepted by revenue and there was no evidence to show that the amount was recycled back to the assessee. Therefore, considering the decision of High Court of similar set of facts, we do not find any merit in the grounds of appeal raised by the revenue. No contrary fact or law is brought to our notice to take other view. Hence, we affirms the order passed by ld. CIT(A). In the result this ground of appeal raised by the revenue is rejected. Difference of closing balance of one of the party - AO rejected the books of accounts before making such addition - CIT-A deleted the addition - HELD THAT:- No specific reason for rejecting the books of account was recorded by the assessing officer. The ld. CIT(A) deleted the additions by taking view that the assessee filed confirmation of Ratan Export during the assessment. AO has not made investigation at Surat addresses, if he has any doubt regarding the existence of the party; the assessing officer ought to have made further investigation. It was further held that after knowing the fact that the party was having the same PAN, the assessing officer could have reconfirmed about the party. As further noted that despite filing the confirmation of Ratan Export the assessing officer has not referred the same in his order. The assessing officer simply held that the assessee filed its explanation only when the issue was brought to his notice and rejected the books of accounts and simply made addition of the difference, without considering the confirmation. No ground for rejection of books of account is recorded by assessing officer. In our view the ld CIT(A) has considered the facts and held that no addition on account of differential amount can be made. No contrary fact is brought to our notice to take other view. Hence, we affirm the order of ld CIT(A). In the result this ground of appeal is also rejected. Appeal of the revenue is dismissed.
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2021 (5) TMI 782
Unexplained cash deposits in HDFC Bank by the Assessee - CIT-A deleted the addition - HELD THAT:- As decided in own case as directed to AO to estimate the profit @8% on the total deposit - While realising from the return of income filed by the Assessee in response to the notice u/sec.148, held that as the Assessee has already increased turnover by adding the amount of cash deposits and admitted the profit @8%, therefore no further addition is required and consequently directed to delete the entire addition . We may observe that the ld. Commissioner thoroughly considered the contentions of the department and the Assessee and deleted the addition in hand, while respectfully following the dictum of the Co-ordinate bench of the ITAT qua identical issue for the A.Y. 2011-12 and considering the peculiar facts and circumstances. Neither any material is available on record nor brought to our notice by the Revenue Department to controvert the finding of the ld. Commissioner, consequently, ground No.2 stands dismissed. Addition on the basis of mere cash flow statement filed by the Assessee - CIT deleted the addition - HELD THAT:- Commissioner has held to the effects that at the time of survey of the business premises of the Assessee, no unaccounted investment or expenses were found and the Assessee submitted cash flow statement and also furnished all the details and receipts for the year under consideration and even otherwise, no specific defect was pointed out by the AO. The AO assumed that the amount drawn in small amounts cannot be considered as available for redeposit, however, no such cogent material to substantiate the same. Commissioner also observed that on a careful perusal of the cash flow statement, he found that the Assessee had cash balance in hand for every deposit made. Further, the other payments shown in the cash flow statement are also found to be from the cash balance available to the Assessee. Revenue Department failed to contradict the finding of the ld. Commissioner for the issue in hand, hence the same does not require any interference. Consequently, the ground No.3 stands dismissed. Addition of unsubstantiated gifts - CIT-A deleted the addition - HELD THAT:- As clear from the record that both the donors from whom the Assessee has taken the loan are close relatives and money has been routed through banking channel and both the donors have disclosed the transactions in their financial statements and before the AO, filed the confirmation letters and also substantiated through their returns of income for the assessment year under consideration and resultantly the Assessee has prima-facie discharged his onus as held by the ld. Commissioner. With regard to contention qua the creditworthiness of the donors, the Assessee is required to discharge its onus prima facie on the basis of probability only, which in the instant case correctly been discharged by the Assessee, hence, we are unable to find out any reason and/or material to controvert the finding of the ld. Commissioner. Consequently, ground No.4 also stands dismissed. Addition made towards unsubstantiated expenditure by the AO - CIT deleted the addition - HELD THAT:- Commissioner thoroughly perused the computation and the profit loss account of the Assessee wherein the Assessee had admitted income from business of interior decors @8% of the turnover and the ld. Commissioner further observed that as the Assessee has opted for the provisions of section 44AD, there is no necessity to submit the profit and loss account. Further, it was observed by the ld. Commissioner that the AO himself has allowed certain expenses like advertisement, travelling expenses, office rent and telephone expenses etc., therefore is not justified in observing that the Assessee failed to show the source as business income. The ld. Commissioner further held that once the Assessee has chosen to admit the income in terms of section 44AD, the profit has to be assessed as per the percentage stipulated in the said section and the AO cannot resort to item wise disallowance of the expenses. Commissioner while deleting the addition also observed that the Hon'ble ITAT, Visakhapatnam bench held that profit of 8% is reasonable in respect of business turnover of the Assessee. Therefore, looking at the issue in any manner the AO is not justified in disallowing the expenditure. Nothing contrary has been brought by the Revenue Department and even we have also failed to find out any material to controvert the decision of the ld. Commissioner for the issue in hand, consequently, no interference is necessitated. Thus the ground No.5 also stands dismissed. Revenue appeal dismissed.
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2021 (5) TMI 781
Un-explained investment in shares u/sec. 69 - Assessee seeked admission of additional evidence - HELD THAT:- Though additional evidence is very much related to the issue involved in the appeal and essential for proper and just decision of the case, however as the Assessee s reply and cause shown for non-filing of documents before the authorities below for a long period, is neither plausible nor satisfactory and sufficient, hence we deem it appropriate to accept the prayer of the Assessee for admission of additional evidence, subject to deposit in Andhra Pradesh Chief Minister s Welfare Fund for Covid-19, within 15 days from the date of this order, as offered and agreed by the Assessee. The case is remanded back to the file of AO for decision afresh while considering the additional evidence filed before us by the Assessee and without being influenced by any of the observations made in this order. Appeal filed by the Assessee allowed for statistical purpose.
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2021 (5) TMI 776
Correct head of income - Income from transaction of shares - CIT(A) in treating income under the head Income from Business or Profession as against Income from Short Term Capital Gains disclosed by the assessee - contention of the assessee is that the assessee is maintaining two separate portfolios i.e. investment portfolios and business portfolio - HELD THAT:- The income from transaction of shares held under investment portfolio has been returned under the head capital gains . The total number of transactions carried out by the assessee under investment portfolio during the period under appeal is 238. In assessee s own case for assessment year 2006-07, the Tribunal accepted assessee s ground on similar set of facts where the frequency of transactions were more than 360. Thereafter, in assessment years 2008-09, 2012-13 and 2014-15 similar issue had come up before the Tribunal where the Assessing Officer had changed the head of income in respect of income earned by the assessee from sale of shares. The assessee offered the income as short term capital gains and the Assessing Officer treated the same as business income . The Tribunal decided the issue in each of the aforesaid assessment years by following the order of Tribunal in assessee s own case in ITA No.2285/Mum/2010 for assessment year 2006-07 [ 2014 (1) TMI 1599 - ITAT MUMBAI] The Tribunal accepted assessee s plea that the income from sale of shares has rightly been disclosed under the head short term capital gains and rejected Revenue s view of holding the income as business income. Disallowance u/s 14A r.w.r. 8D(2) - short contention of the assessee is that the disallowance may be restricted to exempt income earned - HELD THAT:- This issue is no more res-integra that disallowance under section 14A of the Act cannot exceed exempt income earned. [Re. PCIT v. State Bank of Patiala [ 2018 (4) TMI 23 - PUNJAB HARYANA HIGH COURT] The Hon ble Supreme Court of India [ 2018 (11) TMI 1565 - SC ORDER] dismissed the SLP of revenue against the judgement of Hon ble High Court]. The Assessing Officer is directed to restrict the disallowance under section 14A of the Act to the extent exempt income earned by the assessee during the period relevant to the assessment year under appeal. The ground No.2 is partly allowed in the terms aforesaid. Charging of interest under section 234A, 234B and 234C and 234D - HELD THAT:- Charging of interest under aforesaid sections is mandatory and consequential, hence, the ground No.3 raised by the assessee is without any merit, hence, dismissed.
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2021 (5) TMI 775
Registration u/s. 12AA(1)(b)(ii) denied - assessee submitted that the Ld. CIT(E) has rejected the application for the registration u/s. 12AA(1)(b)(ii) of the Act without considering the necessary details filed in response to the notices issued by the Ld. CIT(E) - HELD THAT:- The proviso to section 12AA(1) of the Act requires to grant an opportunity of being heard to the assessee before rejecting the registration application file by the assessee. Thus it is clear that the requirement of providing reasonable opportunity to the assessee is expressly inbuilt in law itself governing the procedure for registration. It is also evident from the order of the Ld. CIT(E) that the assessee vide letter dated 03/02/2020 has made part compliances. Thus it is not the case that the assessee has failed to comply the notices issued by the Ld. CIT(E) completely. As, such the part compliance by the assessee was accepted by the Ld. CIT(E) himself in his order. We also note that the assessee claimed to have filed various details before the Ld. CIT(E) but the same were not considered by the Ld. CIT(E). Accordingly, in our considered view the Ld. CIT(E) should have granted one more opportunity to the assessee if he was not satisfied with the details filed by the assessee. Accordingly, in the interest of justice and fair play, we are inclined to give more opportunity to the assessee for placing its points of contention before the Ld. CIT(E) - Decided in favour of assessee for statistical purposes.
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2021 (5) TMI 774
Estimation of income - bogus purchases - estimation of 12.5% by CIT-A - HELD THAT:- As assessee was engaged in the business of civil construction which would require consumption of material. The purchase transactions carried out by the assessee with suspicious suppliers were evidenced by copies of invoices and the payments were through banking channels. The confirmation of accounts as well as PAN of the suppliers was duly furnished. The sales turnover achieved by the assessee was not disputed by Ld. AO. As assessee failed to produce any of the suppliers for confirmation of accounts and notices issued u/s 133(6) did not elicit satisfactory response. Therefore, it was a fit case for estimation of additions on these suspicious purchases. In our considered opinion, Ld.CIT(A) has clinched the issue in the correct perspective. The estimation of 12.5% was quiet fair and reasonable and the same do not require any interference on our part. Therefore, by confirming the stand of Ld. CIT(A), we dismiss the appeal.
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Corporate Laws
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2021 (5) TMI 783
Maintainability of petition - interest bearing Fixed Deposit - seeking repayment of the Deposit due along with interest due - it is the case of Respondent that the present Petition is not maintainable since the Petition under Section 73(4) can only be filed by a Member of the Company and the Petitioner has not annexed any proof with respect to his Membership in the respondent company - HELD THAT:- The Section 73(4) of Companies Act 2013, under which the present petition has been filed, also comes under Chapter 5 of the Companies Act 2013. Therefore, by virtue of Section 76(2) of Companies Act 2013, the provisions regarding filing of an application by a depositor before this Tribunal shall be mutatis mutandis applicable to public i.e., non-member of the company, from whom the deposit is accepted - there are no force in the plea raised by the Respondent that the Petitioner has not supplied copy to the RoC and RD and no report has come from them. Since the Rule 73(6) of NCLT Rules 2016 stipulates this requirement only in respect of the applications filed under sub-section (2) of section 76 and under sub-section (2) of section 74 of the Companies Act, 2013. The Petitioner has been successful in establishing default made by the Respondents - Application allowed.
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2021 (5) TMI 779
Seeking restoration of name of the company in the Register of members - Section 252 of the Companies Act, 2013 - HELD THAT:- The appellant has not submitted satisfactory evidence to prove that company was in operation during strike off . But we are satisfied that just ground to consider revival of the company, as the company owns plot of agricultural land. Unless, the company is revived, the utilization of plot of agricultural land for fulfilling main objects of the company and to run the business cannot be possible. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. The Public Notice of Registrar of Companies, striking off the name of the company, is hereby declared illegal and set aside. The restoration of the company's name to the Register of Registrar of Companies is ordered - Appeal allowed.
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2021 (5) TMI 777
Seeking restoration of the name of the Appellant Company in the register maintained by the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- This Bench observes that the name of the Company was struck off on 29.10.2019, when the litigation of Oppression and Mismanagement was pending against the Appellant Company before this Tribunal. Hence, the reasons for not filing the Financial Statements seems plausible. The RoC was not justified in striking off the name of the Appellant Company from its register during the pendency of litigation pertaining to the Appellant Company - The provisions pertaining to restoration of the name of the Company are provided in the Section 252(3) of the Companies Act, 2013, which, inter alia, includes that if a company is carrying out its business or in operation or otherwise it is just that the name of the company be restored, this Tribunal can order the RoC to restore the name of the company in the Register of Companies. The Appellant Company has been able to satisfy this Bench that it is just and equitable to restore the name of the Appellant Company in the register maintained by RoC - the name is restored - appeal allowed.
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Insolvency & Bankruptcy
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2021 (5) TMI 785
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - time limitation - HELD THAT:- The applicant issued a demand notice under section 8 in Form 4 of I B Code (Under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 on 18.09.2019. The said notice was sent by Speed Post at the registered address of the corporate debtor as reflected in the master data, which is duly delivered to the Corporate Debtor on 19.09.2019. The tracking report is filed, which mentions 'Shipment Delivered' at the registered address as per master data. The Corporate Debtor has neither raised any dispute to the aforesaid notice nor made any payment towards the outstanding dues - The Corporate Debtor has neither filed any reply nor appeared before the bench. The corporate debtor was proceeded ex-parte on 03.12.2020. Time Limitation - HELD THAT:- As per Form V, Part IV, the Corporate Debtor is liable to pay an outstanding sum of ₹ 1,55,79,348/-. Though the specific mention about the date of default is not mentioned in part IV, the last invoice is of 26.06.2019 and as per the terms of the invoice the payment was to be made within ten days which is on or before 06.07.2019. The present application was filed on 12.12.2019, hence the debt is not time barred and the application is filed within the period of limitation. The Applicant has filed an affidavit under section 9(3)(b) dated 12.12.2019 affirming that no notice of dispute has been given by the Corporate debtor relating to dispute of the unpaid operational debt - registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - the present application is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. The present application is admitted, in terms of section 9 (5) of IBC, 2016. Application admitted - moratorium declared.
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2021 (5) TMI 784
Liability of Purchaser of corporate debtor under liquidation under auction - Certain demand raised by the liquidator - Levy of interest on the balance sale consideration paid for sale of assets of Corporate Debtor as a going concern - seeking exemption and waiver off of interest being charged on the Applicant - applicability of TDS being charged on the Applicant - seeking Liquidator to handover peaceful possession to the Applicant of the Corporate Debtor's factory, building and machinery - HELD THAT:- After going through all the facts and documents as produced by the Applicant/Auction Purchaser is of the view that, it is matter of record that the Applicant has made made the entire payment towards the sale consideration of ₹ 18,72,00,000/- and it is only after the entire payment being made by the Applicant that the Liquidator has issued the sale certificate - Hence, now post the execution of the Sale Certificate, the demand raised by the Liquidator to the Applicant for the Interest as well as TDS is not maintainable. The Liquidator is at liberty to file for refund with the Income Tax department for the refund of TDS, if any, applicable to this case. The Liquidator is also directed to hand over the possession of the Corporate Debtors assets as per Schedule I of the Sale Certificate to the Applicant. Application disposed off.
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2021 (5) TMI 780
Seeking replacement of Financial Creditors - Assignment of debt by Financial Creditors to applicant - Applicant seeking to continue prosecuting the instant proceedings against the Respondents/Personal Guarantors, in place of the Respondent No. 1/Financial Creditor etc - Section 60(5)(C) of the IBC, 2016, R/w Rule 11 of the NCLT Rules, 2016 - HELD THAT:- The learned Counsel for the Respondent No. 1/Financial Creditor has submitted that the debt in question has been assigned to the Applicant i.e. Assets Care Reconstruction Enterprise Ltd. in place of Respondent No. 1/Financial Creditor i.e. M/s. Altico Capital India Ltd. against the Respondent No. 2 and 3/Corporate Debtors i.e. Mr. Vinay K Mehta and Mr. Prateek K Mehta respectively. He has also submitted in his Memorandum dated 22.04.2021 that the Respondent No. 1/Financial Creditor has no objections to the Applicant being substituted in the place of the Respondent No. 1/Financial Creditor. Respondent Nos. 2 and 3 against whom the Petition has been filed u/s. 9 of the Code have no objection. In view of the foregoing the application deserves to be allowed. Application is allowed by substituting the Applicant, namely, M/s. Assets Care and Reconstruction Enterprise Ltd. in place of Respondent No. 1/Financial Creditor, namely, M/s. Altico Capital India Ltd. and also permitting the Applicant to continue prosecuting the instant proceedings against the Respondents/Personal Guarantors, in place of Respondent No. 1/Financial Creditor.
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2021 (5) TMI 778
Seeking to exclude the time consumed on account of time loss due to the lockdown imposed by the Government of India and State Government and time consumed due to pendency of application - HELD THAT:- he Adjudicating Authority rejected the prayer with regard to period seeking exclusion of time consumed in judicial intervention on the ground that the Appellant has not shown the exceptional circumstances for excluding the time. It is unequivocal that the country faced pandemic situation namely Covid -19 and due to the said pandemic the whole nation suffered and regular activities have come to a stand still. The Learned Adjudicating Authority ought to have considered the situation as exceptional circumstances for the reason of prevailing pandemic in the country and the CIRP process was still at nascent stage. It is an admitted fact that only 3 meetings have been convened from the date of commencement of CIRP till August, 2020. However, an Application is filed for replacing the RP. From the Judgment of the Hon'ble Supreme Court in Essar Steel India Ltd. Vs. Satish Kumar Ors. [ 2019 (11) TMI 731 - SUPREME COURT ] that the Adjudicating Authority and/or this Tribunal may extend time beyond 330 days in exceptional cases. The Appellant had shown the exceptional circumstances one is the imposition of lockdown and pendency of the judicial proceedings before the Adjudicating Authority. Apart from the above, the Hon'ble Supreme Court in a number of cases clearly held that the liquidation is the last resort. In the present case as discussed above the CIRP is at nascent stage and the Resolution Professional has to take forward duly complied with the procedure as prescribed under the Code for the purpose of Resolution of the Corporate Debtor instead of pushing the Corporate Debtor into liquidation. A total period of 92 days is excluded whereby the time lost due to judicial intervention from the total time period of 330 days - A total period of 160 days is excluded the time lost on account of imposition of lockdown from 25.03.2020 to 31.08.2020 - Further the time spent in filing this Appeal i.e. from 12.04.2021 to 04.05.2021 is also excluded. Appeal disposed off.
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Service Tax
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2021 (5) TMI 802
Classification of services - Manpower Recruitment Agency Service - conversion of raw material to soap and detergent on behalf of M/s Nirma Limited in the factory of M/s Nirma Limited - HELD THAT:- Very identical issue in the appellant's own case for the previous period i.e. June 2005 to June 2010 was considered by this Tribunal in Service Tax Appeal Nos. 2327 of 2011, 768 of 2011 and 10391 of 2013. In these appeals this Tribunal has passed a Final Order in MESSERS SUREEL ENTERPRISE PVT. LTD., M/S. SUREEL ENTERPRISE P. LTD. VERSUS C.C.E. S. T- AHMEDABAD-III [ 2019 (10) TMI 1245 - CESTAT AHMEDABAD] whereby it was held that the appellant's activities amount to manufacture and does not amount to service of Manpower Recruitment Agency Service. Accordingly, the appeals were allowed. This Tribunal following various judgment namely, RAMESHCHANDRA C. PATEL VERSUS COMMR. OF SERVICE TAX, AHMEDABAD [ 2011 (11) TMI 415 - CESTAT, AHMEDABAD] , JUBILANT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., GHAZIABAD [ 2013 (9) TMI 358 - CESTAT NEW DELHI] and Shiv Narayan Bansal [ 2013 (12) TMI 733 - CESTAT NEW DELHI] held that contract between the appellant and M/s Nirma Limited is of contract manufacturing hence demand under manpower supply cannot be made. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (5) TMI 812
Refund of Excise duty - fixation of the special rate as per para 2.1(1) of the N/N. 20/2008 Central Excise dated 27.03.2008 - HELD THAT:- The present petition is disposed of directing the respondent No.2, Principal Commissioner, Central Goods Service Tax, Guwahati to consider the aforesaid applications submitted by the petitioner in accordance with law and till such consideration, no coercive action be taken against the petitioner in terms of the demand notice dated 22.03.2021. Petition disposed off.
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2021 (5) TMI 804
Reversal of CENVAT Credit - Capital Goods - Lease back of sold out capital goods - Deemed removal of goods from the factory premises of the petitioner - core contention of the petitioner's counsel is that the Central Excise Act does not contemplate any deemed removal - HELD THAT:- Circular No.1063/2/2018-CX, dated 16.02.2018, issued by the Central Board of Excise and Customs, in which, it has been stated that the Department has accepted the aforesaid decision of the Madras High Court. The contention of the petitioner's counsel is that the respondent is squarely bound by the decision rendered by the Madras High Court. It is not open to the respondent to disregard the aforesaid binding decision rendered by the Division Bench in M/s.Dalmia Cements Case [ 2015 (7) TMI 267 - MADRAS HIGH COURT ]. More over, the Central Board of Excise and Customs has mandated that the adjudicating authority shall decide the cases falling within their jurisdiction in that light. The order impugned in the writ petition is quashed. The matter is remitted to the file of the respondent. The respondent will bear in mind the Circular No. 1063/2/2018-CX dated 16.02.2018 issued by the Central Board of Excise and Customs, while deciding the issue - Petition allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (5) TMI 805
Validity of assessment order - wastage of time unnecessarily in seeking extension again and again - HELD THAT:- The writ petition ought to have been dismissed in limini . The petitioner has unnecessarily dragged the proceedings in respect of assessment year 2008-2009. The petitioner has not only wasted the time of the court but has also unnecessarily choked the assessment proceeding by stating that the impugned notice refers to be assessment order dated 27.02.2009 which has been quashed by the court - The case file of this Court also demonstrates that after the petitioner achieved the above purpose after an interim order was passed. The case has not been listed thereafter for all these years. The present writ petition is liable to be dismissed and is disposed of by directing the respondent to complete the assessment proceedings pursuant to order dated 22.04.2009 of this Court in W.P.No.5517 of 2009 within a period of 60 days from the date of receipt of this order. Petition dismissed.
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2021 (5) TMI 803
Levy of Entry Tax on purchase of motor vehicle from the outside state for sale in Tamil Nadu - validity of Circular dated 09.07.2002 - HELD THAT:- The circular issued in July 2002 has been challenged only in August 2015. The Assistant Commissioner, Palakkarai Assessment Circle, Trichy, appears before this Court through Video Conferencing and states that following the introduction of GST regime, the impugned circular has become infructuous. However, this circular would definitely have relevance in respect of the assessments made prior to 01.07.2017. There is only a general challenge to the validity of the impugned circular. If on account of the circular the rights of the assessee has been affected, then challenge will certainly lie - Leaving open the right of the assessee to question the validity of the impugned circular if he had suffered any order of assessment by applying the circular, these writ petitions are closed.
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Indian Laws
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2021 (5) TMI 808
Dishonor of Cheque - cheque on presentation was dishonoured for want of sufficient funds - acquittal of the accused - rebuttal of presumption - Sections 118, 138 and 139 of the NI Act - HELD THAT:- The complainant admittedly is a Public Limited Company incorporated under the Companies Act engaged in the business of manufacturing and selling tea. It is also not in dispute that accused is a distributor of the complainant company at Calicut. The case of the complainant is that it used to supply tea to the accused on credit basis and towards the discharge of the amount due, the cheque in question was issued. In order to prove the transaction as well as the issuance and execution of the cheque, two witnesses were examined on the side of the complainant as PW1 and PW2. PW1 is the Accounts Officer and power of attorney holder of the complainant company. Ext.P13 is the copy of the minutes of the company authorizing PW1 as the PA holder of the complainant company. He gave evidence in tune with the pleadings in the complaint - The Court below on appreciation of evidence found that the evidence of PW1 and PW2 is insufficient to prove the transaction and execution of the cheque. The Court below further found that the amount shown in Ext.P3 cheque does not tally with Ext.P15 tax invoice and Ext.P9 ledger extract. The presumption under S. 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. There is the mandate of presumption of consideration in terms of the provisions of the Act. The onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of S. 138. Once signature, execution and handing over of the cheque are satisfactorily proved, the presumption u/s. 139 of the NI Act would come into play and remain in force until the accused discharges the burden. The complainant has successfully established the signature, execution and handing over of the cheque. There is absolutely no evidence adduced to rebut the said presumption available to the complainant u/s. 139 of the NI Act. No evidence has been adduced by the accused to substantiate that the cheque in question was issued in blank as the security at the commencement of the business transaction between him and the complainant company. In spite of the receipt of the lawyer notice, the accused did not send any reply also. There is absolutely no evidence or circumstances probabilising the defence set up by the accused. The impugned judgment of acquittal, thus, cannot be sustained and is liable to be set aside - Appeal allowed - decided in favor of appellant.
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2021 (5) TMI 807
Dishonor of Cheque - petitioner facing a criminal prosecution for the commission of offence punishable under Section 138 of the Negotiable Instruments Act, 1881, has come up before this Court under Section 482 of the Code of Criminal Procedure - HELD THAT:- A perusal of the petition reveals that the accused has met all the liability as detailed in the petition. The complainant had put in appearance and on 23.4.2021, made a statement on oath that he had received the full and final payment and prays for closure of the complaint/case. The said statement forms part of the record - The jurisprudence behind the N.I. Act is that the business transactions are honored. The legislative intention is not to send the people to suffer incarceration because their cheque was bounced. These proceedings are to execute the recovery of cheque amount by showing teeth of penalty loss. This Court has inherent powers under Section 482 of the Code of Criminal Procedure, further supported by Section 147 of the N.I. Act to interfere in this kind of matter where parties have paid the entire money and where the complainant does not object to clear all the proceedings. Given the entirety of the case and judicial precedents, the continuation of these proceedings will not suffice any fruitful purpose whatsoever. This is a fit case where the inherent jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure read with 147 of Negotiable Instruments Act, is invoked to compound the offence and consequently to quash the proceedings - given the compounding of offences, the proceedings are quashed. Accordingly, the petitioner is acquitted of the offence under Section 138 of the Act. Petition allowed.
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