TMI Tax Updates - e-Newsletter
May 6, 2020

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Refund Under GST-Recent Issues & Clarification

   By: Ashish Mittal

2. RBI Extends Due Dates of Regulatory Returns due to COVID19

   By: CSLalit Rajput

3. Why Import Export Code (IEC) Certificate

   By: Sandeep Rawat

4. 5 Changes regarding GST Refunds which Industry should prepare for

   By: Vivek Jalan

News

1. GSTN Alert to Taxpayers on fake messages on GST Refund

2. The Insolvency and Bankruptcy Board of India invites comments from the public on the Regulations notified under the Insolvency and Bankruptcy Code, 2016

3. Auction for Sale (Re-Issue) of ‘5.09% GS 2022’, Auction for Sale (Issue) of ‘New 10 year GS 2030’, and Auction for Sale (Re-Issue) of ‘7.19% GS 2060’

Notifications

GST - States

1. (4-DC/2019) - FD 03 CSL 2020(e) - dated 30-4-2020 - Karnataka SGST

Seeks to give effect to the provisions of rule 87 (13) and FORM GST PMT-09 of the KGST Rules, 2017.

VAT - Delhi

2. F.3(1) Fin.(Rev-I)/2019-20/DS-VI/149 - dated 4-5-2020 - DVAT

Amendments in the Fourth Schedule appended to S. No 12 and 13

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/RTAMB/CIR/P/2020/77 - dated 3-5-2020

SEBI Notification on COVID-19 dated May 03, 2020

GST - States

2. 85/2020-GST - dated 21-4-2020

Clarification in respect of appeal in regard to non-constitution of Appellate Tribunal

3. 87/2020-GST - dated 21-4-2020

Clarification in respect of issues under GST law for companies under Insolvency and Bankruptcy Code, 2016

Companies Law

4. 20/2020 - dated 5-5-2020

Clarification on holding of annual general meeting (AGM) through video conferencing (VC) or other audio visual means (OAVM)

Highlights / Catch Notes

GST

• Cess u/s 21 of 1972 Act Impermissible Post-GST; Interim Orders Require More Than Prima Facie Case.

  Case-Laws - HC : Impermissibility to levy cess in terms of the provisions of Section 21 of the Act, 1972 in view of the advent of GST - Mere existence of a prima facie case is not sufficient to grant an interim order against Revenue but several other factors like balance of convenience, irreparable injury, public interest, etc. are also to be taken into consideration.
  Visit to Get Source

  ---

Income Tax

• Tax Officer Overlooks Business Model Change, Uses Unfounded 5% Gross Profit Rate Without Comparable Data.

  Case-Laws - AT : Estimation of gross profit - There is a change in the business model of the assessee as compared to the previous year which has apparently escaped the attention of the AO where he has compared the current year results with that of the previous year and in absence of any reasonable basis for estimation of gross profit rate in form of any comparable third party data, the estimation of gross profit rate of 5% cannot be sustained
  Visit to Get Source

  ---

• Assessee's Section 80-IC Deductions Approved Based on Consistency, Despite No CBDT Notification for Industrial Area Designation.

  Case-Laws - AT : Deduction u/ 80IC - AR submitted that assessee has been claiming deduction under section 80-IC since A.Y. 2011-12 and the same has never been disallowed - principles of consistency - there was no CBDT notification notifying the industrial area as per the scheme framed - Deduction allowed
  Visit to Get Source

  ---

• Income from Seized Documents Needs Additional Evidence to be Credible, Seized Documents Alone Insufficient for Assessment.

  Case-Laws - AT : Addition being the income admitted during the search action - Information contained in the seized documents are just the information without any support and therefore no credentials can be given to such information until and unless it is based on some materials. As such, seized loose documents found during the search should be read in association with the other materials before reaching to the conclusion that such seized material represent the income of the assessee
  Visit to Get Source

  ---

• Judgment Clarifies Undisclosed Income Assessment u/s 153A, Highlights Differences with Chapter XIVB and Pending Proceedings.

  Case-Laws - AT : Assessment u/s 153A - determination of undisclosed income - The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings.
  Visit to Get Source

  ---

Customs

• Customs Broker Penalized for Non-Declaration; Importer Concealment Doesn't Imply CB's Involvement Without Direct Interaction.

  Case-Laws - AT : Imposition of penalty on Customs Broker (CB) - non-declaration/concealment of goods - When the importer consciously conceals certain facts from the Customs Broker, it cannot be presumed that the Customs Broker has abetted in such offence merely because he has not met the importer face to face.
  Visit to Get Source

  ---

Corporate Law

• New Circular Allows Virtual AGMs for Companies, Ensuring Compliance and Transparency in Corporate Governance Processes.

  Circulars : Clarification on holding of annual general meeting (AGM) through video conferencing (VC) or other audio visual means (OAVM) - Circular
  Visit to Get Source

  ---

Direct Taxes

• Benami Transaction: Is Plaintiff Fictitious? Examining Section 2(a) and Section 23 of Indian Contract Act on Enforceability.

  Case-Laws - HC : Benami transaction - Whether the plaintiff is a fictitious person? - If an agreement to sale suffers from the vice of benami transaction within the meaning of section 2(a) of the Act, the same falls in the category of contracts forbidden by law as contemplated under section 23 of the Indian Contract Act, the object whereof is unlawful. Hence, inexecutable in an action for specific performance.
  Visit to Get Source

  ---

Indian Laws

• Allegations Against Indian Supreme Court Judges Deemed Scandalous; No Evidence of Misconduct or Bias Found.

  Case-Laws - SC : Freedom to criticise or contempt of court - on going through all the written arguments and the pleadings, other than saying that the Judges had misinterpreted the judgments of this Court or had ignored them or that Justice R.F. Nariman was biased, there is no material placed on record to support this defence. The allegations are also scurrilous and scandalous and such allegations cannot be permitted to be made against the Judges of highest Court of the country
  Visit to Get Source

  ---

IBC

• Application for CIRP Dismissed: No Evidence of Debt or Default Established by Appellant Under Insolvency and Bankruptcy Code.

  Case-Laws - AT : Maintainability of application - initiation of CIRP - existence of debt and dispute or not - Admittedly, the Adjudicating Authority under the ‘I&B’ Code is not a ‘Court of Law’ and it does not decide money claim or ‘Suit’. In any extent, the Appellant has failed to establish when there is any ‘Debt’ recoverable from the Respondent Company and the occurrence of default.
  Visit to Get Source

  ---

Service Tax

• Tax Penalty Waived u/s 78 Due to Honest Staff Error and Reasonable Explanation by Appellant.

  Case-Laws - AT : Imposition of penalty u/s 78 - The appellant have given a cogent explanation for the tax short paid, that they were not having competent staff and as such some errors occurred, it was not deliberate. Such explanation have not found to be untrue. - Penalty waived.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2020 (5) TMI 126
  Collection of cess of the respondent Assam State Agricultural Marketing Board - Restriction on collection due to restraint order - Section 21 of the Assam Agricultural Produce Market Act, 1972, as amended - HELD THAT:- The respondent Board has been permitted to collect the cess in accordance with the judgment and order passed by the Division Bench of this Court on 12.09.2008 [ 2008 (9) TMI 1012 - GAUHATI HIGH COURT ]. In so far as the contention regarding impermissibility to levy cess in terms of the provisions of Section 21 of the Act, 1972 in view of the advent of GST, a communication dated 31.07.2017 issued by the Government of Assam in the Agricultural Department to the Chief Executive Officer of the respondent Board has been brought to the notice of this Court. On perusal of the same, it transpires that the State Government has observed that normal realization of cess under Section 21 of the Act, 1972 on specified agricultural commodities from market areas will continue. It is observed therein that prudence, discretion and circumspection are called for at the time of passing such an interim order. Mere existence of a prima facie case is not sufficient to grant an interim order against Revenue but several other factors like balance of convenience, irreparable injury, public interest, etc. are also to be taken into consideration. Having due regard to the observations made in the order dated 30.03.2010 which is stated to be in operation till date; the fact situation obtaining in the present case and the consideration required to be given before passing any interim order against collection of revenue, as laid down in Dunlop India Ltd. [ 1984 (11) TMI 63 - SUPREME COURT ] and in P. V. Suresh [ 1993 (9) TMI 367 - SUPREME COURT ], I am of the prima facie view that the extension of the interim order dated 26.02.2020 is not found expedient at this stage and accordingly, the same is not extended. List the matter on 08.04.2020.

  ---

• 2020 (5) TMI 125
  Release of confiscated goods alongwith vehicle - section 129 of CGST Act - HELD THAT:- The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged. Application disposed off.

  ---

• Income Tax

• 2020 (5) TMI 123
  Assessment u/s 153A - approval u/s 153D is not valid statutory approval - no proper satisfaction nor proper justification given in the approval - Addition on account of alleged gross profit calculated on the basis of material allegedly found during the course of search of third person by treating it as allege unaccounted income of assessee - HELD THAT:- Counsel could not substantiate with evidence to our satisfaction that the AO has not obtained valid approval u/s 153D. Under these circumstances, and in absence of any material to substantiate his case, the additional grounds raised by the assessee are dismissed. Unaccounted income outside the books of account, unaccounted investment and commission paid - HELD THAT:- Since the documents relating to unaccounted trading outside the books of account along with Dharam Kanta slips showing weight of different types of metals weighed alongwith vehicle number and handwritten slips containing noting of receipt/delivery of purchase/sale of such metals along with dates were found from the premises owned by Shri Himanshu Kohli who himself along with his father are also engaged in such metal trading business and not a single paper giving any hint of any unaccounted trading by the assessee outside his books of account was found from his premises, therefore, we are not able to agree with the finding of the CIT(A) that 70% of such unaccounted turnover belongs to the assessee for which the corresponding profit to be taxed in the hands of the assessee. In this view of the matter, we set aside the order of the CIT(A) and direct the AO to delete the addition being the profit on such unaccounted turnover outside the books of account. Since the addition on account of unaccounted turnover outside the books of account is deleted, the question of initial investment in such unaccounted turnover does not arise and therefore the same cannot be sustained. Accordingly, the same is directed to be deleted. Addition on account of unaccounted commission is concerned, we have held in the preceding paragraphs that the assessee has not done any unaccounted trading in metal in his name and whatever trading has been done was done by Shri Himanshu Kohli from whose premises all the seized documents, which are the basis of addition in the hands of the assessee, were found and that Shri Himanshu Kohli has done some business of metal trading for the family concern, namely, M/s Klaxon Trading (P) Ltd. and all the transactions were recorded in the books of account of the said concern as stated and the commission so paid was through account payee cheque on which TDS has duly been deducted, therefore, no addition on account of unaccounted commission paid by the assessee to Shri Himanshu Kohli is called for. Accordingly, the same is directed to be deleted. Addition on account of alleged commission received from MCX Trading - AO on the basis of the seized document as per Exhibit-4 where the name Pawan appears, made the addition which has been upheld by the CIT(A) - HELD THAT:- As already held that when Shri Himanshu Kohli was himself engaged in such type of business and he has done some business for one of the concerns where the assessee is a director, namely, Klaxon Trading (P) Ltd., therefore, merely because the name of the assessee appears in a code word, addition could not have been made in the hands of the assessee especially in absence of any other corroborative evidence. The submission of assessee in his individual capacity was not engaged in unaccounted metal trading business also has some force since in his statement recorded u/s 132(4), the assessee had categorically stated that his family concern, namely, Klaxon Trading (P) Ltd., was engaged in metal trading business and whatever commission has been paid to Shri Pawan Kumar Dua was paid by the company through proper banking channel which was duly recorded in the books of account and due TDS procedures have been followed. In this view of the matter, the order of the CIT(A) is set aside and the ground raised by the assessee is allowed.

  ---

• 2020 (5) TMI 122
  Exemption u/s 11 - grant of registration u/s 12AA denied - as per CIT-E assessee has failed to produce details and documents in support of his claim for registration - HELD THAT:- Given the advent of e-filing of application and where all further correspondence need to be done through an online-platform, there are certain teething technological problems which needs to be addressed as observed in the present case where there are claims and counter-claims regarding seeking information and filing of submissions in relation to the processing of application filed by the assessee trust for seeking registration u/s 12AA. We deem it appropriate to set-aside the matter to the file of the CIT(E) to examine the application of the assessee trust afresh after granting appropriate opportunity to the assessee trust to appear in person through its authorized representative. The assessee shall be at liberty to raise the various contentions as advanced by the ld AR before the ld CIT(E) and is also directed to submit necessary information/documents as called for by the ld CIT(E) and the latter shall decide the same afresh as per law. - Appeal filed by the assessee is allowed for statistical purposes.

  ---

• 2020 (5) TMI 121
  Addition u/s 41 - cessation of the liability - disallowance of credit entries from the parties - HELD THAT:- Liability continue to exist as on the close of the financial year 2011-12 as evidence by the fact that the permission to remit the money has been sought and granted by the RBI on 4/8/2015 and thereafter, the assessee had again applied for permission to remit on 19/8/2016. The fact that the payment has still not been made cannot be sole reason as reflective of remission or cessation of the said liability as there could be other financial constraints for not making the payment in time. The fact remains that the liability continue to exist and remain payable and the assessee continue to reflect the same as payable in its books of accounts as on close of the financial year 2011-12 and in view of the same, there is no basis for making the addition u/s 41(1) and the findings of the ld CIT(A) are hereby confirmed. Regarding amount of Rs. 1,20,54,761/-, the ld CIT(A) has returned a finding based on perusal of profit and loss account and return of income for A.Y 2017-18, that the assessee has written back the creditors in A.Y 2017-18 which indicates that the assessee was recognizing such liabilities till A.Y 2017-18. Revenue has not brought any evidence on record which suggests that liability in respect of these creditors have ceased to exist during the financial year relevant to impugned assessment year 2012-13. Where liabilities continue to exist and reflected in the assessee s books of accounts, there is no basis to bring the same to tax u/s 41(1) of the Act. Further, in the A.Y 2017-18, where such liabilities have been written back in the books of accounts, the same have already been offered to tax by the assessee in his return of income. - Decided in favour of assessee.

  ---

• 2020 (5) TMI 120
  Estimation of gross profit - Rejection of books of accounts - AO has applied the provisions of section 44AF - HELD THAT:- AO has estimated the gross profit rate of 5% as against 1.76% without even rejecting the books of accounts so maintained by the assessee. Even where the complete books of accounts could not be produced for verification and the assessee has only produced copy of audited financial statements along with audit report, where the figures of sales and purchases have been accepted and in absence of opening and closing stock, we find that there cannot be a case of deemed rejection of books of accounts and estimation of gross profit rate. Estimating gross profit rate, the AO has applied the provisions of section 44AF ignoring the fact that the assessee was engaged in the purchase and sale of animals which doesn t technically falls under the category of retail trade of goods and merchandise, and in any case, the turnover so declared by the assessee and accepted by the Assessing officer for the year well beyond the prescribed limits u/s 44AF. There is a change in the business model of the assessee as compared to the previous year which has apparently escaped the attention of the AO where he has compared the current year results with that of the previous year and in absence of any reasonable basis for estimation of gross profit rate in form of any comparable third party data, the estimation of gross profit rate of 5% cannot be sustained - Appeal filed by the assessee is allowed.

  ---

• 2020 (5) TMI 119
  Reopening of assessment u/s 147 - requirement of supplying the reasons - as per assessee instead of providing copy of the signed reasons originally recorded by the then AO at the time of issue of notice u/s 148, a printout was provided by the incumbent AO which also contained queries raised by him and the same is in violation of the procedure laid down - HELD THAT:- Where the reasons so recorded were duly supplied to the assessee even though not in the original format as recorded by the AO, there is no infirmity in the action of the Assessing officer. The essence and substance of the requirement as laid down in GKN DRIVESHAFTS (INDIA) LTD. [ 2002 (11) TMI 7 - SUPREME COURT] is to allow the assessee to have access to the contents of the reasons so recorded for reopening the matter and where the assessee so desire, he has the liberty to submit his objections against such reopening - requirement of supplying the reasons has been duly complied with by the AO and thereafter, where the assessee has chosen not to object to such reopening after receiving the copy of the reasons so recorded, it has not caused any prejudice to the rights of the assessee and the contentions so advanced cannot be accepted. Assessment was reopened on the ground that the assessee has made time deposit - In the instant case, the assessee has not filed any return of income and only pursuant to notice u/s 148, the return of income has been filed and the assessment proceedings for the impugned assessment year have been initiated. It is therefore a case of assessment and not-reassessment - where AO is ceased of the information that the assessee had made time deposit of Rs. 10 lacs in his bank account and such time deposits remains undisclosed to the Revenue authorities, there is clearly tangible information in the possession of the Assessing officer basis which a prima facie view has been formed that the income has escaped assessment - We believe that necessary nexus has been established between the information and formation of belief that the income has escaped assessment. Capital gains on sale of property - cost of acquisition of the property - Whether entirely long term or is partly long term on assessee s portion/share in the property inherited from his father and partly short term on portion/share of property received from his mother and sister by way of relinquishment without consideration - after the death of his father, the assessee got 1/4th share in the property and thereafter, as per the family settlement and relinquishment deed dated 7.01.2010, his mother and sister relinquished their respective shares in the property in favour of the assessee - HELD THAT:- Relinquishment of share of the property in favour of the assessee without any consideration pursuant to family settlement deed amounts to transfer of the share of the property through gift. In the instant case, the previous owner is the deceased father of the assessee who had initially purchased the property in the year 1967, therefore, the assessee shall be liable to tax on the share of the property, acquired through relinquishment of rights by his mother and sister, as long term capital gains after providing requisite indexation of cost of acquisition and cost of improvement on similar lines as done in case of share of property acquired through inheritance and will be chargeable to tax as long term capital gains. Since Mr. Mody had held the property since 1968 and since the coowners by release deeds in pursuance of love and affection to the assessee had relinquished their right in the property in favour of the assessee which has already been held as gift, therefore, in view of the decision of MANJULA J. SHAH [ 2011 (10) TMI 406 - BOMBAY HIGH COURT] we find merit in the submission of the learned counsel for the assessee that the cost of acquisition of the property should be calculated by taking the value of the property as on 01-04-1981. Unexplained deposits in bank account - HELD THAT:- Assessee has deposited a sum in his bank account and the source of the same has been explained as gifts received from his brother, sister and mother and in support, has submitted affidavits from his family members, family settlement and relinquishment deed and copy of return of income filed by his brother, Shri Ajay Kumar and his bank statement. Amount as shown as gift received by assessee from his brother which is an existing income tax assessee and in the affidavit so submitted, he has explained that he has gifted the said amount to the assessee for purchase of residential property and the source of such money is income from his business, past savings, etc. Further, he has explained that he has withdrawn an amount from his bank account on 8.5.2009 and 4.02.2010 and the same has been gifted to the assessee. We therefore find that the assessee has substantially discharged the initial onus cast on him and in absence of any contrary material on record, the source of deposit. Remaining deposit the source of the same has been explained as gift received from assessee s mother and sister supported by their respective affidavits. Given the quantum of amount involved and the fact that household savings by the women in our society is a norm rather than an exception, we believe that the assessee has reasonably discharged the onus cast on him in terms of explaining the nature and source of such deposit as received from his mother and sister. - Decided in favour of assessee.

  ---

• 2020 (5) TMI 118
  Addition u/s 14A r.w. rule 8D - disallowance being 1% of the average investment - HELD THAT:- Disallowance of expenditure u/s 14A exceeds the dividend income claimed as exempt by the assessee. The Therefore, disallowance on account of administrative expenses under Rule 8D(iii) is hereby restricted to the extent of exempt income so claimed by the assessee. In the result, the ground of appeal is partly allowed. Disallowance of depreciation on windmill - treating the civil work foundation as building on which depreciation is allowed @ 10% and electrical items/ components as plant machinery on which depreciation is allowed @ 15% instead of rate of 80% claimed by the assessee - HELD THAT:- We find that the matter is no more res integra and is covered by the decision in case of K.K. Enterprises [ 2015 (2) TMI 508 - RAJASTHAN HIGH COURT] and Mehru Electricals [ 2016 (7) TMI 708 - RAJASTHAN HIGH COURT] and we fail to understand that where the said decisions were brought to the notice of ld CIT(A), what stopped him in following the same, being the decision of the Hon ble Jurisdictional High Court. In the result, the ground of appeal is allowed. Disallowance of additional depreciation u/s 32(1)(iia) - plant machinery which were used for less than 180 days in the Previous Year 2013-14 - case of the Revenue is that such additional depreciation can be claimed only in the first year in which the asset is acquired and installed, and cannot be carried forward to be claimed in the subsequent year - HELD THAT:- Statutorily provides for carry forward of the balance 50% of the additional depreciation in the immediately succeeding previous year in which the plant machinery is acquired and installed and though the said provisions have been introduced with effect from 1.4.2016, the Courts in case of Shri T.P Textiles and Rittal India [ 2017 (3) TMI 739 - MADRAS HIGH COURT] have held the same to be clarificatory in nature and thus have a retrospective application. Therefore claim of remaining additional depreciation is hereby allowed and the matter is decided in favour of the assessee and against the Revenue. In the result, the ground of appeal is allowed. TDS u/s 195 - Disallowance of commission paid to non residents u/s 40(a)(ia) - HELD THAT:- Neither the A.O. nor the ld. CIT(A) has examined the actual nature of services rendered by the agents so as to bring them in the ambit of the fee for technical services. Even where the claim of the assessee as sales commission is to be considered, the actual nature of payment is required to be examined. The assessee has even not claimed the benefit under any DTAA if any between the India and the country of recipient of these payments. Since neither the A.O. nor the ld. CIT(A) have examined this issue by considering the relevant facts as well as the respective DTAAs if any between the India and the country of the recipient/non-resident, therefore, in our considered opinion, this issue requires a proper verification and examination. Accordingly, we set aside this issue to the record of the ld. CIT(A) for adjudication of the same afresh. Needless to say that if the payment made by the assessee is not chargeable to tax in the hands of the recipient then the same is not liable for TDS merely because of the explanation to Section 195 of the Act as it is a prerequisite contention for invoking provisions of Section 195 of the Act that the payment is chargeable to tax in India in the hands of the recipient. Ground of appeal is allowed for statistical purposes.

  ---

• 2020 (5) TMI 117
  Deduction u/ 80IC - AR submitted that assessee has been claiming deduction under section 80-IC since A.Y. 2011-12 and the same has never been disallowed - principles of consistency - there was no CBDT notification notifying the industrial area as per the scheme framed - HELD THAT:- Undertaking in respect of which deduction has been claimed u/s 80IC falls in the specified Industrial area as per Notification No. 177/2004 dated 28-06-2004 issued by the CBDT in accordance with the scheme framed and notified by the Central Government for the state of Uttaranchal. Apparently, the said notification was not brought to the notice of ld CIT(A) and in absence of the same, the ld CIT(A) has denied the deduction under section 80IC(2)(a)(ii). There is no dispute that the undertaking satisfies the other conditions specified therein. It is engaged in the assembly and manufacturing of LED Televisions and blaster of CFL bulbs and is thus not engaged in manufacturing or producing any article/ thing as specified in Thirteenth Schedule. As per the assessment order for A.Y 2013-14 passed u/s 143(3) dated 27.03.2016, the Assessing officer has recorded a finding that financial year 2012-13 is the third year after commencement of business and is eligible for deduction u/s 80IC - financial 2010-11 would be the first year of commencement of business and the undertaking had begun manufacturing before 01.04.2012 and thus, satisfied all the conditions. Revised audit report in Form 10CCB has been filed during the course of assessment proceedings which was not considered by the AO on account of a mistake on the part of the auditor where he has wrongly mentioned the date of issue of such report as in the original audit report, however, there is no dispute that the assessee substantially complies with all the conditions as prescribed for claim of deduction u/s 80IC of the Act and during the appellate proceedings, the ld CIT(A) has accepted the revised audit report which is not disputed by the Revenue. Only dispute which remains before the ld CIT(A) was that there was no CBDT notification notifying the industrial area as per the scheme framed by the Central Government which the assessee has now filed and the same has been examined. In light of the aforesaid discussion, we set-aside the order of the lower authorities and direct the Assessing officer to allow the deduction u/s 80IC of the Act. The matter is accordingly decided in favour of the assessee and against the Revenue.

  ---

• 2020 (5) TMI 116
  Unverifiable purchases - Rejection of books of accounts - GP estimation - Non-SEZ unit - HELD THAT:- It is an admitted position of both the parties that the past history of the assessee can be taken as a reliable basis for estimating the gross profit rate. In terms of non-sez unit, CIT(A) has taken note of the fact that as against the average gross profit of past years which comes to 3.72%, the assessee has declared G.P of 3.12% and where the addition so made by the AO is considered, the effective current year G.P will come to 3.60%. He accordingly has sustained the addition made by the AO and effectively upheld the gross profit rate of 3.60% which is closer though lower than average gross profit rate. The Revenue is not in appeal and we see no reason to interfere with the said findings of the ld CIT(A) and the same are hereby sustained. Ground no. 1 of assessee s appeal is dismissed. GP estimation of Unit-II SEZ - Once the past year results are taken as a reliable basis for estimating the gross profit and such results have attained finality and where the assessee has disclosed better gross profit rate than the past years results, gross profit so declared should be accepted and the same cannot be disturbed applying the same basis pursuant to which the books of accounts have been rejected. The addition of Rs. 4,26,419/- so sustained by the ld CIT(A) is hereby set-aside. In the results, the ground no. 2 of assessee s appeal is allowed. Disallowance of indirect expenditure - apportioning the total indirect expenditure between non-SEZ unit and SEZ Unit on the basis of total turnover of the units - HELD THAT:- Where common indirect expenditure has been incurred by the assessee and which has either not been incurred by a specific unit or cannot be indentified to a specific unit, applying the turnover basis for apportioning such expenditure is reasonable and we donot see any basis to disturb the said allocation basis in absence of any other basis so highlighted by the assessee. However, as far as claim of expenditure exclusively incurred by the SEZ unit, we agree with the contention of the ld AR. The matter is accordingly set-aside to the file of the AO to verify and exclude expenditure which is claimed by the assessee as specifically incurred by the SEZ unit while apportioning the common indirect expenditure and recompute the disallowance accordingly. The ground is thus allowed for statistical purposes.

  ---

• 2020 (5) TMI 115
  Reopening of assessment u/s 147 - validity of notice issued U/s 148 issued in the name of deceased assessee - HELD THAT:- It is a case where the notice has been issued in the name of deceased assessee as represented by her legal heir Shri Laxmi Kant chaudhary which is clearly in compliance with the requirements of the law. Similarly, we donot find any infirmity in the assessment order where the same has been passed in the name of deceased assessee as represented by her legal heir Shri Laxmi Kant chaudhary. Where during the appellate proceedings, Shri Laxmi Kant chaudhary wishes to contest the said position stating that his statement as so taken was under pressure during the assessment proceedings, the onus is clearly on him to substantiate as to why he has not retracted from such statement at the first available opportunity and further, he has to demonstrate through verifiable and credible documentation that there are other legal heirs to the estate of the deceased assessee which he has failed in the instant case. Therefore, the contentions so advanced by the ld AR in this regard cannot be accepted. Issue of notice by non-jurisdictional Assessing officer - We agree with the contention of the ld DR that once the assessee has submitted to the jurisdiction of ITO Ward 2(1) Ajmer and has been allotted a PAN number, such jurisdiction continues with the said Assessing officer unless there is a communication and request from the assessee due to change of her residence and thereafter, the PAN is migrated by the tax department to the new Assessing officer having jurisdiction over the new residence of the assessee and cannot be done suo-moto by the assessee. Admittedly, in the instant case, no such request was made by the assessee and in the PAN data base, there continues to be old address of Ajmer where she last resided and therefore, ITO Ajmer had the valid jurisdiction over her tax matters and there is no infirmity in his action of issuing the notice u/s 148. Value of the properties not be considered as per the provisions of section 50C - AO has not disputed the fact that the assessee did file her return of income which was duly acknowledged by the Department and infact, the said return of income has been taken into consideration and except for substituting the sale consideration for the deemed sales consideration u/s 50C as per value adopted by the sub-Registrar, the Assessing officer has accepted the cost of acquisition as per the approved valuer enclosed with the said return of income and allowed the necessary indexation benefit as claimed in the return of income - Where the transaction has been duly reflected in the original return so filed, there is no legal basis for the Assessing officer to have any reason to believe that income of the assessee has escaped assessment. We are of the view that in the instant case, the Assessing officer doesn t have the legal basis to acquire jurisdiction for reassessment and thus, the notice issued under section 148 and consequent reassessment proceedings are quashed and set-aside. In the result, ground no. 1 of assessee s appeal is allowed.

  ---

• 2020 (5) TMI 114
  Rectification of mistake u/s 254 - Exemption u/s 10(37) - land was not used for agricultural purpose - HELD THAT:- Regarding the contention of the assessee that section 10(37) does not require that every inch of a Khasra should be used for cultivation and if a particular Khasra of land is used for cultivation, then the condition prescribed in section 10(37) is fulfilled. We find that a view has been taken by the Bench regarding the interpretation and applicability of provisions of section 10(37) which was germane to the issue under consideration and a view so taken on appreciation of the facts of the case is not a matter which can be rectified/modified within the limited scope of section 254(2) of the Act. Fact remains that mere presence of 50 Amla trees on land measuring 1.01 hectare of land will not change or have any bearing on the final conclusion and findings so arrived at by the Bench. There is nothing on record to support the fact that the assessee was owning and using the land till the date of allotment letter dt. 20.11.2009 and therefore, there is thus no mistake in the factual findings of the Tribunal where it held that the land was transferred in the name of JDA in year 2008 on the basis of Khasra Girdwari which reflects the name of the JDA as the owner of the land. The basis of arriving at finding by the Coordinate Bench in A.Y 2009-10 that the capital gains is chargeable to tax in A.Y 2010-11 was on account of fact that the compensation was received by the assessee on 20.11.2009 and on that account, it was held that the capital gains shall be chargeable to tax in the A.Y 2010-11. The same cannot be taken as basis for stating that the assessee was owning and using the land till the date of allotment. Tribunal in case of ITO Vs. Smt. G.S. Lekha (2019 (4) TMI 1783 - ITAT COCHIN) Agricultural officer has certified the land to be agricultural land unlike in the present case where the land records show no agricultural operations were carried on the said land prior to the date of transfer. Therefore, the said decision doesn t support the case of the assessee. While holding so, the Tribunal has not considered the Khasra Girdawari for samvat year 2065 (2008) which shows cultivation of 50 amla trees. Thus, the agricultural operations were carried on the land prior to the date of transfer. Existence of amla trees is itself a proof of cultivation. Further, in the present case there is no dispute that land is an agricultural land. Hence, distinguishing the case laws relied by assessee by assuming incorrect facts is a mistake apparent on record. We find that the decision of the Coordinate Bench in case of Smt. G.S Lekha rendered in its peculiar facts have been duly considered and distinguished in the facts of the present case including the fact relating to amla trees. Therefore, we donot find any mistake apparent from record and the contention so advanced in this regard are rejected. We find that the Bench has duly considered all the relevant facts and material on record including Khasra Girdawari and affidavits of sh. Laxman Singh and Rameshwar Chaudhary and has thereafter arrived at a view and finding that no agricultural activities were carried out on the impugned land and the land was lying vacant for 4 years. If the contention of the ld AR is accepted, the same would result in reappreciation of material on record and review of the decision already taken by the Bench which is not permissible within the narrow confine of section 254(2) of the Act. In the result, the miscellaneous application is dismissed.

  ---

• 2020 (5) TMI 113
  Exemption u/s 11 - registration u/s 12AA - whether such registration should be granted from the date of inception of the trust or from the first day of the financial year in which application seeking registration has been filed by the assessee trust - HELD THAT:- Registration was originally denied by the ld. CIT, Kota vide order dated 28.11.2007, thereafter the matter travelled to the Tribunal and then to the Hon ble Rajasthan High Court which has remitted the matter back to the Tribunal to decide the same on merits. Coordinate Bench vide its order dated 13.09.2017 has directed the CIT(E) to allow the application of the assessee for registration u/s 12AA and in pursuance of directions of the Tribunal CIT(E) vide impugned order dated 28.08.2019 has granted registration to the assessee-trust. Directions of the Coordinate Bench were limited to grant of registration of the assessee trust u/s 12AA - The directions of the Coordinate Bench are silent in terms of condonation of delay in filing the application seeking the registration. On perusal of the order so passed by the Coordinate Bench, we find that there is nothing on record to suggest that any such pleadings were taken by the assessee trust before the Coordinate Bench requesting for condonation of delay and seeking registration from inception of the trust or the application seeking condonation of delay was brought to the notice of the Coordinate Bench. Where the Coordinate Bench has directed registration of the assessee trust and has not passed any specific directions regarding condonation of delay, the contention of the ld AR that since the condonation application was filed along with application seeking registration before ld CIT(Kota), the directions so passed by the Coordinate Bench should be read as if the delay has been condoned cannot be accepted. It is also not clear whether the ld CIT(E) has considered the law as applicable for application seeking registration filed before 1.06.2007 wherein the powers have been conferred on the ld CIT(E) for condonation of delay, or the amended law for application seeking registration filed on or after before 1.06.2007 wherein no such powers for condonation of delay have been conferred on the ld CIT(E). Even where it is assumed that the CIT(E) has taken cognizance of the assessee s application and has applied the applicable law, the aforesaid communication doesn t reflect the precise reasons as to why the explanation of the assessee seeking condonation of delay was not accepted. Such communication reflects the conclusion and not the reasoning and thus, doesn t satisfy the requirement of law which mandate the CIT(E) to specify the reasons in writing which helped him reach a conclusion that the explanation of the assessee seeking condonation is not acceptable. Appeal filed by the assessee is allowed for statistical purposes. Therefore, in absence of findings of the ld CIT(E), we are constrained in deciding the matter and deem it appropriate that the matter is remanded back to the file of the ld CIT(E) to examine and expeditiously adjudicate the matter relating to delay in filing the application seeking registration u/s 12AA and pass a speaking order as per law after providing reasonable opportunity to the assessee trust.

  ---

• 2020 (5) TMI 112
  Deduction u/s 80P(2)(a)(i) - denying the deduction holding assessee was registered under the Karnataka Souharda Act of 1997 under which only co-operatives and co-operative societies were registered - HELD THAT:- As decided in Siddartha Pattina Souharda Sahakari Niyamitha v. ITO [ 2019 (7) TMI 1390 - ITAT BANGALORE] Souharda co-operatives are also one form of co-operative societies registered under a law in force in the State of Karnataka for registration of co-operative societies. Therefore the conclusion of the revenue authorities that co-operative societies and co-operatives are different and that co-operative registered as Souharda Sahakari cannot be regarded as co-operative societies is unsustainable. We therefore hold that the Assessee should be allowed deduction u/s.80P(2)(a)(i) as the ground on which the same was denied to the Assessee is held to be incorrect. Other conditions for allowing deduction u/s. 80P(2)(a)(i) of the Act needs to be examined by the AO. Remand the question of allowing deduction u/s. 80P(2)(a)(i) of the Act to the AO, except the issue already decided above. Appeal filed by the assessee is allowed for statistical purposes

  ---

• 2020 (5) TMI 111
  Netting of interest income - whether or not income paid on interest against the fixed deposits can be said to have been incurred wholly and exclusively for the purpose of earning interest income from fixed deposits? - assessee made fixed deposit with various banks and at the same time, the assessee availed loan from State Bank of India and claimed the interest to be set off against the interest received from various banks from fixed deposits - HELD THAT:- The assessee s payment of interest has no nexus between the earning of income. Facts in the present case is similar to that of the one considered by the Hon ble Supreme Court in the case of CIT v. V.P.Gopinathan [ 2001 (2) TMI 10 - SUPREME COURT] in which it has been held that interest on loan taken by the assessee from the bank on secured fixed deposit could not be reduced from his income by way of interest on the fixed deposit placed by him in the bank. As decided in M/S HARYANA STATE SMALL INDUSTRIES EXPORT CORPORATION L [ 2012 (8) TMI 1178 - PUNJAB AND HARYANA HIGH COURT] there is nothing to show that the expenses claimed as deduction were incurred for earning interest income. Equally, the claim of the appellant that the expenditure incurred by the assessee was allowable under Sections 30 to 37 of the Act is inadmissible for the reason that the business of the assessee was lying closed and income from interest was chargeable to tax as income from other sources under Section 56 of the Act. Once that was so, the Tribunal had rightly adjudicated the matter in favour of the revenue. - Decided against assessee.

  ---

• 2020 (5) TMI 110
  Long term capital gain computation - determination of value of the land - whether the assessee has sold the land in dispute as per the Sanakhat found during the course of search under section 132 or as disclosed in the registered document - HELD THAT:- The provisions of section 48 of the Act does not refer to take the fair market value as the sale consideration. Entire thrust of the AO for making the addition was based on Sanakhat found during the course of search. But the AO has not brought anything on record for any movement of the fund received by the assessee over and above the value declared in the registered documents. Regarding the receipt of money of Rs.2.65 crores from Rajat Finance private Ltd, we find that such money was returned back by the assessee in the subsequent year and this fact was not doubted by the authorities below. Accordingly, the receipt of such money cannot be treated as consideration received by the assessee against the transfer of the land. Even the value determined by the DVO suggest the fair market value at Rs. 13.87 Lacs only. Thus we are of the view that the value as adopted by the AO for Rs. 4.65 crores treating the sale consideration is not sustainable. The impugned transaction cannot be treated as colourable device adopted by the assessee to escape from the income tax liability. Accordingly we are of the opinion that the principles laid down in the case of McDowells[ 1985 (4) TMI 64 - SUPREME COURT] cannot be applied in the case on hand. In view of the above, the ground of appeal of the Revenue is dismissed. Addition being the income admitted during the search action - whether the amount mention in the seized documents represents the income of the assessee as alleged by the AO? - HELD THAT:- Information contained in the seized documents are just the information without any support and therefore no credentials can be given to such information until and unless it is based on some materials. As such, seized loose documents found during the search should be read in association with the other materials before reaching to the conclusion that such seized material represent the income of the assessee. We also note that the lose paper found during the course of search did hold evidentiary value unless the same is supported by cogent material. See COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2017 (1) TMI 1164 - SUPREME COURT] Documents seized during the search proceedings is nothing but representing the dumb documents and therefore no additions based on the same can be made in the hands of the assessee. No reason to interfere in the order of the ld. CIT-A and direct the AO to delete the addition made by him. - Decided against revenue.

  ---

• 2020 (5) TMI 109
  Addition towards the processing charges on account of non-deduction of TDS - Payment exceeding the limit as specified in the TDS certificate or not? - HELD THAT:- In the statement furnished u/s 131 by AR of M/s Cham trading organization, it was clearly admitted that it has received plant hiring charges but there was no finding on such charges received by the party by the AO. AO has accepted the plant hiring charges paid by the assessee to the party. Thus, the finding of the AO in itself is contradictory in the given facts and circumstances. Therefore we are reluctant to make any reference to such finding of the AO. Assessee has made the payment to the partner of M/s Cham trading organization under the instruction. Merely, the payment made to thirdparty under the instruction of the main party cannot be ground to make the disallowance of the expenses. Furthermore, the Shri Ramjibhai Kanji bhai is representing the partnership firm in the capacity of the partner. Thus, payment to the partner cannot be a ground for making the disallowance. There was no documentary evidence brought on record suggesting that earlier TDS certificate issued by the AO for Rs. 50 lakhs was substituted by Rs. 1.50 crores. Thus it is transpired that the TDS certificate issued by the AO up to Rs. 2 crores whereas the payment was made less than Rs. 2 crores. Payment in the given case does not exceeds the limit as specified in the TDS certificate. Hence the ground of appeal of the revenue is dismissed. TDS u/s 194C/195 - addition u/s 40 (a)(ia) - terminal handling charges on account of non-deduction of TDS - Applicability of provisions of section 172(8) - HELD THAT:- Handling charges were recovered/received by the agents of the non-shipping companies as evident from the invoice issued by them which are placed. There is a Circular issued by the CBDT. The said Circular No. 723, dt. 19th Sept., 1995 states that where the provisions of s. 172 are to apply, the provisions of ss. 194C and 195 relating to tax deduction at source are not applicable. We also find that handling charges paid to the non-shipping companies also covered under the provisions of section 172(8) DR at the time of hearing has not brought anything on record suggesting that the handling charges were not paid by the assessee to the non-resident shipping companies. In view of the above, we hold that the assessee was not liable to deduct the TDS under the provisions of section 194C/195. - Decided against revenue. Addition of unpaid liabilities u/s 41(1) - AO found that these are very old creditors appearing in the books of accounts of the assessee AND assessee has not filed any confirmation to the fact that these liabilities are still appearing in the books of accounts - HELD THAT:- . There is no dispute about the fact that the liability shown by the assessee has not ceased to exist in its books of account and the same is very much reflected in its balance sheet. Therefore, in our considered view, the same cannot be added to the total income of the assessee u/s 41(1) of the Act until and unless it is not written off in the book of accounts. See OPTO AUDIO ELECTRONIC PRODUCTS PVT. LTD., KOLKATA VERSUS ITO., WARD-11(2), KOLKATA [ 2012 (7) TMI 613 - ITAT, KOLKATA] - We hold that there cannot be any income on account of cession of liability which has not been written back by the assessee in its books of accounts. - Decided against revenue. Addition of travelling and conveyance expenses, telephone and postage expenses, and motorcycle maintenance expenses - AO on estimated basis disallowed such expenses to the tune of 10% - HELD THAT:- onsidering the nature of the business of the assessee and past history, we feel that the disallowance to the extent of 5% as restricted by the learned CIT (A) is reasonable. Accordingly, we do not want to disturb the finding of the learned CIT (A) - Decided against revenue.

  ---

• 2020 (5) TMI 108
  Assessment u/s 153A - determination of undisclosed income - HELD THAT:- Hon ble Rajasthan High Court in the case of Jai Steel India vs. ACIT [ 2013 (6) TMI 161 - RAJASTHAN HIGH COURT] has categorically held that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. Observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the Assessing Officer is empowered to issue warrant and consequential assessment u/s 153A have to be undertaken. Section 153A proceedings were validly undertaken by the revenue authorities. Bogus share application money - The entries in the incriminating documents seized during the search and mentioned in the assessment order are not specifically adjudicated by the Ld. CIT (A). Furthermore, the observations of ld. CIT (A) that the assessee has furnished all the confirmations and details regarding share capital / share premium are not adjudicated in the light of incriminating materials appearing / mentioned in the assessment order. The assessment order clearly states that the assessee failed to prove the identity, genuineness and creditworthiness of the investors. In view of the above discrepancies found in the order of the CIT(A), we deem it fit and proper to set-aside such incomplete and cryptic order of the ld. CIT(A) and restore the matter back to his file to take due cognizance of all the specific evidences mentioned in the assessment order and pass a reasoned and speaking order. Accordingly, the grounds in Cross Objection by the assessee on merits are therefore restored to the file of the ld. CIT(A) as indicated hereinabove and the appeal of the Revenue is allowed for statistical purposes.

  ---

• 2020 (5) TMI 107
  Penalty levied u/s 271(1)(c) - non-satisfaction of the AO while initiated the penalty proceedings u/s 271(1)(c) of the Act and also not specifying the charge in the notice issued u/s 274 r.w.s. 271 - HELD THAT:- Penalty proceedings in the case has been initiated with the remark penalty proceedings u/s 271(1)(c) of I.T.Act read with explanation 5A for concealment of particulars of income are being initiated separately. However, from the copy of the notice issued u/s 274 r.w.s. 271 we find that the AO has failed to strike off irrelevant portion of the notice not applicable. We find that the said issue stands covered in favour of the assessee by the decision in Pr.CIT vs Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] . Applying the ratio laid down by the Hon ble Delhi High Court to the present case, we hold that where the AO has failed to strike off the irrelevant portion not applicable to the assessee, there is no merit in the penalty order passed u/s 271(1)(c) of the Act. The same is held to be bad and invalid in law. Penalty levied u/s 271AAA - In the case of other members of the Dawat group relying on the decision in the case of Shri Ashwani Kumar Arora vs ACIT [ 2017 (11) TMI 456 - ITAT DELHI] , similar penalty has been deleted u/s 271AAA of the Act. In the case of Ashok Kumar Arora vs ACIT [ 2017 (11) TMI 513 - ITAT DELHI] and in the case of Vijay Kumar Arora vs ACIT [ 2018 (7) TMI 2109 - ITAT DELHI] wherein similar penalty has also been deleted u/s 271AAA of the Act. Following the same parity of reasoning, we delete the penalty levied u/s 271AAA - Decided in favour of assessee.

  ---

• 2020 (5) TMI 106
  Revision u/s 263 - disallowance of 5% of the total purchases - Reopening of assessment - HELD THAT:- The issue on the basis which reopening has been done, has been examined by the A.O and after verifying the evidences, a conscious decision has been taken by the A.O when passing the assessment order on 11-3-2016. A perusal of the order u/s 263 passed by the CIT shows that in the show cause notice, Pr. CIT has mentioned that the disallowance of 5% of the total of such purchases is erroneous and prejudicial to the interest of revenue within the meaning of sec. 263 of the Act. However, when it came to the order passed u/s 263 he does not say as to how the said assessment order passed u/s 143(3) read with sec. 147 for the A.Y. 2010-11 dated 11-2-2016 is erroneous insofar as it is prejudicial to the interest of revenue. CIT also fails to answer the very primary question that if the purchases are going to be treated as bogus and the addition is going to be made of the entirety of the purchases what happens to the sales that have been disclosed, as also the stocks by treating the said purchases as bogus. Sales which have been disclosed cannot be touched. The stock statement of the assessee would also stands disturbed. A perusal of the assessment order however, shows that these have been examined by the A.O and after considering the facts the estimated addition of 5% of purchases have been made by the A.O. The issues have been examined by the A.O and just because the opinion as arrived by the A.O is at a variation of the opinion of the learned Pr. CIT, would not grant the learned Pr. CIT the powers of revision u/s 263 - Decided in favour of assessee.

  ---

• 2020 (5) TMI 105
  Deemed dividend addition u/s. 2(22)(e) - depreciation on temporary structure claimed - As per assessee he submitted that the details placed before the paper book were not examined by the lower authorities - HELD THAT- Assessee has not furnished the relevant material before the lower authorities for due examination. These issues require a fresh examination and hence set aside the orders of the lower authorities for a fresh examination. The assessee shall lay relevant materials in support of its contention before the AO and comply with the requirements of the AO in accordance with law. AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assessee on the material etc to be used against it and decide the matter in accordance with law. Assessee s appeal is partly allowed for statistical purposes.

  ---

• Benami Property

• 2020 (5) TMI 104
  Benami transaction - Whether the plaintiff is a fictitious person? - Agreement to sale on fictitious - whether plaintiff with ulterior motive described himself differently to act as a front man / name lender? - HELD THAT:- There is no document, muchless; official document on record to indicate that plaintiff Satish Kumar Khandelwal is resident of 78A Parshanand Nagar, R.T.O.Road, Indore. For the first time, opened bank account in the Bank of Rajasthan Limited on 27/03/2006 (exhibit P/30) in the name of Satish Shankarlal Khandelwal. Besides, in his affidavit dated 24/04/2007, he has used the surname Satish Sharma (Khandelwal). Non-production of PAN card, school record or marks sheet, driving licence despite notice issued under Order 12 rule 3 CPC upon the plaintiff certainly shall lead to adverse inference against him in view of section 114(g) of the Evidence Act. The aforesaid unnatural conduct of the plaintiff points needle of suspicion towards him and his bona fides are questionable. For want of explanation of genesis of cash flow, preparation of pay orders and bank drafts from the accounts of persons / companies, i.e., Arun Dagariya, A.R. Infrastructure Ansal Housing and Construction Ltd., with whom there was no agreement by the plaintiff to provide consideration amount. Those persons were not examined in the Court. Such sequence of facts suggest that the plaintiff with ulterior motive described himself differently to act as a front man / name lender for the collateral purpose to benefit them. Finding of the trial Court that only for the purpose of agreement to sell (exhibit P/9), the plaintiff used the name of Satish Kumar Khandelwal, resident of 216, Banshi Trade Centre, Indore as prior thereto the documents placed on record admitted by plaintiff himself describe him as Satish Sharma resident of 78A Parshanand Nagar, RTO Road, Indore M.P., cannot be faulted. Whether, the agreement to sell dated 27/04/2005 is vague, uncertain and not capable of execution? - The land falling in survey no.219/2 total area 1.40 acres of land has been jointly recorded in the names of Rajendra Jain, Rachna Jain, Palak and Subham Jain (exhibit P/94). Land falling in survey Nos.221/2 208/12 are recorded in the name of Shantilal (exhibit P/96 P/99). Land falling in survey no.213/1 is recorded in the name of Surendra Dilliwal and Rajendra Jain (exhibit P/98) Land falling in survey No.216/4 is recorded in the name of Surendra Dilliwal, Sudha Dilliwal, Rajendra Jain Rachna Jain (exhibit P/101). Therefore, the same lands were in the names of the aforesaid persons. There is no evidence that at any point of time, partition has taken place for apportionment of shares of defendants No.1, 2 and their heirs and rights conferred upon the defendants No.1 and 2 to deal with the lands of joint ownership. Finding of the trial Court cannot be faulted that the agreement was uncertain and not enforceable. The specific performance of a contract is the actual execution of the contract according to its stipulations and terms, the Courts direct the party in default to do the very thing which he contracted to do. Therefore, unless; the stipulations and terms of the contract are certain and parties must have been consensus ad idem, the specific performance cannot be ordered. The burden that the stipulations and terms of contract and the minds of parties ad idem is always on the plaintiff. If such burden is not discharged and the stipulations and terms are uncertain, and the parties are not ad idem, there can be no specific performance, for there was no contract at all. [Smt. Mayawanti Vs. Smt. Kaushlyadevi, [ 1990 (4) TMI 304 - SUPREME COURT ]. This Court is of the view that the agreement to sale (exhibit P/9) is vague, uncertain and is not capable for execution under law. Whether the agreement to sell is hit by the prohibition under section 3 of the Benami Transactions (Prohibition) Act, 1988 and, therefore, not enforceable under law? - The facts in hand as discussed unambiguously and unequivocally lead to a conclusion that the plaintiff was not a bona fide purchaser with no financial capacity whatsoever. Plaintiff also failed to prove genuineness of the transaction for preparation of pay orders and bank drafts from the accounts of such persons with whom plaintiff had no privity in terms of the agreement for providing the consideration and unexplained cash flow. None of the persons providing consideration amount were examined in the Court. Under such circumstances, the transaction in question in the considered opinion of this Court tantamount to benami transaction prohibited within the meaning of section 2(a) of the Act, the same cannot be termed genuine transaction. Benami transaction defined in section 2(a) of the Act shall not only include transaction in which property is transferred to one person but, also agreement to transfer the property to one person as the intendment of the legislature is to prohibit benami transaction. Sale and agreement to sale defined under section 54 of the Transfer of Property Act being part of the Indian Contract Act, as contemplated under section 4 of the Transfer of Property Act are subject to prohibition contained thereunder. If an agreement to sale suffers from the vice of benami transaction within the meaning of section 2(a) of the Act, the same falls in the category of contracts forbidden by law as contemplated under section 23 of the Indian Contract Act, the object whereof is unlawful. Hence, inexecutable in an action for specific performance. Whether the plaintiff was ready and willing to perform his part of the agreement? - Plaintiff could not be said to be ready and willing to perform his part of the contract. Due to default of payment schedule as agreed to, the agreement stands rescinded on its own. The subsequent conduct of the plaintiff is also unnatural. He sent two telegraphs for taking the remaining amount and presence of defendants No.1 and 2 on 27/03/2006 for registration of sale deed whereas neither he had purchased the stamp paper nor handed over the draft sale deed to defendants No.1 and 2. Plaintiff found to have not made the payment of consideration as agreed to between the parties and on the contrary, has made a factual incorrect statement discussed above regarding cash payment of Rs. 35.00 lakhs before 05/11/2005. Law is well settled that the plaintiff has to plead and prove each and every condition of the agreement right from the date of the agreement upto the date of decree (See N.P.Thirugnanam Vs. Dr. R.Jagan[ 1995 (7) TMI 437 - SUPREME COURT] ). Whether defendants No.4 and 4 are entitled for cost? - Defendants No.4 and 5 found to have been unjustifiably dragged into the instant litigation. Therefore, they are entitled for cost of Rs. 50,000/- (Rupees fifty thousand only) payable by the plaintiff within four weeks from the date of pronouncement of this judgment.

  ---

• Customs

• 2020 (5) TMI 103
  Imposition of penalty on Customs Broker (CB) - non-declaration/concealment of goods - Allegation is that Mr. Santosh and Mr. Janaki Raman filed Bill of Entry without verifying KYC / antecedents of the importer and thus abetted in the import of undeclared goods - HELD THAT:- When the Ministry of Commerce who has granted IE licence has exhibited the details of IEC holders in their website which can be verified, the appellant cannot be found fault when the same has been accepted to be true and correct - also, Mr. Santosh and Mr. Janaki Raman had given statements that previous consignment of the same importer also non-declared goods and therefore they ought to have been more cautious. The goods were cleared and apart from the statement there is no evidence to doubt the previous consignments. The statements were retracted. They were not subjected to cross examination though a request was made. Apart from the allegation that appellant ought to have been cautions, there is no evidence to show that appellant had any knowledge of the import of undeclared goods. When the importer consciously conceals certain facts from the Customs Broker, it cannot be presumed that the Customs Broker has abetted in such offence merely because he has not met the importer face to face. There are nothing to hold that appellant had intentionally connived or abetted in the non-declaration / concealment of the goods. Appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2020 (5) TMI 102
  Approval of proposed scheme of compromise and arrangement - commercial viability of the scheme questioned - HELD THAT:- It is not for this court to sit on the commercial wisdom of the scheme. This court is not sitting as an appellate authority to determine the commercial facets of the scheme. Majority of the concerned creditors in terms of Section 391 of the Companies Act, 1956, have in their wisdom approved the scheme with modification by above 75% majority. There are no reason to not accept the scheme. There is no merit in the objections and the same are dismissed. Petition dismissed.

  ---

• 2020 (5) TMI 101
  Oppression and Mismanagement - misappropriation of funds - Whether this CP is maintainable for it has been filed by a non-member of the company? - Whether sec.241 application is maintainable with regard to the affairs of the sec.8 Companies? - HELD THAT:- Since this issue is limited to examining as to whether a non-member can file Petition u/s 241 of the Act, unless it is self-evident that petitioner is a member of the company, this petition shall not be extrapolated to say that since complexities are involved in this case, the prerequisite of being a member can be done away - As to maintainability is concerned, if requisite qualification is not there, if at all waiver is a requirement, it could be granted under the proviso to sec.244 of the Act. The star argument of the Petitioner herein is that, since this Bench has already stated that this Petition is maintainable even though he is not the member of the company, the petitioner grievance shall be considered under section 241 of the Act, instead of going into as to whether that order is right or wrong, as it has been left open to decide at the final hearing, this Bench is entitled to go into it - Qualification given one to ten cannot be read as qualification zero to ten. Here this person is a non-member; a member u/s.241 cannot be read as non-member just because an application could be allowed even a shortfall is there to the qualification u/s.244 of the Companies Act, 2013. However, this Bench ordered that the CP is maintainable owing to some complexities, therefore, it has been left open to decide this issue at the time of final hearing. Though it is not to make an observation against the interim order passed saying that this petition is maintainable, the basic standard under law is whenever a threshold is set out in the law to initiate proceeding, first that issue shall be looked into at the time of filing, if it is slipped out at the time of numbering, it has to be considered at the time of mentioning. The reason behind this doctrine is, the statute has not left any jurisdiction to the judiciary to consider petition filed by a non-member. The subject matter jurisdiction comes to this Tribunal only when the petitioner crossed the test of being a member of the company. Unless the petitioner has passed that test, the Tribunal ought not to have looked into the petition - We would not have dealt with this issue and especially prima facie view taken at the earlier point of time, but because the petitioner counsel himself vehemently argued that this Bench should not look into maintainability issue on the ground this Bench has already decided the maintainability issue. Prima facie view of consideration will come into operation when the petition under consideration is indicative of likelihood of getting a decree in favor of it unless and until that seemingly insurmountable materials are available on record is rebutted by the answering Respondent, at times courts grant an ex parte ad interim relief looking at the material shown as sufficient to pass decree, but when other side later present and show the material shown by the plaintiff/petitioner could not make out a case, may be on the ground itself, the interim order shall be vacated. The Petitioner is one of the communicant members, even if 24 Consenters are taken into consideration; they are part of 4.5 Million of the church members. The church members at the parish level elect and send delegates to Dioceses, and Synod members. Synod members will elect members of CSITA. This being the arrangement, there is no scope to assume that this Petitioner or 24 Consentors to this Petitioner or 200 members alleged to have attended the alleged General Meeting on 16-1-2016 can be equated with members of CSITA who have reached to CSITA passing through two layers of election. Therefore this Company Petition is not at all maintainable. Whether a person on his own holds meetings and elections thereafter seek an imprimatur of this Bench to the actions of him? - HELD THAT:- When the action taken by this Petitioner itself is in contravention to the provision of law and flouting all the rules under Rule Book, how can he be considered as aggrieved before this Bench to seek an imprimatur of this Bench to an illegal action without any basis for such approval? The Petitioner has gone to the extent of setting up letterhead of the company to prepare a resolution showing as if a committee has been constituted to R1 Company. Basic requirement to interfere with the Indoor Management of any company is that the person shall be either shareholder or member of the company. This Petitioner is neither of them - there are no merit in the argument of the Petitioner saying that the Managing Committee elected by the so-called 250 members as valid. Whether any case has been made out u/s.241 of the Companies Act, 2013 against the Respondents herein? - HELD THAT:- Every action that is falling under sec.213 or any unlawful actions falling under any of the companies Act cannot be straight away considered as an action attracting the provisions of sec.241 of the Companies, Act, 2013. The checklist and the measurement to bring it within the ambit of sec.241 are altogether different, here the Petitioner has miserably failed to establish any case u/s.241 of the Companies Act, 2013. Petition dismissed.

  ---

• 2020 (5) TMI 100
  Transfer of share certificate from its first registered holder to the petitioner - allotment of bonus shares and all other benefits - section 58 of the Companies Act, 2013 - HELD THAT:- The Company Law Board held since transferor has not shown any interest in spite of notices, the company was directed to register the impugned shares in favour of the petitioner on the authority of the order. Similar is the case here also where notice is sent to the original transferor/shareholders, Mona Goel and Deepk Goel but notices could not be served and further no complaint was lodged regarding theft/loss of share certificate till date. Therefore, the Tribunal can direct the first respondent to register the transfer of shares in favour of the petitioner provided the petitioner to furnish indemnity for the amount to be fixed by the first respondent. The company refused to register the transfer on the ground that signature of the transferor differs where under also the original transferor was also directed to file objections and if no objections are filed, the company advised the transferee to execute requisite indemnity bond for effecting the transfer in its name. Since the original transferor has not raised any objection, the Company Law Tribunal directed to register the shares in the name of purchaser. Thus, when transferor has not raised any objection, the Company Law Board directed the company to register the shares including the bonus shares, if any. The first respondent is directed to transfer the impugned 100 shares in favour of the petitioner subject to the petitioner giving requisite indemnity bond within a period of 30 days from the date of order - petition allowed.

  ---

• Insolvency & Bankruptcy

• 2020 (5) TMI 99
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - debt due and payable or not - existence of debt and dispute or not - HELD THAT:- It is evident from the record that there exist no Agreement as between the Operational Creditor and the Corporate Debtor for supply of services as contemplated between the parties. The Operational Creditor has placed on record only the Invoices as raised by them against the Corporate Debtor. It is an undisputed fact that the Managing Partner of the Operational Creditor whom through the present petition has been filed is holding 36.84% stake of the shareholding in the Corporate Debtor. Further, the filing of C.P. No. 4 of 2016, by the Managing Partner against the Corporate Debtor, which is pending on the file of this Tribunal, is a fact borne on record and the same goes on to show that there exists a pre-existing dispute between the parties. From the facts narrated, it is made that there exist a dispute between the parties and the said dispute was in existence even before the issuance of the Demand Notice by the Operational Creditor. The factum of filing of a C.P. No. 4 of 2016 by the Managing Partner of the Operational Creditor in his personal capacity against the Corporate Debtor and others also dealing with the transactions would show that there exist dispute between the parties. The Hon ble Supreme Court in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] held that the existence of dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the Demand Notice or Invoice as the case maybe. Petition dismissed.

  ---

• 2020 (5) TMI 98
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - Pivotal contention advanced by the Learned Counsel for the Appellant is that the Adjudicating Authority had failed to take into account that if a Corporate Debtor commits a default of a Financial Debt then, the Adjudicating Authority is to see that the records of the Information Utility or other evidence produced by the Financial Creditor to satisfy that the Default had occurred - HELD THAT:- There exist serious dispute as to whether the Respondent/ Corporate Debtor owes any sum to the Petitioner/ Financial Creditor and the said dispute cannot be determined in a summary proceedings under the Insolvency Bankruptcy Code in the considered information of this Court. Suffice it for this Tribunal to make a pertinent mention that the dispute between the parties requires to be thrashed out by adducing necessary documentary and oral evidence before the Competent Forum . Admittedly, the Adjudicating Authority under the I B Code is not a Court of Law and it does not decide money claim or Suit . In any extent, the Appellant has failed to establish when there is any Debt recoverable from the Respondent Company and the occurrence of default. Taking note of attendant facts and circumstances of the instant case in an encircling manner this Tribunal comes to an inevitable and irresistible conclusion that the Impugned Order dated 17th September, 2019 in dismissing the Section 7 Application is free from any legal infirmities - Appeal dismissed.

  ---

• 2020 (5) TMI 97
  Maintainability of application - initiation of CIRP - non-payment of the operational debt has not been filed - existence of debt and dispute or not - HELD THAT:- The Hon ble Supreme Court also considered the order of this Appellate Tribunal in the case of SMART TIMING STEEL LTD. VERSUS NATIONAL STEEL AGRO INDUSTRIES LTD. [ 2017 (8) TMI 1590 - SC ORDER] , the Adjudicating Authority dismissed the petition as the second petition was for same cause of action, was not maintainable. In view of the fact that earlier petition under Section 9 was filed by the Appellant- Smart Timing Steel Ltd. - for initiation of the Corporate Insolvency Resolution Process against National Steel Agro Industries Ltd. - (Corporate Debtor) was earlier dismissed by the Adjudicating Authority and affirmed by the Hon ble Supreme Court, we agree with the observations made by the Adjudicating Authority that the second petition for same cause of action is not maintainable. Appeal dismissed.

  ---

• Service Tax

• 2020 (5) TMI 96
  Imposition of penalty u/s 78 - short paid service tax alongwith interest paid on being pointed out - malafide intent or not - HELD THAT:- The substantial amount of service tax was paid on being so pointed out by the audit along with interest. Further, it is recorded in the impugned order that the balance short fall of Rs. 52,429/- was also paid by challan dated 28 February, 2013. That is on before the date of passing of the order in original. Accordingly, under the facts and circumstances, no case of deliberate default is made out against the appellant - The appellant have given a cogent explanation for the tax short paid, that they were not having competent staff and as such some errors occurred, it was not deliberate. Such explanation have not found to be untrue. Penalty u/s 78 is set aside - appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2020 (5) TMI 95
  CENVAT Credit - exempt goods - denial of CENVAT Credit on capital goods on the ground that the amendment to Rule 6(4) does not have retrospective effect - HELD THAT:- As per the submissions made by Appellant before the Adjudicating Authority, they have paid duty in the month of April 2017 and June 2017. The Adjudicating Authority has decided on the interpretation of amendment and no verification was done as regards the payment of duty. If on verification if it is found that appellant have cleared goods on payment of duty, from the date of taking credit they will be entitled for Cenvat credit, subject to condition that dutiable goods should be cleared within two years from the date of commencement of production of goods or installation of such capital goods, as the case may be. The matter is remanded to the Adjudicating Authority to decide the matter afresh - Appeal allowed by way of remand.

  ---

• Indian Laws

• 2020 (5) TMI 124
  Outstanding pensionary benefits - Petitioner was working as Assistant Engineer in Public Works Department and he retired from service on 31.07.2013 but after his retirement, petitioner was not paid pensionary benefits i.e. gratuity, leave encashment, FBF, GIC, GPF - HELD THAT:- Pensionary benefits of petitioner has not been paid by the respondents. As per Madhya Pradesh Civil Services Pension Rules, enabling provision to withhold or to withdraw pension has been provided in Rules 9, 64 and 65. In the case of petitioner, no departmental enquiry was conducted neither petitioner was held to be guilty for causing any loss to the State Government. In any department, recovery and adjustment of Government dues can be made if the government servant does not clear the Government dues and such dues are ascertainable. Ascertainable Government dues have been defined in Explanation to Rule 65, which includes balance of housing, building or convenience advance, arrears of rent and other charges pertaining to occupation of Government accommodation, over payment of pay and allowances and arrears of income tax deductible at source under Income Tax Act, 1961. There is no mention of any punishment imposed upon the petitioner after conducting a departmental enquiry neither it has been stated by the respondents that dues are ascertainable Government dues. In absence of same respondents cannot withhold the pension of the petitioner. Writ petition filed by the petitioner is allowed and respondents are directed to clear the dues of the petitioners within period of 45 days from receipt of order passed by this Court today

  ---

• 2020 (5) TMI 94
  Interpretation of Statute - applicability of Code of Criminal Procedure in the matters of contempt triable by the High Court - Whether contempt proceedings could said to be the proceedings under the Criminal Procedure Code, 1973 (Cr.PC) and the Supreme Court had the power to transfer the proceedings from one court to another under the Cr.PC.? HELD THAT:- A careful analysis of the Constitution Bench decision leaves no manner of doubt that Section 15 of the Act is not a substantive provision conferring contempt jurisdiction. The Constitution Bench finally left the question as to whether the maximum sentence prescribed by the Act binds the Supreme Court open. The observations made in Para 38 clearly indicate that the Constitution Bench was of the view that the punishment prescribed in the Act could only be a guideline and nothing more - The Court also held that Section 15 is not a substantive provision conferring contempt jurisdiction and, therefore, is only a procedural section especially in so far as suo moto contempts are concerned. It is thus clear that the powers of the Supreme Court to punish for contempt committed of itself is a power not subject to the provisions of the Act. Therefore, the only requirement is to follow a procedure which is just, fair and in accordance with the rules framed by this Court. The powers of the Supreme Court to initiate contempt are not in any manner limited by the provisions of the Act. This Court is vested with the constitutional powers to deal with the contempt. Section 15 is not the source of the power to issue notice for contempt. It only provides the procedure in which such contempt is to be initiated and this procedure provides that there are three ways of initiating a contempt (i) suo motu (ii) on the motion by the Advocate General/Attorney General/Solicitor General and (iii) on the basis of a petition filed by any other person with the consent in writing of the Advocate General/Attorney General/Solicitor General. As far as suo motu petitions are concerned, there is no requirement for taking consent of anybody because the Court is exercising its inherent powers to issue notice for contempt. This is not only clear from the provisions of the Act but also clear from the Rules laid down by this Court. Objections as to issuance of notice - HELD THAT:- There are no merit in the argument of the alleged contemnors that the notice was not in consonance with the Rules of this Court or in consonance with the principles of natural justice or fair procedure - the notice was a legal and valid notice - the applications for discharge of notice are also dismissed. Whether these proceedings can be termed suo motu? - HELD THAT:- There is no prayer for initiating contempt proceedings. These letters were placed in the office of the Judges of this Court and after taking note of the averments made therein they decided to issue notice of contempt. This is nothing but a suo motu action on reading the complaints and the letter of the President of the Bombay Bar Association and the President of the Bombay Incorporated Law Society and hence this cannot be termed to be a contempt petition requiring the consent of the Attorney General. Judge in their own Cause - HELD THAT:- The Bench was fully justified in taking note of the letter sent by the Bombay Bar Association and the President of the Bombay Incorporated Law Society and the documents annexed thereto which included the complaints sent by Shri Vijay Kurle and Shri Rashid Khan Pathan. After issuing notice the bench directed that the matter be placed before Hon ble the Chief Justice for placing before the appropriate bench. This is valid and proper procedure and the bench did not act as judge in their own cause. Only notice was issued and thereafter the matter was assigned to this bench. Source of information - HELD THAT:- The disclosure of the information is made in the order itself where it is clearly recorded that the action has been taken on the basis of the letter sent by the President of the Bombay Bar Association and the President of the Bombay Incorporated Law Society to the President of India and the Chief Justice of India in response to the complaints made by the alleged contemnors. The complaints of Shri Vijay Kurle and Shri Rashid Khan Pathan were also attached with the letters and after taking note not only of the letter of the President of the Bombay Bar Association and the President of the Bombay Incorporated Law Society but also the prayer clauses of both the complaints sent by the alleged contemnors and the scandalous allegations made in the complaints, the notice was issued. The source of information is the letter sent by the Bombay Bar Association and the President of the Bombay Incorporated Law Society, as is apparent from the order initiating contempt proceedings - there are no merits in the plea. Freedom to criticise - HELD THAT:- There can be no manner of doubt that any citizen of the country can criticise the judgments delivered by any Court including this Court. However, no party has the right to attribute motives to a Judge or to question the bona fides of the Judge or to raise questions with regard to the competence of the Judge. Judges are part and parcel of the justice delivery system. By and large Judges are reluctant to take action under contempt laws when a personal attack is made on them. However, when there is a concerted attack by members of the Bar who profess to be the members of an organization having a large following, then the Court cannot shut its eyes to the slanderous and scandalous allegations made. If such allegations which have not only been communicated to the President of India and the Chief Justice of India, but also widely circulated on social media are permitted to remain unchallenged then the public will lose faith not only in those particular Judges but also in the entire justice delivery system and this definitely affects the majesty of law. The complaint sent by Shri Vijay Kurle was in connivance and at the behest of Shri Nilesh Ojha. Therefore, there are no doubt that all three i.e. Shri Vijay Kurle, Shri Rashid Khan Pathan and Shri Nilesh Ojha were working in tandem and making scurrilous and scandalous allegations against the Members of the Bench, probably with the intention that the Members of the Bench would thereafter not take action against Shri Nedumpara. Defence of Truth - HELD THAT:- Though not so much in the oral arguments but in the written arguments the alleged contemnors have also raised the plea of truth as a defence. Truth as a defence is available to any person charged with contempt of Court. However, on going through all the written arguments and the pleadings, other than saying that the Judges had misinterpreted the judgments of this Court or had ignored them or that Justice R.F. Nariman was biased, there is no material placed on record to support this defence. The allegations are also scurrilous and scandalous and such allegations cannot be permitted to be made against the Judges of highest Court of the country - all three alleged contemnors i.e. Shri Vijay Kurle, Shri Rashid Khan Pathan, and Shri Nilesh Ojha, guilty of contempt. The matter be now listed on 01.05.2020 for hearing the contemnors on the issue of sentence, through video conferencing.

  ---