Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 10, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Waiver of interest for specified electronic commerce operators for specified tax periods - Notification
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Levy of GST - lease of land for mining - ‘licensing services for the right to use minerals including its exploration and evaluation - Both these amounts are paid in addition to the royalty payable and in a proportion to the royalty paid for extracting minerals from a contract of mining lease. Therefore they are consideration for the service of right to use minerals including its exploration and evaluation which is enumerated as tariff item ‘997337’, this is same as royalty and hence attract tax at the rate of 9% CGST & SGST each. - AAR
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Levy of GST - forest permit fee - The facts of the present case clearly reveal that the forest department is collecting transit fee to allow the transit of vehicles carrying coal through the forest area, thus this is covered under entry 5(e) of the Schedule II to the CGST Act, 2017 wherein ‘to do an act’ is deemed to be a service. Forest department’s act of allowing such vehicles through forest area is therefore covered under this head. - Liable to GST under reverse charge (RCM) - AAR
Income Tax
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Reopening of assessment u/s 147 - notice under Section 148A(b) - The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. - Petition dismissed - HC
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Penalty u/s 271B - Tax Audit - delay in getting the books of accounts audited and furnishing the same - period of limitation for passing penalty orders - the levy of penalty by the assessing officer after passage 30 months after the completion of the assessment, we are of the opinion that the penalty proceedings are barred by limitation and consequently penalties levied under section 271B cannot be sustained - AT
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Estimated income from sale of plots- In this case, except agreement to sale for one plot, the AO does not have any other credible evidence to support his estimation of income by extrapolation of rate on the basis of agreement to sale for one plot to remaining plots sold during the block period. In our considered view, the estimation made by the AO towards undisclosed income of under reporting of sales Revenue from sale of plots, is purely a guess work, which is based on the suspicion and surmises, but not based on any material evidences. - AT
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Disallowance of interest u/s 36(1)(iii) towards interest expenditure - allegation that assessee company diverted its “interest bearing funds” for giving “interest free advances / loans” for unknown purpose - CIT-A deleted the addition - the Assessing Officer merely on an ad hoc basis made the additions under section 36(1)(iii) of the Act, without bringing anything on record to suggest that interest-bearing funds were actually utilised for the purpose of advancing funds on which no interest was charged by the assessee. - order of CIT(A) sustained. - AT
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Addition of sales promotion expenses - Payment to Doctors / medical practitioners - Assessee has not submitted any technical record or any agreement entered with those doctors to carry out this kind of activities which can prove that these doctors have done or carried out certain services to the assessee. In the absence of any documentary evidences or cogent material in support of the assessee’s claim, we are inclined to reject the same. - AT
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Failure to comply with directions given to the AO by the appellate authority - Assessing Officer, in a most negligent and mechanical manner, rejected the application of the assessee. Even the CIT(A)/National Faceless Appeal Centre has miserably failed to consider the simple prayer of the assessee and rejected the appeal in a mechanical manner. The assessee thus, has been left to the mercy of the system and has to approach this Tribunal for the simple case that the Assessing Officer may be directed to give appeal effect to the order of the ld. CIT(A). - AT
Customs
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Extending the time period for furnishing the final Mega power project certificate from 120 months to 156 months and extending the period of validity of security in the form of Fixed Deposit Receipt or Bank Guarantee from 126 months to 162 months, in case of provisional mega power projects - Notification
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Levy of ADD extended on import of Toluene Di-isocyanate (TDI) originating in or exported from China PR, Japan and Korea RP,by amending notification No. 3/2018-Customs (ADD) dated 23-01-2018. - Notification
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Validity of second SCN - invocation of Extended period of Limitation - it is found that the amount of interest under Section 28 AA demanded in the earlier show cause notice also, and the same was confirmed in the adjudication proceedings, which is presently subjudice before the Hon’ble Rajasthan High Court. Thus, in the present show cause notice, which is mainly for the demand of interest under Section 28 AA and also for a small amount of short tax paid for the same period, is bad for invocation of extended period of limitation. - AT
DGFT
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Relaxation in provision of submission of 'Bill of Export' as an evidence of export obligation discharge for supplies made to SEZ units in case of Advance Authorisation - Circular
SEZ
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Payment of Customs duty on export of goods. - Supplying goods, or providing services, from Domestic Tariff Area to a SEZ Unit - Order-Instruction
Corporate Law
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Defect in preparation of profit and loss account of the company - amount of bad debt written off - offence either under Section 447 or 448 of the Companies Act - The present prosecution has been filed mainly on the ground that reply notice given by the petitioner was not satisfactory to the defacto complainant. Otherwise, it is not the case of the de facto complainant that there are material facts which have been suppressed and there is no clear cut findings recorded by the de facto complainant as to the nature of the omissions or suppression of material facts - unless and until, there is a finding as to the suppression of the material facts, the prosecution cannot be launched, as a matter of right. - HC
Indian Laws
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Validity of order of Lok Adalat based on mutual compromise - High court set aside the order of Lok Adalat -Suit for partition and separate possession of property - The High Court's decision to set aside the order of the Lok Adalat, without entering into a discussion as to the findings in such order, cannot be sustained. - Such decision of the High Court runs contrary to established principles of law which seek to protect the sanctity and finality of orders based on a compromise or consent between parties - SC
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Dishonor of cheque - signature on the cheque has been denied or not - The first respondent/P.W. 1 admit that it is the usual practice that, while running a chit fund, unfilled signed cheques will be obtained in the course of the chit business - The petitioner had probabilised his defence, who got into the box, gave explanation as to how the signed cheques, landed in the hands of the first respondent. The first respondent unable to make discredit the evidence of the petitioner while cross examining him. - The Courts below failed to analyse the evidence, weigh the materials, consider the explanation given - this Court is inclined to set aside the conviction and sentence passed by the trial Court. - HC
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Dishonor of Cheque - conviction for offence under Section-138 of the Negotiable Instrument Act, 1981 - The argument advanced on the point of arbitration is not applicable in the facts and circumstances of this case since, it governs under the special statute of Central Act under Section-138. Since the point regarding legal enforceable debt has not been demolished by the counsel appearing for the petitioner, this Court has no hesitation to confirm the orders passed by the learned Courts below. - HC
IBC
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Validity of Ex-parte order of NCLAT - appellant having been deprived of a reasonable opportunity of hearing - Service of notice - Fresh notice was issued on which, the Appellate Tribunal received postal endorsement to the effect that the appellant had ‘left’ the given address. Thus, notice could not be delivered to the appellant. - It appears just and proper that while setting aside the impugned order - Matter restored back - SC
Service Tax
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Levy of Service Tax on amount of penalty (liquidated damages) collected from their contractor - to refrain from an act or to tolerate an act or a situation or to do an act - for such alleged act or tolerance, no remuneration is prescribed in the contract. - The amount of liquidated damages levied by the appellant from their contractor is in the nature of penalty, and not by way of any consideration for any service as defined under Section 66E(e). - No service tax liability - AT
Central Excise
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CENVAT Credit - capital goods - manufacture of exempted goods - On analysis of CENVAT Credit Rules, 2004 particularly Rule 6(6)(v) which are explanation to Rule 6(4), this court finds that in the year 2016-17 the goods were exported under bond. It is also true that in terms of Notification No.30/2004-CE dated 09.07.2004 option was exercised for exemption in the year 2016. The said fact does not debar the respondents from availing the credit. Provisions of Rule 6(4) read with Rule 6(6)(v) of the CENVAT Credit Rules, 2004 gives a time of two years to avail CENVAT Credit. - HC
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Refund claim of amount deposited during investigation - the appellant is entitled to refund with interest under Section 35 FF, for which no limitation is applicable. The revenue department cannot retain such amount of Rs. 10 lakhs (in the nature of pre-deposit). Therefore, the original authority is directed to refund Rs. 10 lakhs to the appellant alongwith interest of 12% on the same for the period starting from the date of deposit, till the date of refund. - AT
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Refund of Service tax paid on reverse charge mechanism which was otherwise not payable - Period of limitation - if on the pretext that since the amount of duty or service tax is not payable, Section 11B will not be applicable, any amount of refund arise only when it is not payable therefore, in any case Section 11B will not be applicable and become redundant which is not the intention of the legislators. - AT
Case Laws:
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GST
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2022 (6) TMI 424
Execution of Arbitral Award passed in favour of the Applicant and against the Municipal Corporation of Greater Mumbai (MCGM) - withholding of amount towards the alleged GST liability of the Applicant - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- It can hardly be disputed that in case of a normal taxable supply, the supplier issues a tax invoice to the recipient of the goods and services and receives the amount from the recipient along with the GST and then discharges its GST liability to the Government. This, as Mr. Andhyarujina puts it, is a forward charge . Then a concept of Reverse Charge is also introduced in the GST regime. In the case of a Reverse Charge, the supplier of the services or goods does not charge GST on the invoice and receives the amount from the recipient without adding GST to his invoice. This is because under the Reverse Charge Mechanism, the liability to pay the GST is on the recipient of the goods or services instead of the supplier of such goods or services. This is however only in respect of the categories notified under Sections 9(3), 9(4) 9(5) of the CGST Act and Sections 5(3), 5(4) and 5(5) of the IGST Act. There are similar provisions, namely, Sections 9(3), 9(4) 9(5), even in the Maharashtra Goods and Services Tax Act, 2017 (the State Goods and Services Tax Act). From the N/N. 10 of 2017-Integrated Tax (Rate) dated 28th June 2017, it is clear that any service supplied by any person, who is located in a non-taxable territory to any person located in the taxable territory [other than a non-taxable online recipient], it is the recipient of the service who would be liable to pay the GST on a Reverse Charge basis - In the present case, it is not in dispute that the Applicant was the supplier of services who is located in a nontaxable territory. The MCGM is a person located in the taxable territory and is not a non-taxable online recipient. This being the case, by virtue of the aforesaid Notification, it would be the MCGM [the recipient of the service] who would be liable to pay the GST on a Reverse Charge basis as contemplated under Section 5(3) of the IGST Act. In the present case, the liability to pay GST has arisen because there were disputes between the Applicant and the MCGM on the amounts payable by the MCGM to the Applicant. Since, the MCGM did not make those payments, the Applicant invoked Arbitration which finally culminated into an Arbitral Award dated 23rd June 2014. Since the Arbitrator found that there were monies due and payable by the MCGM to the Applicant and which were not paid, the Arbitral Tribunal awarded interest on the aforesaid amounts at the rates more particularly mentioned in the Arbitral Award - The rates and prices bid submitted by the Applicant in the priced Bill of Quantities and which were to include all taxes and duties would certainly not have taken into consideration that the MCGM would not make payment in a timely manner, raise disputes, which would then make them liable to pay interest and which would be subjected to the levy of GST. This is also made clear from clause 4, which stipulates that the rate of price (which is to include all taxes and duties) shall be entered against each item in the priced Bill of Quantities whether quantities are stated or not. The costs of item against which the contractor has failed to enter a rate of price shall be deemed to be covered by other rates and prices entered in the Bill of Quantities. When one reads clauses 3 4 of the contract in conjunction with each other, the inescapable conclusion is that the taxes and duties referred to in clause 3 did not in any way contemplate the liability of GST that may arise due to payment of interest for delayed payment of any consideration for the supply of the services. This, according to me, was never in contemplation of the parties when they entered into the contract. It is therefore opined that clause 3 of the contract does not come to the assistance of the MCGM to deduct the GST of Rs.67,94,965.02/- from the Applicant. It is the MCGM, under Notification No.10 of 2017 Integrated Tax (Rate) issued by the Government of India, Ministry of Finance (Department of Revenue), dated 28th June 2017, read with the provisions of Section 5(3) of the IGST Act, who would be liable to pay the GST to the Government on a Reverse Charge basis and the same cannot be deducted from the dues payable to the Applicant. Thus, it is directed that the MCGM shall credit Bank Account No.5020035159821 in HDFC Bank Limited, Nariman Point, Mumbai 400 021 with the sum of Rs.67,94,965.02 on or before 30th August 2022. Once this amount is credited in the aforesaid Bank Account, the Arbitral Award dated 23rd June 2014 shall be marked as fully satisfied and the Applicant would thereafter have no claim whatsoever against the MCGM. The Execution Application is disposed of.
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2022 (6) TMI 423
Seeking grant of Bail - allegation of registration of fake firms with the GST Department - non-existent firms or not - HELD THAT:- The illicit transactions which led to fake Input Tax Credit claims to be processed have also not been disclosed. The applicant is not a beneficiary of any illicit transaction. The applicant cannot be linked with the illicit transactions. The determination of the tax liability of the applicant has not been finalized. There are merit in the submissions of learned counsel for the applicant and accordingly hold that the applicant is entitled to be enlarged on bail - the applicant is entitled to be enlarged on bail - bail application allowed.
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2022 (6) TMI 422
Cancellation of registration of petitioner - Jurisdiction - power to suspend registration during the pendency of proceedings for cancellation of registration - Applicability of Sub-Section 1 of Section 29 of the Act of 2017 or not - HELD THAT:- If a drastic power of suspension of registration even during pendency of the proceedings has been conferred on the authority under the Statute, the proceedings itself are required to be brought to its logical conclusion one way or the other in a time bound manner and merely because the Statute does not provide any limitation for completion of proceedings, the authority cannot be allowed to sit over the matter and leave the person to suffer suspension of registration and all consequences to follow where the entire operations are brought to suspension. The authority was required to decide the matter one way or the other within a reasonable time. The respondent No.3 are directed to conclude the proceedings within an outer limit of 15 days from the date of receipt of the copy of this order - petition disposed off.
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2022 (6) TMI 421
Demand of GST with interest and penalty - Violation of principles of Natural Justice - opportunity of personal hearing not given to petitioner - Section 75(4) of the I.G.S.T./A.P.G.S.T. Act, 2017 - HELD THAT:- From a reading of the provision of Section 75(4) of the A.P.G.S.T. Act, it is very much evident that an opportunity of hearing shall be given when a request is made in writing by the person who is charged with tax or penalty or where any adverse decision is contemplated. In the instant case, a notice for personal hearing, dated 13.10.2020, was issued to the petitioner. But on that day, the Assistant Commissioner directed the petitioner herein to produce documents for verification but however, did not give any date for hearing. Without hearing the petitioner, an adverse order came to be passed, which is impugned in this case. Therefore, it can be said that there is violation of Section 75(4) of the A.P.G.S.T. Act. It may not be necessary for us to go into the other aspects since the impugned order is liable to be set aside on this ground alone. The matter is remanded back to respondent No.1 for consideration of the same after giving notice of personal hearing to the petitioner - petition allowed by way of remand.
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2022 (6) TMI 420
Seeking permission for migration into GST - benefit of input tax credit - Circular No.2018/Computer (24)/70, dated 03-8-2018 - HELD THAT:- A bare perusal of the Circular dated 03-8-2018 shows that the Commissioner, Commercial Tax, Madhya Pradesh, Indore granted opportunity to the traders to migrate in GST, who were earlier registered with VAT, Entertainment Tax, Service Tax and Central Excise etc.. This opportunity was afforded to the dealers, inasmuch as certain dealers could not migrate by furnishing their full information on the website/portal. This writ petition is disposed off with a direction to the respondents, to consider and decide the application, dated 29-8-2018 (Annexure-P/5) moved by the petitioner in quite promptitude, in the light of the Circular dated 03-8-2018 (Annexure-R/1) by passing a well reasoned order, within a period of sixty days from the date of receipt of certified copy of this order.
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2022 (6) TMI 419
Levy of GST - lease of land for mining - royalty paid in respect of Mining Lease can be classified under Licensing services for the right to use minerals including its exploration and evaluation falling under the heading 9973 attracting GST - supply of like goods involving transfer of title in goods - determination of the liability to pay tax on contributions made to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) as per MMDR Act, 1957. HELD THAT:- The contract for mining lease cannot be classified as Leasing or Renting of goods . Further the CGST Act or rules made there under or Notifications issued do not create a legal fiction for mining to be classified as Leasing or Renting of goods . At Serial no. 17 of the Notification No. 11/2017 chapter heading no. 9973 of SAC enumerates leasing or rental services without an operator . This entry was modified by removing with operator vide Notification No. 27/2018 dated: 31.12.2018. According to explanation to this notification any reference to chapter, section or heading shall be with respect to scheme of classification of services annexed to the notification. In this annexure, the service leasing or renting of goods is enumerated under group head 99732 - Under this group, the tariff item 997337 enumerates licensing services for the right to use minerals including its exploration and evaluation . This is the appropriate entry concerning royalty on mining. Hence the rate of tax of the residual entry is attracted on the royalty paid for mining at the rate of 9% CGST 9% SGST. The holder of mining lease shall also pay, to the District Mineral Foundation of the district in which the mining operations are carried under Section 9B of the MMDR Act, 1957 a sum in addition to the royalty either 1/3rd of such royalty or any other such amount in terms of Second Schedule of the MMDR Act - Similarly the holder of the mining lease shall also pay an amount of 2% of the royalty payable to the National Mineral Exploration Trust under Section 9C of the MMDR Act, 1957. Both these amounts are paid in addition to the royalty payable and in a proportion to the royalty paid for extracting minerals from a contract of mining lease. Therefore they are consideration for the service of right to use minerals including its exploration and evaluation which is enumerated as tariff item 997337 , this is same as royalty and hence attract tax at the rate of 9% CGST SGST each.
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2022 (6) TMI 418
Levy of GST - forest permit fee - reverse charge mechanism - can services received by the Applicant be classifiable under heading 9973 of Notification No. 11/2017 Central Tax (Rate) dated 28th June, 2017 and thus be exigible to a lower rate of tax for the period prior to 01-01-2019? - HELD THAT:- The coal mines operated by the applicant are situated in the forest area and under rule 3 of the State Forest produce transit rules, no forest produce shall be moved into or from within the State by land or water. Such movement is permitted only when the person moving the produce obtains a forest permit by paying a fee which in the instant case is Rs. 10 per ton of coal transported - Further the contravention or violation of State Forest produce Transit rules will attract penalty under Sections 20 and 29 of A.P. Forest Act, 1967. Thus transporting coal through forest area without obtaining a forest transit permit and paying the transit fee is punishable under Section 20 (4) of the Forest Act. Penalties are fixed for breach of the provisions of the Rules. The transit fee is the amount of consideration for tolerating an act or a situation arising out of the legal obligation during the transport of the mineral through a forest area. The facts of the present case clearly reveal that the forest department is collecting transit fee to allow the transit of vehicles carrying coal through the forest area, thus this is covered under entry 5(e) of the Schedule II to the CGST Act, 2017 wherein to do an act is deemed to be a service. Forest department s act of allowing such vehicles through forest area is therefore covered under this head. Further these services are not classifiable under heading 9973 of Notification No. 11/2017 as the same relate to Leasing or rental services without an operator whereas the present service relates to Entry 5(e) of the Schedule II to the CGST Act, 2017. The consideration received is taxable on reverse charge basis vide the service entry at Serial No. 5 of Notification No. 13/2017 dated: 28.06.2017 - The supply is to be clarified as tolerating to do an act and is to be treated as service as per entry 5(e) of the schedule II to the CGST Act, 2017.
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Income Tax
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2022 (6) TMI 417
Reopening of assessment u/s 147 - notice under Section 148A(b) - Whether at this stage of notice under Section 148, writ Court should venture into the merits of the controversy when AO is yet to frame assessment/reassemment in discharge of statutory duty casted upon him under Section 147? - HELD THAT:- The consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence the writ petition stands dismissed.
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2022 (6) TMI 416
Interest on refund delayed - Why interest paid to assessee should not be collected from the Officers who had delayed the refund? - HELD THAT:- As stated earlier in other orders that even though assessee gets refund with interest thereon at the rate of 6% p.a., it is public money that is being wasted. It is unacceptable to this Court that public money is used to pay refund when assessee is entitled to refund is not in issue. Principal Chief Commissioner of Income Tax, Mumbai shall file an affidavit in this Court to explain as to (a) why payment of refund was delayed and b) why amount of interest paid to assessee should not be collected from the Officers who had delayed the refund. We say this because, as noted earlier, it is public money that is being used to pay interest to assessee. We have to note that in view of this, delay in giving refund, Revenue has been paying interest. Petitioner will earn interest but at whose cost, is something which Revenue should keep in mind. When entitlement of petitioner to get the refund is not in question, we fail to understand as to why Revenue delays in issuing refund order and pays interest on that with public money. Perhaps the concerned Officer should be directed to show cause and explain the delay otherwise, it is public money being wasted. We are making it clear that if the amount is not paid, we may have to take strict action. We may even consider putting the blame on the concerned Officer and direct action to be taken against such Officer in the event money is not credited to the petitioner s account by 29.03.2022. The affidavit shall be filed within 4 weeks from today. We are also anguished by the fact that precious judicial time is being wasted because of this conduct on the part of the respondents and legal costs are being incurred by Assessee and Government of India.
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2022 (6) TMI 415
Applicability of provision u/s 44ADA - quantifying the turnover of the assessee - whether or not the sales tax or/and VST/CST is includable while quantifying the turnover to determine the applicability of Section 44AD? - HELD THAT:- As in this case, the accounts are not audited and there is nothing on record to show that the method of accounting followed by the assessee is not inclusive method. Since Section 145A of the Act is clear in its import that for the purpose of determining the income chargeable under the head profits and gains of business/profession , the valuation of purchase and sales of goods shall be adjusted to include the tax component also and it was so understood by the ICAI the turnover shall include the tax component unless the assessee maintains a separate tax account in respect of sales tax or/and VST/CST wherein credit is made on collection and debit is made on payment. Admittedly in this case, the assessee did not get their accounts audited for this particular assessment year though it was not so for the earlier assessment years. In these circumstances, we are of the considered opinion that for the purpose of quantifying the turnover of the assessee, the sales tax or/and VST/CST cannot be excluded. On this account, we cannot find fault with the observations of the Ld. CIT(A). Now coming to the net profit relevant for taxation is concerned, CIT(A) estimated the same at 25% of the gross turnover but the figures furnished by the assessee by way of written submissions, show that the net profit was 12.82%, 12.54% and 5.52% for the AYs.2014-15, 2015-16 and 2016-17 respectively - we find that estimate of the same at 25% is very high and taking a pragmatic view, we estimate the same at 12.5% of the gross receipts/turnover. AO is directed to re-compute the income under the head profits and gains of business/profession of the assessee at 12.5% of the gross receipts/turnover. Appeal of assessee allowed in part.
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2022 (6) TMI 414
Levying late fees u/s 234E - delay in filing of TDS statement(s) - i ntimation u/s 200A - scope of amendment to section 200A - HELD THAT:- As levying late fees u/s 234E of the Act; involving varying sums, for delay in filing of TDS statement(s), there is hardly any dispute between the parties that this statutory provision itself carries prospective effect from 01.06.2015 whereas all these quarters / assessment years; as the case may be, in issue before us are well before the said date. That being the clinching fact, we find that the instant issue to be hardly res integra in light of tribunal s decision in MEDICAL SUPERINTENDENT RURAL HOSPITAL DODI BK AND JUNAGADE HEALTHCARE PVT. LTD. [ 2018 (10) TMI 1587 - ITAT PUNE] The Revenue could not file any case law to the contrary except Rajesh Kourani Vs. Union of India [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] which already stands considered in the foregoing discussion. We, accordingly, accept the assessee s identical sole substantive ground in all these appeals
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2022 (6) TMI 413
Additions of unsecured loan - unexplained partners capital - settlement petition before the Hon'ble Settlement Commission, in respect of the capital and loan introduced in the appellant firm by individual partners - Assessee stated that capital introduced by the partners cannot be treated as unexplained under the provision of section 68 as the partners has confirmed the introduction of such capital - HELD THAT:- Substantial ground No.1 is covered in favour of the assessee by the decision in the case of PCIT Vs Vaishnodevi Refoils Solvex [ 2018 (1) TMI 861 - GUJARAT HIGH COURT] wherein it was held that capital introduced by one partner of the firm, in view of the fact that it is duly reflected in books of account maintained by the concerned partner and confirmed by such partner the impugned addition is liable to be set aside. We find that three partners of assessee-firm who contributed capital, are close family members. Thus, they are not stranger and their identity is not in dispute. The partners have not disputed the capital contribution. Further it is not in dispute that the partners who had contributed capital have filed petition before ITSC Mumbai and their settlement petition has not been dismissed or the proposal is not declined. As assessee furnished the details of capital introduced by partners of the firm and the partner has confirmed such contribution, it could be concluded that the assessee has discharged its onus cast upon it. If the assessing officer was not convinced about the creditworthy of the partner, who made capital contribution, enquiry had to be made against such partner and not against firm. Thus, in view of the facts and the legal position, that when the addition under section 68 is liable to be set aside. In the result, substantial ground No. 1 of the appeal is allowed. Addition of unsecured loans - Considering the submissions of ld. AR for the assessee, this issue is restored back to the file of assessing officer to verify the fact that if the unsecured loan is owned by M D Patel in his petition file before ITSC, the additions be deleted. So far as transaction of loan from Kaushik Granites Pvt Ltd is concerned, the assessee has filed complete details like confirmation of party, name, PAN and address, hence, we admit the said documents as additional evidence being relevant for determination of the issue in hand, and also restore this part of the issue direct to the assessing officer to consider those evidence and pass speaking order in accordance with law. Needless to direct that this case relates to AY 2003-04, the assessing officer shall pass the order as early as possible, off course after granting due opportunity to the assessee. The assessee is also directed to provide all information and necessary evidences and documents to the assessing officer and not to linger on the proceedings. In the result, this ground of appeal is allowed for statistical purpose.
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2022 (6) TMI 412
Estimation of income - bogus purchases - disallowance as restricted to 25% - discrepancy in the confirmation by assessee and assessee was asked to produce the parties and that none of the parties were produced by assessee - HELD THAT:- Assessee filed detailed written submission and the evidences to prove the identity, creditworthy of the parties and genuineness of the transaction. We find that the assessee furnished name, address, PAN, the amount was received by cheques and repayment by cheque, confirmation and balance-sheet were amounts of outstanding were provided. AO has not brought any adverse evidence against the transaction of four parties. We find that Ld. CIT(A) considering the evidence held that the Ld. CIT(A) deleted the addition on appreciation of sufficient evidence available on record which was conveniently ignored by Assessing Officer. We find that the AO made addition of entire unsecured loan on the basis of statement of Suresh Kumar Modi (HUF) and Shri Amit Kumar Modi. We further find that assessee availed loan of Rs.5.00 lakh from Basuki Synthetics Pvt. Ltd, which is clearly evident from the ledger account filed by the assessee - Assessing Officer made addition of Rs.10.00 lakh as loan. We find that the Ld. CIT(A) deleted the addition on appreciation of evidence available on record. - Decided against revenue.
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2022 (6) TMI 411
Penalty u/s 271B - Tax Audit - delay in getting the books of accounts audited and furnishing the same - period of limitation for passing penalty orders - assessee have failed in complying with the provision of section 44AB - HELD THAT:- It is not disputed by both the parties that there is no finding in the assessment order for levy of penalty for the alleged default u/s. 271B of the Act and it is also not disputed that after passing of the order on 31.12.2011, the alleged notice is only issued on 16.06.2014 after two and half year time which is very abnormal time to fasten the liability on account alleged default after the assessment is completed. In between there is not notice and even the assessment order is silent on the levy of the alleged penalty. The argument of the ld. AR has thus, forced and is also supported by the judicial decisions relied upon and as extracted here in above. In the light of the above discussion the levy of penalty by the assessing officer after passage 30 months after the completion of the assessment, we are of the opinion that the penalty proceedings are barred by limitation and consequently penalties levied under section 271B cannot be sustained and thus we delete the said penalty levied under section 271B - Assessee appeal allowed.
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2022 (6) TMI 410
Addition u/s 14A - exempt income earned during the year - HELD THAT:- When the assessee company had admittedly not received any exempt income during the year under consideration, therefore, no disallowance u/s.14A of the Act was called for in its hand. Our aforesaid view is fortified by the judgment in the case of CIT Vs. Chettinad Logistics Pvt. Ltd.[ 2018 (7) TMI 567 - SC ORDER] and also in the case of Cheminvest Limited [ 2015 (9) TMI 238 - DELHI HIGH COURT] Backed by the aforesaid judicial pronouncements, it was submitted by the Ld. AR that as per the settled position of law no disallowance u/s.14A in absence of any exempt income could have been made in the hands of the assessee. In the backdrop of the facts involved in the case before us read with the aforesaid settled position of law we find substance in the claim of the Ld. AR that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act was warranted in its case. We, thus, in terms of our aforesaid observations vacate the disallowance made by the assessing officer and thus the ground of appeal no. 2 is allowed. Disallowance u/s 43B on account of professional tax - HELD THAT:- Neither the submission was made nor any arguments were uttered at the time of hearing. The ld. CIT(A) has already based on his finding dismissed this ground and the ld. AR has not placed anything contrary to record at the time of hearing we do not find any reason to deviate from the findings of the lower authorities and in terms of these fact the third ground raised by the assessee is dismissed.
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2022 (6) TMI 409
Revision u/s 263 - Penalty u/s 271D - unsecured loans taken from friends and relatives - offence u/s 269SS - loans to ascertain identity, genuineness of the transactions and creditworthiness of the parties - HELD THAT:- What is clear is that the AO has accepted the fact of amount received by the assessee from his friends and relatives, is loan, which comes under the provisions of Sec.269SS of the Act. Therefore, once a particular receipt has been treated as loans and advances, then the very same receipts cannot be examined in light of provisions of Sec.68 of the Act, to treat the said amount as unexplained credit and income of the assessee. AO cannot blow hot and cold together. In this case, the AO has considered unsecured loans taken from friends and relatives as cash loans and also levied penalty for contravention of provisions of Sec.263 of the Act. On the other hand, the PCIT has taken up the revision proceedings on very same loans and advances in light of provisions of Sec.68 of the Act. In our considered view, powers exercised by the PCIT u/s.269SS of the Act, is not in accordance with law. It is a well settled principle of law that the PCIT can exercise the powers only in a situation, where the assessment order by passed the AO is erroneous in so far as it is prejudice to the interest of the Revenue. In this case, the assessment order passed by the AO is neither erroneous, because, the issue taken up by the PCIT, has been examined by the AO and further, the assessment order passed by the AO is nor prejudice to the interest of the Revenue, because, the Department has already considered amounts to question as loans and levied penalty u/s.271D of the Act. Further, the assessee had settled the tax dispute under Vivad Se Viswas Scheme, 2020 and paid necessary taxes. Therefore, from the above, it is very clear that there is no prejudice caused to the Revenue. We are of the considered view that the PCIT is erred in revision of assessment order u/s.263 of the Act, because the assessment order passed by the AO is neither erroneous nor prejudice to the interest of the Revenue. Hence, we quashed the revision order passed by the PCIT u/s.263 - Decided in favour of assessee.
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2022 (6) TMI 408
Estimated income from sale of plots by extrapolation of income detected during the course of search to remaining period - CIT(A) opined that the AO is erred in extrapolating sale price of plots from Rs.400/- to Rs.1,458/- per sq.ft. and made additions towards differential sale consideration - CIT(A) opined that the AO is erred in extrapolating sale price of plots from Rs.400/- to Rs.1,458/- per sq.ft. and made additions towards differential sale consideration - whether the AO is right in estimation of sales revenue from sale of plots by extrapolating sale price of few plots to remaining plots sold during the relevant period to other parties? - HELD THAT:- The assessee has explained the reasons for difference in sale price received from other parties, when compared to price agreed between the assessee and Mr.M.A.Salim as per the sale agreement. The first reason given by the assessee is that Mr.M.A.Salim is a real-estate Agent who negotiates sale of price with the assessee and gets commission. Secondly, there is a time gap of 8-10 months between the properties sold to other parties and agreement to sale entered into with Mr.M.A.Salim. It is a well-known fact in real estate segment that there is a quick appreciation in property prices which depends upon various factors, including location of the property, size of the property and buyer demand. There cannot be any uniformity in rates of properties like any other goods. Therefore, on the basis of one agreement to sale with one person, there cannot be any estimation of income to remaining plots or properties sold during the relevant period when evidences clearly prove that the assessee has sold the properties for the rate specified in the registered Sale Deed. In this case, except agreement to sale for one plot with Mr.M.A.Salim, the AO does not have any other credible evidence to support his estimation of income by extrapolation of rate on the basis of agreement to sale with Mr.M.A.Salim to remaining plots sold during the block period. In our considered view, the estimation made by the AO towards undisclosed income of under reporting of sales Revenue from sale of plots, is purely a guess work, which is based on the suspicion and surmises, but not based on any material evidences. AO is completely erred in estimating sales Revenue from sale of plots for all the three assessment years. CIT(A) after considering relevant facts has rightly deleted the additions made by the AO and thus, we are inclined to uphold the findings of the Ld.CIT(A) and accordingly, the appeals filed by the Revenue are dismissed for all the three assessment years. Correct head of income - income under which surplus derived from sale of land - whether it is under the head income from capital gains as claimed by the assessee or it is under the head income from business or profession as considered by the AO - HELD THAT:- Considering assessee is in the business of real estate and thus, profit derived from sale of properties is assessable under the head income from business or profession , but not under the head capital gains as claimed by the assessee. The Ld.CIT(A) after considering relevant facts has rightly rejected the arguments of the assessee and sustained the findings of the AO in assessing profit under the head income from business or profession and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee. Addition u/s.69C as unexplained expenditure - during the course of search, a document in the nature of agreement with one Mr.D.Sabapathy, was found, which was marked as ANN/VJ/LS/S - HELD THAT:- There is no dispute with regard to the seizure of agreement between the assessee and Mr.D.Sabapathy, the person was supposed to direct and produce a motion picture. The dispute with regard to payment alleged to have been made to the party and source of said payment. According to the AO, a sum of Rs.24 lakhs paid to the party was unexplained. It was the explanation of the assessee before the AO that although, the agreement specifies payment of Rs.24 lakhs, but, in fact, the assessee had paid a sum of Rs.4 lakhs only and remaining amount, the assessee could not arrange. There are contradicting facts. The AO claims that the assessee has made payment of Rs.24 lakhs, whereas, the assessee claims that he has paid a sum of Rs.4 lakhs. The facts need to be examined. Therefore, we are of the considered view that this issue needs to be go back to the file of the AO for fresh examination. Hence, we set aside the issue to the file of the AO and direct the AO to re-examine the issue. Disallowance u/s.40A(3) for payment in cash in excess of prescribed limit - only argument of the assessee is that there was a business exigency in making cash payment in as much as the film shooting was carried out in remote places, where there is no banking facility and because of this, the assessee was compelled to make payments in cash - HELD THAT:- We find that the arguments of the assessee that its case falls under exceptions as per Rule 6DD(g) of Income Tax Rules, 1962, goes unexplained. The assessee neither filed any evidences to prove its arguments that where payment is made, is not served by a banking facility nor justified its explanation that shooting was carried out in remote places, where there is no banking facility. Therefore, we are of the considered view that there is no error in the reasons given by the authorities below to make additions towards cash payment u/s.40A(3) of the Act. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee. Disallowance u/s.40(a)(ia) - non-deduction of TDS - assessee has incurred certain expenditure under the head garbage cleaning charges paid without deduction of tax at source - HELD THAT:- We find that as per the provisions of Sec.40(a)(ia) of the Act, if assessee proves with necessary evidences that the payee had included the sum paid by the assessee without deduction of tax at source in the return of income and paid necessary taxes, then sum paid without deduction of taxes, cannot be disallowed u/s.40(a)(ia) of the Act. But, from the orders of the authorities below, these facts are not forthcoming. Further, the assessee has taken this argument for the first time before the Tribunal. Therefore, we are of the considered view that the issue needs to go back to the file of the AO for further verification. Hence, we set aside the issue to the file of the AO and direct the AO to re-examine the claim of the assessee in accordance with law.
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2022 (6) TMI 407
Levy of fees u/s 234E for non filing of TDS statement in form 26Q/quarter 2 - intimation u/s 200A - Scope of amendment was made u/s 200A providing the changing mechanism for levy of late fees u/s 234E as inserted w.e.f. 1.6.201 - HELD THAT:- The CPC (TDS) had levied penalty u/s 234E of the Act for belated submission of tax deducted at source statement during the financial year 2012-13. It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the deductor as fee u/s 234E of the Act. The Hon ble Karnataka High Court in the case of Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015 - Decided in favour of assessee.
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2022 (6) TMI 406
Deduction claimed u/s.80P(2) - Claim denied as assessee does not file its return on or before due date specified u/s.139(1) - Eligible reason of delay - HELD THAT:- Except this, the AO has not brought on record any other reasons to deny deduction claimed u/s.80P(2) of the Act. Therefore, from the reasons given by the assessee for not filing return of income within the due date specified under the Act, we are of the considered view that the delay in filing of return, cannot be attributable to the assessee, because, completion of Audit by the Co-operative Department, is not under the control of the assessee. Assessee has filed its return of income as soon as it has received the Audit Report from the Department. Further, the delay in filing of the return for the relevant AY is very small in as much as the extended due date for filing of return of income for the AY 2019-20 was 31.10.2019, whereas, the assessee has filed its return of income on 14.11.2019. Therefore, considering reasons given by the assessee for delay in filing of return of income for the relevant AY and also taken note of the fact that the assessee is, otherwise, entitled for deduction u/s.80P(2) of the Act, we are of the considered view that the ACIT/CPC were erred in rejecting deduction claimed u/s.80P(2) of the Act. Hence, we direct the AO to allow deduction as claimed by the assessee u/s.80P(2) of the Act, and delete additions made to total income. - Decided in favour of assessee.
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2022 (6) TMI 405
Disallowance of interest u/s 36(1)(iii) towards interest expenditure - assessee company diverted its interest bearing funds for giving interest free advances / loans for unknown purpose - CIT-A deleted the addition - HELD THAT:- As clearly discernible that loans and advances given by the assessee, during the year under consideration, marginally increased by Rs. 6.69 crores, whereas the interest-free unsecured loans obtained by the assessee rose by Rs. 26.93 crores. Further, there was a reduction in term loan from Bank of India. During the year under consideration, the assessee has repaid amount of Rs. 75.58 crores of Export packing credit facility by availing a fresh cash credit facility from Central Bank of India. Thus, from the financials of the assessee it is evident that from the loans/credit facility availed from the aforesaid Banks there was no scope for making any payment of interest free loans and advances. Further, it is also evident that assessee had sufficient interest free funds for making any loans and advances. The aforesaid financial state of affairs of the assessee has also not been disputed by the Assessing Officer. Assessing Officer has neither denied nor brought anything contrary to the fact that the amount of secured loan with regard to term loan from banks were utilised by the assessee for the purpose of capital work in progress and the interest on the said amount was capitalised in the capital work in progress and not debited to the profit and loss account, for the year under consideration. We further find that the Assessing Officer merely on an ad hoc basis made the additions under section 36(1)(iii) of the Act, without bringing anything on record to suggest that interest-bearing funds were actually utilised for the purpose of advancing funds on which no interest was charged by the assessee. - Decided against revenue.
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2022 (6) TMI 404
Estimation of income - bogus purchases - HELD THAT:- When no discreet enquiry has been made by the AO qua the alleged bogus purchases by perusing/rejecting the books of accounts of the assessee rather proceeded to make the addition by taking peak balances of the alleged purchases and at the same time the Ld. CIT(A) has also estimated the addition being the 12.5% of the bogus purchases as gross profit, the view taken by the Ld. CIT(A) is a plausible view which is in consonance with the decision rendered by the Hon ble Gujarat High Court in the case of Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] and JK Surface Coatings Pvt. Ltd. [ 2021 (10) TMI 1323 - BOMBAY HIGH COURT] No doubt, the reasoning given by the Ld. CIT(A) to estimate the gross profit at 12.5% is plausible but not in consonance with the past history of the assessee who has gross profit of 6.41% on its actual purchases made during the year under consideration i.e. Rs.11,34,14,455/-. So the gross profit needs to be estimated on the basis of gross profit otherwise being earned by the assessee on genuine purchases. In these circumstances we deem 6.41% as the reasonable gross profit on the gross purchases of Rs.1,55,19,372/- keeping in view the gross profit on genuine purchases. The AO is directed to compute the gross profit of 6.41% on bogus purchases in order to make addition thereof to the assessee.
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2022 (6) TMI 403
Revision u/s 263 by CIT - transaction entered into by the assessee along with other two persons - undisclosed investment - Whether the requisite jurisdiction necessary to assume revisional jurisdiction is existing in this case before the PCIT rightfully exercises his revisional power? - HELD THAT:- PCIT failed to examine the facts in the right prospective because the transaction in question is not a transaction of purchase of immovable property. As per the development agreement dated 28.08.2015, the assessee along with two other persons namely Mr. Rajendra Rampal and Mr. Bishwanath Sukumar Dey approached the land owner Mr. Mahendra Pratap Singh and Mr. Abhisekh Kumar Singh for developing their property located at Chandernagore, Dist.-Hooghly, land measuring 0.7680 acre while entering into the development agreement of Rs. 50 lakh each was paid as advance by the three developers including the assessee. The said transaction is not a purchase transaction being undertaken by the assessee and other two persons with Mr. Mahendra Pratap Singh and others. Actually the said agreement is a development agreement entered into between the land owner and three developers including the assessee for developing the land and then sharing revenue/gains at the mutually agreed ratio. It is also an undisputed fact that after entering into the development agreement no further development took place and the amount advanced by the assessee as per the development agreement was refunded back in subsequent period. Thus the issue raised in the show cause notice has been examined properly by the Ld. AO after conducting necessary enquiry and has also examined the facts properly their hardly remains any scope for Ld. PCIT to exercise jurisdiction u/s. 263 of the Act. Therefore, since the Ld. AO has made necessary enquiry, applied his mind on the issue, examined the facts properly and has taken a possible view, we cannot agree with the finding of the Ld. PCIT of setting aside the assessment order. Accordingly, the proceedings u/s. 263 of the Act are quashed and the assessment order u/s. 143(3) of the Act is restored. Thus, all the grounds raised by the assessee are allowed.
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2022 (6) TMI 402
Addition u/s 68 - assessee had taken accommodation entries - HELD THAT:- From the finding of Ld. CIT(A), it is evident that the assessee failed to prove the genuineness of transaction and creditworthiness of the creditors. Even before this Tribunal, no material is placed to substantiate its claim by the assessee. Therefore, we do not see any reason to interfere into the finding of lower authorities. The grounds raised by the assessee are hereby, dismissed.
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2022 (6) TMI 401
Delayed employees' contribution towards PF ESI on or before the due date as prescribed by the PF ESI Act - scope of Amendment brought in by Finance Act 2021 w.e.f. 01.04.2021 inserting an Explanation to section 36(1)(va) and section 43B - HELD THAT:- As relying on Lumino Industries Ltd [ 2021 (11) TMI 926 - ITAT KOLKATA] we are inclined to allow the appeal of the assessee and direct the A.O. to delete the addition and hold that the Amendment brought in Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature and would apply from AY 2021-22 onwards. Consequently ground No. 1 is allowed. Non-payment of GST within due date of u/s. 139(1) - As submitted that since the assessee did not get any opportunity to appear before the AO to show the necessary document and its submission since the assessment order was passed by the CPC, Bangalore u/s. 143(1) of the Act and the assessee did not get any opportunity to submit their reply - HELD THAT:- Since the assessment order is an ex-parte and no discussion has been made on merits of the case in respect of instant issue. Therefore, interest of justice, we set aside the impugned issue of non-payment of GST within due date prescribed under the Income Tax Act by the assessee u/s. 139(1) and remitted back to the file of the Ld. AO for deciding the issue raised before us by way of a speaking order. We also direct the assessee to remain vigilant in receiving the notices of hearing from the AO and should not request for any adjournment unless otherwise required for reasonable cause and should file all necessary documents at the time of hearing. Needless to mention that the assessee should be given proper opportunity of being heard. The other grounds of appeal are general and consequential in nature and need not to be adjudicated.
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2022 (6) TMI 400
Disallowance u/s. 43B - interest expenses on secured loans - unpaid bank interest on secured loans - HELD THAT:- As far as invoking of provisions of section 43B is concerned, if an assessee claims certain deductions against revenue/income and. If such deductions include any bank interest payable to schedule bank on secured loan, the same is allowable only if it is actually paid. The assessee gets liberty if, in case, interest is not paid during the FY in which the assessee claims, but paid before the due date of filing of return u/s. 139(1) of the Act. Before us, on the basis of submissions made by assessee as well as the comments of the Ld. AO, forming part of statement of facts, we find that out of total alleged amount the assessee has only claimed interest expenses in its P L account and remaining amount has been shown as pre-operative expenses and assessee has not claimed this expenditure. We find that so far as interest as concerned undisputedly since the same has been claimed in the P L account, but not paid by the assessee during the financial year 2013-14 and even not before the due date of filing of return u/s. 139(1) of the Act, the same deserves to be disallowed u/s. 43B of the Act and thus, the disallowance to this extent at Rs. 54,07,413/- is confirmed. But, for the remaining amount since the assessee is not claiming deduction in the P L account and showing it as pre-operative expenses, we confirm the finding of Ld. CIT(A) deleting the disallowance. However, we direct the revenue authorities to take note of this fact that in subsequent years if the assessee claims the Bank interest transferred to pre-operative expenses as an expenditure in the P L account, the same can be allowed only if the assessee is able to prove with documentary evidences that the said bank interest on secured loans has actually been paid. Appeal of revenue partly allowed.
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2022 (6) TMI 399
Addition u/s. 36(1)(va) - Delayed employees' contribution to ESI/Provident Fund were deposited by the assessee after the specified date prescribed under the relevant laws governing ESI and Provident Fund - adjustments and intimation u/s. 143(1) - debatable and controversial issues - HELD THAT:- Payments by way of employees contribution to provident fund and ESI were made by the assessee after stipulated date prescribed under the relevant laws governing provident fund and ESI, but before the due date of filing of return of income prescribed u/s. 139(1) of Income Tax Act; is not in dispute. Whether the aforesaid amendments to Income Tax Act by way of Finance Act, 2021 are retrospective or prospective, is debatable and controversial. Adjustments made by Revenue u/s. 143(1) of Income Tax Act, whereby aforesaid additions were made, were unfair, unjust and bad in law. Addition by way of adjustment and intimation u/s. 143(1) of Income Tax Act on debatable and controversial issues is beyond the scope of Section 143(1) of Income Tax Act. Revenue was clearly in error in making the aforesaid adjustments.Addition by way of adjustment and intimation u/s. 143(1) of Income Tax Act, on the basis of retrospective amendment to Income Tax Act is beyond the scope of Section 143(1) of Income Tax Act. In the present appeal before us, addition of aforesaid amount of Rs. 8,28,211/- has been made by way of adjustments and intimation u/s. 143(1) of Income Tax Act, on a debatable and controversial issue, and Ld. CIT(A) did err in law, in not deleting this addition. Additions by way of adjustment and intimation u/s. 143 were beyond the scope of Section 143(1) of Income Tax Act; and further, that the Ld. CIT(A) erred in law in confirming the aforesaid addition on a debatable and controversial issue.
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2022 (6) TMI 398
Addition of sales promotion expenses - Payment to Doctors / medical practitioners- payments made to general practitioners and other sales promotion expenses - Nature of Transaction - violation of Explanation to section 37 - As per AO assessee could not submit any confirmation or receipts given by these medical practitioners, therefore, the same cannot be allowed - HELD THAT:- Assessee has incurred certain expenditure on sales promotion by making payments to various doctors. However, assessee claims that these payments were made to those doctors in line of its business. These expenditures were in the nature of advisory services to obtain information regarding the acceptability of medicine and necessity for improvement in them and also to gain information on similar products of other companies which are being sold in the same market. Assessee has not submitted any technical record or any agreement entered with those doctors to carry out this kind of activities which can prove that these doctors have done or carried out certain services to the assessee. In the absence of any documentary evidences or cogent material in support of the assessee s claim, we are inclined to reject the same. Since this issue is already considered in the case of Apex Laboratories (P.) Ltd.[ 2022 (2) TMI 1114 - SUPREME COURT] which is against the assessee. Respectfully following the decision of the Hon'ble Supreme Court, we are inclined to dismiss the grounds raised by the assessee. Weighted deduction @ 125% u/s. 35(1)(iia) in respect of the payment for R D - HELD THAT:- We observe that assessee has entered into a scientific research service agreement for the purpose of development of certain intermediates which will be useful for the production of the final products owned by the assessee - AR brought to our notice the various invoices raised by the M/s. Calyx Chemicals and Pharmaceuticals Ltd., which is nothing but the supply of technical staff for the purpose of research activities. No doubt it involves various research activities and which are agreed by the assessee to avail the services to develop chemical process and manufacturing of API and intermediates. This will help assessee to improve its process and manufacturing activities and improvement in its intermediates. Since it involves lot of labour activities which assessee has utilized from M/s. Calyx Chemicals and Pharmaceuticals Ltd. Since there is no document or any evidence that assessee has created any capital assets by doing of such research activities, however, these activities are carried out for the purpose of business only. Therefore these expenditures can be considered to incur only for the purpose of business and initially assessee claimed weighted deduction u/s. 35(1)(iia) of the Act and since there is no proper documents submitted by the assessee to claim any benefit u/s.35(1)(iia), the Assessing Officer has rejected the claim of the assessee. However, we find that assessee has incurred these expenditures for the purpose of business and in relation to development activities in order to improve the process and manufacturing activities. There is no evidence of creation of any capital assets anywhere in the financial records. Therefore, these expenditures can be treated as development expenditure allowable u/s.35 of the Act without any weighted deduction. Accordingly, we direct the Assessing Officer to allow this expenditure u/s. 35 of the Act. Additional ground allowed.
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2022 (6) TMI 397
Penalty u/s 271(1)(c) - Defective notice u/s 274 - as argued notice issued u/s 274 of the Act is defective as it does not specify the limb on which the penalty was proposed to be levied - HELD THAT:- We find that the notice u/s 274 read with Section 271(1)(c ) has been issued in a mechanical manner and in standard format without mentioning one of the two limbs on which the penalty was proposed to be levied. In other words, the notice mentioned both the limbs i.e. considering of record as well as furnishing of income inaccurate manner which is not permissible under the Act. In view of these facts we do not find any infirmity in the order of Ld. CIT(A). Non-mentioning of relevant limb in the penalty notice in substantive defect and infirmity which is not curable. The case of the assessee is squarely covered by several decisions as discussed by the Ld. CIT(A) at length in the appellate order including the decision of Hon ble Jurisdictional High Court in the case of CIT vs. SSA s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] and in the case of CIT vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT ] In view of these facts and circumstances of the case, we are inclined to uphold the order passed by the Ld. CIT(A) by dismissing the revenue s appeal.
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2022 (6) TMI 396
Disallowance u/s 14A read with Rule 8D - sufficiency of own funds - HELD THAT:- Respectfully following the above finding in own case of the assessee [ 2021 (10) TMI 1330 - ITAT AHMEDABAD] we hereby hold that there would be no disallowances of interest expenses u/s 14A read with rule 8D of Income Tax Rule as the assessee was having sufficient interest free own fund against the investment - However with respect to disallowances of administrative expenses under rule 8D(2)(iii) of Income Tax Rules, we inclined to provide one more opportunity to the assessee for to demonstrate the basis of suo moto disallowance. Therefore, the issue to the extent of disallowances of administrative expenses is set aside to the file of the AO for fresh adjudication as per the provision of law. Thus the ground of Revenue s appeal is hereby dismissed whereas ground of appeal of the assessee is allowed for statistical purposes. Addition of commission income from the bank guarantee furnished to the customers - HELD THAT:- It is important to note that the assessee is paying the taxes at the maximum marginal rate and there is no allegation by the Revenue that the income of the assessee by changing the accounting policy has not been offered to tax - the income of 1 year has been postponed to the another year in the manner and for the reasons as discussed above. In view of the above and after considering the facts in totality, we set aside the finding of the ld. CIT-A and direct the AO to delete the addition made by the AO. Hence, the ground of appeal of the assessee is allowed. Addition being the amount of interest on the sticky advances under rule 6EA read with section 43D of the Act - HELD THAT:- We hold that there cannot be any addition to the total income of the assessee by way of interest with respect to the loans and advances which were overdue for 3 months. Thus we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Disallowance on account of lease operating expenses - HELD THAT:- Admittedly, the accounting standard issued by the ICAI are mandatory to be followed by the assessee under the Companies Act. But the question arises, such accounting standards should also be followed while working out the income under the provisions of the income tax Act. So far, the Income Tax Act has not notified the accounting standard 19 issued by the ICAI, though mandatory for the assessee to follow while preparing its books of accounts, but this is not the same under the Income Tax Act. Hence the ground of appeal of the assessee is dismissed. Deduction on account of ESOP - HELD THAT:- The assessee against the order of the CIT(A) for the A.Y. 2014-15 was in appeal before this tribunal [ 2021 (10) TMI 1330 - ITAT AHMEDABAD] where the issue was set aside to the file of the AO for fresh adjudication. Accordingly the learned AR for the assessee before us contended that the issue for the year under consideration should also be set aside to the file of the AO fresh adjudication as per law - after hearing both the parties we hereby set aside the issue to the file of the AO for fresh adjudication as per the provision of the law. Hence the ground of the assessee is hereby allowed for statistical purposes. Deduction on account of education, secondary and higher education cess - HELD THAT:- Hon ble Supreme Court in the case of National Thermal Power Co. Limited. [ 1996 (12) TMI 7 - SUPREME COURT] - Since the claim of the assessee is purely legal claim and entire facts are available on record. Thus it is not justified in not admitting the purely legal ground raised by the assessee for the first time. As the assessee has not claimed deduction of education cess and secondary higher education cess before the lower authorities, they have not got opportunity to examine the same as per the provisions of Act, thus In the interest of justice, these grounds are restored back to the file of the AO with a direction to examine assessee's eligibility to claim of deduction of the items raised in the additional grounds of appeal de novo/ afresh after providing an opportunity of being heard to the assessee. Thus the additional grounds of appeal raised by the assessee are allowed for statistical purposes. Interest expenses incurred in respect of capital work in progress - whether any interest-bearing fund has been utilized in such work in progress? - HELD THAT:- As decided in own case [ 2021 (10) TMI 1330 - ITAT AHMEDABAD] admittedly own fund of the assessee exceeds the amount of capital work-in-progress. Therefore, a presumption can be drawn that the own fund of the assessee was utilised in such capital work in progress. Accordingly, there cannot be any disallowance on account of interest expenses. Hence the ground of appeal of the Revenue is dismissed.
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2022 (6) TMI 395
Short term capital loss/gain - AO held that though proof of cost of acquisition was furnished by the assessee, he failed to furnish any proof regarding sale consideration - AO held that in the absence of any proof in support of assessee's claim that the property in question was sold at a price less than its cost of acquisition cannot be accepted - HELD THAT:- As assessee has purchased the said property and sold - The loss is treated as short term capital loss. Once, the receipt of the amount is treated as receipt from the sale of the property, the loss or the gains have to be treated under the relevant head of the income for taxation purpose. It is not in dispute that the amount received is against the sale of property but not as any advance. We have also gone through the details of purchase of the property by the assessee and also sale of said purchased property. The facts reveal that the property in question is on account of booking made by the first party, then purchased by assessee and then sold by the assessee. Thus, there are only transfer agreements without resorting to registration of the document at different times. In crux, these transactions were sale of booking of plots . Since, the sale purchase of the property is not in dispute, the natural corollary is to treat the profits or losses alike under the relevant head which in this case is capital gains and since the period is less than three years, we hold that it would be short term capital loss . Appeal of assessee allowed.
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2022 (6) TMI 394
Monetary limits for filing appeals specified in any Circular issued under Section 268A - Addition made u/s 68 - sales proceeds from penny stock - Transaction in the nature of organized tax-evasion scam - HELD THAT:- As per Circular No. 23/2019 dated 06.09.2019 para 3 in the case of bogus LTCG/STCL of penny stocks, appeals may be filed on merits as an exception to said Circular where Board by way of special order direct filing of appeal on merit in cases involved in organized tax evasion activity. Considering the directions in the Circular as we found that there is no special order obtained by the Department from Board in this case, hence, same is not qualified to be entertained - Appeal of the Revenue is dismissed relying on Board Circular
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2022 (6) TMI 393
Failure to comply with directions given to the AO by the appellate authority - Claim of deduction u/s 43B - Assessee offered suo moto disallowance of service tax, bonus and leave encashment respectively on provision basis - As argued CIT-A Rejected the claim of the assessee in mechanical manner and on flimsy grounds observing that the Assessing Officer has mentioned in the appeal effect order that the same has been passed after necessary verifications - HELD THAT:- We, with a heavy heart, note that the case is a perfect example of a case where the assessee has been a victim of error in the system and apathy on the part of the concerned Income Tax authorities. It is a simple case where the assessee had pleaded that while giving appeal effect to the order of the ld. CIT(A) dated 25.07.2014, the ld. Assessing Officer failed to give effect to the directions given by the ld. CIT(A) in respect of aforesaid claim of deduction u/s 43B of the Act raised vide Ground nos.5,6 7 in the appeal before him. A perusal of the order dated 05.09.2014 of the Assessing Officer giving appeal effect shows that the Assessing Officer has given relief/complied the directions in respect of Ground nos.1 to 4 of appeal order. However, there is no mention or discussion about the directions given by the ld. CIT(A) in respect of the aforesaid claim raised vide Ground nos.5,6 7 before him. It was a clear-cut case of mistake apparent on record as the Assessing Officer has failed to give full effect to the order of the CIT(A) and failed to comply with the directions given by the ld. CIT(A) in respect of Ground no.5,6 7 of the appeal order. Assessing Officer, in a most negligent and mechanical manner, rejected the application of the assessee. Even the CIT(A)/National Faceless Appeal Centre has miserably failed to consider the simple prayer of the assessee and rejected the appeal in a mechanical manner. The assessee thus, has been left to the mercy of the system and has to approach this Tribunal for the simple case that the Assessing Officer may be directed to give appeal effect to the order of the ld. CIT(A). The action of the Assessing Officer, in our view, is not only negligent but contemptuous in nature as he has failed to comply with the directions given by his appellate authority. In view of the above discussion, the appeal of the assessee is hereby allowed.
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2022 (6) TMI 366
Estimation of income - Bogus purchases - Assessee failed to discharge his onus of proving the purchases - CIT-A Granting part relief by making addition of 25% of the bogus purchases - HELD THAT:- Argument of the Revenue is misconceived because even the AO has not applied any legal yardstick by conducting any enquiry rather proceeded to rely upon the information sent by Sales Tax Department of Maharashtra and made adhoc additions. Identical issue has also been decided in case of JK Surface Coatings Pvt. Ltd. [ 2021 (10) TMI 1323 - BOMBAY HIGH COURT] . Thus we are of the considered view that the Ld. CIT(A) has legally and validly decided the issue and finding no illegality or perversity in the same, appeal filed by the Revenue is hereby dismissed.
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Customs
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2022 (6) TMI 392
100% EOU - Validity of second SCN - invocation of Extended period of Limitation - demand of interest under Section 28 AA of Customs Act - HELD THAT:- The second show cause notice is also on the same facts and circumstances. Further, it is found that the amount of interest under Section 28 AA demanded in the earlier show cause notice also, and the same was confirmed in the adjudication proceedings, which is presently subjudice before the Hon ble Rajasthan High Court. Thus, in the present show cause notice, which is mainly for the demand of interest under Section 28 AA and also for a small amount of short tax paid for the same period, is bad for invocation of extended period of limitation. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (6) TMI 391
Review application - error apparent on the face of record - investments in equity - non-production of share certificates - HELD THAT:- Under FEMA, investments in equity are permitted under the automatic route currently and the same avenue was also open when remittances were made by the first Review Applicant. The automatic route refers to general permission to make investments by way of FDI without the prior approval of the RBI subject to post-remittance compliances such as the issuance of FIRCs by the AD and the filing of Form FC-GPR to report the remittances to the RBI. The rationale for allowing such remittances under the automatic route is that the inflow of foreign exchange is bolstered and given the nature of equity, outflow is generally limited to dividend payouts. By contrast, borrowing by an Indian company from a non-resident is strongly discouraged because it would entail foreign exchange outflow in accordance with the terms of the credit facilities. Therefore, except for specific and limited end-uses, borrowing from non-residents, which is referred to as external commercial borrowing (ECB) is not allowed without prior approval under a stringent regulatory regime. The documents on record provide strong evidence that the remittances were towards the issuance of equity. The contesting Respondents are unable to controvert the genuineness of these documents, which were issued either by the Hospital or by the AD - These documents were disregarded both by the CLB and by this Court without assigning cogent reasons for the same. Besides, these are material and, indeed, vital documents forming part of the record. Consequently, the Review Applicants were non-suited at the threshold. These errors cannot be characterized as minor and are evident ex facie. Therefore, it is not necessary to undertake a fishing expedition to ferret out these errors. The Review Applicants have made out a case of errors apparent on the face of the record to set aside the order sought to be reviewed. In the facts of this case, the documents relied upon by the Review Applicants emanated either from the Hospital or the AD and are not denied by the Respondents. Even the execution of the SSA is admitted by all parties. Therefore, it is difficult to fathom as to why a trial is required to adjudicate this dispute. While on this subject, it is pertinent to notice that under sub-section (7) of Section 111, even title to shares and all questions relating to rectification may be decided. Besides, the Review Applicants prayed for statutory relief under CA 1956, such as rectification and relief from oppression and mismanagement, including surcharge of the defaulting directors, which remedies cannot be granted by an arbitral tribunal. Therefore, even assuming that only one or two Review Applicants out of four are entitled to seek such relief, the petition should not have been rejected in this fashion. The key issue to be adjudicated as regards the eligibility of the Review Applicants would be whether the Review Applicants would be entitled to maintain the composite petition if shares had been allotted by the Hospital upon receipt of remittances. Such issue has not been adjudicated. The assertion by the Review Applicants that their shareholding would be in excess of 10% of the paid up share capital of the Hospital in such event has not been controverted by the Respondents. The primary forum for rectification, as per Ammonia Supplies , should not abdicate its role without due deliberation. For all these reasons, the Review Applicants are entitled to succeed. This Review Application is allowed.
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2022 (6) TMI 390
Appointment of Cost auditors - whether the first petitioner- Company has not appointed Cost Auditor within the prescribed limits as contemplated under the proviso to Section 148 of the Companies Act? - liability for punishment under Section 148 of the Companies Act - HELD THAT:- Sub-section (2) of Section 148 of the Companies Act, 2013, makes it clear that the Central Government may direct that the audit of cost records of class of companies which are covered under sub-section (1) and which have a net worth of such amount as may be prescribed or a turnover of such amount as may be prescribed, shall be conducted in the manner specified in the order. The amendment of Rule 4(2) of the amended Companies (Cost Records and Audit) Rules, 2014 shows that the aggregate turnover in respect of individual product or products or service or services for which the cost records are required, be maintained under Rule 3, is Rs.35 crore or more, in respect of item (B) of Rule 3. Therefore, the said Rule makes it clear that as far as the production is concerned, if the turnover is below Rs.35 crore, the cost audit is not required - In the present case, the statements filed for the financial year 2014-2018 attached in the typed set of papers, which have not been disputed by the respondent, clearly show that the turnover is below Rs.35 crore. This Court is of the view that the very initiation of the prosecution itself is against the amended Rules - Petition allowed.
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2022 (6) TMI 389
Punishment for false statement - Defect in preparation of profit and loss account of the company - amount of bad debt written off - main contention of the learned counsel appearing for the petitioner is that the entire prosecution is nothing but an abuse of process of law and there is no details containing the entire complaint as to the nature of suppression of material facts to attract the offence either under Section 447 or 448 of the Companies Act - HELD THAT:- A combined reading of Sections 447 and 448 makes it very clear that there must be some material evidence to proceed against the person either by way of finding that there has been a fraud committed by a person or there was suppression of material facts with intention to suppress the same. To initiate the prosecution either under Section 448 or to attract the punishment under Section 447, there must be a clear finding on record as to the fraud or suppression or omission of the material facts. Only, on such facts unearthed during investigation as contemplated under the Companies Act, the prosecution will normally lie. The present prosecution has been filed mainly on the ground that reply notice given by the petitioner was not satisfactory to the defacto complainant. Otherwise, it is not the case of the de facto complainant that there are material facts which have been suppressed and there is no clear cut findings recorded by the de facto complainant as to the nature of the omissions or suppression of material facts - Therefore, this Court is of the view that unless and until, there is a finding as to the suppression of the material facts, the prosecution cannot be launched, as a matter of right. The only allegation against the petitioner is that in the financial year ended on 31.03.2011, a sum of Rs.27,85,20,027/- shown as bad debts, written off, therefore, it attracts the offence under Section 447 of the Companies Act. Merely because the de facto complainant was not satisfied with the reply to the show case notice, one cannot be presumed that the offence either under Section 447 or 448, has been committed and the same are attracted. Therefore, in the absence of any materials to show that there was any material suppression or omission of material facts, the prosecution for the false statements will not be maintained and such attempt is nothing but a futile exercise and an abuse of process of law - this Criminal Original Petition is allowed.
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Insolvency & Bankruptcy
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2022 (6) TMI 388
Validity of Ex-parte order of NCLAT - appellant having been deprived of a reasonable opportunity of hearing - Service of notice - Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- As per observations of the Appellate Tribunal in opening paragraph of the impugned order, the registry was directed to serve notice on the parties and in response thereof, respondent of the appeal appeared but nobody appeared on behalf of the appellant. Fresh notice was issued on which, the Appellate Tribunal received postal endorsement to the effect that the appellant had left the given address. Thus, notice could not be delivered to the appellant. It appears just and proper that while setting aside the impugned order dated 09.07.2018, the matter be again restored to the file of the Appellate Tribunal for decision afresh and on merits.
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2022 (6) TMI 387
Rejection of modification/amendment of the resolution plan - Appellate Tribunal took note of the grievance of the appellant that its resolution plan came to be known to everyone and hence, no opportunity should have been given to the others to modify - HELD THAT:- The Appellate Tribunal found no substance in those submissions while taking the view that the Adjudicating Authority had passed the impugned order so as to maintain the level playing field. The Appellate Tribunal also took note of the fact that the resolution plans had already been considered by CoC on 21.12.2021. On a perusal of the order dated 13.12.2021, this much is clear that certain key features/stipulations of the resolution plan were sought to be amended by the appellant. Whether it was done in response to the requirement of the CoC or otherwise, the fact of the matter remains that there was going to be modification of the relevant terms of the resolution plan of the appellant. When that was being permitted at the request of the appellant himself, we cannot find fault in the Adjudicating Authority having passed an order so as to balance the position of the respective parties and to provide level playing field by granting corresponding permission to the other resolution applicant to place its modification for consideration of CoC. The view taken by the Adjudicating Authority as also by the Appellate Tribunal appears to be reasonable and sound, calling for no interference. Appeal dismissed.
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2022 (6) TMI 386
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Financial Creditor had sanctioned credit facilities in the form of a Rupee Term Loan of Rs.10,00,00,000/- and a Working Capital Facility not exceeding of Rs.45,00,00,000- in favour of the Corporate Debtor - The Corporate Debtor has neither disputed the disbursement of credit facilities by the Financial Creditor nor denied the existence of financial debt and default by the Corporate Debtor. The Corporate Debtor has time and again acknowledged its liability as seen from the records. It is observed that the Corporate Debtor issued a letter to the Financial Creditor wherein the Corporate Debtor has admitted an amount of Rs.27,76,67,442.58/- as due and payable by the Corporate Debtor - the Financial Creditor has time and again extended the Credit Facility to which the Corporate Debtor duly acknowledged by admitting the debt as due and payable to the Financial Creditor by the Corporate Debtor. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs.1,00,00,000/- (Rupees One Crore Only) is due and payable by the Corporate Debtor to the Financial Creditor - The application is complete and has been filed under the proper form. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established and the application deserves to be admitted. Application admitted - moratorium declared.
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2022 (6) TMI 385
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The letters which were issued by the Corporate Debtor to the Financial Creditor clearly highlight the existence of Debt due and Corporate Debtor s willingness to settle the same - It is clear from the records that the Corporate Debtor has time and again acknowledged the debt which was due and payable to the Financial Creditor. The corporate Debtor has admitted his liability. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs.1,00,00,000/- (Rupees One Crore Only) is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, we find that it is a fit case for initiation of CIRP against the Corporate Debtor, and that the petition is filed within the limitation period. This Tribunal has jurisdiction to adjudicate the Company Petition filed by the Financial Creditor and that there is a Debt due payable by the Corporate Debtor. Therefore, the Application filed by the Financial Creditor is liable to be admitted. Application admitted - moratorium declared.
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2022 (6) TMI 384
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 - whether the demand notice in Form 3 dated 29.08.2019 was properly served? - HELD THAT:- The petitioner has placed a tracking report, whereunder it was stated that the speed post was delivered to the corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that respondentcorporate debtor in its reply has admitted that its liability and inability to pay the debt. Moreover, petitioner has appended affidavit u/s 9(3)(b) stating that corporate debtor has not issued any notice or raised any dispute regarding the debt for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 19.09.2019 vide Diary No.4927. Whereas the date of default is 07.03.2017 i.e. date of written acknowledgement of the debt, therefore, this Adjudicating Authority finds that this application has been filed within limitation. Apart liability of debt is admitted by respondent-corporate debtor. There is a total unpaid operational debt Rs.2,37,8812/-(Rs. 882128/- plus delayed payment interest @ 24 % p.a. amounting to Rs.1,44,6684/- and legal fee of Rs.50,000/-). The operational creditor has provided Labour Job Forging to the corporate debtor and raised invoices attached as Annexure-4. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor - It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident that from the facts that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is above threshold limit. In the present petition all the aforesaid requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. Application admitted - moratorium declared.
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2022 (6) TMI 383
Acceptance of the claim of Respondent - Whether the acceptance of claims of Respondent Nos.2 to 5 by the Liquidator is not in accordance with the provisions of the Code and the Rules made there in? - whether the Liquidator should wait for the final adjudication of the claims of the Respondents pending before the learned DRT and other Judicial Authorities, before admitting the claims and disbursing the amounts? HELD THAT:- It is an undisputed proposition that the Liquidator is mandated to discharge his duties strictly as per the provisions quoted above while verifying/admitting the claims. On a careful perusal of these provisions, it is clear that the Liquidator is required to verify the claims with reference to the date of liquidation and if there is no crystallization of a debt through a decree on that date, the Code does not direct the Liquidator to wait for the same - As regards the admission of the claims, on going through the voluminous evidence including correspondences etc. produced in the course of proceedings and also the grounds on which the claims have been admitted in the cases of Respondent Nos.2 to 5 by the Liquidator with reference to. Prima facie, the Liquidator has verified the claims on the basis of Form-D submitted by the Financial Creditors along with documents, records and financial statements filed with the same. It is also noted that the Liquidator has accepted only partial amounts of the total claims made by the financial creditors and have sought legal opinion upon some of the issues before reaching a conclusion. No particular procedural mistake on the part of the Liquidator has been pointed out by the applicant during the current proceedings. It may be noted that word adjudication has been used by the Liquidator in more than one place while verifying the claim of the respondents but it seems to be a typographical or mistake through inadvertence, and the same is ignored. The allegation of the applicant that the Liquidator has adjudicated the claims filed by the respondent-financial creditors and has wrongly accepted their claims is misconceived - It is trite law that timelines are sacrosanct in a liquidation proceedings as is apparent from the Regulation 47 laying down Model TimeLine for liquidation process. The general principle of construction in a circumstance where two special Acts are in conflict with each other is that, the Act made later should prevail vide the maxim leges posteriores priores abrogant . The DRT was constituted under Recovery of Debts Due to Banks Financial Institutions Act, 1993, much prior to the I B Code, 2016. In view of Section 238 of the I B Code, 2016 steps taken under the Code by the authority would have precedence over other authorities in parallel proceedings. Thus, the provisions of I B Code, 2016 should prevail in case of any conflict. This Authority, therefore, finds no reason to keep the liquidation proceeding in abeyance, and thus, rejects the Applicant s prayer that the Liquidator should await the final adjudication of the claims before the Hon ble DRT before accepting the claims of the Respondents and subsequently disbursal of the amounts - Application dismissed.
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PMLA
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2022 (6) TMI 382
Assignment of a counsel who shall be within visible distance of the accused but not audible distance during interrogation - If the respondent has a right of presence of his lawyer during recording of his statements under Section 50 of PMLA, at a safe distance from him from where the lawyer can see the accused and not hear him? - HELD THAT:- Since there is neither any FIR nor a complaint against the respondent thus he cannot as a matter of right claim to have the presence of his lawyers during the course of recording of his statement per Ramesh Chander Metra [ 1968 (10) TMI 50 - SUPREME COURT ] and Anant Brahmchari [ 2012 (3) TMI 695 - DELHI HIGH COURT ]. Even otherwise, admittedly, his entire recording of statement is videographed and audiographed which certainly would dispel the apprehension of any coercion, threat to the respondent. Even otherwise, in Sandeep Jain [ 2019 (12) TMI 1247 - DELHI HIGH COURT ] the Division Bench of this Court held the apprehension of coercive measures being employed need to be real and like so that the principle of presence of an advocate, at visible, but not audible distance be applied. Application disposed off.
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Service Tax
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2022 (6) TMI 381
Levy of Service Tax on amount of penalty (liquidated damages) collected from their contractor - to refrain from an act or to tolerate an act or a situation or to do an act - HELD THAT:- Under the facts and circumstances there is no contract between the appellant and their contractor - to refrain from an act or to tolerate an act or a situation or to do an act in favour of their contractor or to tolerate any act or situation. Further, for such alleged act or tolerance, no remuneration is prescribed in the contract. The amount of liquidated damages levied by the appellant from their contractor is in the nature of penalty, and not by way of any consideration for any service as defined under Section 66E(e). This Tribunal in the case of M/S LEMON TREE HOTEL VERSUS COMMISSIONER, GOODS SERVICE TAX, CENTRAL EXCISE CUSTOM [ 2019 (7) TMI 767 - CESTAT NEW DELHI] under the fact that their customer used to book accommodation by making advance payment, and upon cancellation of the booking, the hotel was retaining or forfeiting some of the advance deposit in the nature of penalty, by way of cancellation charges. This Tribunal held that the said amount collected by the hotel is in the nature of penalty, and not consideration as defined under Section 66E(e) of the Finance Act, 1994. Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 380
Works contract done through sub-contractorlaying of pipeline for fresh water - Applicability for exemption under N/N. - whether appellant-assessee, a company registered under Section 617 of the Companies Act 1956, a Government Company, 100% shares are held by the Rajasthan Government? - HELD THAT:- It is admitted fact that the appellant was set up by the Government of Rajasthan in February, 1979 and registered as a Government Company under Section 617 of the Companies Act, 1956. Initially the company was registered in the name of Rajasthan State Bridge and Construction Corporation Limited, to act as a nodal agency for construction of Bridges, Buildings and other Industrial Structure funded by Government of Rajasthan. It is further found that the Government Authority‟ is mentioned in Sl. No. 25 of the exemption notification, and is further elaborated in definition clause (s) of the said notification, which provides that Government Authority means a Board, or an authority or any other body established with 90% or more participation by way of equity or controlled by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under Article 243W of the Constitution. Admittedly the appellant company is established by the Government of Rajasthan, which owns 100% of the equity and further 100% control is in the hands of the Government of Rajasthan - Further, the laying of fresh water pipeline is a work entrusted to a municipality under Article 243W of the Constitution of India. The appellant is entitled to exemption under Notification No. 25/2012-ST. - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (6) TMI 379
CENVAT Credit - capital goods procured and installed by the assessee for the purpose of manufacture of the said goods which are exempted from payment of duty - interpretation of Rule 6(4) of the CENVAT Credit Rules, 2004 - HELD THAT:- On perusal of Rule 6(4) of CENVAT Credit Rules, 2004 which is absolutely clear that if capital goods are used for manufacture of dutiable goods within a period of two years from the date of commencement of commercial production or from the date of installation as per proviso, the same will be entitled for CENVAT Credit. It is relevant to consider that in light of Section 37 of the Act of 1944, the CENVAT Credit Rules, 2004, are framed with the beneficiary intention and to give exclusive effect of duty paid under the VAT regime of Taxation. The legislature in its wisdom has exclusively specified in Rule 6(4) of the CENVAT Credit Rules, 2004 that the credit upon capital goods will not only be debarred and restricted but also not allowed when the same are exclusively used for manufacture of exempted goods for a period of two years from the date of installation/commencement of production. In the case in hand, as per ER-1 return from the month of June- 2017, it is an admitted fact that the appellant had cleared the goods on payment of duty within period of two years. Further, the provisions of CENVAT Credit Rules, 2004 have to read in totality. On analysis of CENVAT Credit Rules, 2004 particularly Rule 6(6)(v) which are explanation to Rule 6(4), this court finds that in the year 2016-17 the goods were exported under bond. It is also true that in terms of Notification No.30/2004-CE dated 09.07.2004 option was exercised for exemption in the year 2016. The said fact does not debar the respondents from availing the credit. Provisions of Rule 6(4) read with Rule 6(6)(v) of the CENVAT Credit Rules, 2004 gives a time of two years to avail CENVAT Credit. This court finds that no Substantial Question of Law arises in the present matter - Appeal dismissed.
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2022 (6) TMI 378
Refund claim of amount deposited during investigation - case of appellant is that the amount was deposited at the time of investigation and the same does not have character of duty - rejection of refund claim on the ground of time bar under Section 11B of the Central Excise Act, 1944 - HELD THAT:- The amount of Rs.10 lakhs was deposited by the appellant during the pendency of investigation and proceedings, is not duty, fine or penalty, but is to be treated as revenue deposit and the provisions of refund of duty as per Section 11B shall not be applicable to the same. It is held that, the appellant is entitled to refund with interest under Section 35 FF, for which no limitation is applicable. The revenue department cannot retain such amount of Rs. 10 lakhs (in the nature of pre-deposit). Therefore, the original authority is directed to refund Rs. 10 lakhs to the appellant alongwith interest of 12% on the same for the period starting from the date of deposit, till the date of refund. Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 377
Refund of Service tax paid on reverse charge mechanism which was otherwise not payable - Period of limitation - applicability of Section 11B of the Central Excise Act, 1944 or not - HELD THAT:- There is no dispute that whether service tax was payable or not, the appellant have paid the amount as service tax only therefore, the refund of the same is governed by Section 11B, there is no other provision for refunding the said amount. It is further observed that, if on the pretext that since the amount of duty or service tax is not payable, Section 11B will not be applicable, any amount of refund arise only when it is not payable therefore, in any case Section 11B will not be applicable and become redundant which is not the intention of the legislators. Accordingly, since the appellant filed the refund claim after the stipulated time period of one year as provided under Section 11B, the same is time barred - appeal dismissed.
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2022 (6) TMI 376
Violation of principles of natural justice - cross examination of various persons were not afforded - relied upon documents/records were not provided to the notices before adjudication of the dispute - HELD THAT:- On perusal of the records, it is found that that Tribunal by impugned order has remanded a batch of appeals (62 Nos.) on the ground that principles of natural justice have been violated by the adjudicating authority in as much as cross examination of various persons were not afforded and also the relied upon documents/records were not provided to the notices before adjudication of the dispute - Since the Tribunal has remanded the matter by keeping all the issues open for discussion by the original authority, it is opined that the present appeals cannot be decided in isolation inasmuch as the issue to be addressed by the original authority in the case of denovo adjudication proceedings, will have the ultimately effect for deciding the fate of the present appeals. These appeals should also be remanded to the original authority for denovo adjudication - Appeal allowed by way of remand.
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2022 (6) TMI 375
Clandestine removal - Non-recording of production in RG-1 register while checking the physical stock by the officers - entire case made out on the basis of statement of Shri Jugal Kishore Munot, partner of the appellant firm and the physical stock taking conducted by the visiting officers - HELD THAT:- In the physical stock taking, stock was not found accounted for in the RG-1 register. In this regard, the partner of the appellant firm, Shri Jugar Kishore Munot categorically stated that the production was not recorded because the concerned dealing staff was on leave. There is no rebuttal to his this statement by the department. The department has not produced any other evidence to establish that the said unaccounted goods were kept as there was a preparation for clandestine removal. Therefore, merely because the goods were not accounted and for which a plaisible explanation has been given by the partner of the firm, goods cannot be confiscated and no fine or penalty can be imposed. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (6) TMI 374
Recovery of dues - priority of charges - default in payment of Loan Cash Credit etc. by previous owner of property M/s Dev Bhumi Ispat - overriding effect of SARFAESI Act and RDB Act over HPVAT Act - HELD THAT:- SARFAESI Act as well as RDB Act are Central Legislations whereas HPVAT is a State Legislation. SARFAESI Act and RDB Act declare priority of secured creditors upon secured assets over all revenues, taxes, cesses and other rates payable to Central Government or State Government or local authorities. Provisions of Section 31-B of RDB Act are also the same. Section 26 of HPVAT creates first charge on property of dealer or such other person from whom any amount of tax or penalty including interest is recoverable - As has been reiterated by the Supreme Court in UCO Bank s case [ 2017 (1) TMI 742 - SUPREME COURT ], by virtue of provisions of Article 246(1), the Parliamentary Legislation would prevail and such Legislation will have to give way notwithstanding the fact that the State Legislation is within demarcated field. The Supreme Court in Punjab National Bank vs. Union of India, [ 2022 (2) TMI 1171 - SUPREME COURT ] has held that provisions contained in SARFAESI Act, 2002 will have an overriding effect on the provisions of Central Excise Act of 1944. Therefore, the provisions of SARFAESI Act shall have priority not over the State Excise Act but also over the Central Excise Act. Thus, it is concluded that SARFAESI Act and RDB Act shall have overriding effect to provisions of HPVAT Act and therefore, creation of charge upon the property in reference by and in favour of respondents No. 3 and 4 vide Rapat Nos. 745 dated 8.8.2014 and 190 dated 10.12.2014 is not sustainable and the said property is to be permitted to be transferred in favour of petitioners free from all encumbrances in terms of E-aution dated 30.7.2019, confirmation of sale dated 2.8.2019 and Sale Certificate dated 4.11.2019, possession whereof has already been handed over to petitioners vide document Annexure P-2 on 5.11.2019. Petition allowed.
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Indian Laws
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2022 (6) TMI 373
Validity of order of Lok Adalat based on mutual compromise - High court set aside the order of Lok Adalat -Suit for partition and separate possession of property - Schedule properties - Compromise entered into between parties - Order XXIII Rule 3 of the Code of Civil Procedure, 1908 - HELD THAT:- It is a settled position of law that where an allegation of fraud is made against a party to an agreement, the said allegation would have to be proved strictly, in order to avoid the agreement on the ground that fraud was practiced on a party in order to induce such party to enter into the agreement. Similarly, the terms of a compromise decree, cannot be avoided, unless the allegation of fraud has been proved. In the absence of any conclusive proof as to fraud on the part of the objectors, the High Court could not have set aside the compromise decree in the instant case. There are no ground made out warranting the decision of the High Court to set aside the order of the Lok Adalat dated 07th July, 2012, wherein compromise was recorded between the parties - The High Court's decision to set aside the order of the Lok Adalat, without entering into a discussion as to the findings in such order, cannot be sustained. Such decision of the High Court runs contrary to established principles of law which seek to protect the sanctity and finality of orders based on a compromise or consent between parties. - appeal allowed.
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2022 (6) TMI 372
Seeking grant of Regular Bail - Smuggling - MDMA pills of Commercial Quantity - offences punishable under Sections 8(c), 22(a)(b)(c), 27, 28 and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- On perusal of the material on record, on receipt of credible information, the parcel was seized in the post office and the same contains the name and phone number of this petitioner. The same is not disputed by the petitioner before the Court. But, the only contention of the learned counsel for the petitioner before this Court is that, he was working as an employee with the accused No.1 and he was discharging his duties as an employee with accused No.1. The counsel also not disputes the fact that the said parcel contains 493.5 grams of MDMA and the report is also before the Court. While exercising the discretion, the Court has to keep in mind the very proviso of Section 37(1)(b)(II) of the NDPS Act and the same has to be satisfied by a person, who approaches the Court. In the case on hand, admittedly, the parcel was in the name of this petitioner and the phone number mentioned in the parcel also belongs to this petitioner and the quantum of MDMA which is a manufactured drug seized is 493.5 grams which is 10 times the commercial quantity. It has to be noted that, while exercising the discretion, the Court has to keep in mind the fact that, to combat the menace in the society, the special enactment of NDPS Act was brought into force, when the IPC and other penal provisions are inadequate to prevent the offences which are against the society at large. The petitioner has to make out a case to grant bail and the Court has to keep in mind the very proviso of Section 37 of the NDPS Act. Hence, it is not a fit case to exercise the discretion under Section 439 of Cr.P.C. to grant bail in favour of the petitioner - Application allowed.
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2022 (6) TMI 371
Dishonor of Cheque - insufficiency of funds - offence under section 138 is a document based offence or not - Rebuttal of presumption - issuance of summons - reliability on statements of accused - HELD THAT:- In the beginning itself, unhesitatingly, it can be stated that the judgment of the trial court is a very good example as to how justice suffers if the judges blindly place reliance on case law without understanding the true purport of the principles laid down in those decisions with utter disregard for the first principles of law - The trial court has drawn presumption in favour of the respondent under sections 118 and 139 of the Negotiable Instruments Act observing that the petitioner being the accused failed to rebut the evidence given by the respondent. Following the judgment of the Supreme Court in the case of Indian Bank Association [ 2014 (5) TMI 750 - SUPREME COURT ], the trial court adopted the affidavit filed by the respondent at the inception as sufficient compliance of evidence to be adduced post summons stage, and of course there is no legal infirmity in it. But the trial court has proceeded on the ground that the Hon'ble Supreme Court in the case of Indian Bank Association has held that there is no need to secure the presence of the accused. This is the wrong committed by the trial court - the case clearly indicate that summons must be sent to the proper address of the accused and that the summons may also be served by sending it to the email address of the accused; and in appropriate cases, the assistance of the police or the nearby court may be sought for service of summons. It is further stated that if the summons served is received back unserved, immediate follow up action must be taken. That means, if summons is not served, the reason for non-service must be ascertained and then summons may be re-issued or warrant may be issued. This para does not indicate that if the accused does not appear before the court in spite of service of summons on him, the trial can be held in his absence. In the case on hand, it is not in dispute that the petitioner did not appear before the court. If the petitioner did not appear having received summons, the trial court ought to have issued warrant and then proclamation for securing his presence. The records do not disclose any such effort being made by the trial court to secure the presence of the accused. This is the blatant error that can be pointed out from the judgment of the trial court. It is trite to observe here that in the Code of Criminal Procedure, there is no provision for keeping an accused ex parte similar to one found in Code of Civil Procedure which provides for placing a defendant ex parte if there is due service of summons or notice on him - The trial court has then dispensed with examination of the accused under section 313 of Cr.P.C. The accused did not appear and examining him under this section did not arise. But the trial court has given some reasons again based on the judgment in Indian Bank Association. The appellate court holds that the conclusion of trial court to dispense with recording of statement under section 311 Cr.P.C. is also supported by another judgment of the Supreme Court in the case of Basavaraj R Patil and Others vs. State of Karnataka and Others [ 2000 (10) TMI 953 - SUPREME COURT ] - Therefore appellate court is also of the view that recording of statement of the accused under section 313 Cr.P.C. can be dispensed with. It is thus concluded that trial cannot be held in the absence of an accused unless personal appearance is dispensed with for valid reasons and there cannot be dispensation of examination of an accused under section 313 Cr.P.C. if incriminating evidence appears in the evidence of the witness. Speedy trial does not take the meaning of jumping the stages in criminal trial - revision petition allowed.
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2022 (6) TMI 370
Dishonor of Cheque - existence of legally enforceable debt or not - main ground that has been focused by the petitioner in this petition is the strained relationship - possibility for the petitioner to have borrowed a sum during strained relationship - HELD THAT:- There was a continuous trouble between the parties, which caused strained relationship, not only between the respondent and the petitioner, but also between the husband and wife - The signature of the petitioner in the disputed document is not denied. It is the duty of the petitioner to prove her case before the trial court by setting out the facts and circumstances. The disputed factual aspects cannot be gone into by this court at this stage. Except the factual issues, no other legal ground has been raised by the petitioner. Contention of the petitioner is that the cheque was given as security, when the amount was invested in the share business conducted by the respondent; But later the business ran into loss. Absolutely, there was no binding liability between the parties - HELD THAT:- The Hon'ble Supreme Court in the case of M/S. INDUS AIRWAYS PVT. LTD. OTHERS VERSUS M/S. MAGNUM AVIATION PVT. LTD. ANOTHER [ 2014 (4) TMI 464 - SUPREME COURT ] has observed that when there was not existing liability on the date of issue of the cheque, the offence under section 138 of the Negotiable Instruments Act may not be attracted. There is no quarrel on the proposition of law. Whether there was existing liability on the date of issue of the cheque, is a matter for consideration by the trial court through evidence. The factual circumstances are entirely different - Here, it is the specific case of the respondent that on the particular date mentioned in the petition, this petitioner received Rs.9,50,000/- to meet out her requirement in the business. So when that is being so, as mentioned earlier, whether it was a security document or not cannot be a matter for consideration sitting in 482 Cr.P.C jurisdiction. The statement of account of the petitioner has been filed for the purpose of argument that the date of presentation of the cheque is not mentioned in the statement of the accounts. It is a matter for evidence. So, improbable question cannot be taken for discussion in this petition - Petition dismissed.
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2022 (6) TMI 369
Dishonor of cheque - signature on the cheque has been denied or not - rebuttal of statutory presumption - HELD THAT:- On a perusal of the materials on record, it is not in dispute that the petitioner/accused had handed over the signed cheque/Ex. P2 to the first respondent. According to the petitioner during the year, 1995, the first respondent was running a chit business in the name of M/s. Praveenath Chits. The first respondent/P.W. 1/complainant admitted that from the year 1995 to 2009, he had been running the business, which is proved by Ex. D1. The petitioner had subscribed to the chit. To prove the fact marked Ex. D2/Chit Fund Pass Book. The first respondent/P.W. 1 admit that it is the usual practice that, while running a chit fund, unfilled signed cheques will be obtained in the course of the chit business - The petitioner had probabilised his defence, who got into the box, gave explanation as to how the signed cheques, landed in the hands of the first respondent. The first respondent unable to make discredit the evidence of the petitioner while cross examining him. The Hon'ble Apex Court in a case of Basalingappa Vs. Mudibasappa [ 2019 (4) TMI 660 - SUPREME COURT] had clearly given guidelines, as well as in the case of RANGAPPA VERSUS SRI MOHAN [ 2010 (5) TMI 391 - SUPREME COURT] , and held that the statutory presumption is rebuttable, which can be either from the cross examination of the witnesses or the accused getting into the box and giving his explanation. In this case, the petitioner had got into the box, gave his explanation about the handing over of the cheque and questioned the difference in ink. Both the Courts below failed to analyse the evidence on the contrary proceeded merely on presumption and convicted the petitioner. This Court finds that the petitioner had probabilised his defence, gave proper explanation. The Courts below failed to analyse the evidence, weigh the materials, consider the explanation given, on the other hand primarily on the presumption convicted the petitioner, failing to look into the fact that the petitioner has probabilised his defence. In view of the same, this Court is inclined to set aside the conviction and sentence passed by the trial Court. This Criminal Revision Case is allowed.
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2022 (6) TMI 368
Dishonor of Cheque - legally enforceable debt or not - main stand of the petitioner that since the cheque in dispute was given as a security, the proceeding initiated by the respondent is legally unsustainable - HELD THAT:- The Hon'ble Supreme Court in SRIPATI SINGH (SINCE DECEASED) THROUGH HIS SON GAURAV SINGH VERSUS THE STATE OF JHARKHAND ANR. [ 2021 (11) TMI 66 - SUPREME COURT ] has observed that the dishonour of cheque issued as security can also attract the offence under Section 138 of NI Act and that there cannot be hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. In the case on hand, the petitioner has herself admitted that the cheque in question was issued as a security. This Court has no hesitation to hold that the contention of the petitioner that the proceeding initiated by the respondent is not maintainable, as the cheque was issued as a security, cannot legally be entertained. Hence, this Court concludes that this Criminal Original Petition is devoid of merits and the same is liable to be dismissed - Petition dismissed.
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2022 (6) TMI 367
Dishonor of Cheque - appellant was convicted by the lower court - insufficiency of funds - illegalities in exercise of jurisdiction - statutory presumption - rebuttal of presumption or not - whether the impugned judgment is both against law and facts of the case? - HELD THAT:- A combined reading of the provisions of Section 139 and 142 of NI Act shows that a presumption is attached in regard to each and every negotiable instrument that the same was drawn for consideration and was issued for due discharge of liability. But this presumption is rebuttable and the burden lies heavily upon the accused petitioner to rebut this presumption. It also appears that the accused has not been able to substantiate his claim that he had issued 35 nos. of post-dated cheques to the Shriram Transport Finance Company Limited as security for the repayment of the loan taken by him and one of those cheques was misappropriated by the complainant to lodge the complaint against the accused petitioner. He has not adduced and concrete evidence to substantiate this claim of having issued 35 post-dated cheques. The penultimate that remains to be decided is whether the accused petitioner committed an offence under Section 138 of the NI Act? - HELD THAT:- Section 138 of the NI Act is an exclusive provision dealing with dishonor of cheques and it comprehensively provides all the essential ingredients which requires to be satisfied before a complaint under this Section can be lodged. Exihibit-1, which is the loan cum hypothecation agreement entered between Shriram Transport Finance Company Limited and the accused petitioner Sri Manik Lal Das reveals that on 21.11.2012, the accused petitioner Sri Manik Lal Das entered into a loan cum hypothecation agreement bearing No- AGRTL0211200012, with the Shriram Transport Finance Company Limited, for purchasing one JCB 3DX (Machinery) vide registration No- TR01R0524. The creation of this agreement has not been denied by the accused-petitioner - Exhibit-2 which is the original cheque bearing No- 686379 shows that a cheque of Rs. 22,12,141/- was issued by Sri Manik Lal Das in favour of Shriram Transport Finance Company Limited and his signature is inscribed in the cheque. It also reveals that the cheque was issued against the account of the accused petitioner maintained in the United Bank of India, Kaman Chowmuhani Branch, Agartala. Whether the cheque was issued by the accused petitioner for discharging a legally enforceable debt? - HELD THAT:- A conjoint reading of provisions of Section 118 and the Section 139 of the NI Act shows that a presumption is attached in regard to each and every negotiable instrument that the same was drawn for consideration and was issued against for due discharge of the liability. But this presumption is rebuttable and the burden of proof lies heavily upon the accused petitioner to rebut this presumption - The essential ingredient which requires to be established is that the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. It is established cheque No-686379 dated 20/02/2016, for an amount of Rs. 22,12,141/-, was issued by the accused in the account maintained by him with United Bank of India, Kaman Chowmuhani Branch and that the said cheque was dishonored as the account of the accused petitioner was closed. The cheque was issued on 20.02.2016 and the same was presented to the Bank of the same date. So, it can be concluded that the cheque was presented within its validity for encashment - Thus all the ingredients of Section 138 of Negotiable Instruments Act, 1881 are satisfied. Whether it is a fit case for releasing the convict on admonition or probation of good conduct under the Probation of Offender's Act, 1958? - HELD THAT:- While imposing a sentence, it has to be borne in mind the nature of the offence and the manner in which the offence has been committed. The case is a result of breach of commitment on the part of the convict which led to pecuniary loss to the complainant. The convict is matured person and committed the offence intentionally knowing the consequences of such an act. Therefore, considering the above, the convict cannot be granted the benefit provided in the Probation of Offender's Act, 1958. The entire case runs around the legally enforceable debt. Admittedly, learned senior counsel appearing for the petitioner has not denied with regard to the payment received and the cheque issued and he has not even advanced any evidence with regard to the issuance of post dated cheques. Further, he has not placed any evidence before this Court with regard to the non-compliance of the notice issued by the complainant show that the recipient is a stranger - The argument advanced on the point of arbitration is not applicable in the facts and circumstances of this case since, it governs under the special statute of Central Act under Section-138. Since the point regarding legal enforceable debt has not been demolished by the counsel appearing for the petitioner, this Court has no hesitation to confirm the orders passed by the learned Courts below. The Ld. Trial court has rightly held the accused Manik Lal Das guilty and convicted him for the offence under Section-138 of the Negotiable Instruments Act, 1881. This Court also finds no infirmity in the decision of Ld. Trial court in so far as it has sentenced the petitioner to pay a fine of Rs. 22,12,141/-, and in default to suffer simple imprisonment for one year and that the fine money, if realized shall be paid in full to the complainant as compensation - As the petitioner herein has failed to make out his case before the Courts below, this Court has no hesitation to say that in the revision, appreciation of the factual issues is not permissible. The instant revision petition is dismissed.
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