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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter June 12, 2024 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST Violation of natural justice in tax assessment order challenged. Petitioner not given fair chance to contest. Order quashed, remit 10% disputed tax. The High Court addressed a challenge to an assessment order, noting a violation of natural justice principles due to lack of communication of show cause notice and order through means other than GST portal upload. Discrepancies between GSTR 3B and GSTR 2A were reconciled in annual return GSTR-9. Petitioner, though not participating in proceedings, reconciled disparities in the return. The court held that the petitioner should be given an opportunity to contest the tax demand. The impugned order was quashed, with a condition for the petitioner to remit 10% of disputed tax demand within two weeks for the petition to be allowed. Visit to Get Source Court held that end of lease doesn't negate petitioner's claim for GST amounts. Arbitral tribunal to decide. Limited protection granted. The High Court addressed the restriction on the petitioner's claim for GST amounts due to the end of the agreement between the respondent and the renter. The court held that the agreement's termination does not negate the petitioner's claim. The court determined that the arbitral tribunal is the appropriate forum to decide the petitioner's entitlement under the assignment agreements. An interim order was granted, restraining the respondent from dealing with the Escrow Account pending arbitration proceedings u/s 17 of the Arbitration and Conciliation Act, 1996. Application allowed. Visit to Get Source Delay in filing revocation application for GST registration condoned. Petitioner must pay all dues for consideration. The High Court considered a case involving the condonation of delay in filing a revocation application for the cancellation of GST registration. The court held that the delay in invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules was condoned. The petitioner was directed to deposit all taxes, interest, late fees, penalties, etc., and comply with other formalities. Upon doing so, the petitioner's application for revocation would be considered in accordance with the law. The petition was disposed of accordingly. Visit to Get Source AAAR: Appeal delay condoned for Tamilnadu Govt Electricity Utility due to staff shortage. The Appellate Authority for Advance Ruling (AAAR) considered the condonation of delay in filing an appeal u/s 100(2) of the CGST/TNGST Act, 2017. The appellant, a Tamilnadu Government-owned Electricity Generation and Distribution Utility, sought condonation of a one-day delay in filing the appeal, citing reasons of staff shortage and administrative issues. The AAAR noted that the appeal should have been filed within 30 days of receiving the order, which was on 12.02.2024. The appellant's explanation for the delay was accepted as not deliberate, and the delay of one day was deemed condonable u/s 100(2). The AAAR, empowered u/s 101(1) of the Acts, allowed the condonation, and the appeal will proceed for consideration on merits. The AAAR granted the COD application. Visit to Get Source Income Tax High Court ruled on validity of bonus shares issuance & GAAR vs. SAAR. GAAR prevails. Petitioner's argument flawed. The High Court considered the validity of proceedings u/s 144BA regarding issuance of bonus shares and the invocation of GAAR over SAAR. The petitioner sought to set off short term capital loss against long term gains, questioning the application of Section 94(8) vs. GAAR. The court noted GAAR's overriding effect u/s 95(1) and rejected petitioner's argument favoring SAAR. The court found the arrangement lacked commercial substance, falling u/s 96 of Chapter X-A. The petitioner's reliance on the Shome Committee Report was deemed misplaced. The court emphasized fair tax planning within the law and dismissed the writ petitions, allowing proceedings u/s 144AB to continue. Visit to Get Source Income from software license fees not taxable as royalty in India. No liability for tax resident of Denmark. Appeal allowed. The case involved determining tax liability on royalty receipts for software license expenses. The Assessing Officer (AO) considered the receipts taxable as royalty u/s 9(1)(vi) due to IT infrastructure use. However, the ITAT found no transfer of copyright in the software, citing EY Global Services Ltd and Engineering Analysis Centre of Excellence Pvt. Ltd judgments. The license granted did not confer proprietary interest or exclusive rights, thus not constituting royalty. As neither party could sublicense or modify the software, the receipts were not taxable as royalty. The appeal was allowed, holding no liability on the assessee despite tax deduction. Visit to Get Source Reopening of assessment due to unexplained cash deposits. Assessee failed to provide details. Tribunal limits income estimation to 15%. The Appellate Tribunal considered the issue of reopening assessment u/s 147 and estimation of income from cash deposits u/s 69A. The Tribunal noted that the assessee failed to comply with notices explaining the source of deposits. The CIT(A) mentioned that returns were filed after receiving notice u/s 148, but there was no evidence that the returns were treated as non-est by the AO. The assessee did not provide necessary details to the AO due to business cessation and joining government service. The Tribunal found that the assessee had filed returns for previous years and directed the AO to apply a net profit rate of 15% on total deposits for taxation, partially allowing the appeal. Visit to Get Source Addition u/s 69C r.w.s.115BBE - Furniture import expenditure not recorded in books. No proof of business relation with China supplier. Custom duty paid. Appeal dismissed. The ITAT held that the addition u/s 69C r.w.s.115BBE for unexplained import expenditure was justified as the assessee failed to record the expenditure in the books. Lack of proof of past business relation with China-based supplier raised doubts on credit imports. The payment of custom duty was acknowledged, but the explanation provided did not meet the standard of human probabilities. The assessee's failure to prove import agreement conditions led to dismissal of the appeal. The alternative plea for relief on custom duty was rejected as lower authorities had already granted relief and sec.69C proviso barred further addition. Assessee's appeal was dismissed. Visit to Get Source Penalty notice must specify reason for penalty u/s 271(1)(C). Ambiguous notice not valid. Assessee must be clear on grounds. The Appellate Tribunal considered a case involving a penalty u/s 271(1)(C) for a defective notice related to TP adjustments. The AO determined arm's length OP/OC at 13.87% and made net additions based on differences in figures. The notice lacked specificity on the section invoked, contrary to legal requirements. Citing relevant case law, it was held that ambiguity in the notice is not sustainable. The provisions of Explanation-7 to section 271(1)(c) were also analyzed, emphasizing the need for a specific notice without ambiguity. The burden of proof lies on the assessee to establish bona fide and due diligence. Due to the ambiguous notice, the penalty order was ruled in favor of the assessee. Visit to Get Source Assessment u/s 153A needs incriminating material from search. Completed assessments can't be changed without it. The Appellate Tribunal considered the validity of assessment u/s 153A regarding the inclusion of incriminating documents seized during a search. Referring to the Kabul Chawla case, it was held that assessments u/s 153A can only be altered based on incriminating material found during the search. The Supreme Court in the Meeta Gutgutia case upheld the Delhi High Court's decision, emphasizing the need for incriminating material to justify assessment changes. As the AO did not cite any seized incriminating documents during the search, and no additions were based on such material, the completed assessments were upheld. Citing the Abhisar Buildwell case, the Tribunal affirmed that without evidence linking additions to seized material, the revenue's case lacked merit. Consequently, the appeal by the assessee was allowed. Visit to Get Source Revision u/s 263 - ITAT ruled in favor of the assessee on issues of limited scrutiny assessment, deduction u/s 80JJAA, and share issuance. The Appellate Tribunal considered a case involving a revision u/s 263 regarding the validity of a Limited scrutiny Assessment. The PCIT observed that the AO did not properly examine issues u/s 36(1)(iii) and u/s 14A. It was held that the AO lacked authority to scrutinize these issues without permission. The assessment was for limited scrutiny, so the PCIT's view that the AO erred by not examining these issues was deemed incorrect. The DR agreed with this. The claim u/s 80JJAA was also discussed, with the Tribunal finding that adequate enquiries were made by the AO and the PCIT's general observation of requiring more enquiries was not valid. Regarding the issue of shares to two companies, the PCIT did not specify what further enquiries were needed, leading the Tribunal to conclude that the PCIT's revision was not justified. The appeal of the assessee was allowed. Visit to Get Source Penalty u/s 271(1)(c) not justified for addition on closing stock valuation. No clear findings on concealment. Assessee's explanation deemed bona fide. The Appellate Tribunal addressed the issue of penalty u/s 271(1)(c) related to the addition of closing stock. The AO levied penalty on an addition u/s 36(1)(iii) that was deleted by the CIT(A), showing a lack of application of mind. Both authorities failed to provide reasons for considering the closing stock valuation addition as concealment. The Tribunal found no basis for concluding that the addition constituted inaccurate particulars, citing legal precedent. The Tribunal examined the valuation difference in closing stock, noting the assessee's justifications were not refuted by the Revenue. As the explanation was deemed bona fide, the penalty was deemed unsustainable, ruling in favor of the assessee. Visit to Get Source Approval u/s. 153D must be granted after thorough review, not mechanically. Failure to do so vitiates assessment orders. The Appellate Tribunal (ITAT) considered the issue of the validity of assessment u/s 153A due to the lack of valid approval u/s 153D. It was alleged that the approving authority did not apply their mind properly. The ITAT held that the approving authority must examine relevant material in detail before granting approval u/s 153D, as it is a mandatory requirement and not meant to be given mechanically. In this case, the approval was granted hastily without proper examination of the material, vitiating the assessment orders. The AO claimed the case was related to a search action u/s 132. The ITAT found that the approving authority did not adequately review the evidence, documents, and statements before granting approval, leading to a decision in favor of the assessee. Visit to Get Source Revision u/s 263: Interest income on Core Settlement Guarantee Fund not taxable. ICCL controls funds. Income exempt u/s 10(23EE). The ITAT reviewed a case involving the revision u/s 263 regarding the accrual of interest income on contributions made by the assessee towards Core Settlement Guarantee Fund. The CIT held that the AO erred in not examining the taxability of the accrued interest income before allowing its application in the accounts. The ITAT found that the contributions to the fund were under the control of ICCL and created to safeguard investors' interests, with any income accrued being exempt u/s 10(23EE) of the Act. The ITAT determined that the AO had collected and verified relevant information, and the PCIT did not demonstrate how the income earned by ICCL was chargeable to tax in the assessee's hands. The ITAT concluded that while the AO's order may be considered erroneous, it did not meet the condition of being prejudicial to revenue, ruling in favor of the assessee. Visit to Get Source Assessee not penalized for alleged tax evasion due to lack of concrete evidence. Penalty deleted. The Appellate Tribunal considered the levy of penalty u/s 270A. The Assessing Officer (AO) imposed the penalty u/s 270A(9)(a) for misrepresentation of facts and misreporting of income. However, the Tribunal found that the assessee had provided evidence of expenses through books, vouchers, and banking channels. The CIT(A) agreed that there was no failure to claim expenditure. The Tribunal noted that the AO did not provide fresh notice to the assessee after changing the basis for penalty. The disallowance of expenditure on an estimate basis was not sufficient for penalty u/s 270A(9)(a) or (c). The authorities did not independently examine the matter for penalty. The Tribunal held that disallowance alone cannot justify the penalty without proof of misrepresentation or suppression of facts. As there was no evidence of misrepresentation, the penalty was deleted, and the assessee's appeal was allowed. Visit to Get Source Notice u/s 148 to reopen assessment quashed. AO failed to prove alleged receipt of Rs. 35 Lakh. Assessee appeal allowed. The case involved the validity of reopening assessment u/s 147 based on a notice u/s 148. The key issue was the burden of proof regarding credible information to initiate reassessment proceedings. The Appellate Tribunal held that the notice was illegal as the AO failed to provide details of alleged receipt of Rs. 35 Lakh, relying on insufficient information. The burden lies on AOs to verify credibility of information, which was not done in this case. Previous assessment on the same issue with the same entity showed no addition was made, indicating lack of proper examination by the AO. Mere reliance on information without applying mind is unsustainable. Assessee's appeal was allowed. Visit to Get Source ITAT ruled in favor of the assessee on TP Adjustment issue. Additional evidences admitted for further examination. Proviso to Section 92C(2) benefit allowed. The Appellate Tribunal (ITAT) considered a case involving Transfer Pricing (TP) Adjustment where the Transfer Pricing Officer (TPO) determined the Arm's Length Price (ALP) of transactions at Rs. Nil, which was accepted by the Dispute Resolution Panel (DRP) and Assessing Officer (AO). The TPO was not satisfied that the assessee had received services for which payments were made, leading to the ALP being set at Rs. Nil. The assessee faced challenges in submitting evidence due to a short timeframe and the impact of Covid. Additional evidence was filed under Rule 29, acknowledged as critical. The ITAT admitted the evidence, directing the AO/TPO to re-examine the case. The ITAT also directed consideration of the Proviso to Section 92C(2) for Business Support Services, granting the benefit to the assessee. The appeal of the assessee was allowed. Visit to Get Source Addl. CIT lacked authority / jurisdiction to pass assessment order u/s 143(3). AO has sole power for scrutiny assessment. The Appellate Tribunal considered the validity of a scrutiny assessment conducted by an Additional Commissioner of Income Tax (Addl. CIT) under section 143(3) read with section 144C(13) of the Income Tax Act. It was held that only the Assessing Officer (AO) has the authority to conduct a scrutiny assessment and pass the assessment order. The Addl. CIT can exercise AO's powers only if authorized under section 120(4)(b) of the Act, which was not demonstrated in this case. The Tribunal emphasized that the Revenue must provide evidence of such authorization. The Tribunal also clarified that the time limit for challenging the jurisdiction of the AO does not apply when the action is deemed to be without authority of law. As no separate orders were passed authorizing the Addl. CIT and no jurisdiction transfer order was issued, the assessment order was deemed to be without jurisdiction and was set aside, resulting in the appeal being allowed in favor of the assessee. Visit to Get Source Sales added to income u/s 69A due to lack of evidence. Assessee proved innocence with docs & steps. No addition warranted. The Appellate Tribunal addressed two key issues. Firstly, u/s 69A, the AO added sales to the assessee's income due to lack of evidence, despite the assessee providing relevant documents and taking steps against GST fraud. The Tribunal found no need for addition as sales were lower than purchases under the relevant GST number, dismissing the Revenue's appeal. Secondly, the AO's addition for bogus purchases was dismissed as statements relied upon were from previous years, and the assessee provided evidence during assessment proceedings. The Tribunal ruled that AO's findings were not based on current year transactions, dismissing the Revenue's second ground. Visit to Get Source Reopening assessment u/s 147 for unexplained cash credit u/s 68 - Reasons must have live nexus with info possessed - Appeal allowed The Appellate Tribunal considered the issue of reopening assessment u/s 147 regarding unexplained cash credit u/s 68. It was held that the Assessing Officer must have a live nexus between the information possessed and the belief formed. The reasons provided by the AO only mentioned the nature of information and listed 13 companies without proper analysis. The AO did not inquire about the nature of these companies or how the money reached the assessee. The Tribunal found that the AO did not apply his mind and relied on information without proper examination, leading to the quashing of the assessment reopening. The appeal of the assessee was allowed. Visit to Get Source ITAT ruled that gains from sale of shares allotted in IPO should be treated as Short-Term Capital Gains, not business income. The case involved determining whether gains from the sale of shares allotted in an IPO should be classified as Short-Term Capital Gains (STCG) or business income. The principle of consistency was emphasized, with CBDT Circular stating that if shares are treated as investments, income from their transfer should be considered capital gains. The CBDT Circular aimed to reduce litigation and uncertainty. The Revenue's change in treatment without valid reason was deemed incorrect. Court precedents supported treating such gains as capital gains when shares were held as investments. The Revenue's classification of the gains as business income was overturned, and the gains were treated as STCG, following the principle of consistency. The appeal by the assessee was allowed. Visit to Get Source ITAT ruled on various tax issues: 26AS mismatch, disallowance of guarantee commission, TDS credit, & interest levy. The ITAT held that the assessee must reconcile differences in TDS amounts between Form No. 26AS and books of accounts. The matter was sent back to AO for further enquiry. Disallowance u/s. 35AC was rejected as donor's deduction cannot be denied for recipient's misuse of funds. Disallowance of guarantee commission was deleted as AO failed to justify the disallowance. Short credit of TDS was allowed upon verification by AO. Interest u/s. 234A was disputed due to extended filing date, following a High Court directive to not charge interest if tax was paid by original due date. Visit to Get Source Tax rate dispute resolved in favor of assessee on LTCG from unlisted shares sale. Share transfer is not a business asset transfer. TDS deduction explained. The case involved a dispute over the tax rate applicable on Long Term Capital Gains (LTCG) from the sale of unlisted shares u/s 112(1)(c) of the Act. The Appellate Tribunal held that the Share Purchase Agreement did not involve the transfer of assets but was a dilution of shareholding in a joint venture. The tax authority failed to properly examine the agreement, leading to an incorrect conclusion of a sale of capital assets. The Tribunal ruled in favor of the assessee, stating that there was no Long Term Capital Gain on the transfer of shares, and the income should not be taxed at the higher rate of 20% plus surcharge and cess. The Tribunal also accepted the explanation for the TDS deduction and rejected the tax authority's position. Visit to Get Source Bank deposits = turnover. Assessee failed to prove otherwise. GP estimated @ 6%. No interference. The Appellate Tribunal addressed the issue of estimating Gross Profit by considering all bank deposits as turnover. The assessee failed to provide sufficient evidence to support their claim that not all credits were turnover. Without documentary evidence or accounting records, the Assessing Officer estimated income at 8%. The CIT(A) directed estimation at 6%, providing relief to the assessee. The Tribunal found no fault in the CIT(A)'s decision and dismissed the assessee's grounds for appeal. Visit to Get Source ITAT ruled in favor of taxpayer, canceling interest charges u/s 234B. No liability post original assessment. The Appellate Tribunal addressed the issue of levying interest u/s 234B in proceedings u/s 147/148. The AO had enhanced the interest from the date of the original assessment order u/s 143(3) to the date of the order u/s 147. However, as the original demand was already paid and there was no discussion on enhancing interest in the reassessment order, the Tribunal held that interest u/s 234B was not applicable. The CIT(A) misunderstood the issue, stating interest u/s 234B is automatic, but the Tribunal disagreed. Since the demand was paid and no income variation occurred, interest u/s 234B was deemed unnecessary. The Tribunal allowed the assessee's appeal, deleting the interest charged by the AO. Visit to Get Source Appellate Tribunal ruled against penalty for cash deposits below Rs. 20,000 as unexplained. Sale transactions legit. The ITAT held that levying penalty u/s 271D for cash sale transactions is not acceptable. Addition of cash loans below Rs. 20,000 as unexplained deposits u/s 68 was made in the assessment order, but the revenue did not dispute the genuineness of the flat purchase and sale. The assessee entered into an agreement for an under-construction flat, which later went to another party due to financial issues. The ITAT found the AR's submissions realistic, setting aside the CIT(A) order and directing the AO to delete the penalty. The appeal was allowed in favor of the assessee. Visit to Get Source Penalty notice u/s 271(1)(c) upheld for unexplained trading cost difference. Assessee's explanation inconsistent. Penalty imposed. The Appellate Tribunal considered the validity of a penalty notice u/s 271(1)(c) and u/s 274 regarding unexplained differences in trading sales and purchase costs. The Tribunal found the notice u/s 274 not vague and upheld the penalty due to the inability of the assessee to substantiate accounts. The Tribunal highlighted the importance of strong reasons for selling goods below cost and the need for accurate valuation. The penalty was imposed based on inconsistencies in the assessee's claims and lack of transparency in accounts. The Tribunal emphasized the burden of proof on the assessee and the necessity to address all observations made by the assessing officer. The Tribunal allowed the appeal partially for statistical purposes. Visit to Get Source Customs High Court ruled that importer evaded duty on over Rs. 50 Lakhs worth of gold, not exported as required. No bail granted. The High Court considered jurisdiction for Anticipatory Bail Applications, extension of export obligation period, duty evasion, and confiscation of gold worth over Rs. 50 Lakhs. The importer failed to export processed articles within the specified period. Statements revealed discrepancies in gold processing and export. 37 kgs of imported gold went missing, indicating possible misappropriation. Duty payment and confiscation under u/s 111 (o) of Customs Act were warranted. Custodial interrogation of Applicants was deemed necessary due to seriousness of offense. Protection u/s 438 of Cr.P.C. was denied, and the Application was dismissed. Visit to Get Source CESTAT ruled that the value of imported used goods can be enhanced based on Chartered Engineer Certificate. No error in rejecting transaction value. The case involves valuation of imported goods, specifically a used Reach Truck with additional batteries and charger, along with new parts. The Appellate Tribunal rejected the transaction value and enhanced it based on a Chartered Engineer Certificate, as old goods require such certification for valuation. The Tribunal found no error in rejecting the declared value, considering the nature of the goods. The decision was supported by the absence of a load port Chartered Engineer Certificate. The Tribunal upheld the enhancement of value, citing a previous case with similar circumstances. The appeal was dismissed as the Tribunal saw no reason to interfere with the decision. Visit to Get Source CESTAT ruled on classification of imported goods under different tariff headings. No mis-declaration found. Penalties set aside. The case involved the classification of imported consignments u/s CTH 5903 or CTH 5407. CESTAT held that goods were not classifiable u/s CTH 54071094. No mis-classification by the appellant, who correctly claimed consignments u/s CTH 5707. Show Cause Notice error in classifying consignments u/s CTH 5903. Impugned order set aside, duty and penalty confirmed for one consignment. Penalty on Director set aside due to no mis-declaration. Revenue's appeal dismissed, importer and Director's appeals allowed. Visit to Get Source CESTAT on valuation: Declared value vs actual payment to seller. Exchange rate on Bill of Entry date. Exemption upheld for fertilizer use. The case involved valuation of imported goods for duty levy and denial of CVD exemption. The issue was whether to consider declared value or actual payment to High Seas Seller. Tribunal held that exchange rate on Bill of Entry date applies. Citing precedents, it confirmed exchange rate relevance. CVD exemption was granted as appellant used goods as fertilizers. Demand for differential duty was set aside. Appeal allowed. Visit to Get Source CESTAT ruled against absolute confiscation of foreign cigarettes due to packaging non-compliance. Confiscation reduced to â‚¹50,000. The case involved the absolute confiscation of cigarettes with penalty u/s 105 of Customs Act, 1962. The Tribunal held that while lack of compliance with Cigarettes and Other Tobacco Products Act, 2003 could infer goods as illicitly imported, only designated authorities can enforce municipal laws for goods intended for domestic sale. Seized cigarettes of foreign origin not compliant with the Act justified confiscation u/s 110 of Customs Act, 1962. The onus u/s 123 of Customs Act, 1962 was applied to hand rolling tobacco, rolling paper, and filters for non-compliance with the Act. As there was no evidence of smuggling, confiscation u/s 111 and penalty u/s 112 were set aside, except for the confiscation of 10,200 foreign-origin cigarettes valued at â‚¹1,53,000, reducing the penalty to â‚¹50,000. Visit to Get Source Jurisdiction, penalty, and confiscation of gold jewelry under Customs Act. Show cause notice timing valid due to COVID. No appeal filed. Penalty upheld. The case involved jurisdiction for show cause notice and Order-in-Original, penalty u/s 112(a) and 112(b) of the Customs Act, and confiscation of gold jewelry. The Tribunal held that confiscation of jewelry from one individual was not appealable. Penalty was upheld for association with individuals involved in seized jewelry. The Tribunal found no issue with jurisdiction for notice and order. The notice issued within COVID-related time extensions. Commissioner's decision was deemed valid despite errors in individual analysis. Burden of proof shifted to the accused due to lack of valid explanations. Penalty upheld under Sections 112(a) and 112(b) of the Customs Act. Appeal was dismissed. Visit to Get Source DGFT Notification: Import policy amended for specific gold items. Policy for specified items put into "Restricted" category. The Ministry of Commerce & Industry, u/s 3 and 5 of Foreign Trade (Development & Regulation) Act, 1992, amended the import policy of specific ITC (HS) codes under Chapter 71 of ITC (HS) 2022. ITC (HS) codes 71131912, 71131913, 71131914, 71131915, 71131960 changed from "Free" to "Restricted." Import under these codes is allowed without restriction under a valid INDIA-UAE CEPA TRQ. The notification was approved by the Minister of Commerce & Industry and issued by the Director General of Foreign Trade. Visit to Get Source Indian Laws Accused acquitted in cheque dishonour case u/s 138 NI Act. No proof of debt. Accused paid instalments. Appeal dismissed. The High Court acquitted the accused of the offence u/s 138 of the NI Act due to failure to prove a legally recoverable debt. The complainant's evidence did not align with the transaction details in the hire purchase agreement. The accused claimed full payment per the agreement, refuting any outstanding amount. The court found the accused successfully rebutted statutory presumptions, leading to the dismissal of the appeal. Visit to Get Source Appellants entitled to higher compensation due to deceased's multiple income sources. Compensation increased to â‚¹35,000/month. The Supreme Court addressed the issue of reducing compensation awarded by the Motor Accident Claims Tribunal. The deceased had multiple income sources including land sale, milk supply, coconut supply, and government contracting. The High Court conservatively assessed the deceased's income at â‚¹20,000 per month. However, based on evidence presented, the Court re-assessed the income at â‚¹35,000 per month due to the deceased's multiple work activities and the subsequent loss of income after death. The appellants were awarded compensation of â‚¹38,81,500 with 8% interest from the claim petition date. The judgment of the High Court was modified accordingly. Visit to Get Source Court rules in favor of auction purchaser in loan default case. Respondent aware of auction notice. Sale upheld. SC held that the respondent was aware of auction sale notice and participated in auction process. Despite no proof of notice service, respondent knew of auction. Appellant claimed Rs.22,53,004 due from respondent since 21.03.2013. Respondent rejected cheque for balance amount. High Court's order set aside, sale to auction purchaser confirmed. Appeal allowed. Visit to Get Source Dishonour of Cheque: Time limitation issue clarified. Order set aside, proceedings restored to Trial Court. The Supreme Court addressed a case involving dishonour of cheque and time limitation. The party sought to quash proceedings, arguing the debt was time-barred u/s the summoning order date. SC held that determining if the debt was time-barred requires evidence. The issue involves a mixed question of law and fact not for the High Court u/s 482 CrPC. The Impugned Order was set aside, restoring proceedings to the Trial Court. The appeal was allowed. Visit to Get Source PMLA Supreme Court ruled improper bail grant in Money Laundering case. Bench not assigned case. Bail set aside. The Supreme Court addressed the issue of the maintainability of a complaint u/s Prevention of Money Laundering Act, 2002 due to an improper grant of bail by a Bench not assigned the case. The Court held that the Bench should not have passed any order on merits after directing the case to be heard afresh by another Bench. It was noted that bail was granted without a prayer and without following the proper roster assignment. The Court emphasized that the roster assigned by the Chief Justice is binding on all Judges, and only the roster Bench can hear specific cases. The order granting bail was set aside, and the first respondent was directed to move the roster Bench for any interim relief or bail application. The appeal was allowed in part. Visit to Get Source Service Tax CESTAT ruled in favor of the appellant on issues of CENVAT Credit reversal and time limitation. No suppression found. The case involves a dispute u/s CENVAT Credit Rules. The Appellate Tribunal addressed issues related to Scope of Show Cause Notice (SCN), reversal of CENVAT Credit, and time limitation. Tribunal held that including services beyond the scope of SCN is impermissible. Appellant's reversal of CENVAT Credit on a proportionate basis was found unsupported by law. Amendment to Rule 6 clarified recovery of only proportionate credit. Extended limitation period demand was rejected due to lack of evidence of suppression. The appeal was allowed on both merit and limitation grounds. Visit to Get Source CESTAT ruled that once NCLT approves Resolution Plan, appeal abates. Similar cases considered. Appeal disposed of as abated. The CESTAT, an Appellate Tribunal, addressed the issue of abatement of appeal following NCLT's approval of a Resolution Plan. Citing precedents from Mumbai and Hyderabad Benches, it was held that once NCLT approves the Resolution Plan, the appeal stands abated. The Tribunal is functus officio in such matters. The appeal was disposed of as abated. Visit to Get Source Central Excise CESTAT ruled in favor of refunding interest under Section 72 of Finance Act, 2010 for retrospective amendment. Tribunal upheld interest on excess credit. The case involved a claim for refund of interest u/s 72 of Finance Act, 2010 to benefit from a retrospective amendment to Rule 6 of CCR, 2002/2004. The Tribunal held that the appellant's claim for refund of interest was not valid as the interest had already been paid in compliance with the retrospective amendment. The Tribunal noted that the appellant failed to provide evidence of filing a refund claim for the interest paid on reversed credit. Regarding excess credit, the Tribunal upheld the rejection of interest refund for Rs. 88,22,475/- but allowed interest on Rs. 1,00,10,808/- from three months after filing the refund claim. The impugned orders were modified accordingly, and the appeal was disposed of. Visit to Get Source Adjudication after 7 years barred. Elasticity of time frame "where it is possible to do so", u/s 11A(11) clarified. Legislature's intent emphasized. The High Court interpreted the phrase "where it is possible to do so" u/s 11A(1) of the Central Excise Act, 1944, ruling that it allows flexibility only in exceptional circumstances beyond the Adjudicating Authority's control. The legislative intent behind Section 11A(11) emphasizes timely adjudication. The Court held that the 6-month or 2-year limitation cannot be extended to over 7 years. Citing K.M Sharma Vs. I.T.O, it stressed strict construction of fiscal statutes for certainty. Delay impacts Article 14 of the Constitution; a reasonable time frame of 5 years u/s 11A is upheld. The Court found a 7-year delay unreasonable, emphasizing completion within the statutory 5-year limit. The application was allowed. Visit to Get Source VAT High Court: Challenge to summons for documents under TNVAT Act dismissed. Dealer's compliance with Section 22(2) to be ascertained. The High Court addressed a challenge to summons issued u/s 81 of TNVAT Act, 2006 in Form PP to petitioners for document submission. Petitioner argued Form PP applies only to third parties, not assesses. Court held Section 22(3) of TNVAT Act, 2006 and Rule 10(11) of TNVAT Rules, 2007 aim to select 20% assessments for detailed scrutiny. Assessment completion u/s 22 doesn't bar Assessing Officer from seeking info from listed dealers. Commercial Tax Dept. can summon petitioners for records to verify return accuracy. Court found no merit in the petitions and dismissed them. Visit to Get Source Claim for input tax credit rejected due to loss of goods not used in business. Plain reading of law shows credit repayable. The High Court rejected a claim for proportional Input Tax Credit u/s 19 of the KVAT Act for losses like spillage, ground loss, and during transportation. The court held that input tax credit is repayable if goods are not used in business. Precedents showed that mere stock shortage does not imply suppression. Judgments u/s 19 (9) of TNVAT Act disentitled credit for goods lost in transit. The court upheld authorities' decision, dismissing the petition. Visit to Get Source Articles DGGI Officer empowered to issue SCN Procedure For LEI (Legal Entity Identifier) Code Renewal INITIATION OF RECOVERY PROCEEDINGS UNDER SECTION 78 OF THE ACT Notifications Customs 41/2024 - dated 10-6-2024 - Cus (NT) Appointment of Common Adjudicating Authority for the purpose of finalization of Provisional Assessment in SVB case w.r.t. M/s Tyco Safety Products lndia Pvt Ltd. DGFT 17/2024-25 - dated 11-6-2024 - FTP Amendment in import policy of specific ITC (HS) codes under Chapter 71 of Schedule – I (Import Policy) of ITC (HS) 2022 News Union Minister Shri Piyush Goyal assumes charge of Ministry of Commerce and Industry Shri Jitin Prasada takes charge as Minister of State of Ministry of Commerce and Industry Centre releases Rs. 1,39,750 crore installment of Tax Devolution to States Case Laws: GST 2024 (6) TMI 432 Condonation of delay in filing the revocation application - application for revocation of cancellation of GST registration - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off. 2024 (6) TMI 431 Violation of principles of natural justice - challenge to assessment order - petitioner was not provided a reasonable opportunity because the show cause notice and order were not communicated to him by any other mode other than uploading on the GST portal - reconciliation of disparity between the GSTR 3B and GSTR 2A returns while filing the annual return in Form GSTR-9 - HELD THAT:- The petitioner has placed on record the annual return in Form GSTR-9. It is asserted that the disparity was reconciled in such annual return. Undoubtedly, the petitioner did not participate in proceedings and, hence, could not contest the tax demand. Therefore, on being put on terms, the petitioner should be provided an opportunity to contest the tax demand. The impugned order dated 10.08.2023 is quashed subject to the condition that petitioner remits 10% of the disputed tax demand, as agreed to, within a period of two weeks from the date of receipt of a copy of this order - Petition allowed. 2024 (6) TMI 430 Restriction/negation on petitioner s claim for the GST amounts altogether - Agreement between the respondent/assignee and the renter has come to an end - proper forum to decide the amounts which the petitioner is entitled to - HELD THAT:- This Court is of the view that whether the Lease Agreement has come to an end by efflux of time would not have a bearing on the petitioner s claim or demolish the petitioner s claim in totality. Admittedly, the respondent received receivables from the renters during subsistence of the Agreement between the respondent and the renters. Hence, any amount which the respondent collected as part of the GST component from the renter/s would be the petitioner s entitlement in terms of the two Assignment Agreements. Proper forum to decide the amounts which the petitioner is entitled to - HELD THAT:- The arbitral tribunal will be the proper forum to decide the amounts which the petitioner is entitled to in terms of these Agreements and also adjudicate on any construction of the clauses of the Agreements which the respondent seeks to argue before this Court. Till that adjudication is done, the Court is inclined to grant a limited protection to the petitioner in the form of a restraint on the respondent from dealing with the Escrow Account bearing no.2105107000000044 in the respondent bank. The interim order will be subject to the formation of the arbitral tribunal and until the parties can approach the tribunal for continuing the interim protection or otherwise under Section 17 of the 1996 Act. Application allowed. 2024 (6) TMI 429 Condonation of delay in filing an appeal under Section 100 (2) of the CGST/TNGST Act, 2017 - HELD THAT:- As per Section 100 (2) of the CGST/TNGST Act, 2017, 30 days is the time limit for filing the appeal from the date of receipt of the order. Hence, in the present case, the appeal should have been filed on or before 12.03.2024 as the order was reportedly received by the Appellant on 12.02.2024. They have stated that the reason for delay was due to paucity of staff and also administrative reasons but certainly not wanton or deliberate. The said delay being less than one month, the same is condonable in terms of Section 100 (2) of the CGST/TNGST Act, 2017. Accordingly, the appellant stated that they are a 100% Tamilnadu Government owned Electricity Generation and Distribution Utility, and that they are making a request for condonation of delay of one day in filing the appeal. When the Members requested the authorised representative (AR) to be more specific about the reasons for delay during the personal hearing on 23.04.2024, the AR explained that TANGEDCO, being a 100% Tamilnadu Government owned Electricity Generation and Distribution Utility, they were outside the ambit of indirect tax compliance matters including Central Excise, Service Tax, VAT, etc., in the past. Even after the introduction of GST, TANGEDCO was not having a dedicated cell of office staff for indirect taxation, as Transmission or distribution of electricity by an electricity transmission or distribution utility, stood exempted. Only after 3 to 4 years of the introduction of CST, when issues started cropping up in GST related matters, a cell with minimal staff to attend to indirect tax compliance was reported to be formed. The delay of one day beyond the normal time limit in filing the appeal is condonable as provided under the proviso to Section 100 (2) of CGST Act, 2017 - this authority is empowered vide Section 101 (1) of the CGST /TNGST Acts, 2017 to pass such orders as deemed fit. The delay in filing the appeal by the appellant beyond the normal time Limit of 30 days is condoned in terms of proviso to Section 100 (2) of CGST/TNGST Act, 2017, and the appeal will be taken up for consideration on merits. COD application allowed. Income Tax 2024 (6) TMI 433 Validity of proceedings u/s 144BA - Issuance of bonus shares to the shareholder - Validity of invoking GAAR over SAAR - petitioner set-off the short term capital loss incurred on the sale of shares of REFL against the long term gains made on another transaction of sale of shares - Applicability of Section 94(8) vs. Chapter X-A (GAAR) of the Income Tax Act - In assessment of income sought to treat the transactions as impermissible avoidance arrangement as per the General Anti-Avoidance Rules ( GAAR ) under chapter X-A starting from Section 95-102 of the Act - as submitted what has been specifically excluded from the provisions curbing bonus stripping by way of SAAR cannot be indirectly curbed by applying GAAR - whether respondent No.1 has committed an error in law while issuing notice invoking Section 96 of the Act, which is the provision otherwise, referred as GAAR which would not be attracted to the facts of the petitioner? HELD THAT:- It is worth taking note of the fact that here is a situation where the special provision of law was already there in the Act when the general provision of law has been subsequently enacted by way of an amendment. Normally it is the vice-versa, i.e., where the general provision of law already being in force, the special provision of law is subsequently enacted. What next to be appreciated is the fact that chapter X-A begins with a non-obstante clause, where in Section 95(1) dealing with the applicability of the General Anti-Avoidance Rules, it has been held that, notwithstanding anything contained in the Act if the Assessing Authority finds that an arrangement entered into by the Assessee is an impermissible avoidance arrangement, the determination has to be done in respect of the consequential tax arising there from and shall be subject to the provisions of chapter X-A. This in other words means that by virtue of the aforesaid non-obstante clause, the provisions of chapter X-A gets an overriding effect over and above the other existing provisions of law. So far as the contention of petitioner that the case of the petitioner is one which should have otherwise fallen under Section 94(8) of the Act, it would be relevant also to take note of the said provision of Section 94(8). As is known to all, Section 94 deals with avoidance of tax by certain transactions in securities. Securities can be of different natures like stocks, mutual funds, derivatives of non-recognized stock exchanges and the case of the petitioner is that the transactions of the petitioner is one which would fall under Section 94(8). At the relevant point of time sub-section 8 of Section 94 dealt with only buying and acquiring of units within a period of three (3) months prior to the record date. The explanation to the said Section provides for definitions of certain terminologies used in the said sub-section which includes the definition of securities and the definition of units. In the present case, the petitioner puts forth an argument rooted in the belief that the Specific Anti Avoidance Rules (SAAR), particularly Section 94(8), should take precedence over the General Anti Avoidance Rule (GAAR). This contention, however, is fundamentally flawed and lacks consistency .The reason being the Petitioner's own previous assertion that Section 94(8) is not applicable to shares during the relevant time frame. This inherent contradiction in the Petitioner's stance significantly weakens the overall credibility of their argument. As per the Revenue's perspective, given the multiple transactions that the taxpayer has undertaken, the case should be, one which should fall under the umbrella of Chapter X-A and not Chapter X. Section 94(8) might be relevant in a simple, isolated case of the issuance of bonus shares, provided such issuance has an underlying commercial substance.This provision does not apply to the current case, as issuance of bonus shares here is evidently an artificial avoidance arrangement that lacks any logical or practical justification. It is clear that this arrangement was primarily designed to sidestep tax obligations, in direct contravention of the principles of the Act. Petitioner's reliance on the 2012 Shome Committee Report - As in the given factual backdrop, the same is totally misplaced and misconstrued. Even the contention of the petitioner that the aforementioned Report with regard to SAAR under Section 94 would override the GAAR in Chapter X-A, is unacceptable. The Committee's stance that SAAR should generally supersede GAAR mainly pertains to international agreements, not domestic cases such as this. This stand, as per the report is further substantiated by the Finance Minister's declaration, made on January 14, 2013. During this announcement, the Minister stated that the applicability of either GAAR or SAAR would be determined on a case-by-case basis. What further weakens the petitioner's argument is the subsequent introduction of a Rule under Section 95 and Section 100. This provision indicates that Chapter X-A could be used in conjunction with, or as a substitute for, other Sections of the Act. This development again highlighted the selective and misinterpreted use of legal provisions by the Petitioner. Finance Bill, 2013, only incorporated some of the expert committee s recommendations and CBDT also clarifies that both GAAR and SAAR would be applied depending upon the specifics of each case. However, Petitioner's assertion is that the facts of the case are irrelevant in determining the application of a general law is also fundamentally flawed. This stance was already addressed and refuted by the Supreme Court in M/s. S. Zoraster and Company [ 1967 (2) TMI 25 - DELHI HIGH COURT] The Court, in its wisdom, stated that laws must be interpreted based on the specific facts of each case. The Petitioner's argument, thus, is not only inconsistent but also contradicts the well-established legal principles. The current arrangement is being scrutinized as it is considered devoid of commercial substance as per Section 97. It is perceived as a deliberate misuse of the Act's provisions, going beyond the intended use of the law, and manipulating it to one's advantage. It creates extraordinary rights and obligations that seem to be conducted not in good faith. These unusual rights and obligations are not in line with the general principles of fair dealing, leading to the conclusion that it's an impermissible avoidance agreement under Section 96. Consequently, the arrangement falls under the purview of Chapter X-A. Given these circumstances, procedures were set in motion to apply the rules and regulations of Chapter X-A to this arrangement. Section 144AB outlines the procedure for applying the rules in Chapter X-A. This section ensures that transactions are thoroughly evaluated at multiple levels and from various perspectives before determining any connected outcomes. This involves a comprehensive examination of all the elements of the transaction, upholding the principles of fairness at each step. It ensures that the process is thorough, fair, and just. However, the Petitioner has chosen to seek this court's intervention instead of following the process set out under Section 144AB. This circumvention of the process raises questions about the Petitioner's motives. Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. Accordingly, we are of the considered opinion that the Revenue has persuasively and convincingly shown that the transactions in the instant case are not permissible tax avoidance arrangements. The evidence points towards the fact that these transactions do not qualify as permissible under the tax laws. Therefore, the provisions of Chapter X-A would become applicable. Therefore, the current writ petitions lack merit, as they fail to make a case so far as the application of Chapter X-A in the present facts of the case. Writ Petitions are dismissed. The respondents are allowed to proceed further with the process under Section 144AB 2024 (6) TMI 428 Allowable revenue expenditure u/s 37 - broken period interest paid on purchase of securities - securities constitute stock-in-trade - whether broken period interest paid on purchase of securities is revenue expenditure since the securities constitute stock-in-trade? - As held by HC [ 2023 (1) TMI 673 - TELANGANA HIGH COURT] Tribunal correctly held that the respondent had purchased securities to hold them as stock-in-trade. Therefore, interest paid on such securities would be an allowable deduction.- HELD THAT:- There is no merit in the present special leave petition and hence, the same is dismissed. Pending application(s), if any, shall stand disposed of. 2024 (6) TMI 427 Validity of scrutiny assessment - Jurisdiction of the Addl. CIT in passing the assessment order u/s 143(3) r.w.s.144C(13) in absence of orders passed u/s 120(4)(b) or section 127 of the Act - HELD THAT: Undisputedly, under the Act, only the AO is empowered to conduct a scrutiny assessment and passed the assessment order u/s 143(3) of the Act. As per the provisions of section 2(7A) of the Act, the Addl. CIT can exercise the powers of the Assessing Officer under the Act if the direction in this respect has been issued under section 120(4)(b) of the Act. Assignment orders have neither been furnished to the assessee nor been placed on record before us by the Revenue. Thus, nothing has been brought on record by the Revenue to suggest that the Addl. CIT, Range-3(2), Mumbai, who has passed the assessment order was authorized under section 120(4)(b) of the Act to perform functions and, exercise the powers of an AO in the case of the assessee. When the jurisdiction of the Addl. CIT to conduct scrutiny assessment and pass the assessment order under the Act is under challenge, the Revenue is under an obligation to bring on record the copy of the aforesaid order(s) to justify the basis of authority of the Addl. CIT to perform the functions, and exercise the powers of an Assessing Officer and pass the assessment order. Thus, apart from the sole statement in the intimation letters dated 13/08/2009 and 11/08/2010 as well as draft and final assessment order for the assessment year 2007 08, the Revenue has failed to produce any such order. Time limit for raising objection to the jurisdiction of the AO - As regards the submission of the learned DR that as per the provisions of section 124(3) of the Act, any challenge to the jurisdiction of the AO can be raised within a period of one month, we find that in Bansilal B. Raisoni Sons [ 2018 (12) TMI 223 - BOMBAY HIGH COURT ] held that the time limit for raising objection to the jurisdiction of the Assessing Officer prescribed under sub-section (3) of section 124 has a relation to Assessing Officer s territorial jurisdiction and the said time limit would not apply to a case where the assessee contends that the action of the Assessing Officer is without authority of law, and therefore, wholly without jurisdiction. Therefore, in absence of separate orders passed under section 120(4)(b) authorising the Addl. CIT to perform the functions, and exercise the powers of an AO under section 2(7A) and also in absence of an order transferring the jurisdiction under section 127 of the Act, the impugned final assessment order passed under section 143(3) read with section 144C(13) of the Act, in the case of the assessee, by the Addl. CIT for assessment year 2007 08 is without the jurisdiction, and hence is set aside. Assessee appeal allowed. 2024 (6) TMI 426 Addition made u/s 69A - sales to M/s. Gulathi Enterprises - AO added the sales to the assessee's income due to lack of corroborative evidence - sales of the assessee as per the GST return was higher than in the sales as per the Profit and Loss Account - HELD THAT:- From the perusal of the record, we find that the assessee furnished the letter as well as police complaint during the assessment proceedings and also furnished the cancellation of GST certificate of M/s. Gulathi Enterprises. From the copy of the letter of the AO to the Commissioner of CGST and Central Excise, we find that the same is dated 08/12/2022 and the assessment order was passed on 28/12/2022. Thus, the Department of GST had only 20 days to respond to the aforesaid letter by the AO. However, it is undisputed that no response was received from the Department of GST. As evident from the record that the AO did not conduct any other inquiry as noted by the learned CIT(A) - also evident from the record that the assessee furnished all the relevant documents and took all the necessary steps as could have been taken by the victim of the GST fraud. Undeniably purchases relating to M/s. Gulathi Enterprises amounts of Rs. 5.37 crore, while the sales are just Rs. 3.95 crore, and even if it is assume to be treated as transaction done by the assessee, no addition is warranted as the sales are anyway lesser than the purchases under the relevant GST number - assessee has also satisfactorily proved before lower authorities that the GST number assigned to it is different from the GST number of M/s. Gulathi Enterpris - no infirmity in the impugned order passed by the learned CIT(A) deleting the addition of sales of M/s. Gulathi Enterprises u/s 69A of the Act in the hands of the assessee. As a result, the ground no. 1, raised in Revenue appeal is dismissed. Addition on account of bogus purchases - AO has relied upon the statement recorded during the search and survey action conducted in the year 2017 2018 - HELD THAT:- Undisputedly, statements considered by the AO were recorded on dates 13/07/2017, 14/07/2017, 19/07/2017 and 11/08/2018. Thus, it is evident that none of these statements pertain to the year under consideration. Also during the assessment proceedings in order to examine the genuineness of the transaction, the AO issued notices u/s 133(6) of the Act as well as summons issued u/s 131 of the Act to Shri Pranav Jain, proprietor of M/s. Ankit International. We find that the notices and summon were duly responded by Shri Pranav Jain along with furnishing the corroborative evidences in respect of the sales made to the assessee. AO did not find any fault with the evidences so furnished. Therefore, we find that the findings of the AO are just based on the evidences and statements recorded during the search and survey action conducted in the year 2017 2018, and none of the findings are on the basis of evidences furnished by the assessee for the transaction undertaken in the year under consideration. Ground no. 2, raised by Revenue is dismissed. 2024 (6) TMI 425 Reopening of assessment u/s 147 - unexplained cash credit u/s 68 - eligibility of reasons to believe - HELD THAT:- Formation of belief made by the ld. Assessing Officer should have a live nexus between the information possessed by him, vis- -vis his belief. A perusal of the above reasons would indicate that the first four line only make a mention about the nature of information possessed by the AO and thereafter made reference to a list of 13 Companies. AO after reproduction the details of 13 Companies and observed that as per MCA data and ITD module, these Companies are paper/shell companies having no real existence and business activities. The ld. Assessing Officer himself has not made any inquiry about the nature of these Companies. The assessee had not taken the money from all these 13 Companies. AO nowhere analyzed as to how which Company has received the money from the assessee and how it has been layered to reach to the accounts of the assessee. He has simply reproduced certain information from the Website of the Income Tax Portal and formed the belief that income has escaped. There was no application of mind at the end of ld. Assessing Officer while forming a belief that income has escaped assessment. He has relied upon the information without analytically examining at his own end and reopened the assessment. We allow this fold of grievance and quash the reopening of assessment. Appeal of assessee allowed. 2024 (6) TMI 424 Correct head of income - Nature of gain arising on sale of shares allotted to the assessee in IPO - whether it is STCG or business income? - principle of consistency - contention of the Revenue is that the intention of the assessee was to earn profit and not long-term appreciation or earning of dividend - HELD THAT:- As a corollary to the guideline where the assessee has treated the holding of shares as investment and not stock-in-trade, the income derived from transfer of such shares has to be considered as capital gain, either long-term or short-term depending upon the period of holding. CBDT has also directed in the said Circular that for listed shares and securities held for a period of more than 12 months, the stand once taken by the assessee in a particular year shall remain applicable in subsequent assessment years also. Therefore, the principle of consistency was acknowledged by the CBDT in this Circular. Further this Circular was issued with a view to reduce litigation and uncertainty. Therefore, the principle of consistency has to be followed in the case of shares held for less than 12 months as well. The assessee had shown the sale of shares held for less than 12 months as STCG in the past year which was accepted by the Department in the scrutiny assessment. As the facts were identical, the Revenue was not correct in changing its stand without any valid reason to treat the STCG disclosed by the assessee as business income in the current year. Further, no reason has been given by the Department for changing its stand for the treatment of the gain arising from sale of shares. The principle of consistency has be applied in respect of listed shares and securities held for a period of less than 12 months as well so as to reduce litigation and uncertainty. Hon ble Gujarat High court has held in the case of Deepaben Amitbhai Shah ( 2016 (8) TMI 1003 - GUJARAT HIGH COURT] that when the assessee had made investment in shares as investor, income arising to assessee on sale of those shares would be assessable as capital gains and not as business profit. It was also held in the case of Dhruv H. Patel ( 2014 (12) TMI 1237 - ITAT MUMBAI] that the intention of the assessee to apply in shares to IPO was to get higher allotment of shares and there was no repetitive purchase and sale of the same script. Under the circumstances merely because assessee had used borrowed capital to apply for such shares, it cannot be a ground to treat the gain arising on sale of shares allotted through IPO as business income. Thus we are of the considered opinion that the Revenue was not correct in treating the gain arising on sale of shares allotted through IPO as business income. Following the principle of consistency, the same should be treated as STCG. Appeal filed by the assessee is allowed. 2024 (6) TMI 423 Addition u/s 69C r.w.s.115BBE - unexplained/ unaccounted import expenditure - HELD THAT:- Assessee had not recorded the impugned furniture import expenditure in the books of account. We wish to reiterate here that the furniture supplier herein is China based and therefore, we fail to comprehend as to how the assessee could get such huge imports items on credit without proving any past business relation even if it is accepted that no actual payment had been made. There is further no issue that custom duty (supra) stood duly paid on imports. These assessee s explanation herein fails to satisfy the test of human probabilities going by Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT] and CIT vs. Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] We thus see no reason to accept the impugned identical sole substantive ground(s) raised in both these appeals. We further wish to make it clear that it was the bounden duty of the assessee only to plead and prove all the relevant facts including the import agreement conditions so as to buttress the point that in case of any eventuality of quality defect on the furniture items ought to be returned to the China based supplier. No such explanation, much less a satisfactory one, has come from the assessee s side all along. We thus affirm the learned lower authorities action deleting the impugned addition. Assessee s alternative prayer that we ought to grant relief of the foregoing custom duty component against the impugned addition(s) also carries no substance in light of the fact that the learned NFAC has already granted sufficient relief(s) to this effect in lower appellate proceedings. Coupled with this sec.69C proviso also bars such addition. The assessees instant alternative prayer is declined in very terms. Assessee appeal dismissed. 2024 (6) TMI 422 Addition based on Form No. 26AS - assessee explained that certain difference was found between the amount received and the TDS credit as per 26AS statement of the assessee and the amount as appearing in the books of accoun t - HELD THAT:- As assessee had not denied the quantum of transaction and the TDS of Urbanize Developers India Pvt. Ltd. as reported in Form No. 26AS, rather the difference of TDS of Rs. 1,40,028/- was carried forward in the return. Under the circumstances, the assessee was duty bound to reconcile the difference in the quantum of transaction as per 26AS and as appearing in the books of accounts. The assessee has also not filed any confirmation from Urbanize Developers India Pvt. Ltd. that ledger account appearing in its own account which was filed before the AO, was correct. The ledger account as appearing in the books of the assessee is a self-serving document and it does not explain the difference in transaction as noted in the case of Urbanize Developers India Pvt. Ltd. AO has not made any enquiry from Urbanize Developers India Pvt. Ltd. on the basis of ledger account as filed by the assessee. The matter is, therefore, set aside to the file of the AO to re-examine the matter once again by making necessary enquiry from Urbanize Developers India Pvt. Ltd. The assessee may also be allowed another opportunity to reconcile the difference in respect of Urbanize Developers India Pvt. Ltd. and the AO may decide the matter after making a proper enquiry as indicated above. The ground is allowed for statistical purpose. No wrong with the direction of the CIT(A) to make enquiry from Vijaya Bank and re-decide the matter in respect of difference as appearing in 26AS. Any mismatch between the accounts of the assessee and Form No.26AS has to be properly explained and enquired into. A direction to make specific enquiry from the bank and to re-decide the matter does not tantamount to setting aside the order of the AO. In view of discussions in respect of Ground No.1 as above, the direction of the CIT(A) is held as proper and Ground No.2 is dismissed. Proportionate disallowance u/s. 35AC - assessee has paid a sum to Health Management and Research Institute, Hyderabad (HMRI), an approved institution - approved institute has applied the funds towards ineligible project - AR had contended that for wrong application of funds by the recipient institute, no disallowance can be made in the hand of the donor and he has drawn our attention to Explanation to Section 35AC(2) - HELD THAT:- Deduction to the donor cannot be denied even in a case where the approval of the institute is withdrawn after the date of payment by the donor or where the notification in respect of eligible project or scheme is also withdrawn. Thus, the prime requirement for deduction under this section is that the payment is made by an assessee to an approved institute for carrying out any eligible project or scheme. It is found that this condition is fulfilled in the case of the assessee. Merely because the approved institute has applied the funds towards ineligible project or scheme, this cannot be a ground to deny the deduction in the hands of the assessee . The provision of Section 35AC(6) of the Act further stipulates that where the approval granted to the institute is withdrawn or where the approval for project or scheme is withdrawn then the amount received by the approved institute will be treated as deemed income of such approved institute only. It is, thus, crystal clear from this provision that for the default of not spending amount for eligible projects, action can be taken only in the hands of the done institute and not in the hands of the donor. As held in the case of Gujarat Co-op Milk Marketing Federation Ltd. [ 2014 (2) TMI 79 - GUJARAT HIGH COURT ] that if the donee trust doesn t fulfil the conditions as stipulated u/s. 80G of the Act, it will not have any effect on the deduction in the hands of the donor. Though, this decision was rendered in the context of deduction u/s. 80G of the Act, the ratio of this decision is equally applicable in respect of deduction u/s. 35AC of the Act. No disallowance of claim u/s. 35AC of the Act should have been made in the hands of the assessee for the default on the part of the approved institute. Accordingly, the addition made on account of proportionate disallowance of claim u/s. 35AC of the Act is deleted. The ground is allowed. Disallowance of guarantee commission - AO disallowed 50% of corporate guarantee commission paid to the associate concern who had extended guarantee for various loans taken by the assessee from HFDC Bank, Kotak Bank, Axis bank, IndusInd Bank SBICAP Trustee Co. etc. - AO found that the rate of guarantee commission was excessive and, therefore, disallowed 50% of the guarantee commission paid, which has been upheld by the Ld. CIT(A) -HELD THAT:- AO has treated the guarantee commission as excessive and disallowed 50% of the claim without bringing on record any comparable case. As rightly pointed out by the assessee the onus was on the department to demonstrate that the expenditure incurred was excessive or unreasonable by brining on record guarantee commission payment in comparable cases. AO has also not given any reason for disallowing 50% of guarantee commission payment. Further, the provision of Section 40A(2)(b) of the Act was not invoked before making adhoc disallowance of 50% of guarantee commission. Even in the case where the provision of Section 40A is invoked, the AO has to establish that the expenditure was excessive or unreasonable having regard to fair market value of the payment made or the legitimate needs of the business. The fact that similar guarantee commission was claimed in the past years which was allowed by the department has also not been disputed. The disallowance made by the AO is based on mere assumption and presumption, which cannot be upheld. Accordingly, 50% disallowance out of corporate guarantee commission made by the Revenue is deleted. Short credit of TDS - AR submitted that full credit of tax deducted at source as claimed in the return of income was not allowed by the AO - assessee had filed reconciliation of TDS as per Form 26AS and TDS as claimed in the return - HELD THAT:- The assessee had also filed a rectification application u/s. 154 of the Act dated 12.12.2016 for allowing full credit of TDs claim. AO is directed to verify the claim of TDS as made in Income Tax Return and also the re-conciliation statement filed by the assessee. The credit for TDS claim should be allowed in accordance with provision of Section 199 of the Act. The ground is allowed for statistical purpose. Levy of interest u/s.234A - AR submitted that the due date of filing of Income Tax Return for this year was extended by the CBDT - assessee had paid all the taxes within the original due date of filing of return i.e. before 30th September, 2017. Under the circumstances, no interest u/s. 234A of the Act should have been charged - HELD THAT:- The due date of filing of return for A.Y. 2014-15 was 30th September, 2014, which was extended by the CBDT. While extending the date of filing of return, interest chargeable u/s. 234A of the Act for late filing of return was still permissible. The Hon ble Gujarat High Court in All Gujarat Federation of Tax Consultants [ 2014 (9) TMI 784 - GUJARAT HIGH COURT ] had directed that in case of tax payers who have paid the entire amount of tax on or before 30th September, 2014, no interest for late filing of return may be levied despite their filing of return after 30 September, 2014. As the decision of the Jurisdictional High Court is binding, the department is directed to verify whether the entire amount of tax was paid by the assessee by 30 September, 2014 and if yes, then follow the direction of the Hon ble Court regarding non-charging of interest u/s. 234A of the Act. The ground is allowed for statistical purpose. 2024 (6) TMI 421 Tax rate applicable on LTCG from the sale of unlisted shares - Applicability of section 112(1)(c) of the Act - action of AO in computing the tax on the long term capital gain on sale of unlisted shares at the rate of 21.63% (including surcharge and cess) under section 112(1)(c) (i) as against the tax computed by the assessee in the return of income at the rate of 10.815%. (including surcharge and cess) under the provisions of section 112(1)(c) (i) - HELD THAT:- Share Purchase Agreement in no way depict the transfer of assets individually or collectively. As we go across this agreement, it is more in the nature of dilution of share holding of the assessee company in the joint venture by way of exit from the joint venture and the consequences of the same is that the Firestone TVS Pvt. Ltd. was to stop using Firestone Mark and to use the name of Firestone from the name of the Company. The tax authority below have not made any effort to examine the Share Purchase Agreement and for that reasons a very general conclusion of consequences of transfer of shares considered it to be sale of capital assets of company, while it is a simple case of transfer of shares and there can be no attribution of any Long Term Capital Gain on account of transfer of shares for the purpose of Section 112(1)(c)(ii) taxing the income at 20% plus surcharge and cess. Assessee had reasonably explained the reasons for deduction of 20% of the TDS by Sundaram Industries Pvt. Ltd. and, even otherwise on the basis of deduction of excess TDS there cannot be any estoppel to change the nature of income with consequential effects, as to, at what rate the income is taxable. Decided in favour of assessee. 2024 (6) TMI 420 Penalty u/s 271(1)(C) - defective notice - TP Adjustment/addition - AO determined the arm's length OP/OC at 13.87% and made the net addition as computed being difference between figures as shown by assessee and as finally computed - HELD THAT:- Notice does not mention as to which limb of section 271 of the Act has been invoked as the assessee was called upon to show cause for: have concealed the particulars of your income or have furnished inaccurate particulars of such income. The law in this regard stands settled that such an ambiguous notice is not sustainable in law. Reliance can be placed on Hon ble Supreme Court judgement in the case of CIT vs. Reliance Petro Products Pvt. Ltd [ 2010 (3) TMI 80 - SUPREME COURT] and CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] - There should be categorical communication as to under which limb the assessee is show caused. The AO had concluded that there was: the furnishing of inaccurate information, thus, relates to furnishing of factually incorrect details and information about income. As considered the provisions of Explanation-7 to section 271(1)(c) of the Act, as the Revenue authorities contend that it is a deeming provision and the assessee is deemed to have concealed income or income of which inaccurate particulars have been furnished and the onus is on the assessee to establish bona fide and due diligence, then, what is required is that the notice should be specific and there should not be any ambiguity of any sort, rather, the notice should specifically provide that the penalty is being invoked in the light of the Explanation-7 of section 271(1)(c) of the Act, as the presumption of the deeming provision is called to be rebutted by the assessee. Thus on ground of ambiguity in the notice too the penalty order cannot be sustained. Decided in favour of assessee. 2024 (6) TMI 419 Assessment u/s 153A r.w.s. 153C - incriminating material found during the search or not? - HELD THAT:- On perusal of the assessment order, it is noted that the instant assessment is pursuant to notice u/s. 153C read with 153A of the Act. We note that the additions in dispute are not based upon any incriminating material found during the course of search. DR could not dispute this proposition. We note that as per the decision of Abhisar Buildwell Pvt. Ltd. ( 2023 (4) TMI 1056 - SUPREME COURT ) no addition can be made the assessment framed u/s. 153A dehors incriminating material found during the search. We find considerable cogency in the contention of the AR that the original return of income was filed on 25.09.2010 and notice u/s.153C is dated 18.09.2014 and in view of the Hon ble Supreme Court in the case of CIT vs. Jasjit Singh 2023 (10) TMI 572 - SUPREME COURT ] should be taken as the date of search in the present case and therefore, the assessment year 2010-11 did not abate on the aforesaid date of search as time limit to issue notice expired on 30.09.2011. Identical disallowance on account of freight charges was made in assessee s own case in AY 2007-08 and AY 2009-10 and the Tribunal has deleted the same. Thus we set-aside the order of the CIT(A) and decide the issues in favour of the assessee and accordingly, allow the appeal of the assessee for AY 2010-11. Assessee appeal allowed. 2024 (6) TMI 418 Estimation of Gross Profit - treating the entire deposits in the bank account as turnover of the appellant - CIT(A) justification in directing the AO to estimate the gross profit @ 6% of the turnover - HELD THAT:-When the assessee claims that all the credits are not the turnover of the assessee-firm, the onus is on the assessee to prove its claim with cogent documentary evidence, which the assessee failed to do so even before us. Further, in the absence of any documentary evidence to prove the variation of Rs. 63,27,044/-, as contended by the assessee, and also in the absence of any books of account and bills vouchers etc., for verification to substantiate the cash deposits, taking into account the earlier years disclosure of gross profit by the assessee, the Ld. AO estimated the income of the assessee @8% and on appeal the Ld. CIT(A)-NFAC has granted considerable relief to the assessee by directing the Ld. AO to estimate the GP @ 6%. No hesitation to come to a conclusion that there is no infirmity in the order of the Ld. CIT(A)-NFAC and it does not call for any interference. Accordingly, the grounds raised by the assessee are dismissed. 2024 (6) TMI 417 Levying of interest u/s 234B - proceedings u/s. 147 / 148 - enhancing the levy of interest u/s. 234B for the period starting from the date of passing of the original assessment order u/s. 143(3) dated 31/01/2017 till the date of passing of order u/s. 147 dated 18/12/2019. HELD THAT:- AO has levied the interest for the period when there was no demand. The original demand was of Rs. 52.68 Crores which was raised vide order u/s. 143(3) r.w.s. 144C(13) dated 30/01/2017 which was already paid in the month of February 2017. Thus, there was no liability to pay interest u/s 234B thereafter. Once the ld. AO in his re-assessment order u/s. 143(3) r.w.s. 147 has accepted the income as determined vide original assessment order u/s. 143(3) dated 30/01/2017; and there is no discussion in the order enhancing the interest u/s. 234B between the period 31/01/2017 to 18/12/2019, then how interest can be charged for this period. CIT(A) has completely misunderstood the entire issue wherein he has held that charging of interest u/s. 234B is automatic and interest u/s. 234B is to be assessed from 01/04/2012 to the date of regular assessment. Here the regular assessment was already completed 30/01/2017 and there was no variation in the re-assessment order dt. 18/12/2019, then where is the question of levying penalty of Section 234B for this period when assessee had already paid the entire demand arising out of order dated 30/01/2017 within the time limit of 30 days, i.e., by February 2017. Thus, there was no payment pending nor there is any variation in the income. Accordingly, we hold that assessee was not liable for charging of interest u/s. 234B from the period 30/01/2017 to 16/12/2017. Thus, interest computed by the ld. AO in the re-assessment order is deleted.Appeal of the assessee is allowed. 2024 (6) TMI 416 Validity of Reopening of assessment u/s 147 - Legality of Notice u/s 148 - burden to prove - credible information to initiate reassessment proceedings - Whether the notice issued u/s 148 of the Act is illegal, wrong and liable to be quashed? - HELD THAT:- In the present case, evidently the assessee received a sum of Rs. 20 Lakh as the statement submitted by the ld. Counsel for the assessee from M/s. Brahma Tradelinks Pvt. Ltd. during the relevant financial year. There is nothing brought by the AO with regard to the receiving of Rs. 35 Lakh, save and except this fact that he received credible information. The AO failed to provide any details of the alleged receipt of Rs. 35 Lakh from the said party at any point of time. Burden lies upon the AOs to verify the genuineness of the credible information. In the present case, there is nothing brought by the AO to substantiate that an amount as received by the assessee from M/s. Brahma Tradelinks Pvt. Ltd., contrary to that the statement filed by the assessee goes to establish that an amount of Rs. 20 Lakh was received. So, we are of this opinion that information as alleged to be received by the AO cannot be said to be a credible information. Moreover, we further find that in the preceding A/Y 2012-2013, reopening proceeding was initiated by the then Ld. AO against the assessee on the same issue, i.e the transaction of the assessee with the same entity, viz. M/s Brahma Tradelink Pvt. Ltd. and after being satisfied with the identity of the entity and the genuineness of the transaction, no addition was made. A/O did not apply his own mind to the information and examine the basis and material of the information. He(AO) accepted the plea in a mechanical manner. It is settled law that mere reliance on the information received, without having acted there on before recording the reason, showing non application of mind on the part of the A/O., is unsustainable in law. Assessee appeal allowed. 2024 (6) TMI 415 Income chargeable to Tax in India or not - Royalty receipts - reimbursement of software license expenses received from its group entity - amount received from Indian entity - assessee, a tax resident of Denmark - AO held that the assessee receives from its group concerns is charges for allowing use of its IT Infrastructure which consists of various third party software, owned/leased/supported platforms including hardware systems, hence, the receipts are taxable as royalty as per explanation 2(iva) to section 9(1)(vi) of the Act - HELD THAT:- We have gone through the facts and in agreement with the fact that the software used by SGIPL and the amount for which is cross charged by assessee, does not pertain to any use or right to use of any copyright as neither the assessee nor SGIPL can sub-license, transfer, reverse engineer, modify or reproduce the software / user license. SGIPL acknowledges that the Microsoft Software has been granted to assessee by Microsoft Denmark ApS under an object code-only, non-exclusive, non-sublicensable, non-transferable, revocable license to access and use the object code version of the proprietary software, solely for assessee and its group/associate companies' internal business purposes. A reading of the judgment EY Global Services Ltd [ 2021 (12) TMI 571 - DELHI HIGH COURT] and Engineering Analysis Centre of Excellence Pvt. Ltd[ 2021 (3) TMI 138 - SUPREME COURT] clearly show that for the payment received by the assessee to be taxed as royalty , it is essential to show a transfer of copyright in the software to do any of the acts mentioned in section 14 of the Copyright Act, 1957. A licence conferring no proprietary interest on the licencee, does not entail parting with the copyright. Where the core of a transaction is to authorize the end-user to have access to and make use of the licenced software over which the licencee has no exclusive rights, no copyright is parted with end therefore, the payment received cannot be termed as royalty . The software used by SGIPL and the amount for which is cross charged by assessee, does not pertain to any use or right to use of any copyright as neither the assessee nor SGIPL can sub-license, transfer, reverse engineer, modify or reproduce the software / user license. SGIPL acknowledges that the Microsoft Software has been granted to assessee by Microsoft Denmark ApS under an object code-only, non-exclusive, non-sublicensable, non-transferable, revocable license to access and use the object code version of the proprietary software, solely for assessee and its group/associate companies' internal business purposes. Thus, we hold that no liability arises on the assessee. The mere fact that tax has been deducted doesn t automatically make the receipt taxable as royalty . Appeal of the assessee is allowed. 2024 (6) TMI 414 Rejection of application for registration u/s 12A(1)(ac)(iii) - Non effective service of notice as per the provisions of Section 282 - denial of natural justice -- Assessee failed to furnish the relevant documents/details online through e-proceedings on e-filing portal alongwith supporting documents/evidences - as submitted notices were uploaded on the e-portal of the assessee but the assessee states that he did not receive any notice of hearing and assessee was unaware about the issuance of letters/notices for hearing as the same was not served HELD THAT:- Merely uploading of information about the date of hearing on the Income Tax Portal is not an effective service of notice as per the provisions of Section 282 of the Income Tax Act. The matter now stands covered by the decision of Munjal BSU Centre of Innovation and Entrepreneurship, Ludhiana [ 2024 (3) TMI 479 - PUNJAB HARYANA HIGH COURT] as held that the provisions of Section 282(1) of the Income Tax Act and Rule 127(1) of the Income Tax Rules, 1962, envisage that it is essential that before any action is taken, a communication of the notice must be in terms of these provisions; that these provisions do not make mention of communication to be deemed by placing the notice on the e-portal of the Department; that an pragmatic view has always to be adopted in these circumstances; that an individual or a company is not expected to keep the e-portal of the Department open all the times so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms, etc.; and that the principles of natural justice are inherent in the Income Tax provisions and the same are required to be necessarily followed. Thus in the interest of justice, the file is restored to the file of ld. CIT(E) to decide the matter afresh in accordance with law after giving reasonable opportunity of being heard to the assessee. Appeals of the assessee are allowed for statistical purposes. 2024 (6) TMI 413 Validity of assessment u/s 153A - incriminating document as seized, during the course of search proceedings or not? - addition u/s 68 - HELD THAT:- In view of consideration of the judgement of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] it has been held that completed assessments can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search. Hon'ble Supreme Court in the case of Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER] , upheld the decision of the Hon'ble High Court of Delhi [ 2017 (5) TMI 1224 - DELHI HIGH COURT ]. The aforesaid judgments have lucidly pronounced that the case of completed assessment can be interfered only on the basis of some incriminating material found during the course of search. The case of the assessee for the assessment years before us are completed assessments and there were no proceedings pending on the date of the search conducted i.e. 20.04.2017. In the case of the assessee, the AO has not referred to any incriminating document which was seized, during the course of search proceedings and the additions made in the Assessment Orders are not based upon any incriminating material or documents found during the course of search Further, we also find that the Hon ble Supreme Court in the case of Pr. CIT Vs. Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] has affirmed the ratio of the Hon ble Delhi High Court laid down in the case of Kabul Chawla (supra). Since, the revenue has not brought anything on record to prove that the additions have been made on the basis of the material found and seized during the search conducted u/s 132 of the Income Tax Act, 1961, we find no reason to interfere with the order of the ld. CIT(A). Assessee appeal allowed. 2024 (6) TMI 412 Revision u/s 263 - validity of Limited scrutiny Assessment - observation of the PCIT that the AO has not properly examined the issue relating to disallowance u/s 36(1)(iii) of the Act and u/s 14A of the Act - HELD THAT:- AO was not authorized to scrutinized and enquire these issues without the permission of the Competent Authority. The assessment was selected for limited scrutiny on the three issues and the AO was not supposed to scrutinize any other issue, therefore, the observation of the ld. PCIT that the assessment order was erroneous because the AO has not scrutinized the issue relating to disallowance u/s 36(1)(iii) and Section 14A of the Act is not correct, the assessment order cannot be held erroneous as the AO was not supposed to go into these issues in case of limited scrutiny. DR has fairly agreed on these submissions of the ld. counsel. Since in this case, the aforesaid issue relating to disallowance u/s 36(1)(iii) and 14A of the Act were not covered under the limited scrutiny, therefore, the assessment order cannot be held to be erroneous for want of detailed enquiries on these issues by the AO. Claim of deduction u/s 80JJAA - We note that the adequate enquiries were made by the AO on these issues and the ld. PCIT has not pointed out what additional enquiries were required to be made by the AO on this issue. Moreover, the assessee has duly explained before the ld. PCIT that the assessee has outsourced the employees, therefore, the expenditure on account of additional infrastructure was not incurred. The ld. PCIT has simply held the order erroneous on this issue by making general observation that the AO was required to make more enquiries, which, in our view, is not a valid ground to hold the assessment order erroneous and prejudicial to the interests of the Revenue. Issue of shares to the two companies - PCIT has not pointed out in the impugned order that what further enquiries were required to be made by the AO in this case which have not been so made. The ld. PCIT has only by single observation held that these claims of the assessee alongwith claim on the issue of share capital paid to the companies namely M/s Takecare India Pvt. Ltd. and Videocon Realty Infrastructure Ltd. are held to be a matter that needs to be factually verified and examined accordingly by the AO. We note that these are the general observations of the ld. PCIT. PCIT has not given any specific finding as to why the order of the AO was erroneous and prejudicial to the interests of the Revenue on this issue and on what account. The ld. PCIT has not pointed out any defect, infirmity or inadequacy in the explanation offered by the assessee on the queries made by the ld. PCIT. Simply holding that the AO was required to make more enquiries is not a valid ground to hold assessment order as erroneous and prejudicial to the interests of the Revenue. The exercise of the revision power by the Ld. PCIT, in this case, is not justified. Appeal of the assessee stands allowed. 2024 (6) TMI 411 Revision u/s 263 - Accrual of interest income - interest earned on the contribution made by the assessee towards Core Settlement Guarantee Fund - as per CIT AO erred in not examining the taxability of accrued interest income being investment income of the assessee before allowing its application in the accounts - HELD THAT:- As ssessment order passed u/s. 143(3) is reviewed by Ld PCIT which was passed after due scrutiny by the AO after collecting information through various notices issued to the assessee. The AO has verified the issue of contributions to Core Settlement Guarantee Fund (Core SGF) set upon the direction of SEBI. This issue was under dispute in the previous assessment year also. The contribution to this funds are under the control of ICCL. The above funds were created to safeguard the interest of investors and any income accrued to this funds are exempt u/s. 10(23EE) of the Act. Assessee is only a contributor to the funds and it is under control of ICCL. The above funds can be considered as part of assessee s operation. The income accrued out of funds in the control of ICCL is chargeable to tax in their hands and ICCL has already submitted a letter indicating that this income was duly declared by them as their income and they have claimed that as exempt. That being so, the Ld PCIT has not brought on record how the share of income earned by the ICCL are chargeable to tax in the hands of the assessee We observe from the record that Assessing Officer has collected the information from the assessee and as per the assessment records there is no evidences to show that Assessing Officer has not verified the same in detail. However, the assessee has submitted all the relevant information, the basis of allocation and adjustment of exempt income before the Assessing Officer. Even otherwise if we consider that Assessing Officer has not verified the adjustment of exempt income claim made by the assessee it can be considered as erroneous order. However, in order to invoke provisions of section 263 of the Act, both conditions has to be satisfied, not just erroneous, even the condition, prejudicial to the revenue. But, we do not agree with the Ld. Pr.CIT that the condition of prejudicial to the interest of the Revenue is satisfied - Decided in favour of assessee. 2024 (6) TMI 410 Reopening of assessment u/s 147 - Estimation of income from cash deposits - unexplained money u/s 69A on the ground that assessee failed to comply with all the notices / letters issued to her explaining the source of deposits - HELD THAT:- Even though the CIT(A) has mentioned that these returns were filed after receiving notice u/s 148 and that to before a different AO, however, there is nothing on record to suggest that those returns were treated as non-est by the AO and that any proceedings u/s 147 of the Act has been initiated by treating the returns as non-est and brining the income to tax. Although, the assessee in the instant case, did not appear before the AO by producing requisite details and that the Assessing Officer has passed order u/s 144 of the Act, however, it was explained before us that assessee has stopped her business and has joined government service and therefore, all the past records are not available at present. Considering the totality of the facts and considering the fact that assessee has filed the returns of income for A.Ys. 2012-13 to 2014-15 by offering income from proprietary concern namely, M/s. Sri Sai Consultancy and that returns for A.Y. 2012-13 to 2014-15 were also filed before the completion of assessment for the impugned year, we are of the considered opinion that adoption of net profit rate of 15% on the total deposits will meet the ends of justice. We therefore direct the AO to restrict the disallowance to 15% of the total cash deposits in the bank accounts of assessee as her business income, to be taxed at normal rate - The balance addition is directed to be deleted. Accordingly, the appeal of the assessee is partly allowed. 2024 (6) TMI 409 Levy of penalty u/s 271(1)(c) - addition on account of addition of closing stock - allegation of lack of clear finding on concealment of income or furnishing inaccurate particulars - HELD THAT:- CIT(A) confirmed the addition only on account of addition of closing stock. He thereafter goes on to levy penalty on account of addition confirmed by the CIT(A), but in the calculation of the penalty levied, which forms part of the order of the AO, the AO levies penalty on other addition made u/s 36(1)(iii) of the Act also, which addition as per his own admission, was deleted by the CIT(A) However, at para-5.3 of the same order, wherein he levied penalty at the rate of 100% of the tax sought to be evaded, he calculated concealed income at Rs. 34,60,005/- which includes the addition made under section 36(1)(iii) of the Act, which stood deleted by the CIT(A) -This clearly shows the total non-application of mind by the AO while levying the penalty. This fact of addition made by the AO in quantum proceedings and confirmed by the CIT(A) has been corroborated by the orders of the AO and the ld.CIT(A) in quantum proceedings, which were placed before us. Other glaring aspect which comes out from the assessment order is that both the AO and the CIT(A) have not given any reasons as to how the mere addition on account of valuation of closing stock made to the income of the assessee tantamounted to furnishing inaccurate particulars/concealment of the income related to the same. On going through the order of both the AO and the CIT(A), we are unable to understand what the addition exactly pertained to in relation to the valuation of the closing stock. The penalty order passed by the AO makes no mention either of the facts or the basis for the addition made. Therefore, there is no method for understanding as to how he arrived at the conclusion that the addition made on account of valuation of closing stock tantamounted to furnishing inaccurate particulars of income for the levy of penalty under section 271(1)(c) of the Act. Thus basis for arriving at the finding that the addition on account of valuation of closing stock tantamounted to furnishing inaccurate particulars of income for the levy of penalty under section 271(1)(c) of the Act, is completely absent both in the assessment order and even in the CIT(A) s order. It appears that both the authorities have proceeded on the assumption that the addition made to the income of the assessee automatically tantamount to concealment/furnishing of inaccurate particulars of income, which is contrary to the law, which has been settled in the case of CIT Vs. Reliance CIT Vs. Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ]\ Therefore, we hold, the penalty is not sustainable. Even otherwise, despite the AO and the CIT(A) making no effort to bring out the facts of the case leading to the addition made on account of valuation of the closing stock, the same were gone into by us from the assessment order and the order of the ld.CIT(A) in quantum proceedings. Addition on account of valuation of closing stock is merely on account of difference in the basis of valuation of WIP adopted by the department and that adopted by the assessee. The assessee s justification for the method adopted by it, has not been countered or found fault in the same by the Revenue. We have noted that the assessee s explanation was that it had allocated actual cost, while the department s stand was that it ought to have allocated cost on estimate basis. The explanation of the assessee appears to be bona fide to us regarding the valuation of closing stock adopted by it. Therefore, in these facts and circumstances, merely because the addition on account of valuation of closing stock has been confirmed by the ld.CIT(A) the assessee cannot be said to have concealed or furnished inaccurate particulars of income - Decided in favour of assessee. 2024 (6) TMI 408 TP Adjustment - TPO has determined ALP of impugned transactions at Rs. Nil and the same is accepted by DRP and AO - foundational reason of taking a decision to determine ALP at Rs. Nil as culled out from order of TPO is such that the TPO was not even satisfied that the assessee had actually received services for which payments were made - HELD THAT:- TPO has determined ALP of impugned transactions at Rs. Nil and the same is accepted by DRP and AO. The foundational reason of taking a decision to determine ALP at Rs. Nil as culled out from order of TPO is such that the TPO was not even satisfied that the assessee had actually received services for which payments were made. TPO has strongly noted that in absence of proof of receiving services, it is not possible to carry out benchmarking exercise and determine ALP. Assessee also acknowledges that there was a short period of just 5 days allowed by TPO and moreover that period was a difficult time of Covid due to which the assessee could not file all documents. Assessee has also filed additional evidences in terms of Rule 29 as noted above. Assessee has also reported in first para of the application filed under Rule 29 that the evidences now filed are critical and robust to substantiate the assessee s stand. DR has also submitted that he has no objection if the evidences are considered at appropriate level. During hearing, with the assistance of assessee we have seen that the evidences are substantial. Looking into the circumstances preventing the assessee from filing these evidences before TPO coupled with the fact that the present appeal before us is the first- appeal against assessment-order passed by AO, we are persuaded to admit these evidences. These evidences go to the root of the matter and require an in depth examination and analysis at lower level. If the lower authorities, based on evidences, take a view that the assessee had actually received services, there would be further necessity to determine the amount of ALP. Therefore, in the situation, we feel it most appropriate to refer this matter back to the file of AO/TPO who shall re-fix the case and give necessary opportunities to assessee to make all submissions including these additional evidences. Not allowing (+)/(-) 3% benefit to assessee as provided under Proviso to Section 92C(2) of the Act in the matter of Provision for Business Support Services - AR prays that there should be a clear direction to AO/TPO to give benefit of this Proviso. We find that the above-noted Proviso to section 92C(4) is a statutory provision which cannot be ignored by AO/TPO. Accordingly, the AO/TPO is directed to consider the effect of this provision. Accordingly, this ground is allowed. Appeal of assessee is allowed. 2024 (6) TMI 407 Levy of penalty u/s 270A - assessee was not able to substantiate its expenses with concrete evidences and it is clear that these expenses were wrongly claimed to evade tax - AO has passed penalty order levying penalty u/s 270A(9)(a) of the Act stating that there is a mis-representation or suppression of the facts, thereby misreporting of income - HELD THAT:- The facts are that the assessee produced the books of accounts, vouchers and the payment has been made through banking channels, the payments which are required to be subject to deduction of TDS, same has been deducted. Still, the ld. AO was of the opinion that the assessee has not produced the concrete evidence to support the payments. NFAC/CIT(A) has agreed by the contention that there was no failure on the part of assessee to claim expenditure and it was admitted that assessee has substantiated the expenditure by evidence. On the other hand, he invoked the provisions of section 270A(9)(a) of the Act for misrepresentation or suppression of facts. In our opinion, even if he wants to change the head of levying of penalty u/s 270A of the Act after agreeing with the contention of the assessee that it not falls under the limb for which the ld. AO has levied the penalty, he should give a fresh notice to the assessee, so as to give an opportunity of hearing to explain the case of the assessee under the limb which the CIT(A) has invoked. Admittedly, the NFAC has not carried out this exercise. On this count, the penalty cannot be levied. Disallowance of expenditure made by ld. AO on estimate basis though the assessee has filed all the necessary details of expenditure, which is not accepted by the ld. AO for the reason best known to him and as such, this case is not fit for levy of penalty u/s 270A(9)(a) or 270A(9)(c) of the Act. Authorities proceeded merely on the basis of findings in the quantum proceedings and have not independently examined the matter for levy of impugned penalty. Disallowance of expenditure by itself cannot be the reason to levy the penalty u/s 270A(9)(a) or 270(9)(c) of the Act. The addition is only on estimate basis and the ld. AO could not prove that there was non- incurring of this expenditure by assessee and there was no positive material to suggest that the assessee misrepresented or suppressed any facts either before ld. AO or before ld. CIT(A). Hence, in our opinion, this is not a fit case for penalty u/s 270A(9)(a) or 270A(9)(c) of the Act. Accordingly, we delete the penalty. Assessee appeal allowed. 2024 (6) TMI 406 Levying penalty u/s 271D - sale transactions were the amounts are received in cash - addition of cash loans below Rs. 20,000/- made as unexplained cash deposits u/sec 68 - HELD THAT:- Addition in the assessment order U/sec. 143(3) r.w.s.147 of the Act has made addition of cash loans below Rs. 20,000/-each aggregating to Rs. 6,00,000/- as unexplained cash deposits u/sec 68 of Rs. 4,75,000/- and also initiated penalty U/sec. 271(1)(c) of the Act, and again invoked the penalty provisions of section 271D of the Act is not acceptable. Sale consideration received by the assessee, we find the revenue has not disputed the genuiness of purchase and sale of the flat by the assessee. Whereas the assessee has entered into agreement for purchase of under construction flat and since the deal could not go through due to non compliance of financial transactions and subsequently the agreement of sale was registered in the name of Mr. Kishore M Patel which is not disputed and the assessee has received the sale consideration in lieu of agreement of sale as per the confirmation dealt in the above paragraphs and found the submissions made by the AR are realistic. We set-aside the order of the CIT(A) and direct the AO to delete the penalty and allow the grounds of appeal in favour of the assessee. 2024 (6) TMI 405 Levy of penalty u/s 271(1)(c) - Validity of Notice u/s 274 - unexplained difference between the trading sale and the average cost of purchase - HELD THAT:- Notice u/s. 274 not striking off one of the two limbs attracting penalty u/s. 271(1)(c), charging it therefore of being vague - The Revenues sole case is of the assessee s inability to prove his accounts, inferring, on the basis of the available material, the cost of the goods sold for the year (Rs.247/kg) to have been recovered in-so-far as it relates to cashew kernels sold to sister concerns, at an average of Rs. 205/kg, inclusive of the cost of containers. The assessee renders no substantiated explanation, making a false plea as to absence of quality-wise grading. During hearing before us, however, he provides one with reference to the purchase cost, which appears plausible, and for consideration of which the matter stands restored to the file of the AO, also noting, at the same time, of it being inconsistent with the assessee s both original and revised claims, which would therefore need to be reconciled, only which would render the explanation acceptable to that extent. There is thus a clear understanding of the said case by the assessee, also apparent from the detailed replies in the assessment and the penalty proceedings; in fact; offering a sum of Rs. 1.8 crores in assessment proceedings, reiterated in penalty proceedings. Why, his case remains the same year after year, which it pleads for acceptance, as by the Tribunal in the quantum proceedings for the later years. No prejudice, whatsoever, stands caused, or in fact even suggested, as was questioned by the Bench during hearing. To say, therefore, that the charge is vague, is ludicrous. Reference in this context may be made to the decision in T.A. Abdul Khadar v. CWT [ 2006 (10) TMI 78 - KERALA HIGH COURT] ; and Sundaram Finance Ltd. [ 2018 (5) TMI 259 - MADRAS HIGH COURT] the facts of which be noted. Much less being raised in good faith and for bona fide reasons, we find the said legal ground as, rather, an abuse of the process of law. We therefore decline admission, relying thereon, as indeed on Jute Corp. of India [ 1990 (9) TMI 6 - SUPREME COURT] Burden of Proof and Quality of Goods - There have to be, it may be appreciated, strong reasons for selling goods at rate/s below par, much less recovering indirect cost as well, as also including an element of profit, more so where it is on a regular basis and, further, from sister concerns. This is precisely what the assessee seeks to justify without material though, stating of having sold inferior grade cashew kernels. That apart, valuation of goods varying in quality and price, de hors the same, i.e., at the average cost for the year across all varieties, obfuscates and distorts the correct operating result, and toward which the assessee s explanation, i.e., absence of such a practice in the industry, is equally misplaced. Couple these debilitative facts with the omission to record purchase and sale worth several crores, it seriously undermines the credibility of the assessee s accounts, ostensibly audited; more so when the omission admittedly had a chain reaction, resulting in revising initial claims u/ss. 80-IA/HHC, and not merely an addition of Rs. 1.02 lac in trading profit. The accounts, much less of sister concerns even whose identity is not disclosed, equally under cloud, are not produced at any stage. Penalty stands accordingly imposed and confirmed in appeal, as was the relevant adjustment to the returned income in quantum proceedings up to the second appeal, not stated to have been contested further. He, before us in second appeal in penalty proceedings, while not improving his case in any manner, seeks to capitalize on the alleged defect in the notice u/s. 274, claiming it as vague, not conveying the basis for the initiation of penalty proceedings. The same is wholly misplaced on facts; rather, a false statement and, accordingly, only needs to be stated to be rejected, which is done at the threshold, denying admission to the charge. If the adjustment is reasonable, consistent with the facts and circumstances of the case - How could an assessment made inferring recovery of direct cost, implying nil gross profit, be said to be excessive? No case of it being excessive or not reasonable stands made in either quantum or penalty proceedings. Two things, however, need to be made clear. Firstly, that penalty, imposable in principle, would be w.r.t. the assessee s revised return, to the extent the adjustment qua the trading profit on sale of 61,266 tins (Rs. 14,24,30,582), including revised claims u/ss. 80IA and 80HHC, incident thereon, remain unexplained. Though generally levied with reference to the original return, as rightly argued by Sri.Vijayaraghavan, no penalty in the instant case has been proposed on the additional income of Rs. 1.02 lakh offered in reassessment. Two, even as the assessee shall be allowed incidental deductions u/ss. 80IA and 80HHC, i.e., to the extent consistent with the assessee s explanation, penalty shall have to be necessarily computed in accordance with law. This is as the quantification of penalty is subject to Explanation 4 to section 271(1)(c). Finally, we have explained, even if broadly, as to why the assessee s legal challenge to the notice u/s. 274 is de hors the facts and, thus, invalid and, even otherwise, without merit. Accepting the assessee s explanation of having purchased the omitted goods sold for Rs. 6.10 cr., at Rs. 6.09 cr., i.e., of the same being also bought at like prices, subject to being verified, does raise the inference of they being of the same, inferior grades. Why, we wonder, this was not stated earlier, resulting in no finding in its respect. The assessee, nevertheless, has some explaining to do; his revised claims u/ss. 80IA 80-HHC being inconsistent therewith, as indeed per the original return, i.e., of having sold inferior grades goods through sister concerns at marginal gross profit. Having claimed deduction u/s. 80HHC qua his total export sale (52671 tins) for the year per his original return, no modification in his claims for deduction u/s. 80HHC, as indeed u/s. 80IA, ought to have followed per the revised return, particularly considering that the only omission in the original return, as stated, was to account for purchase and sale of the same (quantity of) goods, at Rs. 6.09 cr. and Rs. 6.10 cr. respectively. The assessee s case rests critically on the truth and validity of his explanation, made presumably w.r.t. his accounts. Each of the observations made herein, as indeed by the AO, have to be addressed, and toward which reference is also made to para 6.5 of this order. The AO also contradicts himself. While charging the assessee to have diverted profit to sister concerns, i.e., under-reporting it, seeking to neutralize the inferred deficit of Rs. 321.15 lacs, even without proportionate administrative cost, and which the assessee works at Rs. 180.40 lacs, he determines the trading net profit on export at Rs. 327.40 lacs! That is, goes by the reported figures, which, he, in the same breath, claims as inflated. This is in view of a clear lack of transparency in the assessee s claims and working, which is to be necessarily w.r.t. his accounts, duly substantiated. That apart, he allows deduction u/c. VI-A in a sum higher than that originally claimed, which cannot be in view of it being reassessment proceedings, i.e., other than where it is in respect of and w.r.t. a higher profit. Deduction u/s. 80- HHC, being consequential to the acceptance, to whatever extent, of the assessee s claim of export trading profit, would need to be revisited, toward which we may refer to decisions, inter alia, in Topman Exports [ 2012 (2) TMI 100 - SUPREME COURT] and IPCA Laboratory Ltd. v. Dy. CIT [ 2004 (3) TMI 9 - SUPREME COURT] Where and to extent accepted, the higher of the two sets of income, i.e., net of deductions, u/ss. 80-IA 80-HHC, shall prevail inasmuch as the reassessment proceedings are for the benefit of the Revenue (Sun Engg. Works Pvt. Ltd. [ 1992 (9) TMI 1 - SUPREME COURT] ). Further, again, penalty would stand to be finally restricted to the sum, i.e., qua the adjustment, net of incidental deductions, as finally assessed, for which reference, apart from the decisions afore-cited, be made to s. 80-AB. Needless to add, the assessee s objections to the proposed re computation, i.e., consistent with the manufacturing trading export profit as finally accepted by the AO, on the basis of evidence furnished, be sought, to eliminate both, the scope for error, as well as comply with the principles of natural justice. His order shall be a speaking order, meeting the assessee s objections, which we expect would conform to the clear provisions of law, as explained by the higher courts of law. We decide accordingly. We are conscious that some of our observations may not be in agreement with the case of either party before us. That, however, would be to no moment inasmuch as it is the correct legal position that is relevant, and not the view that the parties may take of their rights in the matter: CIT v. C. Parakh Co. (India) Ltd. [ 1956 (3) TMI 1 - SUPREME COURT] Assessee s appeal is partly allowed for statistical purposes. 2024 (6) TMI 404 Validity of Assessment u/s 153A - no valid approval u/s. 153D granted - allegation of non-application of mind by the approving authority - HELD THAT:- There should be some indication that the approving authority examined relevant material in detail while granting the approval u/s. 153D of the Act. The approval u/s. 153D is a mandatory requirement and such approval is not meant to be given mechanically. Such approval granted mechanically without application of mind by the Addl. CIT resulting in vitiating the assessment orders. See M/s. Serajuddin Co. [ 2023 (3) TMI 785 - ORISSA HIGH COURT ] We find in the present case that the AO sought approval u/s. 153D of the Act on 18-03-2016, the JCIT granted approval on 21-03-2016 and the final assessment order u/s. 143(3) r.w.s. 153A of the Act was passed on 30-03- 2016 which clearly indicates that the approving authority granted approval in one day mechanically without examining the relevant material. According to the AO, the case of the assessee was covered by search action u/s. 132 of the Act conducted at Bhilwara concerning Mantri-Soni Group of Jalna/Bhilwara and their family members and business concerns at the business and residential premises of different members/associate which is evident from para 1 of the assessment order. The approving authority has to examine number of evidences, documents, statements of various persons etc. recorded which were necessarily to be taken into consideration while granting approval u/s. 153D of the Act by the JCIT. On an examination of the approval dated 21-03-2016 which is on record placed by the ld. DR on 09-10-2023, we find no such indication of examination of evidences, documents, statements of various persons etc. at least, no reference whatsoever made by the JCIT i.e. approving authority. JCIT granted approval u/s. 153D of the Act mechanically without application of mind which resulting in vitiating the present final assessment order dated 30- 03-2016 u/s. 143(3) r.w.s. 153A of the Act. Decided in favour of assessee. Customs 2024 (6) TMI 403 Jurisdiction to entertain the Anticipatory Bail Applications - Validity of the extension of export obligation period - evasion of duty - Confiscation of gold which is imported, on which the duty is not paid which is more than Rs. 50 Lakhs - HELD THAT:- The importer had to process the articles imported under that scheme and had to export the processed articles within 120 days of actual receiving that consignment in India. The period of 120 days is the maximum period. The authorization extending the export obligation period, which is relied on by learned counsel for the Applicants mentions that the period under export obligation period was extended from 4.5.2024 to 4.11.2024 but that would again relate back to the imports made 120 days before any day falling between this period. It is not the case of the Applicants that they had imported any gold after 25.1.2023. Therefore, this extended period for export would not be of much relevance in the present facts of the case. As far as the merits of the matter is concerned, there are statements recorded of a few witnesses and the statements recorded of the Applicants themselves. One Dushyant Ashok Soni was concerned with D.B. Gold He has stated that the Applicants had never given him any gold for processing work. On the day of search i.e. on 12.6.2023 the Applicant Hemang had telephonically instructed him not to go to the office premises of D.B. Gold. This witness denies of having received any part of the gold i.e. any part of 37 kgs of gold which was imported by the Applicants. The Applicants wanted him to sign the vouchers without any supply of the gold. The sum and substance of this discussion is that 37 Kgs of gold which was imported by the Applicants under that Scheme has disappeared; either it is sold in the local market or it was misappropriated by the Applicants. It is quite obvious that the gold after processing was not exported. Therefore, the Applicants are liable to pay the duty. The matter does not rest there, but the gold itself was liable to be confiscated under Section 111 (o) of the Customs Act. Since the gold is not found, the further steps for confiscation cannot be taken and for this very purpose the Applicants custodial interrogation is necessary - The gold is misappropriated. The offence is quite serious. The Applicants custodial interrogation is necessary. No case for grant of protection under Section 438 of Cr.P.C. is made out. The Application is rejected. Application dismissed. 2024 (6) TMI 402 Jurisdiction for issuance of show cause notice and Order-in-Original - levy of penalty u/s 112(a) and 112(b) of the Customs Act - confiscation of gold jewelleries - Issuance of show cause notice beyond 6 months - Non-application of the mind by the Commissioner - Onus to prove (shifting burden). Confiscation of the seized gold jewellery - HELD THAT:- The issue of confiscation of gold jewellery recovered from the possession of Shri Niazi Pathan Nymatullah Khan is not a subject matter for decision in this appeal. As far as the confiscation of the gold jewellery is concerned, there are no reason to indulge in the examining the legality of the same in the order of the Commissioner (Appeals), as no appeal has been filed by Shri Niazi Pathan Nymatullah Khan against the said absolute confiscation. Levy of penalty u/s 112(a) and 112(b) of the Customs Act - HELD THAT:- Shri Dumpy Kumar Jain has not denied his association with Shri Nasarulla Khan and Shri Nymatulla Khan in relation to gold jewellery seized from the possession Shri Nymatulla Khan and in fact he has tried to claim the ownership also but further investigation conducted and especially the investigation at the end of the supplier clearly showed that Shri Dumpy Kumar Jain had tried to cover up for the seizure of jewellery made on 18.12.2020, by referring to some other unrelated transactions made with HK Chains on earlier occasions and this act makes him liable for penalty under Section 112, in as much as he abated with Nasarulla Khan in relation to the seized gold jewellery, and indirectly with Nymatulla Khan by trying to claim the same as his legitimate jewellery. The seized gold jewellery were liable to confiscation and actually confiscated, against which no appeal has been filed by Shri Niazi Pathan Nymatulla Khan. Jurisdiction for issuance of show cause notice and Order-in-Original - HELD THAT:- The matter has already been dealt with by the Original Authority and there are no reason to interfere with the same in as much as the Additional Commissioner work under who is having jurisdiction over the entire geographical area and he can adjudicate any matter arising within the jurisdiction in terms of any specific or general order given by Commissioner and therefore it does not vitiate the adjudicating proceedings. It is not disputed that the Additional Commissioner, who has adjudicated the case is not within administered control of the Commissioner, who has the jurisdiction over the entire area where the goods were seized. Issuance of show cause notice beyond 6 months - HELD THAT:- It is noticed that in terms of general relaxation for limitation due to COVID as allowed by Hon ble Supreme Court in COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER ], there is no breach of limitation of 6 months as the show cause notice could have been issued up to 28.02.2022, whereas, in this case, the show cause notice has been issued on 10.12.2021. Non-application of the mind by the Commissioner - HELD THAT:- Because of multiple persons involved in carrying the offending goods and drawal of different panchanamas, facts applicable to Shri Jacky Jain has been analysed as the facts applicable to Shri Dumpy Kumar Jain by the Adjudicator. However, that alone will not make it a case of non-application of mind if the entire Order-in-Original and Order-in-Appeal are read holistically bringing out the culpability of Shri Dumpy Kumar Jain vis-a-vis the offending goods, which were liable for confiscation and were actually confiscated by the Adjudicator. Onus to prove (shifting burden) - HELD THAT:- In this case, interception was made on specific intelligence, recovery of jewellery was made from concealed compartment, Shri Niazi Pathan Nymatulla Khan could not give any valid answer to the bonafide purchase or source or documents at the time of seizure and in fact gone wrong details about source, therefore Section 123 was rightly invoked for seizure and the onus to prove thereafter shifted to Shri Niazi Pathan Nymatulla Khan to prove otherwise that it is neither smuggled good nor made out of smuggled gold. Further, he has chosen not to come in appeal against said decision or confiscation. Therefore, in the facts of the case penalty has been rightly imposed on Shri Dumpy Kumar Jain under Section 112(a) and 112(b) of the Customs Act 1962 and therefore there is no legal infirmity in the impugned order passed by Commissioner (Appeals) - Appeal dismissed. 2024 (6) TMI 401 Valuation of imported goods - Used Reach Truck with 2 Additional Batteries and 1 Charger BT RRE 77 No. 737271 year 2005 Mast TXHI 11,500MM and some other new Reach Truck Parts - rejection of transaction value - enhancemnat of value value based on Chartered Engineer Certificate - no evidence to doubt the value declared by the appellant - HELD THAT:- The goods imported are used and old goods. It is impossible to assess the value of such old goods without being supported by a load port Chartered Engineer Certificate. As per Clause (c) of Board Circular referred above, old and used goods can be subject to examination of an approved Chartered Engineer in case the goods imported is not accompanied by load port Chartered Engineer Certificate. For these reasons, there are no error in rejecting the transaction value. The value has been enhanced on the basis of the Chartered Engineer Certificate and the CE has considered depreciation also. Taking note of the facts and also after perusal of the order passed by the Original Authority, there are no grounds to interfere with the enhancement of the transaction value declared by the appellant. The same has been enhanced on the basis of the certificate issued by the Chartered Engineer which is also proper. The decisions relied by the Ld. Counsel for appellant do not apply to the facts as the appellant has imported the goods without load port Chartered Engineering Certificate. The Tribunal in the case of SWARNA HEATING CONTROL CO. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) CHENNAI [ 2018 (4) TMI 1253 - CESTAT CHENNAI] in similar set of facts rejected the appeal filed by the importer. The impugned order does not call of interference - Appeal dismissed. 2024 (6) TMI 400 Classification of imported consignments under different tariff headings - to be classified under CTH 5903 or under CTH 5407? - interest and penalty - penalty on the Director of the firm. Classification of imported consignments - HELD THAT:- In respect of 181 consignments it is found that the issue was before this Bench in the case of Commissioner of Customs (Port), Kolkata vs. M/s. Umbar Marketing Private Limited, [ 2023 (6) TMI 421 - CESTAT KOLKATA] . This Bench has held ' the goods are not classifiable under CTH 54071094 as proposed by the Appellant.' Interest and penalty - HELD THAT:- There is no mis-classification or mis-declaration on the part of the Appellant. They have claimed the consignment to be under CTH 5707 and they have paid the applicable Customs duty. The Show Cause Notice was in error by taking the view that all the 182 consignments were classified by the appellant under CTH 5903. Since the duty has already been correctly discharged by the Appellant under the heading 5407, we hold that the impugned order is required to be set aside. Accordingly, the impugned order is set aside to the extent that it confirms the duty and interest and penalty thereon in respect of this one consignment. The Appeal filed by the importer is allowed. Penalty imposed on the Director - HELD THAT:- There is no mis-declaration or mis-classification in respect of 1 consignment, the penalty imposed on the Director is set aside. The Appeal filed by the Revenue is dismissed - Appeals filed by the importer and the Director are allowed. 2024 (6) TMI 399 Absolute confiscation of goods with penalty - Cigarettes - Search and seizure of goods u/s 105 of Customs Act, 1962 - Onus under section 123 of Customs Act, 1962. Seizure of goods - HELD THAT:- Scattered across the adjudicatory terrain are also liberal references to Cigarettes and Other Tobacco Products Act, 2003 and to the extent of lack of compliance thereto having been alluded to for the purpose of inferring the goods as not having been licitly imported, there can be no cause for cavil. However, the statute is municipal law and, therefore, enforceable only by the designated authorities in the context of having been put up for sale in the domestic market which precludes confiscation under customs law for non-compliance thereof. That the seized cigarettes were of foreign origin is beyond the scope of controverting and that the packaging of the cigarettes were not in consonance with Cigarette and Other Tobacco Products Act, 2003, as demonstrative of illicit cross-border movement, sufficed for seizure under section 110 of Customs Act, 1962 and also for operability of section 123 of Customs Act, 1962. Onus under section 123 of Customs Act, 1962 - HELD THAT:- In so far as hand rolling tobacco , rolling paper and filters are concerned, too, the onus under section 123 of Customs Act, 1962 and non-compliance with Cigarette and Other Tobacco Products Act, 2003 were applied but through indirect association for coverage therein as also to justify confiscation under section 111(d) of Customs Act, 1962 for having been imported contrary to prohibition under other law. In the lack of any fact or evidence that hand rolling tobacco , rolling paper and filters had been smuggled into the country, the very proceedings stand voided ab initio. The confiscation under section 111 of Customs Act, 1962 and imposition of penalty thereto on the appellant lacks authority of law and are set aside. The confiscation of 10,200 sticks of cigarettes of foreign origin valued at ₹ 1,53,000 alone stands unaltered. It would, therefore, be inappropriate to uphold the penalty imposed under section 112 of Customs Act, 1962 on the appellant in its entirety and the ends of justice will be served by reducing it to ₹ 50,000 - Appeal disposed off. 2024 (6) TMI 398 Valuation of imported goods for the purpose of levy of duty - value to be adopted for the purpose of levy of duty - declared value as per the Bill of Entry or the actual payment made to the High Seas Seller by the importer - exchange rate to be applied is as on date of presentation of the Bill of Entry or on the date of actual payment by the appellant to the High Seas Seller - denial of exemption of CVD under Serial No.63 of the Notification No.4/2006 CE dated 01.03.2006. Valuation of imported goods for the purpose of levy of duty - value to be adopted for the purpose of levy of duty - whether the declared value as per the Bill of Entry or the actual payment made to the High Seas Seller by the importer? - HELD THAT:- From the records, it is clear that the price of the imported product Muriate of Potash is USD 484.75 PMT and the price paid to the High Seas Seller is also USD 484.75 PMT. The differential value arose only on account of the exchange rate, the exchange rate was Rs.50.05 per US Dollar on the date of filling of the Bill of Entry i.e. 28.11.2011 and on the date of actual payment by the appellant to the High Seas Seller, the exchange rate was Rs.62.68 per US Dollar and hence, the change in value from Rs.66,87,70,836/- to 68,67,86,485/-. Exchange rate to be applied is as on date of presentation of the Bill of Entry or on the date of actual payment by the appellant to the High Seas Seller - HELD THAT:- The Hon ble High Court of Calcutta in the case of Ever Bright Plastic Pvt. Ltd. Vs. Collector of Customs [ 1992 (9) TMI 108 - HIGH COURT AT CALCUTTA ], and the Hon ble High Court of Madras in the case of Trio Marketing Pvt. Ltd. Vs. UOI [ 1999 (12) TMI 79 - HIGH COURT OF JUDICATURE AT MADRAS ] have also categorically held that the applicable exchange rate is as on the date of filing of the Bill of Entry. Denial of exemption of CVD under Serial No.63 of the Notification No.4/2006 CE dated 01.03.2006 - HELD THAT:- The benefit of Notification is eligible for all those who use the goods as fertilizers or in the manufacture of other fertilizers whether directly or through the stage of an intermediate product. The appellant being a manufacturer and distributor of fertilizers having license under Fertilizers Controls Order and having cleared the same as a fertilizers to the farmers, the question of denying the benefit does not arise. Therefore, the benefit of the Notification is extended and the demand of differential duty on account of difference in the rate of exchange is set aside. Appeal allowed. PMLA 2024 (6) TMI 397 Money Laundering - maintainability of complaint u/s Prevention of Money Laundering Act, 2002 - improper grant of bail by Bench not assigned the case - HELD THAT:- The moment the Bench directed that the case was released and it should be heard afresh, the propriety required that the Bench should not have passed any order on merits, as the roster of the writ petition was with another Bench on that day. What is shocking is that after releasing the case, when admittedly there was no prayer made by the first respondent for grant of bail on 26.06.2023, the Bench granted bail for releasing the first respondent. Even during the pendency of writ petition, bail was not granted to the first respondent though a prayer for interim relief of grant of bail was made in the petition. Even if such a prayer would have been made on 26.06.2023, the Bench could not have heard the prayer for bail. Only the roster Bench could have heard the same. On that day, the advocate for the first respondent admittedly did apply for bail. Therefore, the appellants were not heard on the prayer for bail. Moreover, bail was granted in an offence under the PMLA without recording any reasons. Bail cannot be granted in such a case only to strike a balance . Roster notified by the Chief Justice is not an empty formality. All Judges are bound by the same. On 26.06.2023, after releasing the case which was heard two months back, the Bench has proceeded to grant bail without anyone praying for grant of bail. No Bench can hear a case, unless as per the prevailing roster, the particular case is assigned to the Bench or that the case is specially assigned to the Bench by the Chief Justice. Therefore, that part of the impugned order by which bail was granted is set aside - the first respondent is permitted to move the roster Bench by filing an application for interim relief/grant of bail. Appeal allowed in part. Service Tax 2024 (6) TMI 396 Scope of SCN - reversal of CENVAT Credit - non-maintenance of separate records for the input services received for provision of taxable and exempted services - invoices issued to R.D. Enterprises for decoration of banquet halls and two other parties providing security consultants and Ascon Engineers services etc - time limitation. Scope of SCN - HELD THAT:- There is no reference to the services provided by Orient Decorators in the Show Cause Notice - This would amount to travelling beyond the scope of Show Cause Notice. Reversal of CENVAT Credit - HELD THAT:- As a matter of fact, there is no provision to take the cenvat credit on proportionate basis as has been done by the appellant during the years 2008-09 and 2009-10. On being pointed out, though they have taken the cenvat credit to the tune of about Rs.73000 on proportionate basis, they have reversed the entire credit of Rs.6,14,107/- along with interest of Rs.1,33,720/- on 27.11.2010 - in several cases, the Tribunals and High Courts have been consistently holding that for mere taking of a few thousands worth of Cenvat Credit, the assessee should not be burdened with 6% / 8% of the value of the exempted goods for recovery of the Cenvat Credit. Amendment carried out to Rule 6 of Cenvat Credit Rules 2004 by insertion of Rule 6 (3AA), clarifies the legislative intent to recover only the proportionate cenvat credit and not 6 % / 8% even when the assessee fails to opt for proportionate reversal at the initial stages even though the option was not exercised earlier. In cases, where the entire cenvat credit taken is reversed, the assesse would be in a much better footing - thus the appeal allowed on merits. Extended period of limitation - HELD THAT:- There are sufficient force in the Appellant s submission that no case has been made out by the Revenue on account of suppression on the part of the Appellant. The cenvat credit taken by them have been reflected in the ER 1 Returns filed by them. As is clarified by the Certificate issued by the Chartered Accountant, during the first two years no Cenvat Credit was taken whereas during the next two years they have taken proportionate Cenvat Credit - the Department has not made out any specific case of suppression on the part of the Appellant as so to fasten the demand in respect of extended period on the Appellant - the confirmed demand of the extended period is not sustainable even on account of time bar. The Appeal is allowed both on merits as well as on limitation 2024 (6) TMI 395 Levy of service tax - amounts collected for performing tour operator services - canter ride charges - movie shooting charges - camping and angling charges - short term accommodation service - HELD THAT:- These issues have been decided by this Tribunal Principal Bench in the case of Dy. Conservator of Forest and Dy Field Director vs. Commissioner of Central Excise, Jaipur [ 2018 (4) TMI 777 - CESTAT NEW DELHI ] where it was held that ' We are of the view that Forest Department has the mandatory duty to protect the environment and to safeguard forests and wild life. Amounts recovered by them towards issue of entry permits as well as vehicles which have also been credited to the State Treasury are to be considered in the nature of fee or amount collected as per the provisions of relevant statute for performance of statutory functions. This cannot be considered as consideration for purposes of organizing tour.' In the present case facts are identical, appellant is also same and that there are no reason to differ from these findings - the order under challenge is set aside. Appeal allowed. 2024 (6) TMI 394 Abatement of appeal due to approval of Resolution Plan by NCLT - recovery of service tax dues with interest and penalties - HELD THAT:- The identical matter has been considered by two coordinate benches of the Tribunal; Mumbai Bench in the case of M/s Jet Airways (India) Limited vs. Commissioner of Service Tax-IV [ 2023 (5) TMI 767 - CESTAT MUMBAI] and Hyderabad Bench in the case of Icomm Tele Ltd. vs. Commissioner of Central Tax, Puducherry [ 2023 (10) TMI 1344 - CESTAT HYDERABAD] . It is pertinent to refer the findings of Mumbai Bench of the Tribunal in the case of M/s Jet Airways (India) Limited where it was ordered that the appeals stand abated once the Resolution Plan has been approved by NCLT and the CESTAT has become functus officio in the matters relating to this appeal. Thus, once the Resolution Plan has been approved by the NCLT, thereafter, the present appeal stands abated as the CESTAT has become functus officio in the matter relating to the present appeal. The appeal filed by the appellant is disposed of as abated. 2024 (6) TMI 393 Classification of service - Business Auxiliary Service or not - bought out steel strips are given on job work basis the buyers to the appellant for strapping the steel roll - strapping of steel rolls is important to completing the manufacturing activity of steel sheets - Extended period of limitation. Business Auxiliary servies or not - HELD THAT:- Admittedly, the goods in question are Steel Strips which are cleared by the Appellant to various manufacturers of Steel Sheets / Rolls on payment of Excise Duty. After the Steel Strips are received by the buyers, they have given a contract to the Appellant to come to their factory premises and strap the Steel Rolls/Steel Sheets. For such activity, the Appellant is being paid the service charges. The activity carried out by them is a job work on behalf of the client, wherein the ultimate goods are cleared on payment of Excise Duty by the client. This situation is fully covered by the exemption granted under Notification No. 8/2005 dated 01/03/2005. Extended period of limitation - HELD THAT:- There are also force that the Appellant being manufacturer and recipient of service would have been filing their ER-1 Returns and ST-3 Returns before the authorities. The Appellant also would be carrying a bonafide belief that since the Excise Duty is paid by the Steel manufacturers after strapping, they are well covered by the exemption under Notification No. 08/2005. Therefore, in such cases, the Appellant cannot be fastened with the suppression clause to demand the Service Tax for the extended period. The confirmed demand for the extended period set aside on account of limitation. Appeal allowed. 2024 (6) TMI 392 Levy of service tax - advances received by the appellant for construction of residential projects - taxability prior to 01.07.2010 - amounts received by the appellant for additional works done for the existing projects. Levy of service tax - advances received by the appellant for construction of residential projects - taxability prior to 01.07.2010 - HELD THAT:- The Board vide Circular No.108/2/2009 dated 29.01.2009 has clarified that Promoter/Builder/Developer is not liable to pay service tax prior to 01.07.2010 - The Tribunal in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] in a similar issue has held that the demand of service tax against promoter/builder/developer cannot sustain for the period prior to 01.07.2010 - thus, the demand raised for advances received by the appellant for construction of residential projects is unsustainable. Levy of service tax - Construction of Residential Complex Services - amounts received by the appellant for additional works done for the existing projects - HELD THAT:- The appellant has submitted that the works carried out were composite in nature and not service simplicitor. The Commissioner (Appeals) after taking note of the use of materials has allowed the abatement, which establishes that the works are composite in nature. The Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] had held that the demand of service tax for composite contracts can only be made under Works Contract Services. The demand raised under Construction of Residential Complex Services, therefore cannot sustain and is set aside. The impugned order is set aside - The appeal is allowed. Central Excise 2024 (6) TMI 391 Interpretation of statute - where it is possible to do so u/s 11A(1) of the Central Excise Act, 1944 - adjudication of the impugned show-cause notice after more than 7 years is barred by time or not. Interpretation of where it is possible to do so u/s 11A(1) of the Central Excise Act, 1944 - HELD THAT:- It is pertinent to note that the words where it is possible to do so is elastic only when there are reasonable grounds beyond the control of the Adjudicating Authority to conclude adjudication within the time frame given under Section 11A (11) and not otherwise. If there is no reasonable explanation, the elasticity would not be available. It is fairly well settled that legislature never wastes words or says anything in vain. The insertion of sub-section Section 11A (11) is not without any purpose or it is not a dead letter. The words where it is possible to do so under Section 11A (11) of the Central Excise Act, 1944 must be read reasonably keeping in mind the legislative intent and policies and the mischief sought to be remedied. It cannot be read dehors the same. The provisions of under Section 11A (11) of the Central Excise Act, 1944 is not dead letter and mere surplusage. The outer limits fixed by the Legislature under Section 11A (11) of the Central Excise Act, 1944 of the completed within a reasonable time frame set out under Section 11A (11) unless an extra ordinary situation arises beyond the control of the Adjudicating Authority and it can never be kept pending for an indefinite period or sine die. The period of limitation of 6 months or 2 year under Section 11A of the Central Excise Act, 1944 cannot be extended to more than seven years as is done in the instant case. In the case of K.M Sharma Vs. I.T.O [ 2002 (4) TMI 7 - SUPREME COURT ] it has been held by the Hon'ble Apex Court that the provisions of a fiscal statute, more particularly, one regulating the period of limitation must receive a strict construction as the law of limitation is intended to give certainty and finality to legal proceedings. When an application under Section 18 is not entertained on the ground of limitation, the same not fructifying into any reference, then that would not tantamount to an effective application and consequently the rights of such applicant emanating from some other reference being answered to move an application under Section 28-A cannot be denied - the dismissal of an application seeking reference under Section 18 on the ground of delay would tantamount to not filing an application within the meaning of Section 28-A of the Land Acquisition Act, 1894. Delay in adjudication and its impact on Article 14 of the Constitution of India, 1950 - HELD THAT:- Where no time limit has been prescribed; the action should be completed within a reasonable time period. The reasonable time period U/s 11A of Central Excise Act, 1944 is 5 years. In the instant case the matter is pending adjudication for more than 7 years - where the statute does not prescribe any period of limitation within which power has to be exercised by the authorities, in such circumstances also the proceedings must be concluded within a reasonable period of time. The maximum period of limitation provided under the special statute should be considered to be the reasonable period within which the adjudication order should be concluded. In the instant case period of more than 7 years from the issuance of impugned Show Cause Notice on 22.09.2014 cannot be said to be reasonable period for taking up/concluding adjudication proceedings. Section 11A (1)/Section 11A (4) of the Central Excise Act, provides 5 years as a maximum period which in any case should be taken as reasonable period within which the adjudication should be completed. The instant application stands allowed. 2024 (6) TMI 390 Clandestine Removal - confiscation of goods - penalty - goods were found to be transported outside the factory premises of the Appellant without any documents - physical stocks were found which were not recorded in the Daily Stock Register. HELD THAT:- Admittedly, the Appellant is carrying the job-work for IOCL. They get the bulk lubricant from IOCL and the same are converted into smaller pouches by way of re-packing and re-filling. This activity amounts to manufacture in terms of Section 2(f) of the Central Excise Act 1944. After this, necessary Excise Duty is paid on the small pack being cleared by them - the work undertaken by the Appellant is not an activity of normal manufacture wherein the bought out raw materials are converted into finished goods. The appellants are actually undertaking the activity on behalf of IOCL and they are fully responsible for the stock reconciliation to be provided to IOCL after converting the bulk lubricants into smaller pouches. Without any dispute, the goods in question were very much found within the factory premises and they are not seized while they were being transported without any proper document. It cannot be seen as to how the Department can presume that these were unaccounted for goods and are likely to be cleared without payment of Excise Duty. It is also not the case of the Department that the seized goods did not have the marking/emblem of IOCL. This would prove that the goods in question belonged to IOCL only. The Tribunal in the case of KISAN SAHKARI CHINNI MILLS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., MEERUT [ 2016 (9) TMI 937 - CESTAT ALLAHABAD] , has held ' Further, I take notice of the fact that the State Excise authority, who are in physical control of the stock of molasses of production, storage and dispatch in the appellant s factory have accepted the recorded stock and at the end of the molasses season have accepted the net excess at 961 qtls. Therefore, I hold that the whole demand is based on assumption and presumptions and is fit to be set aside.' In the present case also, it is clear that the bulk quantity has been given to the Appellant by IOCL for conversion into smaller pouches and the appellants are responsible to reconcile and quantity received and despatched and thus account for the entire stock received by them. With the packed pouches still within the premises, it gets clarified that entire proceedings have been initiated on assumptions and presumptions. The ratio laid down in the cited case law is squarely applicable. The impugned order is not sustainable - Appeal allowed. 2024 (6) TMI 389 Denial of CENVAT Credit with interest and penalty - HELD THAT:- Undisputedly, these proceedings have arisen in the demand notice issue relying upon the grounds stated in earlier show cause notice dated 30.01.2015. Those proceedings has been culminated by the above referred order of the Tribunal in favour of the appellants [ 2018 (12) TMI 363 - CESTAT ALLAHABAD ] as no further ground is raised, there are no merits in the impugned orders. Appeal allowed. 2024 (6) TMI 388 Levy of service tax - business auxiliary services - amount received from VISA and Mastercard - mutual benefit of both the parties - interpretation of cost-sharing agreement - export of services under Rule 3(1)(iii) of the Export of Service Rules, 2005 - extended period of limitation. Levy of service tax - HELD THAT:- The said agreement is basically nothing but cost-sharing agreement. Further, we find that Revenue wants to tax under business auxiliary service whereas the services provided by the appellant relates to promotion of the brand of VISA/Mastercard and not any product/service provided by VISA/Mastercard. Further, the business auxiliary services are covered under the category of III services as per Rule 3(1)(iii) of export of service Rules and the service failing under 3(1)(iii) should be seen qua the person receiving the service and not the place of performance of the service. Further, this issue is no more res integra and has been settled in various cases relied upon by the appellant s own case SBI CARDS AND PAYMENT SERVICES PVT. LTD. VERSUS C.S.T. DELHI [ 2017 (12) TMI 237 - CESTAT NEW DELHI] where it was held that Even for the period afier 1st July 2012 the provision of telecommunication service by Vertzon India to Verizon US satisfied the conditions under Rule 6A (1) (a), (b), (d) and (e) of the ST Rules and was therefore an 'export of service. The amount received for the export of service was not amenable to service tax. The impugned order is not sustainable - appeal allowed. 2024 (6) TMI 387 Refund of interest as per Section 72 of Finance Act, 2010 to avail the benefit of Retrospective amendment to Rule 6 of CCR, 2002/2004 - interest on the excess credit after expiry of three months from the date of filing of refund i.e., from 17.9.2011 till 21.11.2019. Refund of interest as per Section 72 of Finance Act, 2010 to avail the benefit of Retrospective amendment to Rule 6 of CCR, 2002/2004 - HELD THAT:- The claim of the appellant that even though the amount of interest has been paid in compliance with Section 72 of the Finance Act, 2010 giving retrospective effect by amending Rule 6 of the CENVAT Credit Rules, 2002/2004 allowing the assesses to reverse proportionate credit with applicable interest to settle the litigation saddled with huge amount of demands on 8% / 10% of the value of the exempted product, the refund of the said interest still be allowed in pursuance to the order of the Tribunal dated 18.07.2019 and the Tribunal cannot the examine the said issue in the present Appeals. The said contention of the appellant deserves to be rejected for the simple reason that taking note of their compliance with the requirement to avail the facility of retrospective amendment, the adjudicating authority in the denovo adjudication in the year 2011 recorded payment of said interest and passed the order in favour of the appellant in setting aside the demand of 8%/10% value of the product following the statutory mandate of retrospective amendment incorporated in Section 72 of the Finance Act, 2010 where the condition include reversal of proportionate credit with interest. No mention in the said amendment on the fact of utilisation or otherwise of the credit availed. Therefore, any judgment/Order contrary to the said statutory provisions be per incuriam and cannot be a binding precedent - Besides, no evidence has been brought on record by the Appellant that they had filed refund claim for the interest paid on the proportionate credit reversed after the de novo order in 2011 along with the refund claim for excess credit of Rs.1,00,10,808/- not allowed to them by the Commissioner. The Tribunal being the last fact finding authority, to render complete justice, has a bounden duty to ascertain the facts in its proper perspective and dispose the case accordingly. Interest on the excess credit of Rs.1,00,10,808/- after expiry of three months from the date of filing of refund i.e., from 17.9.2011 till 21.11.2019 - HELD THAT:- The learned Commissioner in the impugned order dated 21.4.2011 observed that after appropriation of the proportionate CENVAT credit of Rs.91,82,820/-, the balance CENVAT credit of Rs.1,00,10,808/- reversed by the appellant on 6.11.2007 cannot be restored as they have not followed proper procedure by filing the refund claim under Section 11B of CEA, 1944. Consequently, the appellant filed the refund claim on 17.6.2011, therefore, the appellants are entitled to interest on expiry of three months from the date of filing of the refund claim in view of the judgment of the Hon ble Supreme Court in the case of Ranbaxy Laboratories Ltd. [ 2011 (10) TMI 16 - SUPREME COURT] . The impugned orders are modified by upholding the rejection of the refund of interest amount of Rs.88,22,475/- and setting aside the order denying interest on the refund application for Rs.1,00,10,808/- for the period after expiry of three months from the date of filing of refund. Appeal disposed off. CST, VAT & Sales Tax 2024 (6) TMI 386 Rejection of returns - determination of taxable turnover on best judgment basis - levy of VAT at the applicable rates on the consideration received by the petitioners from their customers by treating the transactions as works contracts - absence of a machinery provision in the KVAT Rules that provides for the exclusion of the value of land from the total turnover, for the purposes of determining the taxable turnover - allowance of deduction of 22.5% of the contract receipt as deduction towards value of land. HELD THAT:- While the charging section [Section 6 of the KVAT Act] specifies the rate of tax applicable to the works contract in question, the determination of the turnover on which the tax is to be levied, at the said rate, is to be in the manner prescribed under the KVAT Act and Rules. The Scheme for determining the taxable turnover under the KVAT Rules is to begin with the total amount received or receivable by the dealer for the execution of the works contract and then deduct therefrom the amounts expressly mentioned in Rule 10 (2) (a) of the KVAT Rules. The formula in the Rules is thus for the purposes of determining the taxable turnover pertaining solely to the transfer of goods involved in the execution of the works contract. In a situation where, as under the KVAT Act and Rules, there is no contemplation of inclusion of the land value in the value of the works contract undertaken, the absence of a machinery to exclude such land value from the total turnover so as to arrive at the taxable turnover, cannot be seen as rendering the machinery provision under the KVAT Rules unworkable - it was for the petitioner companies to have provided the turnover relatable to the works contract undertaken by them, by reducing the portion attributable to the undivided share of land from the amounts received by them from the customers, and then arrive at the taxable turnover by applying the formula under Rule 10. Thus, in the absence of a statutory Scheme similar to what obtains in the State of Maharashtra or Haryana referred above, we are of the view that it was incumbent upon the petitioner/assessees to declare the total turnover [contract receipts] pertaining solely to be works undertaken by them, without including therein the component representing the value of the undivided share in the land - The statutory Scheme for determining the taxable turnover of a works contract under the KVAT Act does not suffer from any defect so as to render it unworkable to effectuate the charge to tax on a works contract - The contentions of the learned senior counsel for the petitioner/assessees rejected on the said issue. In the absence of any document produced by the petitioner to show the actual land value included in the contract receipts, the above methodology can be adopted by the Appellate Tribunal to determine the taxable turnover of the petitioner assessees for the assessment years 2008-09 and 2009-10 respectively. For this limited purpose, therefore, it is deemed appropriate to remand O.T. Rev. Nos. 105, 106 and 107 of 2019 to the Appellate Tribunal for a fresh determination of the taxable turnover of the respective petitioners in those cases for the assessment years in question. Revision disposed off. 2024 (6) TMI 385 Challenge to summon issued in Form PP calling upon the respective petitioners to furnish the documents - intention of implementing Section 81 of the TNVAT Act, 2006 - specific case of the petitioner is that summon in Form PP under Rule 16 (1) of the TNVAT Rules, 2007 applies only to a third party and not to an assessee - HELD THAT:- The purpose of Section 22 (3) of the TNVAT Act, 2006 read with Rule 10 (11) of the TNVAT Rules, 2007 is to ensure that atleast 20% of the total number of such assessments are selected by the Commissioner in a manner as may be prescribed for the purpose of detailed scrutiny regarding the correctness of the returns submitted by the dealer. Wherever there is a stratified random sampling method of selection by the Commissioner, revision of assessment can be made, wherever necessary. This is in addition to the power to be exercised independently by an Assessing Officer under Section 81 of the TNVAT Act, 2006. Merely because assessment is deemed to be completed under Section 22 of TNVAT Act, 2006, ipso facto will not mean that an Assessing Officer cannot call for information from a dealer whose name features in the list under Section 22 (3) of the Act. In this case, it has been informed by the respondent Commercial Tax Department that the Commissioner of Commercial Taxes vide Letter dated 08.01.2021 bearing reference No. R5/4593/2017 has issued instructions relating to finalization of accounts relating to dealers who have been selected for detailed scrutiny under Section 22 (3) of the TNVAT Act, 2006 - there are no embargo on the respondent Commercial Tax Department from summoning the respective petitioners to furnish the records. Issuance of summons is for ascertaining to produce information. Whether the petitioners have complied with all the requirements of Section 22 (2) of the Act and whether the declarations in the returns filed by the petitioners are correct or not can be ascertained only if records are summoned. There are no merits in the present Writ Petitions and these Writ Petitions are liable to be dismissed - Petition dismissed. 2024 (6) TMI 384 Rejection of claim of proportional Input tax credit - normal loss/material loss due to spillage, ground loss, and during transportation - Section 19 of the KVAT Act - HELD THAT:- On plain reading of Section 19, it is clear that when a registered dealer has deducted input tax on any goods, and those goods are not used in the course of his business or lost or destroyed, input tax deducted is repayable. Section 19 (1) of the KVAT Act does not provide for any exception from repayment of input tax credit when the goods are not used in the course of business or lost or destroyed, with reference to any nature of business, circumstances or situation. It is settled position of law, while interpreting the fiscal statute, the provision has to be read on its plain text without reading in or reading out words. In the facts of the present case, it is undisputed that the Iron ore valued at Rs. 85,08,160/- is not used in the course of business. Hence, the authorities have rightly held that proportionate input tax credit is to be repayable by the petitioner. The Co-ordinate Bench of this Court in the case of State of Karnataka vs. Deccan Mining Syndicate Private Limited, Race Course Road, Bangalore [ 2021 (3) TMI 525 - KARNATAKA HIGH COURT ] was dealing a different factual situation. The dealer therein was transporting Iron ore by rail to the ports for onward exports. On stock verification, the authorities found that there was shortage of few metric tons of Iron ore. The prescribed authority issued proposition notice, treating the difference as suppressed taxable turnover on the basis of the report of Central Bureau of Investigation (CBI). This Court held that merely because there is a shortage of stock, the difference cannot be held to be suppression that too on the basis of the report of the CBI. There is a possibility of transit / handling loss. The other judgments of the Madras High Court deals with Section 19 (9) of the TNVAT Act wherein the goods were used in the course of business and the quantity of goods lost was considered as invisible loss in the process of manufacture. The nature of loss claimed in the present case i.e. due to transportation, handling, processing, ground loss etc., are not the nature of losses as considered by the Madras High Court. In fact, Section 19 (9) of the TNVAT Act specifically disentitles the input tax credit to the goods lost in transit or for any other reason. In view of the above distinction, the judgments relied upon by learned counsel for the petitioner are of no assistance. The finding recorded by the authorities and the Tribunal does not call for interference and question of law is to be answered in the affirmative - Petition dismissed. Indian Laws 2024 (6) TMI 383 Quantum of compensation to which the appellants are entitled to - Reduction of compensation awarded by the Motor Accident Claims Tribunal - assessment of the income of the deceased - HELD THAT:- It is evident that besides generating income from the land owned by the family in the form of sale of paddy and bananas, the deceased was also having income from supply of milk and coconuts to the school. There is also material available on record to show that he worked as a Government contractor. Meaning thereby, to make the lives of his family members comfortable, the deceased was multi-tasking and he was not engaged in a 9.00 to 5.00 P.M. job. The High Court on a very conservative basis assessed the income of the deceased at ₹20,000/- per month, bifurcating the same at ₹8,000/- per month for supply of milk to the school, ₹5,000/- per month from agriculture and ₹7,000/- per month from working as a contractor - considering the material placed on record by the appellants, income of the deceased deserves to be re-assessed as it is established that he was doing multiple works. It also came on record that after his death, the land was lying barren and was not being cultivated. Assessment of compensation cannot be done with mathematical precision. The Motor Vehicles Act, 1988 also provides for assessment of just and fair compensation. In our opinion, considering the material placed on record by the appellants, as has been referred to above, and value of the labour being put in by the deceased in agriculture, it would be reasonable to assess his income at ₹35,000/- per month. The appellants are found entitled to compensation of ₹38,81,500/- with interest @8% from the date of filing of the claim petition till realization. The judgment of the High Court is modified - Appeal disposed off. 2024 (6) TMI 382 Dishonour of Cheque - time limitation - seeking to to quash the underlying proceedings on the principal premise that as on the date of the issuance of the summoning order, the underlying debt and/or liability qua Respondent No. 2 was time barred - HELD THAT:- The classification of the underlying debt or liability as being barred by limitation is a question that must be decided based on the evidence adduced by the parties. Undoubtedly, the question regarding the time barred nature of an underlying debt or liability in proceedings under Section 138 of the NI Act is a mixed question of law and fact which ought not to be decided by the High Court exercising jurisdiction under Section 482 of the CrPC. The Impugned Order is set aside. The proceedings emanating from the Underlying Complaint i.e., CC No. 6437 of 2017 is restored to the file of the Trial Court - Appeal allowed. 2024 (6) TMI 381 Service of auction sale notice - auction sale - Default in repayment of loan - HELD THAT:- The respondent was fully aware of the auction notice dated 30.11.2012. He had, within 14 days thereafter, filed a writ petition before the High Court and was aware of the auction notice from before. He had also entered into an agreement with Abdul Haleem Siddiqui, who later on became the auction purchaser. The respondent was present at the time of the auction. The auction purchaser, has constructed flats on the property and transferred the same to various third parties, though it is stated that some flats are yet to be sold. At the same-time, there is no proof that notice dated 30.11.2012 was served by the appellant on the respondent. As per the appellant, after adjusting the amount due and payable by the respondent, a sum of Rs.22,53,004/- (rupees twenty two lakhs fifty three thousand and four only), is due and payable and has been with them since 21.03.2013. By letter dated 21.03.2013, the appellant had sent a cheque of the aforesaid balance amount to the respondent, which was not accepted - we cannot be oblivious to the fact that the respondent was entirely aware of the auction process in terms of the notice dated 30.11.2012. The auction purchaser had constructed flats, which had been sold to various third parties. The impugned order dated 02.07.2019 passed by the High Court and the order passed in review application are set aside. The sale by the appellant in favour of Abdul Haleem Siddiqui is upheld and confirmed. Appeal allowed. 2024 (6) TMI 380 Dishonour of Cheque - acquittal of accused of offence u/s 138 of the NI Act - failure to prove the existence of a legally recoverable debt from the side of the accused to the complainant - rebuttal of statutory presumptions - HELD THAT:- A perusal of the complaint and the evidence of PW1 in chief examination clearly shows that the nature of the transaction alleged in the complaint and the chief affidavit of PW1 does not tally with the nature of the transaction mentioned in Exhibit P7, hire purchase agreement. PW1 has categorically admitted in cross examination that he is not in a position to depose regarding the entire matters in connection with the transactions between the accused and the complainant and he is also not in a position to say under what circumstance, the complainant issued Exhibit D1 notice to the accused and as to whether any legal proceedings was initiated against the accused by the complainant on the basis of Exhibit D1 notice. It is pertinent to note that the specific case of the accused is that he has paid the entire instalments to the complainant as per Exhibit P7, hire purchase agreement and that no amount is due from him to the complainant in that connection. There are no reason to disagree with the finding in the impugned judgment that the accused has succeeded in rebutting the statutory presumptions in favour of the complainant and therefore, this appeal, which is devoid of merit, is liable to be dismissed. Appeal dismissed.
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Newsletter: Where Service Meets Reader Approval.

TMI Tax Updates - e-Newsletter June 12, 2024

Highlights / Catch Notes

GST

Violation of natural justice in tax assessment order challenged. Petitioner not given fair chance to contest. Order quashed, remit 10% disputed tax.

Court held that end of lease doesn't negate petitioner's claim for GST amounts. Arbitral tribunal to decide. Limited protection granted.

Delay in filing revocation application for GST registration condoned. Petitioner must pay all dues for consideration.

AAAR: Appeal delay condoned for Tamilnadu Govt Electricity Utility due to staff shortage.

Income Tax

High Court ruled on validity of bonus shares issuance & GAAR vs. SAAR. GAAR prevails. Petitioner's argument flawed.

Income from software license fees not taxable as royalty in India. No liability for tax resident of Denmark. Appeal allowed.

Reopening of assessment due to unexplained cash deposits. Assessee failed to provide details. Tribunal limits income estimation to 15%.

Addition u/s 69C r.w.s.115BBE - Furniture import expenditure not recorded in books. No proof of business relation with China supplier. Custom duty paid. Appeal dismissed.

Penalty notice must specify reason for penalty u/s 271(1)(C). Ambiguous notice not valid. Assessee must be clear on grounds.

Assessment u/s 153A needs incriminating material from search. Completed assessments can't be changed without it.

Revision u/s 263 - ITAT ruled in favor of the assessee on issues of limited scrutiny assessment, deduction u/s 80JJAA, and share issuance.

Penalty u/s 271(1)(c) not justified for addition on closing stock valuation. No clear findings on concealment. Assessee's explanation deemed bona fide.

Approval u/s. 153D must be granted after thorough review, not mechanically. Failure to do so vitiates assessment orders.

Revision u/s 263: Interest income on Core Settlement Guarantee Fund not taxable. ICCL controls funds. Income exempt u/s 10(23EE).

Assessee not penalized for alleged tax evasion due to lack of concrete evidence. Penalty deleted.

Notice u/s 148 to reopen assessment quashed. AO failed to prove alleged receipt of Rs. 35 Lakh. Assessee appeal allowed.

ITAT ruled in favor of the assessee on TP Adjustment issue. Additional evidences admitted for further examination. Proviso to Section 92C(2) benefit allowed.

Addl. CIT lacked authority / jurisdiction to pass assessment order u/s 143(3). AO has sole power for scrutiny assessment.

Sales added to income u/s 69A due to lack of evidence. Assessee proved innocence with docs & steps. No addition warranted.

Reopening assessment u/s 147 for unexplained cash credit u/s 68 - Reasons must have live nexus with info possessed - Appeal allowed

ITAT ruled that gains from sale of shares allotted in IPO should be treated as Short-Term Capital Gains, not business income.

ITAT ruled on various tax issues: 26AS mismatch, disallowance of guarantee commission, TDS credit, & interest levy.

Tax rate dispute resolved in favor of assessee on LTCG from unlisted shares sale. Share transfer is not a business asset transfer. TDS deduction explained.

Bank deposits = turnover. Assessee failed to prove otherwise. GP estimated @ 6%. No interference.

ITAT ruled in favor of taxpayer, canceling interest charges u/s 234B. No liability post original assessment.

Appellate Tribunal ruled against penalty for cash deposits below Rs. 20,000 as unexplained. Sale transactions legit.

Penalty notice u/s 271(1)(c) upheld for unexplained trading cost difference. Assessee's explanation inconsistent. Penalty imposed.

Customs

High Court ruled that importer evaded duty on over Rs. 50 Lakhs worth of gold, not exported as required. No bail granted.

CESTAT ruled that the value of imported used goods can be enhanced based on Chartered Engineer Certificate. No error in rejecting transaction value.

CESTAT ruled on classification of imported goods under different tariff headings. No mis-declaration found. Penalties set aside.

CESTAT on valuation: Declared value vs actual payment to seller. Exchange rate on Bill of Entry date. Exemption upheld for fertilizer use.

CESTAT ruled against absolute confiscation of foreign cigarettes due to packaging non-compliance. Confiscation reduced to â‚¹50,000.

Jurisdiction, penalty, and confiscation of gold jewelry under Customs Act. Show cause notice timing valid due to COVID. No appeal filed. Penalty upheld.

DGFT

Notification: Import policy amended for specific gold items. Policy for specified items put into "Restricted" category.

Indian Laws

Accused acquitted in cheque dishonour case u/s 138 NI Act. No proof of debt. Accused paid instalments. Appeal dismissed.

Appellants entitled to higher compensation due to deceased's multiple income sources. Compensation increased to â‚¹35,000/month.

Court rules in favor of auction purchaser in loan default case. Respondent aware of auction notice. Sale upheld.

Dishonour of Cheque: Time limitation issue clarified. Order set aside, proceedings restored to Trial Court.

PMLA

Supreme Court ruled improper bail grant in Money Laundering case. Bench not assigned case. Bail set aside.

Service Tax

CESTAT ruled in favor of the appellant on issues of CENVAT Credit reversal and time limitation. No suppression found.

CESTAT ruled that once NCLT approves Resolution Plan, appeal abates. Similar cases considered. Appeal disposed of as abated.

Central Excise

CESTAT ruled in favor of refunding interest under Section 72 of Finance Act, 2010 for retrospective amendment. Tribunal upheld interest on excess credit.

Adjudication after 7 years barred. Elasticity of time frame "where it is possible to do so", u/s 11A(11) clarified. Legislature's intent emphasized.

VAT

High Court: Challenge to summons for documents under TNVAT Act dismissed. Dealer's compliance with Section 22(2) to be ascertained.

Claim for input tax credit rejected due to loss of goods not used in business. Plain reading of law shows credit repayable.

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TMI Tax Updates - e-Newsletter
June 12, 2024