Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 14, 2021
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
PMLA
Central Excise
Articles
News
Notifications
Highlights / Catch Notes
GST
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Maintainability of appeal before the appellate authority - time limitation - this Court is of the view that the mere delay in enclosing a certified copy of order appealed against along with the appeal should not come in the way of the Petitioner’s appeal for being considered on merits by the Appellate Authority. This is a case of substantial compliance and the interests of justice ought not to be constrained by a hyper technical view of the requirement that a certified copy of the order appealed against should be submitted within one week of the filing of the appeal. - HC
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Seeking Bail - fake / bogus ITC without any purchase or sale of goods - compounding of offences - Section 132 of the Act of 2017 - considering the fact that, the petitioners have already remained in custody for about 5 1/2 months, whereas the maximum punishment provided under the Act of 2017 is five years and also considering the fact that investigation is already complete and charge-sheet has been filed, bail granted - HC
Income Tax
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Validity of assessment order - Faceless Assessment - Request for personal hearing rejected - since the revenue, time and again, portrays to the assessees’ at large, in various communications, that since Covid-19 pandemic is prevalent, it would like to create an environment, which is friendly, this approach of the revenue, while carrying out assessment proceedings, has not been understood by us. According to us, on this short point alone, the impugned order deserves to be set aside. - HC
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Reopening of assessment u/s 147 - the dropping of the earlier proceedings was only on account of technical reasons. It was not after a thorough scrutiny and consideration of the reply of the petitioner. It was withdrawn only for technical reason to pave way for issue of a fresh notice under Section 148 of the Income Tax Act, 1961 on 24.03.2017. The earlier proceedings initiated vide Notice dated 4.12.2015 was not dropped on merits. - Issuance of earlier notice under Section 148 of the Income Tax Act, 1961 did not preclude issue of fresh notice under the same section - HC
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Revision u/s 263 - denial of deduction u/s 54 in the hands of Individual - Partition of HUF or not - reading of sub- section 171 of the Income Tax Act, 1961 makes it very clear that it is applicable only where a Hindu family was already assessed as an Hindu Undivided Family(HUF). Otherwise, there is no meaning to the expression “hither to” in Section 171(1). - Where a Hindu family was never assessed as a HUF, Section 171 of the Income Tax Act, 1961 will not apply even when there is a division or partition of property which does not answer to the above definition. - HC
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TP addition - Specified Domestic Transaction (SDT) of Rent payment - Once it is held that the property was used by the assessee for its business purpose and the Revenue brought no contrary reliable evidence on record, the case of the TPO applying `Other method’ and determining Nil ALP on the ground that no independent party would have paid any rent for not having occupied the premises, fails. - AT
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Exemption u/s.10(23C)(vi) - payment of lease rent to trustees of the trust - ld. CIT(E) had stated that this payment of lease rent is in violation of provisions of Section 13 (1)(c) of the Act. It is pertinent to note that assessee trust had only sought claim of exemption u/s. 10(23C)(vi) of the Act for which the provisions of Section 13(1)(c) need not be looked into as it is only applicable if exemption is claimed u/s.11/12 - AT
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Penalty u/s. 271(1)(c) - recording of specific finding or not? - In para 7 of the penalty order u/s. 271(1)(c), the Assessing Officer held that it is found to be a fit case to levy penalty u/s. 271(1)(c) of the I.T. Act, 1961, for furnishing of inaccurate particulars and concealment of income, which indicate that Assessing Officer has not recorded specific finding in respect of reason for imposing penalty in the final penalty order. - AT
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Addition u/s 68 - Each one of them has confirmed the MCX transaction and the confirmation account of each individual customers, transaction by transaction was submitted before the Assessing Officer. Thus, the assessee has established the three limbs of genuineness, creditworthiness and identity of the transactions as contemplated by various decisions of the High Court and Supreme Court envisaged u/s 68. - AT
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Inclusion of an amount on the basis of Form 26AS to the returned income of the assessee - The assessee who had denied ownership of the aforesaid income or the source thereof, we are of the considered view that the A.O was not justified in adding the impugned amount as the income of the assessee. Multiple reasons leading to the aforesaid anomaly in reflection of the above mentioned amount in the annual tax statement of the assessee cannot be ruled out. - AT
IBC
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Enforcement of a claim - time barred debt or not - The Applicant, in the present case, would not be in a position to approach the Civil Court by way of a suit for recovery of money, as the claim amount admittedly falls beyond the prescribed period of limitation and thereby by filing the present Application under Section 60(5) of IBC, 2016, cannot seek to enforce a claim, which is time barred as per the provisions of the Limitation Act, 1963 on the date of initiation of the CIRP itself. - Tri
Central Excise
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CENVAT Credit - capital goods - availment of credit while availing depreciation - The adjustment in the balance sheet of 2015-16 cannot be considered as reversion of the depreciation claimed in the balance sheet of the year 2013-14 and 2014-15 - there is no infirmity in the findings of the Commissioner (Appeals) where it has been held that the adjudicating authority has grossly erred in interpreting the provisions of Rule 4(4) of CENVAT Credit Rules, 2004. Once the full depreciation was claimed, the respondent could not claim availment of cenvat credit on capital goods - AT
Case Laws:
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GST
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2021 (6) TMI 412
Maintainability of appeal before the appellate authority - time limitation - dismissal of appeal on the ground that appeal was not presented within the time - HELD THAT:- Considering that the explanation offered by the petitioner is a plausible and not an unreasonable one, especially in these Covid times, and further considering that a downloaded copy thereof was in fact submitted along with the appeal which was otherwise filed within time, this Court is of the view that the mere delay in enclosing a certified copy of order appealed against along with the appeal should not come in the way of the Petitioner s appeal for being considered on merits by the Appellate Authority. This is a case of substantial compliance and the interests of justice ought not to be constrained by a hyper technical view of the requirement that a certified copy of the order appealed against should be submitted within one week of the filing of the appeal. The impugned order dated 10th March, 2021 of the Appellate Authority rejecting the appeal on the ground of delay, is hereby set aside. The appeal is now restored to the file of the Additional Commissioner of State Tax (Appeal), Balasore and is directed to be listed there for directions on 5th July, 2021 at 11 am.
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2021 (6) TMI 411
Input tax credit was blocked - no notice and/or opportunity of hearing given before blocking of credit - petitioner, qua imported goods, has paid Integrated Goods and Services Tax (IGST) on reverse charge basis - HELD THAT:- Issue notice. Mr. Harpreet Singh, who appears on advance notice, accepts notice on behalf of the respondent/revenue. List the matter on 02.08.2021.
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2021 (6) TMI 407
Seeking Bail - fake / bogus ITC without any purchase or sale of goods - compounding of offences - Section 132 of the Act of 2017 - HELD THAT:- In view of the fact that the petitioners have already remained in custody for about 5 1/2 months, whereas the maximum punishment provided under the Act of 2017 is five years and also considering the fact that investigation is already complete and charge-sheet has been filed and also considering the age of petitioner Ramesh Jain and the fact that the petitioners have no criminal antecedents. Also in view of the present pandemic of COVID-19 situation in the State of Rajasthan, but without expressing any opinion on the merits of the case, it is deemed just and proper to enlarge the petitioners on bail. The bail applications are allowed.
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Income Tax
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2021 (6) TMI 410
Validity of assessment order - Request for personal hearing rejected - Faceless Assessment - HELD THAT:- Given the circumstances, which were put forth by the petitioner in the communication the AO should have, in the very least, dealt with the same, i.e., either rejected the request made or accommodated the petitioner having regard to the circumstances put forth by her. In reaching a conclusion as to which of the two options he/she should opt for, the AO could have asked for necessary supporting material, in case, he/she was under the impression that what was stated in the said communication was only a ruse to impede progress of the matter. Respondent no.1, instead, proceeded to pass the impugned assessment order, dated 26.05.2021, even when the timeframe for passing the assessment order stood extended till 30.06.2021. Therefore, according to us, since the revenue, time and again, portrays to the assessees at large, in various communications, that since Covid-19 pandemic is prevalent, it would like to create an environment, which is friendly, this approach of the revenue, while carrying out assessment proceedings, has not been understood by us. According to us, on this short point alone, the impugned order deserves to be set aside. Second ground/objection raised need not detain us [i.e. the purported failure on the part of the respondents/revenue to deal with and/or factor in the detailed response/objections filed by the petitioner while passing the impugned assessment order led to breach of natural justice], in view of what is stated hereinabove by us. This objection may not survive once a fresh assessment order is passed. For the foregoing reasons, we are inclined to set aside the impugned assessment order dated 26.05.2021, as also the consequential notice of demand and notice for initiating penalty proceedings of even date.
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2021 (6) TMI 409
Reopening of assessment u/s 147 - deemed assessment - earlier proceeding initiated was withdrawn - notice under Section 148 was issued before completion of the Assessment was dropped and thereafter, a fresh notice was issued based on the identical reasons - survey under Section 133A - survey revealed undisclosed income in terms of the valuable jewellery and cash - HELD THAT:- Since the petitioner failed to offer amount for payment of Income Tax in his return of income under Section 139 of the Income Tax Act, 1961, a notice dated 04.12.2015 was issued to the petitioner under Section 148 - The said notice was issued even before the time for completing the assessment expired on 31.12.2016 i.e, 21 month from the end of the assessment year 2013-14 under Section 153 (1) for the assessment year 2013-14. Having issued the aforesaid notice dated 04.12.2015 under Section 148 it was incumbent to have completed assessment within a period of nine months as per Section 153(2) of the Income Tax Act, 1961 from the date of issue of the said notice. Since the period of nine months expired on 03/04.09.2016 in terms of Section 153(2) which is three months before the last date for completing the assessment on 31.12.2016, the officer therefore could not have proceeded further after the expiry of the nine months on the strength of the said proceeding initiated on 04.12.2015 after the first week of the September, 2006. Thus, there was a deemed assessment. Thus, there is no infirmity in the impugned proceeding after the earlier proceeding initiated vide notice dated 4.12.2015 was withdrawn was withdrawn vide communication dated 26.12.2016. The respondent can issue a fresh notice under Section 148 of the Income Tax Act, 1961 which is what the respondent has done. It is to be emphasized that after 31.12.2016, the respondent had 4 years to invoke section 148 of the Income Tax Act 1961. Thus, the dropping of the earlier proceedings was only on account of technical reasons. It was not after a thorough scrutiny and consideration of the reply of the petitioner. It was withdrawn only for technical reason to pave way for issue of a fresh notice under Section 148 of the Income Tax Act, 1961 on 24.03.2017. The earlier proceedings initiated vide Notice dated 4.12.2015 was not dropped on merits. Issuance of earlier notice under Section 148 of the Income Tax Act, 1961 did not preclude issue of fresh notice under the same section on 24.3.2017. The petitioner has indulged in large scale evasion of tax as is evident from the survey conducted on 03.09.2012.Since the reassessment proceeding remained inconclusive, there is no case made for interference - No merits in these present writ petitions.
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2021 (6) TMI 408
Revision u/s 263 - denial of deduction u/s 54 in the hands of Individual - Partition of HUF or not - Assessment as a Hindu Undivided Family(HUF) - division of income without physical division of property did not amount to partition under Section 171 - notice u/s 263 as issued primarily on the ground that there was no physical division of the property and therefore the exemption under Section 54 F on sale appeared to be contrary to section 171 of the Income Tax Act, 1961. HELD THAT:- A reading of sub- section 171 of the Income Tax Act, 1961 makes it very clear that it is applicable only where a Hindu family was already assessed as an Hindu Undivided Family(HUF). Otherwise, there is no meaning to the expression hither to in Section 171(1). Admittedly, during the lifetime of Shir.A.R.Pandurangan, the family was not assessed as a Hindu Undivided Family(HUF). It is only where there is a prior assessment as a Hindu Undivided Family(HUF) and during the course of assessment under section 143 or section 144 it is claimed by or on behalf of member of such Hindu Undivided Family which was assessed as a Hindu Undivided Family that there was a partition whether total or partial among the members of such family, such assessing officer shall make an enquiry thereto after giving notice of enquiry of all members. Where no such claim is made, question of making such enquiry by an Assessing Officer does not arise. It is only in the above circumstances, the definition of partition in Explanation to Section 171 of the Income Tax Act, 1961 is attracted. The above definition cannot be read in isolation. Where a Hindu family was never assessed as a HUF, Section 171 of the Income Tax Act, 1961 will not apply even when there is a division or partition of property which does not answer to the above definition. Therefore,we are inclined to interfere with impugned notice dated 31.3.2015 and the impugned communication dated 16.11.2016 overruling the objection of the petitioner against the petitioner - Writ petition stands allowed
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2021 (6) TMI 406
Addition on account of unaccounted interest income on FDs - unaccounted income in gold - Tribunal deleted the addition - HELD THAT:- This Court, vide judgment [ 2020 (11) TMI 912 - KARNATAKA HIGH COURT] , quashed the order passed by the Income Tax Appellate Tribunal on the ground that the same is cryptic and suffers from non-application of mind and has remitted the same to the Tribunal to consider the substantial question of law Nos. 1 and 2. For the reasons assigned in the aforesaid judgment, the order passed by the Tribunal in respect of Assessment Year 2005-06 [ 2016 (12) TMI 1856 - ITAT BANGALORE] is quashed and the matter is remitted to the Tribunal to consider the substantial question of law Nos. 1 and 2 afresh by assigning reasons.
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2021 (6) TMI 402
TP addition - Specified Domestic Transaction (SDT) of Rent payment to Giriraj Promoters Pvt. Ltd. (GPPL) - assessee having used or not used the Sawant Corner premises for which it paid the rent - HELD THAT:- The Department s case is that the property was, in fact, in occupation of JSPM and not the assessee and the assessee was simply paying rent without occupying the same - the onus was upon the Revenue to prove that apparent was not real, which it failed to discharge. If the Department was convinced that whatever external evidence the assessee had filed to prove its case were make-believe, it had and always has a very wide powers to unearth the reality even beyond the assessment proceedings. Once it is held that the Sawant Corner property was used by the assessee for its business purpose and the Revenue brought no contrary reliable evidence on record, the case of the TPO applying `Other method and determining Nil ALP on the ground that no independent party would have paid any rent for not having occupied the premises, fails. Reverting to the CUP method applied by the assessee as the most appropriate method for benchmarking the SDT of rent payment, the assessee has given a comparable instance of rent paid @ ₹ 112 per sq.ft. by ICICI bank under a lease agreement dated 17.02.2012 for a nearby premises. As against that, the assessee paid rent @ ₹ 75.28 per sq.ft., which shows that the rent paid by the assessee was less in comparison with the comparable uncontrolled transaction. Thus, the ALP of the SDT of payment of rent cannot be disputed. Ergo, we are satisfied that the ld. CIT(A) was justified in deleting transfer pricing addition, which view is hereby countenanced.
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2021 (6) TMI 401
Exemption u/s.10(23C)(vi) - exemption denied as Appellant did not solely exist for education purposes because there were several objects of non-education nature and was making huge surplus - Appellant had contravened the provisions of S.13(1)(c) in as much as it had paid lease rent to two of trustees of the Appellant - HELD THAT:- We find that assessee trust had derived income only from educational activity and not otherwise. Hence, even the financial statements of the assessee support the contention of the ld. AR that the trust is existing solely for the purpose of education only and not of any other purpose. Even otherwise during the year under consideration, i.e. F.Y.2018-19 relevant to A.Y.2019-20, for which claim of 10(23C)(vi) is sought by the assessee trust, the assessee trust had carried all activities only with respect to education and not otherwise at all. Other incidental objects provided in the Memorandum of Association for smooth attainment and fulfilment of the main objects, was not even carried out by the assessee during the year under consideration. Hence, the objection of the ld CIT(E) that the objects contain other irrelevant activities (though factually it is not) deserve to be dismissed in limine Assessee trust had derived surplus in its income and expenditure account - What is to be seen is the computation of income which are applicable to charitable trusts which works completely on a different principle wherein even the amounts invested in fixed assets are allowed as application of income. This has been conveniently ignored by the ld. CIT(E) while arriving at the conclusion that assessee has earned surplus. If the said investment made in fixed assets are considered as an application of income excluding depreciation thereon, we find that for the A.Y.2019-20, the assessee had only incurred a deficit . Hence the observation of the ld CIT(E) that the assessee trust had made surplus during the A.Y. 2019-20 and thereby existing for profit, is factually incorrect. Hence there is no question of any surplus earned by the assessee, as per the computation of income asper the provisions applicable to charitable trusts for the A.Y.2019-20. Even otherwise, we find that the surplus in the income and expenditure account has not been distributed by the assessee to any trustees or their relatives as profits or as dividend. The said surplus has been re-deployed regularly for the educational objects of the trust. Hence, it could be safely concluded that the assessee trust is existing solely for the purpose of education and not for the purpose of profit. Hence the second objection raised by the ld. CIT(E) for rejecting the claim of exemption u/s. 10(23C)(vi) of the Act is hereby dismissed as baseless. Assessee trust has paid lease rent to trustees of the trust for lease of the land on which assessee s school is functioning - We find that the ld. CIT(E) had stated that this payment of lease rent is in violation of provisions of Section 13 (1)(c) of the Act. It is pertinent to note that assessee trust had only sought claim of exemption u/s. 10(23C)(vi) of the Act for which the provisions of Section 13(1)(c) need not be looked into as it is only applicable if exemption is claimed u/s.11/12 Reliance placed on the provisions of Section 13(1)(c) of the Act by the ld. CIT(E) is not applicable to the issue under consideration. Even assuming the provisions u/s.13(1)(c) of the Act are to be brought into operation in the instant case, then the ld. CIT(E) ought to have brought evidence on record by bringing comparative quotations to prove the fact that the lease rent paid in the sum of ₹ 2 lakhs per month to the trustees is excessive or unreasonable and beyond the fair market value thereon. On the contrary, we find that the ld. AR placed on record that market value of the land is ₹ 13,03,76,400/- as per the registered lease deed and the payment of lease rent of ₹ 24 lakhs works out to hardly 1.86% thereon. Hence, it could be safely concluded that the rent paid by the assessee trust to the trustees is not excessive or unreasonable. Thus third objection raised by the ld. CIT(E) for exemption u/s. 10(23C)(vi) of the Act is hereby dismissed. Accordingly, the grounds raised by the assessee are allowed
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2021 (6) TMI 400
Addition u/s 68 - loans received by the assessee - addition based on statement of third party - disallowance of interest on aforesaid unsecured loans - HELD THAT:- From the perusal of the assessment order, we find that the ld AO had given more emphasis in the entire assessment order to discuss the modus operandi adopted by Shri Praveen Kumar Jain and his group which had been unearthed during the search action carried out on him on 1.10.2013. We find that the assessee had submitted before the ld AO that nowhere in the statements of Shri Praveen Kumar Jain or his accomplices, the name of the assessee LLP had been mentioned. This fact has not been controverted by the ld DR before us. Hence we hold that the entire addition made by the ld AO and confirmed by the ld CITA, merely based on the statement of Shri Praveen Kumar Jain (third party) (which also stood subsequently retracted by him by way of an independent affidavit), deserve to be deleted on this count itself. No other corroborative evidence was brought on record by the revenue to even remotely suggest that the loan transactions carried out by the assessee with the aforesaid 5 loan creditors to be ingenuine. As assessee had duly discharged its onus by submitting all the relevant details (as listed supra) that are available with it before the ld AO. All these documents clearly prove the identity of the loan creditors, creditworthiness of the loan creditors and genuineness of transactions. We find that the ld AO had not even bothered to issue notice u/s 133(6) of the Act to the loan creditors to verify the veracity of the documents submitted by the assessee. In other words, the ld AO simply remained silent after receiving all the documentary evidences from the assessee. assessee had duly discharged its onus by submitting all the relevant details (as listed supra) that are available with it before the ld AO. All these documents clearly prove the identity of the loan creditors, creditworthiness of the loan creditors and genuineness of transactions. We find that the ld AO had not even bothered to issue notice u/s 133(6) of the Act to the loan creditors to verify the veracity of the documents submitted by the assessee. In other words, the ld AO simply remained silent after receiving all the documentary evidences from the assessee. Thus we direct the ld AO to treat the loans received from aforesaid 5 parties as genuine and delete the addition made u/s 68 of the Act. Correspondingly, the interest paid on such loans also should be allowed as deduction
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2021 (6) TMI 399
Capital gain computation - expenditure incurred for transfer of the property - as per AO set off any capital gains tax liability and to claim capital loss in the return with the sole purpose to evade tax - assessee has deducted as expenditure incurred on such transfer and after claiming indexed cost of acquisition has claimed capital loss - HELD THAT:- Assessee might have received more money for the first and second floor from the buyer who had shown lesser amount of sale consideration to avoid future tax liability. At the same time, the assessee has also enclosed a receipt for ₹ 600/- mentioning the existence of first and second floor. It is also pertinent to mention here that the AO has not called the buyer to find out the truth nor the assessee has produced the buyer for his examination. It is also not understood as to how the valuer has given the report without verifying the existence of the property and has simply valued the property on the basis of submissions made by the assessee. We deem it proper to restore the issue to the file of the AO with a direction to grant one final opportunity to the assessee to substantiate his case by producing the buyer and the registered valuer for their examination by the AO and to arrive at the true character of the property. The AO shall decide the issue - Grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (6) TMI 397
Bogus LTCG - unexplained cash credit u/s.68 - HELD THAT:- Both the parties before us stated that both the issues in dispute in original grounds as well as in additional grounds are already covered in the decision of this Tribunal in the case of sister concerns of the Jajoo Enterprises Ltd. [ 2020 (11) TMI 646 - ITAT MUMBAI] wherein in respect of same fact of the receipt of share application money from companies allegedly belonging to Shri Shirish Chandrakant Shah, this Tribunal had remitted the issue to the file of the ld. AO. Thus the grounds raised by the assessee for both the years are remitted to the file of the ld. AO to decide the same in the light of the aforesaid decision of this Tribunal. Appeals of the assessee are allowed for statistical purposes.
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2021 (6) TMI 396
Penalty u/s. 271(1)(c) - recording of specific finding or not? - defective notice u/s 274 - exemption u/s. 54F is not allowable against short term capital gain - HELD THAT:- While passing final order the Assessing Officer has to record a specific finding for which breach he has visited the assessee with penalty i.e. for concealment of income or furnishing inaccurate particular of income as laid down in the decision of Jurisdictional High Court of Gujarat in the case of Sunita Transport [ 2012 (12) TMI 981 - HIGH COURT OF GUJARAT] . In para 7 of the penalty order u/s. 271(1)(c), the Assessing Officer held that it is found to be a fit case to levy penalty u/s. 271(1)(c) of the I.T. Act, 1961, for furnishing of inaccurate particulars and concealment of income to the extent of ₹ 7,30,000/- which indicate that Assessing Officer has not recorded specific finding in respect of reason for imposing penalty in the final penalty order. As considered the similar decision of ITAT Ahmedabad in the case of Sh. Hasmukh Jayantilal Thakkar [ 2018 (6) TMI 30 - ITAT AHMEDABAD] wherein penalty was deleted following the decision of Sunita Transport because of not mentioning specific charges in the penalty order. In the light of the above facts and findings we observe that the Assessing Officer has not mentioned the specific charge in penalty order whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, the principles laid down by the Hon ble High Court as supra are squarely applicable to the facts of this case and such penalty order is not sustainable. Accordingly, this ground of appeal of the assessee is allowed.
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2021 (6) TMI 395
Disallowance u/s 14A r.w.r. 8D - no activity of purchase and sale took place during the year - as argued by assessee no satisfaction was recorded by AO before making addition - HELD THAT:- As proper satisfaction is recorded by the AO inasmuch as making investment, maintaining or continuing with any investment in a particular share/mutual fund etc. and the time when to exit from one investment to another are all the activities requiring well-coordinated and well-informed management decisions, involving not only inputs from various sources but it also involves acumen of senior management functionaries. Decision to hold the shares and not to make any purchase of sales during the year could also be a conscious decision. Assessee does not maintain any separate account in respect of the purchase or sale of the shares on the connector expenditure and no such accounts are forthcoming for any assessment year. In the absence of any details furnished by the assessee, it is not possible for the learned Assessing Officer to record a detailed satisfaction with reference to the accounts of the assessee. It s not as though Assessing Officer straightaway proceeded to compute the disallowance by invoking section 14A of the Act read with Rule 8D of the Rules. By recording the reasons, the learned Assessing Officer proceeded to compute the same. Hence, we reject the contention of the assessee that no satisfaction was recorded by the learned Assessing Officer and consequently the addition is bad. Alternative submission on behalf of the assessee to limit the disallowance to the tune of dividend income received - Submission supported by the decision of Joint Investments P. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT ] wherein it was held that the disallowance of expenditure u/s 14A of the Act cannot exceed the amount of tax exempt income. We, therefore, accept the same and direct the assessing officer to limit the disallowance under section 14A of the Act read with Rule 8D of the Rules and delete the rest of the addition. Appeal of the assessee is allowed in part.
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2021 (6) TMI 394
Addition u/s 40(a)(ia) - secondment expenses on which tax was not deducted at source - HELD THAT:- Since this issue is covered in favour of the assessee by the decisions of the Tribunal in assessee s own case for the AYs 2009-10 [ 2017 (1) TMI 1751 - ITAT MUMBAI] 2011-12 [ 2018 (2) TMI 2035 - ITAT MUMBAI] and since the findings of the ld. CIT(A) are in accordance with the decision of the Tribunal, we do not find any reason to interfere with the findings of the ld. CIT(A). We accordingly uphold the decision of the ld. CIT(A) and dismissed this ground of appeal of the revenue. Addition on estimation basis on account of compensation from customers - HELD THAT:- As decided in own case [ 2018 (2) TMI 2035 - ITAT MUMBAI] this Bench has deleted the identical addition in assessee s case.
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2021 (6) TMI 391
Stay of demand - Demand raised u/s 201 (1) - HELD THAT:- We feel it proper to grant stay for six months from the date of this order or till the disposal of appeals whichever is earlier because we find that the payment already made by the assessee is about 52% of total outstanding disputed demand of tax and interest. As pointed out by the assessee that the date of hearing fixed at present for these appeals are 27/4/2021 and that one of the issues involved is about Secondment aspect is pending before special bench of the Tribunal. Based on the above we granted stay of outstanding demand for a period of 6 months or till the disposal of appeal whichever is earlier. Assessee shall not seek adjournment in course of hearing of these appeals without justifiable reasons and if the assessee does so, the stay granted as per this order shall stand vacated automatically. The revenue should also come prepared on this date of hearing and should not seek any adjournment without justifiable reasons. Stay petitions filed by the assessee are allowed.
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2021 (6) TMI 390
Addition u/s 68 - HELD THAT:- Additions received by the assessee for next transactions from his individual customers is being in the nature of cash credits u/s 68 of the Act are not correct. In the present assessment order, the AO has examined customers of the assessee u/s 131 and statements were also filed. Each one of them has confirmed the MCX transaction and the confirmation account of each individual customers, transaction by transaction was submitted before the Assessing Officer. Thus, the assessee has established the three limbs of genuineness, creditworthiness and identity of the transactions as contemplated by various decisions of the High Court and Supreme Court envisaged u/s 68.
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2021 (6) TMI 389
Bogus purchases - CIT-A sustained 12.5% disallowance out of the bogus purchases - HELD THAT:- We find that in this case the sales or any other aspect of working have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchases cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from Hon'ble jurisdictional High Court decision in the case of Nickunj Eximp Enterprises [ 2014 (7) TMI 559 - BOMBAY HIGH COURT] . In this case, the Hon'ble High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However, the facts of the present case indicate that assessee has made purchase from grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. In such situation, in our considered opinion, on the facts and circumstances of the case, the 12.5% disallowance out of bogus purchases done by the learned CIT(A) meets the end of justice. Accordingly, we uphold the order of learned CIT(A).
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2021 (6) TMI 388
Disallowance u/s 14A r.w. Rule 8D(2)(iii) - HELD THAT:- As the assessee had not earned any exempt income from the mutual funds therefore, the same in our considered view could not have been included for the purpose of computing the average value of investments while quantifying the disallowance u/s 14A r.w. Rule 8D (2)(iii). Our aforesaid view is fortified by the order in the case of ACIT Anr. Vs. Vireet Investment Pvt. Ltd. Anr. [ 2017 (6) TMI 1124 - ITAT DELHI ] In the said case it was observed by the Tribunal that as per rule 8D(2)(iii), only those investments were to be considered for computing average value of investment which had yielded exempt income during year under consideration. Accordingly, in the backdrop of our aforesaid deliberations, we herein direct the A.O to exclude the mutual funds which had not yielded any exempt income during the year for the purpose of quantifying the disallowance under Sec. 14A r.w. Rule 8D(2)(iii) in the hands of the assessee. Inclusion of an amount on the basis of Form 26AS to the returned income of the assessee - HELD THAT:- We find, that as per Form 26AS commission income stated to have been received from Abu Dhabi Commercial Bank Ltd. Churchgate Branch stands reflected in the annual tax statement of the assessee. In rebuttal, it is submitted by the ld. A.R that no part of the aforesaid amount of income belongs to the assessee. As the assessee had declined of having owned any part of the aforesaid income, the same, thus, could not have been summarily added by the A.O as its income. The assessee who had denied ownership of the aforesaid income or the source thereof, we are of the considered view that the A.O was not justified in adding the impugned amount as the income of the assessee. Multiple reasons leading to the aforesaid anomaly in reflection of the above mentioned amount in the annual tax statement of the assessee cannot be ruled out. Be that as it may, we are of the considered view that the matter in all fairness requires to be revisited by the A.O, who is directed to verify the aforesaid claim of the assessee. A.O shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate its aforesaid claim - Appeal of the assessee is allowed
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Insolvency & Bankruptcy
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2021 (6) TMI 393
Enforcement of a claim - time barred debt or not - applicability of Moratorium on such enforcement - HELD THAT:- The Applicant has not placed on record any document after 08.07.2014, in order to show that the claim of the Applicant falls within the period of Limitation. It is seen that the CIRP in relation to the Corporate Debtor was initiated on 05.05.2020 and the claim of the Applicant relates to the year 2014. By taking into consideration the provisions of Section 238-A of IBC, 2016 the debt is hopelessly barred by limitation as rightly pointed out by Learned Counsel for Respondent and also Learned Counsel for Applicant has not placed on record any document to show that he has obtained any acknowledgment after the year 2014 - It seems that the Applicant has been indolent after the year 2014 and has not pursued the alleged arrears of rent, if any, which is payable by the Corporate Debtor by diligently prosecuting the Corporate Debtor before any forum. It is also relevant to refer to the decision of the Hon'ble Supreme Court of India, in the matter of B.K. Educational Services Private Limited Vs. Parag Gupta And Associates [ 2018 (10) TMI 777 - SUPREME COURT] wherein it has held that Limitation Act is applicable since the inception of the Code while posing itself with a query as to whether the Limitation Act, 1963 will apply to Applications that are made under Section 7 and or Section 9 of the Code on and from its commencement on 01.12.2016 to 06.06.2018 (date of amendment of insertion of Section 238-A coming into effect). The applicability of the Limitation Act, 1963 during the Period of moratorium and the computation of the period of Limitation, specified for any Suit or Application by or against the Corporate Debtor, is required no doubt to be excluded and which exclusion points out that as compared to ordinary laws, IBC, 2016 is a separate Code by itself and being of recent origin (2016) is still in its nascent stage and evolving what with several amendments effected by the Legislature within 4 years and 3 months of its existence in the Statue Books - The Applicant, in the present case, would not be in a position to approach the Civil Court by way of a suit for recovery of money, as the claim amount admittedly falls beyond the prescribed period of limitation and thereby by filing the present Application under Section 60(5) of IBC, 2016, cannot seek to enforce a claim, which is time barred as per the provisions of the Limitation Act, 1963 on the date of initiation of the CIRP itself. The Application as filed by the Applicant is liable to be dismissed.
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2021 (6) TMI 392
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - personal guarantor to a corporate debtor - invocation of Guarantee - Demand notice was not served upon the personal guarantor before application filed for CIRP - existence of debt and dispute or not - HELD THAT:- An application by the creditor against the personal guarantor shall be filed under Section 95 (1) of the IBC and according to Section 95(4) IBC 2016 (i) an application under sub-section (1) shall be accompanied with details and documents relating to the debts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application, (ii) it shall only be filed on failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand and (iii) supported with relevant evidence of such default or non-repayment of debt - On co-joint reading of Section 95 of IBC with Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, made it clear, an application under Section 95 shall only be filed, on failure of debtor to pay the debt within the period of 14 days of service of the demand notice, served u/s. 95(4) IBC 2016. which means an application u/s. 95(1) IBC 2016 can only be filed after the expiry of period 14 days from the date of service of demand notice under Section 95(4)(b) of the IBC. The applicant/creditor has filed under Section 7 of the IBC not under Section 95 of IBC. Secondly, the applicant has filed the application for initiation of CIRP not against the Corporate Debtor rather against the personal guarantor. Therefore, the applicant is required to submit an application in Form C under Section 95(1) of the IBC and that too after service of demand notice as required under Section 95(4)(b) read with Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 and if the debt is not paid within 14 days from the date of service of demand notice.
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PMLA
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2021 (6) TMI 413
Jurisdiction - maintainability of appeal filed by Enforcement Directorate itself before Learned Tribunal - Money Laundering - scheduled offences - proceeds of crime - defalcation of ₹ 2672 Crores, involving 25 banks of which five were private ones - Section 26(1) of the PML Act - HELD THAT:- Section 26 is a provision enabling certain entities to file an appeal. In this, so far the Directorate is concerned, the Legislature thought it prudent to specify the Head of the Directorate i.e., the Director as the authority to initiate an appeal. This, however, cannot preclude the Enforcement Directorate itself from preferring an appeal if it decides to do so for some reason. In doing so, the Directorate may fairly be represented by any of its authorities, especially the ones who have been specifically mentioned in section 48 of the Act. Had the appeal been filed by the Assistant Director in his own name instead of by the Director, then a question could have at all arisen about proper adherence to the provisions of section 26 of the Act in filing an appeal. But, when the Directorate itself files the same, whether through the Assistant Director or any other authority as mentioned in the Act itself, it is a substantial compliance of the said provision - Moreover, section 68 of the PML Act espouses a spirit of pragmatism and shuns thwarting actions taken under the said Act merely on the excuse of technicalities. Whether the Enforcement Directorate could also invoke the locus of an 'aggrieved person' in filing an appeal under section 26 of the PML Act? - HELD THAT:- It is true that in the instant case, there is no interpretation clause present to qualify the inclusive definition. However, section 48 of the PML Act, as referred to above, squarely brings an aggrieved entity like the Enforcement Directorate within the ambit of a 'person' as described in section 2 (s) of the Act - the Enforcement Directorate should be competent to file an appeal under section 26 of the PML Act. Thus, there is no bar on the Enforcement Directorate to file an appeal under section 26 of the PML Act, through the Assistant Director, before the learned Appellate Tribunal - appeal dismissed.
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2021 (6) TMI 405
Seeking permission to travel Singapore - Seeking to uplift Lookout Circular in F. No. ECIR/CEZO/I/01/2018 - overstaying in abroad during COVID-19 situation - non-cooperation in proceedings or not - HELD THAT:- The Special Court (PC Act), CBI-16, Rouse Avenue District Court, Delhi, passed the order dated 15.03.2021 permitting the petitioner to travel abroad from 16.03.2021 to 30.06.2021, by suspending the LOC till 30.06.2021, on the same terms and conditions that have been imposed in its earlier order dated 07.02.2020. The learned Senior Counsel for the petitioner as well as the Special Public Prosecutor for the second respondent submitted that similar conditions may be imposed for the present travel also by suspending the LOC issued by the second respondent till 30.06.2021. This Court is of the view that without expressing any view on the other contentions raised by both parties, the petitioner shall be granted the relief sought for on the same terms and conditions. Accordingly, the LOC issued by the second respondent shall remain suspended till 30.06.2021, so as to enable the petitioner to travel abroad, namely, Singapore, Malaysia and United Kingdom, any day on and from 27.04.2021 till 30.06.2021 on compliance of conditions imposed.
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2021 (6) TMI 404
Seeking enlargement on Bail - Money Laundering - transfer of money outside the country without making any import - the amount parked outside India - tampering of evidence is possible - HELD THAT:- Considering the serious nature of the offence, this Court declines to grant bail. Petition dismissed.
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2021 (6) TMI 403
Money Laundering - issuance of non-bailable warrant - HELD THAT:- The learned Designated Judge was pleased to register a complaint under Sections 3 and 4 of the PMLA Act and was pleased to issue summon against respondent no. 1-M/s. Sanket Media Private Limited (represented by the Directors-Shri PVS Sharma) and accused no. 2-Shri PVS Sarma who is in judicial custody and further, ordered to issue non-bailable warrant against accused nos. 3 and 4. It appears that before passing the order of issuance of non-bailable warrant against accused nos. 3 and 4, the Court should direct serving of the summons along with the copy of the complaint. If the accused seem to be avoiding the summons, the Court, in the second instance, should issue bailable-warrant. In the third instance, when the Court is fully satisfied that the accused is avoiding the Court proceedings intentionally, the process of issuance of the non-bailable warrant should be resorted to. In the order passed by the learned Designated Judge dated 21.01.2021 below Exh. 1 in PMLA Case No. 1 of 2021 in ECIR Number ECIR/01/STSZO/2020, non-bailable warrant against accused nos. 3 and 4 would be converted into bailable warrant against accused nos. 3 and 4. Rest of the order passed by the Court-below would remain as it is - Application disposed off.
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Central Excise
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2021 (6) TMI 398
CENVAT Credit - capital goods - availment of credit while availing depreciation - appellant claimed the depreciation on entire invoice value including the excise duty as well and 100% CENVAT Credit on these capital goods has also been availed on 31.7.2014 - HELD THAT:- When the appellant was subsequently asked about the said adjustment to have been made in the balance sheet for the year 2015-16 and 14-15, the appellant did not respond nor submitted any revised balance sheet for the aforesaid period. In absence thereof, it actually remained unclear as to whether the double benefit claimed by the appellant i.e. 100% availment of Cenvat Credit on the capital goods purchased in the year 2013-14 and 2014-15 and also claiming depreciation thereupon has actually been surrendered by the appellant or not. Infact Rule 4(4) of CENVAT Credit Rules, 2004 do not permit CENVAT Credit in respect of part of value of capital which represents duty of amount on such capital goods or which the manufacturer or producer of output service claims as depreciation under section 32 of the Income Tax Act. The adjustment in the balance sheet of 2015-16 cannot be considered as reversion of the depreciation claimed in the balance sheet of the year 2013-14 and 2014-15 - there is no infirmity in the findings of the Commissioner (Appeals) where it has been held that the adjudicating authority has grossly erred in interpreting the provisions of Rule 4(4) of CENVAT Credit Rules, 2004. Once the full depreciation was claimed, the respondent could not claim availment of cenvat credit on capital goods - appeal dismissed.
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