TMI Tax Updates - e-Newsletter
June 15, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

• Applicability of RCM on Director Remuneration -Version 3
• LATEST CHANGES IN GST
• CORPORATE SOCIAL RESPONSIBILITY: A CURSE OR CREDIT

Notifications

GST - States

• 13/2019- State Tax (Rate) - dated 10-6-2020 - Delhi SGST
  Amendment in Notification No. F.3( 15 )/Fin(Rev-1)/2017-18/DS-VI/380 dated the 30th June, 2017

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• 47/2020-State Tax - dated 12-6-2020 - Gujarat SGST
  Seeks to amend Notification No. 40/2020 – State Tax dated 07.05.2020 in respect of extension of validity of e-way bill generated on or before 24.03.2020 (whose validity has expired on or after 20th day of March 2020) till the 30th day of June.

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• 46/2020-State Tax - dated 12-6-2020 - Gujarat SGST
  Seeks to extend period to pass order under Section 54(7) of GGST Act

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Income Tax

• 32/2020 - dated 12-6-2020 - IT
  Seeks to amend Notification No. 44/2017 Dated 5th June, 2017

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Circulars / Instructions / Orders

SEBI

• SEBI/HO/IMD/DF4/CIR/P/2020/100 - dated 12-6-2020
  Investment by the sponsor or asset management company in the scheme

GST - States

• 869/GST-2 - dated 9-6-2020
  Withdrawal of Circular issued vide memo No.1882/GST-2, dt.26.07.2019
• 875/GST-2 - dated 9-6-2020
  Clarification in respect of certain challenges faced by the registered persons in implementation of provisions of GST Laws

Highlights / Catch Notes

Income Tax

• Levy of penalty u/s.271(1)(c) - defective notice - it would be too technical and pedantic to take the view that because in the printed notice the inapplicable portion was not struck off, the order of penalty should be set aside even though in the assessment order it was clearly mentioned that penalty proceedings u/s 271(1)(c) of the Act had been initiated separately for furnishing inaccurate particulars of income. - However penalty deleted since the assessee had declared the full facts.
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• Unexplained cash credits u/s 68 - accommodation entries - The cash amounts deposited by the customers i.e., the beneficiaries had been accounted for in the assessment orders of these beneficiaries. Therefore, question of adding such cash credits to the income of the assessee, more so when the assessee was only concerned with the commission earned on providing accommodation entries does not arise.
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• Reopening of assessment - if the Assessing Officer had no jurisdiction to initiate reassessment proceeding, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction infructuous. If the very basis for reopening assessment does not survive, orders on such re-opening would not survive too.
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• Reopening of assessment u/s 147 - if in the course of such proceedings the respondent comes to a conclusion that there were other grounds on which assessment can be reopened, the respondent can assess or reassess such income in the light of Explanation 3 to Section 147 of the Income Tax Act, 1961.
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• TP Adjustment - the finding returned by the Tribunal that the assessee did not provide any marketing support services to the AE and did not receive any commission from the AE for providing such marketing support services is a finding of fact based on appreciation of evidence and materials on record. Such a finding of fact cannot be said to be vitiated by any material irregularity or perversity
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• Penalty u/s.271A - non complying the provisions of Section 44AA - failure to maintain books of accounts - there is no any specific date or nearby date when the books of accounts were got damaged by the white ant which came to the notice of the assessee that on a particular date the books of accounts have been damaged by the white ant and there is also no date as to when the hard disks were corrupted - reasonable cause under which he may get relief u/s. 273B - Penalty confirmed.
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• Nature of loss - write off of business investment resulting into loss - business loss or capital loss - Apparently as per accounting policy and Notes to Accounts also the investments in the above company are long-term investments. - Additions confirmed.
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Customs

• Levy of Anti-Dumping Duty - It is also not even the case of the domestic producer that products having inlay work on the top layer were manufactured by it. As such, no material injury could have been caused to the domestic producer by this product - Thus, products having inlay work on the top layer have to be excluded from the scope of the product under consideration.
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• Valuation of imported goods - Diammonium Phosphate (DAP) - related party transaction - if the price fluctuation is reasonably explained the same can be accepted. In the instant case cogent reasons have been given along with evidence and post practice details. - no reason to reject the declared value.
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PMLA

• Jurisdiction of the National Company Law Tribunal, Hyderabad Bench-I, Hyderabad, to entertain the appeal - Money Laundering - diversion of money - Section 60(5) of Insolvency and Bankruptcy Code, 2016 - the NCLT has got no jurisdiction to go into the matters governed under the PMLA
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Service Tax

• Benefit of small scale exemption - Notification No. 06/2005-ST - Since each Mandi Samiti has its own PAN number and that all the statutory dues like Income tax, House Tax & other taxes are deposited separately & individually, thus each Samiti is an independent legal entity and should be treated as a separate body - clubbing receipts of all Samitis is not justified and benefit of exemption limits should be given to the appellant.
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• CENVAT Credit - Input Services - the insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering ‘output services’.
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Central Excise

• Clandestine Removal - Confiscation - The subject matter of said show-cause-notice is altogether different than the show-cause-notice demanding duty. Question of double jeopardy does not at all arise for cause of action of both SCNs to be different. No doubt duty demand cannot be made for the same goods after entire duty liability has been discharged. However, liability towards confiscation remains.
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VAT

• Compounding of Offences - suppression of sales turnover - failure to take registration - Kerala VAT Act - Special Rebate - t the assessee had been carrying on job-works as also the fact that the assessee is dis-entitled from claiming special rebate we modify the further addition to be at 25% (1/4th ) of the actual addition made on account of the sales and purchases as adopted by the Assessing Officer.
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Case Laws:

• GST

• 2020 (6) TMI 308
  Maintainability of appeal - existence of alternative remedy - appealable order - Section 112 of the C.G.S.T. Act, 2017 - HELD THAT:- It is not disputed that the impugned orders are appealable under Section 112 of the C.G.S.T. Act, 2017. The appeal is to be filed within 90 days from the date on which the order sought to be appealed is communicated to the person preferring the appeal - The instant petition has been filed bypassing the remedy of appeal under Section 112 of the Act on the ground that the appellate tribunal has not been constituted till date. The instant petition is disposed of by providing that the petitioner can invoke the remedy of filing appeal before the Tribunal in terms of the provisions of the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019.

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• 2020 (6) TMI 307
  Maintainability of appeal - appealable order or not - existence of alternative remedy - Imposition of penalty u/s 74 of the Central Goods and Service Tax Act, 2017 - suppressed turnover - case of petitioner is that suppression of turn over is not covered under section 74 of the Act, for the purpose of imposition of penalty - HELD THAT:- The order of penalty passed under section 74 of the Act or under section 122 of the Act, are both appealable under section 107 of the Act. Since the petitioner has an alternative remedy of filing an appeal against the order dated 3.2.2020, we do not deem it necessary to exercise our jurisdiction on the merits of the case - writ petition is dismissed on the ground of alternative of remedy.

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• 2020 (6) TMI 306
  Permission for withdrawal of petition - vires of Section 174(2) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Petitioner submits to withdraw these writ petitions and further seeks liberty of this Court to file it afresh by challenging the vires of Section 174(2) of the Central Goods and Service Tax Act, 2017. The vires of the provision has not been assailed in the present writ petitions. Petition dismissed as withdrawn.

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• Income Tax

• 2020 (6) TMI 305
  Levy of penalty u/s.271(1)(c) - defective notice as to impose penalty was in printed format but the inapplicable portion therein was not struck off - Disallowance of deduction u/s 36(i)(vii) on account of bad debt and subsequently claimed as a deduction u/s 37 as expenditure expended wholly and exclusively for the purpose of business - HELD THAT:- The statutory show-cause notice under Section 274 read with Section 271 of the Act proposing to impose penalty was issued on the same day when the assessment order was passed i.e., on 28.02.2006. The said notice was in printed form. Though at the bottom of the notice it was mentioned 'delete inappropriate words and paragraphs', unfortunately, the Assessing Officer omitted to strike off the inapplicable portion in the notice i.e., whether the penalty was sought to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of such income. Such omission certainly reflects a mechanical approach and non-application of mind on the part of the Assessing Officer. For breach of the second limb of Section 271 (1)(c) of the Act i.e., for furnishing inaccurate particulars of income that the penalty proceedings were initiated. The purpose of a notice is to make the noticee aware of the ground(s) of notice. In the present case, it would be too technical and pedantic to take the view that because in the printed notice the inapplicable portion was not struck off, the order of penalty should be set aside even though in the assessment order it was clearly mentioned that penalty proceedings under Section 271(1)(c) of the Act had been initiated separately for furnishing inaccurate particulars of income. Therefore, this contention urged by the appellant / assessee does not appeal to us and on this ground we are not inclined to interfere with the imposition of penalty. Coming to the facts of the present case, we have already noticed that in the assessment order dated 28.02.2006, Assessing Officer had ordered that since the assessee had furnished inaccurate particulars of income, penalty proceedings under Section 271(1)(c) were also initiated separately. Therefore, it was apparent that penalty proceedings were initiated for furnishing inaccurate particulars of income. Whether in the return of income the assessee had furnished inaccurate particulars of income? - Penalty cannot be imposed for alleged breach of one limb of Section 271(1)(c) of the Act while penalty proceedings were initiated for breach of the other limb of Section 271(1)(c). This has certainly vitiated the order of penalty. In appeal, CIT (A) took a curious view that submission of inaccurate particulars of income resulted into concealment, thus upholding the order of penalty. This obfuscated view of the CIT (A) was affirmed by the Tribunal. On the ground that while the charge against the assessee was of furnishing inaccurate particulars of income whereas the penalty was imposed additionally for concealment of income, the order of penalty as upheld by the lower appellate authorities could be justifiably interfered with, still we would like to examine whether there was furnishing of inaccurate particulars of income by the assessee in the first place because that was the core charge against the assessee. Reverting back to the present case it is quite evident that assessee had declared the full facts; the full factual matrix or facts were before the Assessing Officer while passing the asessment order. It is another matter that the claim based on such facts was found to be inadmissible. This is not the same thing as furnishing inaccurate particulars of income as contemplated under Section 271(1) (c) of the Act.

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• 2020 (6) TMI 304
  Unexplained cash credits u/s 68 - accommodation entries - commission income at the rate of 0.15% - Substantial question of law - HELD THAT:- It has been the consistent stand of the assessee which has been accepted by the First Appellate Authority and affirmed by the Tribunal that the business of the assessee centered around customers / beneficiaries making deposits in cash amounts and in lieu thereof taking cheques from the assessee for amounts slightly lesser than the quantum of deposits, the difference representing the commission realized by the assessee. The cash amounts deposited by the customers i.e., the beneficiaries had been accounted for in the assessment orders of these beneficiaries. Therefore, question of adding such cash credits to the income of the assessee, more so when the assessee was only concerned with the commission earned on providing accommodation entries does not arise. Percentage of commission - Tribunal had already held 0.1% commission in similar type of transactions to be a reasonable percentage of commission. Therefore Tribunal accepted the percentage of commission at 0.15% disclosed by the assessee itself. This finding is a plausible one and it cannot be said that the rate of commission was arrived at in an arbitrary manner. The same does not suffer from any error or infirmity to warrant interference, that too, under Section 260-A of the Act. - Decided against revenue.

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• 2020 (6) TMI 303
  Reopening of assessment - change of status - Independent entity for tax purposes by the tax authorities in India - statutory trust is converted into LLC [Limited Liability Company] - AICFL sought an advance ruling from AAR on the question as to whether it was entitled to carry forward accumulated capital loss ? - HELD THAT:- From the AAR application it came to the knowledge of the Assessing Officer that the loss claimed as set off under Section 74 and the claim of carry forward of loss by the assessee for the assessment year 2011-12 are not losses incurred by the assessee; rather those are losses incurred by Aberdeen Delaware Business Trust Asia Pacific Inc Japan Fund which is a different person being a trust fund or sub-trust. Respondent No.1 observed that carry forward and set off of loss is a privilege given by the Act to an assessee who has suffered the loss. Therefore, loss incurred by one assessee cannot be claimed to be carried forward or allowed to be set off by another assessee. It was on that basis that respondent No.1 issued the impugned notice under Section 148 re-opening the assessment for the assessment year 2011-12. It is quite apparent that the view taken by respondent No.1 which led to the formation of belief that income of the petitioner chargeable to tax has escaped assessment is totally erroneous being contrary to the ruling of AAR. It stood totally contradicted by the judgment of this Court in AICFL - contrary to the stand taken by the Revenue itself in the said writ proceeding. It was the stand of the Revenue that AICFL was not the assessee under the Act and it did not file return of income. Claiming of any carry forward of loss or set off of loss by AIFCL did not arise. On the other hand, it was the specific case of the Revenue that returns of income were filed by the three series (funds) i.e., the present three writ petitioners each of which are recognised as assessees under the Act. It was admitted by the Revenue that it is the series (funds) which would be entitled to carry forward the loss declared in the earlier returns of income to the assessment year 2011-12 and subsequent years, if otherwise eligible. In the reasons recorded by respondent No.1 it was precisely on the ground of change of status that the claim of the assessee i.e., the petitioner was found to be not acceptable which led to formation of the belief that income of the petitioner chargeable to tax had escaped assessment for the assessment year 201112. Therefore, the very foundation for formation of such belief is erroneous, which has been contradicted by this Court. In other words, after the judgment of this Court in AICFL, the very basis for re-opening the assessment no longer survived. Coming to the objection raised by learned standing counsel for the Revenue that in view of the fact that re-assessment order has been passed for the assessment year 2011-12 and assessment order for the assessment year 2012-13 petitioner should be relegated to the alternative remedy of appellate forum as provided under the statute, it is trite that if the Assessing Officer had no jurisdiction to initiate reassessment proceeding, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction infructuous. If the very basis for reopening assessment does not survive, orders on such re-opening would not survive too. The impugned notice under Section 148 of the Act issued by respondent No.1 for the assessment year 2011-12 cannot be sustained. - Decided in favour of assessee.

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• 2020 (6) TMI 302
  Non credit on the tax deducted at source (TDS) - rectification application pending - It is contended that the concerned officer of the Income Tax Department had not taken any call or decision on the rectification applications; particularly when Form 16A had been issued - HELD THAT:- Dispose of this writ petition by issuing directions to the 1st respondent to consider and dispose of all the rectification applications at Exts.P2 to P6; the particulars of which have already been given and the status of which is evident from Ext.P12 dated 09.06.2016, after affording an opportunity of hearing to the petitioner, by issuing a speaking order, as to whether the benefit of the credit on account of Form 16A TDS, the petitioner is entitled to or otherwise, within a period of two months from the date of receipt of a copy of this writ petition. Till such time, the demand raised at Exts.P14 and P14A shall be kept in abeyance. It is also made clear that the interim stay is only till the adjudication of the rectification applications.

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• 2020 (6) TMI 301
  Reopening of assessment u/s 147 - merger proceedings - whether assessee was not entitled to adjust the loss of the transferor company as the said company was not engaged in the manufacturing activity within the meaning of Section 72A(1)(a)? - HELD THAT:- Whether the petitioner was entitled to adjust the loss of the brought forward from the books of accounts of the transferor company was subject matter of discussion before the assessment orders were passed for the respective Assessment Years. Reopening of the assessment to deny the adjustments made under is therefore without jurisdiction. Therefore, the proviso to Section 147 puts an embargo on the respondent from proceeding further as no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. If in the course of such proceedings the respondent comes to a conclusion that there were other grounds on which assessment can be reopened, the respondent can assess or reassess such income in the light of Explanation 3 to Section 147 of the Income Tax Act, 1961. In the light of the above discussion, direct the petitioner to participate in the proceedings before the respondent. The respondent is however precluded from disturbing the adjustments made by the petitioner and allowed in their respective assessment orders under Section 72A(1)(a). The respondent may however look for such other aspects which may come within the purview of Explanation 3 to Section 147 of the Income Tax Act, 1961, for them to demand while passing orders.

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• 2020 (6) TMI 300
  TP Adjustment - Comparability - substantial question of law or fact - Tribunal after exhaustive analysis came to the conclusion that Motilal Oswal was not functionally similar to that of the assessee whereas ICRA and IDC were found to be functionally similar - HELD THAT:- Whether two entities are functionally similar or not and consequently whether one should be treated as a comparable of the other is a question of fact. The answer arrived at to such question would be a finding of fact. Unless such answer is vitiated by perversity, no substantial question of law can be said to arise therefrom. In the context of international transactions and the resultant transfer pricing analysis to determine Arm s Length Price. In the case of Principal Commisioner of Income Tax Vs. M/s. Softbrands India Pvt. Ltd. [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] held that it is not open to either the assessee or the Revenue to invoke the jurisdiction of the High Court under Section 260-A of the Act merely because the Tribunal comes to reverse or modify the findings given by the Transfer Pricing Officer and / or by the Dispute Resolution Panel leaving out certain comparables or adding certain comparables for determining the Arm s Length Price in the hands of the assessee. Unless perversity in the finding(s) of the Tribunal is established, an appeal under Section 260-A of the Act should not be entertained as no substantial question of law can be said to arise therefrom. Also in M/s. Eight Roads Investment Pvt. Ltd. [ 2019 (2) TMI 1806 - BOMBAY HIGH COURT] declined to entertain an appeal by the Revenue under Section 260A of the Act raising similar questions of exclusion and inclusion of comparables. No substantial question of law arises from the impugned order of the Tribunal. - Decided against revenue.

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• 2020 (6) TMI 299
  TP Adjustment - services to its AE in respect of marketing support services provided by the assessee to its A.E. in supply of gas turbines to PWD (CGW) in supplying gas turbines to the public works department (PWD) in carrying out construction for Common Wealth Games (CWG) - Whether Tribunal was correct in holding that the assessee did not render any services to its AE in respect of marketing support services provided by the assessee? - According to the assessee, the turbines were not supplied by it but were directly purchased by the party from the AE. Assessee also claimed that it did not have any permanent establishment (PE) in India - why no service charges/ commission was not charged by the assessee from the AE when the entire licensing work for the purchase of turbines by the Indian customers from the AE was undertaken by the assessee and the contract for installation/ commissioning/ maintenance of such turbines were done by the assessee? HELD THAT:- Tribunal noted that the basis of the entire transfer pricing adjustment was the supply of gas turbines to PWD (CWG) by the AE - relevant clauses of the contract and noted that eligibility condition for participating in tender was submission of registration certificate under Delhi Value Added Tax Act, 2004, besides submission of certificate of being original equipment manufacturer of gas turbines. Admittedly, assessee was not a manufacturer of gas turbines but its AE was. However, the AE did not have VAT registration certificate. Therefore, it was not qualified to participate in the tender. On the other hand, assessee had registration certificate under the Delhi VAT Act, 2004. Therefore, for participating in the tender and for obtaining the contract the bid was submitted in assessee s name though it was clearly understood by the contracting parties that the original equipment manufacturer of gas turbines was the AE. Tribunal found that there was nothing on record to suggest that the assessee had provided any services to its AE for sale of its gas based turbines either to PWD or to other customers in India. It was found as a matter of fact that in case of sales made by the AO to other parties in India, the assessee was in no way involved in the sales affected. The six parties had stated that they had negotiated directly with the AE for purchase of gas turbines and the assessee was in no way involved in such transactions. Tribunal also noted that for earlier assessment years too there were no transfer pricing adjustments. Thus, there was no basis for concluding that assessee had provided any market support services to the AE or received any commission from the AE for providing such marketing support services. In the absence of concrete evidence, transfer pricing adjustment could not have been made merely on presumptions and surmises. Therefore, the transfer pricing adjustment was deleted. No error or infirmity in the approach of the Tribunal which is quite reasonable and pragmatic. That apart, the finding returned by the Tribunal that the assessee did not provide any marketing support services to the AE and did not receive any commission from the AE for providing such marketing support services is a finding of fact based on appreciation of evidence and materials on record. Such a finding of fact cannot be said to be vitiated by any material irregularity or perversity. In the absence thereof, no substantial question of law arises from the impugned order of the Tribunal. - Decided against revenue

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• 2020 (6) TMI 298
  Penalty u/s.271(1)(c) - Penalty levied on tax allegedly sought to be evaded on the amount of interest earned on income tax refund - HELD THAT:- As decided in JAYANTI SUPER CONSTRUCTION (PREVIOULSY : SUPER CONSTRUCTION CO.) AT POST KAKOSHI TAL SIDHPUR VERSUS THE DCIT MEHSANA CIRCLE MEHSANA [ 2019 (6) TMI 466 - ITAT AHMEDABAD] we see force in the plea of the assessee that a person of his stature diligently paying large taxes would not imagine to keep away something from the very Department which issued the refund and which would be making the assessees assessment. Such brazen behaviour on the part of the assessee or of any assessee for that matter, cannot at all be ordinarily postulated. It is only on verification of records generated from Income Tax site that the information towards interest component has come to the fore. Failure of the assessee to look into the aforesaid form at the time of filing return would not indicate any contumacious or obstinate conduct on the part of the assessee, but possibly reflect laxity or some carelessness. Under these circumstances, we are of the view that benefit of doubt should go to the assessee, more so where we have a case in hand for determination of penalty which is penal in nature. The order of the CIT(A) is accordingly set aside and the Assessing Officer is directed to cancel this penalty on this score. - Decided in favour of assessee.

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• 2020 (6) TMI 297
  Condonation of delay - order of the ld. CIT(A) was not received by the assessee but the same was served upon some other person of the same name as of assessee of the village - HELD THAT:- Delay in filing the appeal has been explained by the assessee due to the misdelivery of the impugned order to some other person. The assessee has also filed an affidavit in support of the application for condonation of delay. We are satisfied with the explanation of the assessee for the delay of 60 days in filing the present appeal. Accordingly, in the facts and circumstances of the case and in the interest of justice, the delay of 60 days in filing the appeal is condoned. Ex parte order u/s 144 - undisclosed cash deposits - HELD THAT:- In the facts and circumstances of the case where the A.O. has made addition of the entire cash deposited in the bank account without examining the source being the sale proceeds as well as trading addition made for want of production of books of account and further the ld. CIT(A) has not decided the issue on merits, therefore, we are of the considered view that the matter is required to be reconsidered by conducting a proper verification and enquiry at the level of the A.O. of the evidences and books of account as produced by the assessee before this Tribunal. Accordingly, we set aside the matter to the record of the A.O. for adjudication of the same afresh after considering the documentary evidence produced by the assessee. Needless to say, the assessee be given appropriate opportunity of hearing before passing the order - Appeal of the assessee is allowed for statistical purposes only.

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• 2020 (6) TMI 296
  Determination of income of trust - Ascertaining the taxable income of the assessee in absence of registration u/s.12A - Revenue taxing the entire amount of receipts without allowing claim of expenditure - assess only net income of the assessee and not the entire gross receipts - CIT(A) did not give the benefit of provisions of Section 11 - HELD THAT:- In the case of Nirmal Agricultural Society vs ITO. [ 1998 (12) TMI 106 - ITAT HYDERABAD-B] has held that even in absence of registration u/s.12A of the Act, the Assessing Officer could assess only net income of the assessee and not the entire gross receipts. Accordingly, we have no hesitation to hold that even in absence of registration u/s.12A AO could assess only net income of the assessee and not the entire receipts because in absence of registration u/s.12A assessee should be assessed in the capacity of AOP on the commercial principles, wherein, the total gross receipts cannot be treated as income of the assessee without allowing revenue expenditure incurred by the assessee during the relevant same period and thus, we are inclined to hold that the authorities below were not right in disallowing the claim of expenditure of the assessee. AO has framed assessment u/s.143(1) of the Act without verifying the quantum of expenditure claimed by the assessee and the CIT(A) has not verified the same during the relevant appellate proceedings. Therefore, we direct the Assessing Officer to verify the quantum of expenditure claimed by the assessee. If the AO finds that the expenditures have been incurred for the object of the society then the AO is directed to allow the same and decide the issue as per law. - Appeal of the assessee is allowed for statistical purposes.

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• 2020 (6) TMI 295
  Penalty u/s.221(1) - non-payment of admitted tax - HELD THAT:- Since the very addition has been deleted and there is no outstanding demand of tax, the penalty u/s.221 of the Act is not sustainable. Also find support from the decision of Heddle Knowledge (P) Ltd., Vs. ITO [ 2018 (3) TMI 208 - ITAT MUMBAI] wherein the Tribunal has considered the amended provisions of 140A(3) of the Act w.e.f. 01-04-1989 and held that it does not envisage any penalty for non-payment of self-assessment tax and therefore the AO was not justified in levying penalty by taking recourse to Section 221(1). In view of the provisions of Section 221(2) delete the penalty levied u/s.221(1). Accordingly, the appeal of assessee is allowed.

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• 2020 (6) TMI 294
  Depreciation on Fuel oil Pump Test benches u/s 32 @ 80% - asset is not used for business or profession - assessee had claimed depreciation @ 40% in the year of purchase 2013-14 relevant to the A.Y 2014-15 - HELD THAT:- Assessee s claim of depreciation in the year of purchase and use i.e. financial year 2013-14 relevant to A.Y 2014-15 has been allowed by the AO and the asset has become part of the block of assets. It is also not in dispute that the asset has not been used in the relevant A.Y before us or in the subsequent two A.Ys. However, it is not the case of the Revenue that the equipment is not in existence and is not ready for use. Once the assessee has purchased the machinery and has put to use and thereafter has not used for lack of orders, the assessee cannot be denied the claim of depreciation. DR has also not brought to our notice any evidence to the contrary that the assessee had claimed depreciation @ 40% in the year of purchase 2013-14 relevant to the A.Y 2014-15 and the claim of depreciation subsequently cannot be disallowed. As relying on M/S. SPR PUBLICATIONS P. LTD. AND OTHERS VERSUS ACIT, CIRCLE 3 (2) HYDERABAD AND OTHERS [ 2015 (7) TMI 117 - ITAT HYDERABAD] grounds appeal raised by the assessee.

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• 2020 (6) TMI 293
  Penalty u/s 271(1)(c) - mistake in calculation of Capital Gains - incorrect claim has been made by the assessee by claiming of cost of acquisition - shares received in gift - HELD THAT:- Assessee s father had acquired the shares and after being allotted the bonus shares, the total number of his shares was 5220, and it was out of these 5220 shares, that the assessee has been gifted 2000 equity shares on 14.11.2014 - assessee has been allotted shares after allotment of bonus shares by her father and therefore, Explanation 2 of section 55(2) would definitely apply as the assessee has received the shares by way of gift. As per Explanation 2 of sub-section 2 of section 55, the cost of acquisition wherein an asset has been acquired u/s 49(1) then the cost of asset to the previous owner has to be considered as cost of acquisition and therefore find no incorrect claim has been made by the assessee by claiming of cost of acquisition. For whatever reasons during the assessment proceedings, the assessee has withdrawn the same and has also paid taxes. As satisfied that the claim of the assessee i.e. the claim of acquisition was bonafide and therefore, the penalty u/s 271(1) (c) is not justified. Interest income - Assessee has earned interest income the assessee has not offered the entire income to tax. This is certainly a case of furnishing of inaccurate particulars of income and the assessee has not explained as to why she did not report or offer the entire interest income to tax. Therefore, the penalty to the extent of interest income is confirmed. Assessee s appeal is partly allowed.

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• 2020 (6) TMI 292
  Penalty u/s.271A - non complying the provisions of Section 44AA - CIT(A) upheld the action of AO observing that non-maintenance of books of account by the assessee enabled the AO to levy penalty u/s.271A - AO did not accept the book results shown by the assessee for computing the taxable income and he rejected the profits shown by the assessee in the return of income and he applied Section 145(3) of the Act and computed the profit after applying 4% of the turnover shown by the assessee - HELD THAT:- If the income of the taxpayer falls above the prescribed limit, then he should have to maintain books of accounts u/s.44AA and he should produce the same as and when required by the AO enabling him to calculate correct taxable income of the assessee, which is lack in this case. As noted from the assessment order and submissions of the assessee that there is no any specific date or nearby date when the books of accounts were got damaged by the white ant which came to the notice of the assessee that on a particular date the books of accounts have been damaged by the white ant and there is also no date as to when the hard disks were corrupted. Assessee could not show any reasonable cause under which he may get relief u/s.273B of the Act. Therefore, the AO was justified in imposing the penalty u/s.271A of the Act for non-maintenance of the books of accounts. Accordingly, we do not see any reason to interfere in the order of the CIT(A) in upholding the penalty levied - Decided against assessee.

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• 2020 (6) TMI 291
  Exemption u/s 11 - grant of registration u/s 12AA denied - establishment of prepaid taxi booths - Charitable activity u/s 2(15) - HELD THAT:- CIT(DR) fails to dispute that the CIT(Exemption) herein has nowhere recorded a specific finding as to whether the assessee's dominant activity of providing prepaid taxi booths to railway passengers prima facie involves any profit making or not - circumstances involved in the instant list that such an establishment of prepaid taxi booths is collaboration with local taxi operators; and that too at the local police level, indeed brings the sense of security amongst the general public. Mr. Meena has sought to highlight the CIT(Exemption)'s findings that the setting up of prepaid taxi booths in the name of assessee society amounts to violation of the scheme of the constitution. Also the assessee's aggregate receipts indicate its profit motive whilst earning surplus of income over expenditure right from assessment year 2013-14 to 2016-17. We find no reason to sustain the Revenue's foregoing objections. In DIT(E) vs. Sabarmati Ashram Gaushala Trust Tax [ 2014 (1) TMI 1539 - GUJARAT HIGH COURT] holds that it is the concerned predominant activity that has to be considered as to whether it was in the nature of trade or commerce regarding general public utility limb u/s 2(15) of the Act. Hon'ble apex court's latest decision in M/s. Ananda Social and Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT] holds that commencement of charitable activities is not a mandatory condition for claiming 12AA registration. We have quoted the lordship's decision keeping in mind the fact that the CIT(Exemption) has declined the assessee's impugned registration on the ground that it has not filed income tax return for four assessment years (Supra). We thus are of the opinion that the CIT(Exemption) needs to examine the entire issue of assessee's registration afresh as per law. We accept the assessee's instant sole grievance for statistical purposes and restore the instant lis back to the CIT(Exemption) for his fresh adjudication within three effective opportunities of hearing - Assessee's appeal is allowed for statistical purposes

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• 2020 (6) TMI 290
  Deemed dividend u/s 2(22) (e) - Addition being the transaction with E-edit Infotech Pvt. - as per AO fresh advances have been given by the subsidiary companies to the assessee company and since such advances were not in the normal course of business, therefore the provisions of Section 2(22)(e) of the Act shall get attracted to the extent of accumulated profits of the respective subsidiary companies - HELD THAT:- Assessee emphasized the money advanced to the assessee company by EIPL (E-edit Infotech Pvt. Ltd.) is either an advance for property or current account transaction. CIT(A) has also gone through the audited account of E-edit Infotech Pvt. Ltd. and noticed that substantial part of business of E-Edit Infotech Pvt. Ltd. was granting of loans. DR submits before us that object clause of memorandum of association of E-Edit Infotech Pvt. Ltd. does not say that the company is in the business of money lending. It is also not clear that said advance by E-Edit Infotech Pvt. Ltd. is for advance for purchase of property / land. Both these issues have not been examined by ld. CIT(A). Therefore, we think it fit and appropriate to remit this issue back to the file of CIT(A) for fresh examination. Therefore, we set aside the order of CIT(A) and remit this issue back to the file of ld. CIT(A) for fresh adjudication in accordance to law. For statistical purposes, the ground raised by the Revenue is allowed. Addition u/s 2(22)(e) being trade advance received from EDP Software Ltd - whether such advance was given by EDP Software Ltd in the ordinary course of business and substantial business of the said company were to deal in loan and advance, as evident from the audited accounts? - HELD THAT:- Section 2(22) (e ) of the Act states that any payment by a company .for the individual benefit of any such shareholder, to the extent to which the company in either case possesses accumulated profits . That is, deemed dividend would be to the extent of accumulated profits of the company and that accumulated profit should be as on 31st March 2012 ( P.Y.2011-12), however, in assessee`s case under consideration the accumulated profit as on 31st March 2012 is in negative, that is,loss to the tune of ₹ 10,60,332/- , therefore, the provisions of section 2(22) (e ) does not apply.That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is therefore, upheld and the grounds of appeal of the Revenue are dismissed. Addition u/s 2(22)(e) on account of advances received from Nathvar Tracon Pvt. Ltd. - main grievance of the assessee is that the CIT(A) has confirmed the addition without appreciating that the assessee is having current account with M/s Nathvar Tracon Pvt. Ltd. (i.e. the company from whom the assessee took the advance and given advance were through current account). - HELD THAT:- As per the ld. Counsel for the assessee mere perusal of the ledger account, it is clear that the said account was for the purpose of doing business which was in the nature of current account wherein one can find debit entry and credit entry on several occasions which needs to be examined by the ld. CIT(A). Therefore, we are of the view that this matter should be remitted back to the file of ld. CIT(A) for fresh examination. We also make it clear that if the ld. CIT(A) having examined the ledger account finds that it is a current account, no addition is warranted as held by the Co-ordinate Bench of this Tribunal in case of M/s Snehapusph Barter Pvt. Ltd [ 2017 (10) TMI 934 - ITAT KOLKATA] - we set aside the order of ld. CIT(A) and remit this issue back to the file of ld. CIT(A) for fresh examination and adjudicate the issue in accordance to law.

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• 2020 (6) TMI 289
  Rectification application u/s 254 - assessee had deprived from raising objection regarding valuation made by DVO before the assessing officer and hence to be rectified - as directed AO to adopt the DVO`s valuation or Registered Stamp Valuation whichever is less, however in the said direction, the assessee had not been given an opportunity of raising objection regarding valuation made by DVO before the assessing officer - HELD THAT:- We note that AO was under a statutory obligation to serve notice of hearing to the DVO and assessee and afford them an opportunity of hearing but the AO has failed to do so, because this Tribunal has not given specific direction to AO while passing the order therefore it is a mistake apparent from record and should be rectified. Valuation report of the DVO is not the last word on valuation, it can be challenged by the assessee and for that we also rely on the judgment of Lovy Ranka Vs. DCIT [ 2019 (5) TMI 404 - ITAT AHMEDABAD ] - we direct the Assessing Officer to examine the DVO valuation report afresh and the assessee is at liberty to challenge the DVO report if it seems to him inconsistent on law as well as on facts. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (6) TMI 288
  Revision u/s 263 - non-enquiry qua the issue of long term capital gains claimed as exempt u/s 10(38) - Bogus LTCG - as per PCIT's since the AO had failed to examine all factual aspects prima facie indicating lack of genuineness in assessee's long term capital gains - HELD THAT:- We adopt the detailed discussion of M/s. Gitish Tikmani, HUF Ors. [ 2019 (9) TMI 1177 - ITAT KOLKATA] mutatis mutandis and hold that PCIT has erred herein whilst doubting genuineness of the assessee's long term capital gains based on all the supporting evidences. Assessing Officer had rightly treated the assessee s foregoing LTCG derived from sale of shares to be genuine - Assessing Officer had issued sec. 133(6) letter / notice to the M/s SHCL during the course of scrutiny which stood adequately replied in assessee s favour - relevant factual details in support of the assessee s share purchase document, contract notes, bank statement, (supra) already in the case records.There is not even an iota of material quoted against the assessee to have been engaged in all the foregoing artificial price rigging. The PCIT's revision directions under challenge are therefore reversed on merits as well. The AO's regular assessment dated 11.01.2016 stands restored as a necessary corollary. - Decided in favour of assessee.

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• 2020 (6) TMI 287
  Nature of loss - write off of business investment resulting into loss - business loss or capital loss - DR submitted that the investment made by the assessee is a capital investment - HELD THAT:- A current investment refers to an investment that is readily realizable and is held for not more than one year from the date on which such an investment is made. Long-term investment refers to an investment other than the current investment even though such investments are readily marketable. To determine the carrying amount for current investments to be stated in the balance sheet, the lower of cost or fair value of such an investment must be considered he carrying amount of the long-term investment is typically the cost of such an investment. However, if there is a permanent reduction in the value of the long-term investment, the carrying amount of such an investment is also reduced. Such a reduction is charged to P L statement. Such a reduction in the carrying amount is reversed when there is an increase in the value of such an investment or the reasons that lead to a reduction in its carrying amount do not exist anymore. Apparently as per accounting policy and Notes to Accounts also the investments in the above company are long-term investments. No infirmity in the orders of the lower authorities and confirmed their action. - Decided against assessee.

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• Customs

• 2020 (6) TMI 286
  Levy of Anti-Dumping Duty - Domestic injury - imports of Veneered Engineered Wooden Flooring originating in or exported from China PR, Malaysia, Indonesia and the European Union - Customs Notification dated 27 March, 2018 alongwith the Corrigendum issued by the Designated Authority on 02 April, 2018 and by Central Government on 10 May, 2018 - scope of the product under consideration - Two layer products having Ply Board as the bottom layer - Products having inlay work on the top layer - requirement of providing soft copy of the import data in excel format to the Appellants by the Designated Authority. Whether the two layer products having Ply Board as the bottom layer should also have been excluded from the scope of the product under consideration? - HELD THAT:- No finding has been recorded by the Designated Authority as to how two layer products having fibre board as the bottom layer could be included in the product under consideration because what was stated by the domestic producer as also in the Notification initiating anti-dumping duty was that the bottom layer has necessarily of real wood. It appears that in the final findings, the Designated Authority merely reiterated what was stated in the disclosure statement that the product under consideration can be of two or three layers without examining that the Appellants had sought exclusion of two layer products which had the bottom layer of ply board. The Notification issued by the Central Government on 27 March, 2018 and the subsequent corrigendum Notification issued on 10 May, 2018 also do not address this issue - It is, therefore, clear that the scope of the product under consideration has been enlarged by the Designated Authority by including two layer products having plywood as the bottom layer. Whether the products having inlay work on the top layer should also have been excluded from the scope of the product under consideration? - HELD THAT:- The Designated Authority, while dealing with this aspect, noted that the domestic producer, being a new industry, may not be producing each and every kind of product falling within the Veneered Engineered Wooden Flooring , but still it did not exclude such products. It needs to be remembered that it had been specifically pointed out by the Appellants that the products not manufactured by the domestic producer cannot possibly be the cause of any material injury to the domestic producer. It is also not even the case of the domestic producer that products having inlay work on the top layer were manufactured by it. As such, no material injury could have been caused to the domestic producer by this product - Thus, products having inlay work on the top layer have to be excluded from the scope of the product under consideration. Whether the Designated Authority should have provided a soft copy of the import data in excel format to the Appellants as it is in this format and manner that the data was taken on record for the purpose of investigation? - HELD THAT:- Neither the domestic producer has claimed any confidentiality on the soft format of the import data, nor it can possibly claim such confidentiality. Learned Counsel appearing for the Respondent has not been able to justify the practice adopted by the Designated Authority. Though this aspect would have no bearing in this case as the first two submissions advanced by the Appellants have found favour of the Bench, yet it is appropriate to accept the contention advanced on behalf of the Appellants that the Designated Authority, as a matter of practice, should provide the import data in the same form and manner in which it was taken on record. Appeal allowed - decided in favor of appellant.

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• 2020 (6) TMI 285
  Valuation of imported goods - Diammonium Phosphate (DAP) - related party transaction - whether the relationship has influenced the value of goods imported, or not? - HELD THAT:- Sub rule 3(3) (a) mandates that even if the buyer and seller are related, the transaction will be accepted if the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. In the instant case, the appellant have claimed that their transactions with the foreign supplier have been subjected to detailed examination by SVB and SVB has come to the conclusion that the transaction between them are not influence by relationship and, therefore, the same can be accepted. SVB order no. SVB/CUS/11/PV/2006 dated 22/06/2006 allows acceptance of the declared price only in the circumstance when no contemporaneous imports at higher price are noticed - In the instant case, it is seen that the goods imported by M/s Tata Chemicals Ltd. which were identical in nature, from the same supplier and the same country of origin imported at the same bottom cargo from the same port have been assessed at a much higher price. Thus, the Revenue is relying on conditional acceptance of the declared price as per para 11 of the SVB order dated 22/06/2006. The data given by the appellants confirms and the duty has always been paid on the price contracted with supplier and such price always corresponded to the prevailing price in the international journals. The evidence produced suggests that even when the prices published in international journals at the time of import were much lower the appellants paid duty on the contract prices which were much higher than the prevailing international prices - The dispute is if at the time of contract is not seen as relevant or the price at the time of contract. In the section 14 of the Customs Act, 1962, the price at the time of contract is more relevant. The interpretative Rule to the rule 3(3)(a) clearly lays down that Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price - if the price fluctuation is reasonably explained the same can be accepted. In the instant case cogent reasons have been given along with evidence and post practice details. Appeal allowed - decided in favor of appellant.

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• Securities / SEBI

• 2020 (6) TMI 284
  Reversal trades - manipulative and unfair trading - 5 Entities restrained from accessing or dealing in the securities market directly or indirectly for a period of 5 - 7 years - Further 11 entities, who have already undergone a debarment of more than 5 years from the date of the interim order have been directed to disgorge an amount of ₹ 3,05,99,174/- jointly and severally along with the 5 entities who have now been restrained along with interest @ 12% p.a. from December 17, 2012 till the date of payment - HELD THAT:- In a scheme of manipulative and unfair trading it is not necessary that every participant should be indulging in every type of trading violation or even in the same/similar magnitude. Once they are found to be part of a group trying to manipulate the volume or price of the scrip they became party to the violation. Hair splitting arguments that some traded more than others or on more days or some indulged in synchronized reversal and self trade while others did only one of those types do not cast away their violations. We agree with the contention of Dave that more disaggregated details are needed to prove reversal trade and in the impugned order only aggregates are given though we do not agree with their submission that reversal trade done on the same trading day only can be treated as reversal trades. As borne out from SEBI's record that detailed calculations regarding profits made by the trading entities in respect of two entities were not given to the appellants - We also note that there is considerable discrepancy between the profits as calculated by the appellants themselves as well as SEBI as given in the impugned order though the appellants claim that those calculations are based on the trade logs given by SEBI. In order to harmonize the appellants deserve to be given details of calculations made by SEBI in respect of all noticees which admittedly is not done in the instant matter. We pass the following directions:- (a) Appeal No. 356 of 2019 is allowed and we permit the appellant to liquidate the shares lying in the margin account of Ghogari to the extent of the legally permissible debit amount. (b) In respect of other 11 appeals while upholding the finding in the impugned order that the appellants have violated provisions of SEBI Act and PFUTP Regulations and therefore upholding the direction relating to the restraint imposed on the appellants we remit the matter to SEBI with the following directions:- (i) Bring out date-wise details of reversal trades in respect of the trading noticees. (ii) Bring out details of calculation of profits in respect of all the trading noticees. (iii) SEBI shall provide (i) and (ii) above to all the appellants and thereafter recalculate the amount of disgorgement against the appellants and pass an order within three months from the date of this order after giving an opportunity of hearing.

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• Insolvency & Bankruptcy

• 2020 (6) TMI 282
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - existence of Operational Debt and amount in default - HELD THAT:- This is an Application filed U/s.9 of the Code. According to the provisions of Sec.8 and 9, for initiation of resolution process U/s.9, the Applicant must send a demand notice, to which the Corporate Debtor should reply within 10 days brining to the attention of the Applicant either (a) existence of a dispute or record of pendency of suit or arbitration proceedings filed before receipt of such notice or (b) the payment of unpaid operational debt by placing evidence of payment. In the instant case, notices U/s.8 were served on 31.08.2019/04.09.19, which was replied to by the Corporate Debtor herein on 12.09.2019. In the reply, it has been contended that all terminal benefits as per terms of employment of the Applicant herein had already been paid and that the claim made by the Operational Creditor in the Demand Notice is not payable in law and is also disputed. This Adjudicating Authority observes that there is evidence on record in the form of the e-mail correspondence which indicates that there was pre-existence of dispute between the Applicant and Respondent in respect of the claims made by the Applicants - Since there exists a real dispute between the Applicant and Respondents in respect of claims, we are not inclined to admit this Application, and the same is hereby rejected. Application dismissed.

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• 2020 (6) TMI 281
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute or not - HELD THAT:- The dispute raised by the corporate debtor does not categorizes as dispute, and the plea of dispute is nothing but moonshine defence, created by Corporate Debtor against the applicant without any evidence and hence merit, which is clear afterthought to defeat the claim of applicant. The date of default is occurred from 26-12-2016 and hence the debt is not time-barred and the application is filed on 3-5-2019 within the period of limitation - The Applicant has filed an affidavit under section 9(3)(b) affirming that no notice of dispute has been given by the Corporate debtor relating to dispute of the unpaid operational debt - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. The present application is complete and the applicant has established the default in payment of the operational debt, hence is entitled to claim - Application admitted - moratorium declared.

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• 2020 (6) TMI 280
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - HELD THAT:- In the case on hand, the petition is filed in the name of M/s. Wind Water System, a proprietary concern as operational creditor, who is not a person for the purpose of filing the application u/s. 9 of the I B Code. Hence, on this ground itself the application is not maintainable. It is also a matter of record that the respondent had made complaints with regard to the quality of the machinery supplied by the petitioner and the respondent has placed on record copy of the e-mails exchanged between the two parties clearly establishes that there is/was pre-existing dispute before issuance of the demand notice. Thus the application is also not maintainable on account of pre-existing dispute which was raised prior to the issuance of demand notice. Application is not maintainable and is dismissed.

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• PMLA

• 2020 (6) TMI 283
  Jurisdiction of the National Company Law Tribunal, Hyderabad Bench-I, Hyderabad, to entertain the appeal - Money Laundering - diversion of money - Section 60(5) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The issue sought to be raised including the power under Article 226 of the Constitution of India is no longer res integra. In a recent pronouncement, the Apex Court in M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. VERSUS STATE OF KARNATAKA OTHERS [ 2019 (12) TMI 188 - SUPREME COURT] has dealt with the same, which states that the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. Thus, the NCLT has got no jurisdiction to go into the matters governed under the PMLA - the proceedings have been initiated before the jurisdictional Court by the petitioner pursuant to the Final Report filed by the Central Bureau of Investigation within the territorial jurisdiction of this Court. A mere fact that NCLT has been established now at Chennai would not be a ground to drive the petitioner to go on an appeal before it especially when arguments have been heard at length. Considering the facts of the case and invoking Section 14 of the Limitation Act, 1963, we grant a further period of six weeks to respondents 1 and 3 to take appropriate action in accordance with law under the PMLA by exhausting the remedy provided therein - Petition allowed.

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• Service Tax

• 2020 (6) TMI 279
  Recovery of Service tax - Renting of immovable property Service - benefit of exemption Notification No. 06/2005-ST dated 01.03.2005 - period Apri, 2009 to March, 2014 - threshold limit of ₹ 10 lakhs - HELD THAT:- Admittedly, the period of demand is 2009 to 2014 i.e. pre as well as post Negative Regime. It is also admitted that gross rent received by appellant during these years is ₹ 15253485/- whereupon service-tax payable is ₹ 1748702/-. It is nowhere has been denied that some part of rent is received for sheds/shops/godowns used for the purpose of agricultural produce. With the introduction of Negative List Regime of Taxation w.e.f. 1.7.2012, the appellants' services were excluded from the tax liability - It is clear that the appellants, being an Agricultural Produce Marketing Committee, is excluded from the tax liability in terms of the above provisions. Services relating to agricultural produce by way of storage or warehousing are in the negative list - the appellants are not liable to service tax on renting of immovable property used for storage of agricultural produce in the market area - the adjudicating authority has by twisting the legal position has denied the exemption by mentioning Mandi Parished wrongly. Valuation - inclusion of rent received - clubbing of incomes of various Mandi Parishads - HELD THAT:- The adjudicating authority has wrongly clubbed to incomes of various Mandi Parishads to that of appellant s value of rent received. Hence, said amount is also liable to be deducted - Since each Mandi Samiti has its own PAN number and that all the statutory dues like Income tax, House Tax other taxes are deposited separately individually, thus each Samiti is an independent legal entity and should be treated as a separate body - clubbing receipts of all Samitis is not justified and benefit of exemption limits should be given to the appellant. The rent received by appellant qua sheds rented for commercial purpose is liable to service tax. Also, the Proviso to Section 73(1) can be invoked only, where the service tax has not been paid or levied or short paid or short levied, by reason of fraud; or collusion; or willful mis-statement; or suppression of facts; or contravention of any of the provisions of Chapter V of Finance Act, 1994 or rules made thereunder with intent to evade payment of service tax by the person chargeable with service tax - Admittedly, the appellants are a Government Organisation; their functions are regulated by the said enactment and the rules. In such situation, it is clear that there will be a rebuttable presumption regarding non-existence of any of these ingredients on the part of the appellant. As there is no evidence of the appellants' malafide act to evade Service Tax liability by resorting to conduct, which will attract any of the serious allegation listed in the proviso to Section 73(1) of the Act - the demand confirmed against the appellant is liable to be set aside because the value of rent which falls within tax net and within normal period of limitations remains less than the threshold value of ₹ 10 lakhs in the impugned notification - appeal allowed - decided in favor of appellant.

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• 2020 (6) TMI 278
  CENVAT Credit - Input Services - Nexus with output service - service provided by the Deposit Insurance Corporation to Banks - Whether the insurance service received by the banks from the Deposit Insurance Corporation can be considered to be an input service ? - Larger Bench has been constituted as divergent views have been expressed by Division Benches of the Tribunal on this issue. HELD THAT:- The basic activity of a banking company, as contemplated under the definition of banking , either under the Deposit Insurance Act or the Banking Regulation Act, is to accept deposits from the public, which deposits are used for the purpose of lending or investment by the banks. Thus, the main activity of a banking company is to mobilise the resources received by the banks in the form of deposits from the public for the purpose of lending or investment. These deposits, thus generate returns for the banks. A part of the returns is given by the banks to the depositors as a consideration, which consideration is normally in the form of interest - What also needs to be noticed is that the lending and investment portfolio of banks are required to be funded by deposits and the funds of the shareholders. The Credit Deposit ratio is the percentage of how much the banks lend out of the deposits they have mobilised and also indicates how much of the core funds of the banks are being utilised for lending. A higher ratio indicates more reliance on deposits for lending. In such circumstances, the raising of deposits is an important function of the banks. In other words, the acceptance of deposits is not only a pre-requisite for lending but is also necessary for the banks since the entire activity undertaken by the bank begins with the acceptance of deposits, without which the subsequent activities of lending or investment cannot be undertaken by the banks. The insurance service received by the banks from the Deposit Insurance Corporation is not only mandatory but is also commercially expedient. In fact, without this service the banks may not be able to function at all. The service rendered by the Deposit Insurance Corporation to the banks would fall in the main part of the definition of input service , which is any service used by a provider of output service for providing an output service. Once this service falls in the main part of the definition of input service , it would not be necessary to examine whether the service would be covered by the inclusive part of the definition. It has also been noted that the service is not excluded from the definition of input service - The Assessable deposits, on which the premium is calculated, not only includes deposits such as savings, fixed, current, recurring, etc., but also certain balances appearing in the account of the banks such as credit balances in cash credit accounts, margin held against letters of credit, guarantees, bills purchased, etc., unpresented drafts and payment orders, provident fund balances relating to staff held by bank before they are transferred to Provident Fund Commissioner, amount representing pay orders/ bankers cheques/ demand drafts issued by closing deposit accounts with or without reference to depositors, but remaining unpaid etc. Thus, the contention of the Department that insurance premium is paid only on the deposits of the customers cannot also be accepted. Sub-rule (3B) has, therefore, been introduced with a view to disallow the credit of input and input services attributable to interest/investment income earned by banking companies. Having regard to the fact that it is difficult to ascertain the actual amount of input and input services used in earning interest income, sub-rule (3B) provides for reversal of 50% of input and input services - Thus, the reversal has been made, banks are entitled for credit of the entire amount of service tax paid on input service having nexus with the provisions of output service and it is irrelevant as to which part of the input service is used for provision of taxable output service and which part has been used for provisions of exempted service. Having made reversal under rule 6(3B), the banks have duly complied with the 2004 Rules and hence they are entitled to avail CENVAT credit on the insurance service received from the Deposit Insurance Corporation. In the present appeals also, in order to render any output service under the category of banking and other financial services , it is necessary for a bank to register itself with the Deposit Insurance Corporation and pay premium after registration. A bank, without obtaining registration and without payment of insurance premium on the deposits outstanding, cannot render any output service of banking and other financial service . Thus, the insurance service provided by the Deposit Insurance Corporation to the banks is an input service and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering output services . The appeals may now be placed for hearing before the respective Division Benches of the Tribunal.

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• Central Excise

• 2020 (6) TMI 277
  Clandestine Removal - Department alleged that the appellant had full knowledge regarding the manufacture of excisable goods in the factory premises and subsequent removal without following the due process of law and without payment of Central Excise Duty - Confiscation - Redemption Fine - Penalty - applicability of Section 11AC of Central Excise Act - HELD THAT:- The only element for the applicability thereof, no doubt, is mensrea that is the intent to avoid the tax liability either in full or in half. The above observation that appellant knew about his goods to be excisable not only this he was also aware about the concept of SSI exemptions but failed to prove that his entire stock is covered under said SSI exemption. The absence of Central Excise Registration in the given scenario is nothing but the intent of the appellant to avoid his tax liability - It has been settled that for imposition of penalty mensrea has to be there. Further, admittedly, appellant has paid the duty as was demanded vide the subsequent show-cause-notice. The prosecution of the said subsequent show-cause-notice met the fate of deemed conclusion on the payment of duty demanded therein by the appellant - I am not at all convinced with the argument that the said deemed conclusion is applicable to the impugned show-cause-notice. The present show-cause-notice is with respect to violation of mandatory duty to obtain the Central Excise Registration before manufacturing and clearing the excisable goods. The said show-cause-notice is about confiscating such goods which have been, clandestinely, removed on account of the said violation. The subject matter of said show-cause-notice is altogether different than the show-cause-notice demanding duty. Question of double jeopardy does not at all arise for cause of action of both SCNs to be different. No doubt duty demand cannot be made for the same goods after entire duty liability has been discharged. However, liability towards confiscation remains. Appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2020 (6) TMI 276
  Validity of Assessment Order - Recovery of the amounts due in term of the assessment order - CST Act, 1956 read with Assam Value Added Tax Act, 2003 - violation of principles of Natural Justice - HELD THAT:- List this matter along with WP(C) No. 2278/2020. Till the next date fixed, no coercive is to be taken by the respondent authorities in respect of the recovery of tax sought to be made by the impugned notice dated 28th December, 2019.

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• 2020 (6) TMI 275
  Stay on operation of the assessment order - deposit of pre-requisite money as required U/S 70(2) of the TVAT Act, 2004 - HELD THAT:- This court finds sufficient force in the submission made by Mr. Bhowmik, learned Advocate General. But as from the record it has surfaced that the said amount has been shown on account as the excess payment, the revisional authority (the Commissioner of Taxes, Government of Tripura) is directed to consider the said excess amount and adjust the same against the pre-requisite payment in terms of Section 70(2) of the TVAT Act, if the said amount is really the excess amount. Since the revisional authority has fixed date on 07.07.2020 for consideration of admission, till that day, no coercive action shall be taken against the petitioner on the basis of the assessment order of the dated 17.01.2020 for the assessment years of 2016-17 and 2017-18. In addition thereto, the direction of the Commissioner of Taxes to the respondent No.5 to deduct the amount i.e. the assessed tax and penalty from his bill as reflected in the communication dated 15.05.2020 (annexure-2 to the writ petition), shall remain suspended till the decision in the revision petition. Petition disposed off.

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• 2020 (6) TMI 274
  Compounding of Offences - suppression of sales turnover - failure to take registration - Kerala VAT Act - Special Rebate - HELD THAT:- In the present case , what assumes significance is that the assessee failed to establish that the stock available belongs to a registered dealer; and that it reached the assesse s hands as per the permissible mode and with supporting prescribed documents, under the KVAT Act - there are no reason to interfere with the assessment made adopting the sales turnover as detected by the Intelligence Officer. Purchase Turnover - HELD THAT:- It is very clear from the records that the assessee had not been maintaining proper books of accounts and there were purchases made of gold and sale of ornaments. The mere fact that the sale effected was minimal would not detract from the fact that the assessee would have probably suppressed other transactions also for which there would be no material available. The purchases found on inspection, to have been made, were above the limit prescribed under Section 15, for registration. The sale made of the goods purchased after manufacture would definitely have been higher. The Intelligence Officer had only adopted the actual turnover suppression and in the best judgment assessment, the Assessing Officer was well within his power to make an estimation of the purchase made which also had to suffer tax under Section 6(2). When there is no material to evidence the purchases or the tax paid on that count, the estimation made is perfectly in order. Special Rebate - Whether the Tribunal erred in allowing the Special rebate under Section 12, in the context of the specific prohibition under sub-section (2) of Section 12? - HELD THAT:- There would be no question of law arising from the assessment made insofar as the equal addition as made by the Assessing Officer and affirmed by the Tribunal with respect to both the liability under Section 6 and Section 6(2). However considering the contention of the assessee that the assessee had been carrying on job-works as also the fact that the assessee is dis-entitled from claiming special rebate we modify the further addition to be at 25% (1/4th )of the actual addition made on account of the sales and purchases as adopted by the Assessing Officer. Application disposed off.

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• Indian Laws

• 2020 (6) TMI 273
  Grant of mandatory injunction - Raising finances to meet the requirement of deposit of ₹4 crores in terms of the decision of the Hon ble Supreme Court by creating an appropriate security in respect of such number of unsold units - raising of funds by way of issuance of non-convertible debentures (NCD s) on a private placement basis in two tranches - HELD THAT:- Applicants in the present application are defendant No.1 and 3 in the suit who are acting in representative capacity of defendant No.4. As noted above, the present suit has been filed by the plaintiffs for recovery of a sum of ₹448,75,58,347/- from defendant Nos. 1 to 4 jointly and severally and for permanent and mandatory injunction. The dispute between the parties is investment of the plaintiff No.2 in defendant No.4 of which defendant No.3 is 99% shareholder. The plaintiffs claim that by virtue of Shares Subscription Agreement and the other documents agreed to between the parties, the plaintiff No.2 is the only secured creditor of defendant No.4 and thus has first charge on the property of defendant No.4. Case of the applicants is that as per the Resolution dated 15th January, 2018 defendant No.1 has been absolved of part liabilities post the Resolution, however he continues to be responsible for the litigation including the one in relation to POCSO where the award for a sum of ₹45 crores has been passed against defendant No.4. ₹1 crore has already been deposited from the account of defendant No.4 pursuant to the extension of time granted by the Hon'ble Supreme Court on 11th May, 2020 and if a further sum of ₹4 crores is not deposited, the defendant No.4 would have to incur the liability of a sum of ₹45 crores immediately and thus the requirement of Section 1(a) that the property in dispute in the suit i.e. property of defendant No.4 is in danger of being wasted or alienated is satisfied. Even if the suit is finally disposed of the reliefs as sought by the applicants/defendant Nos.1 and 3 cannot be granted to them in the absence of a counter claim. The reliefs sought are not in the nature of seeking restoration of status-quo ante or the position at the time when the suit was filed. The applicants/defendant Nos.1 and 3 have also not made out a strong case so that during the trial they would be in a position to assert the right as sought to be enforced by the present application. Further, the reliefs sought by the applicants/defendant Nos.1 and 3 do not arise out of the plaintiffs cause of action nor are incidental thereto. To consider the plea of equity raised, it would be appropriate to note that though the claim of the applicants is that in the defendant No.4 the land was brought by the applicants and they also infused a capital of ₹130 crores, however when this Court raised further queries from learned counsel for the applicants the said claim is found to be apparently incorrect, for the reason it was accepted that the land for the project was transferred to defendant No.4 on payment of approximately ₹130 crores taken as a loan and when the agreement was entered into with the plaintiffs, from the sum of ₹190 crores infused by the plaintiffs received as debenture subscriptions, the liability of ₹130 crores which was the value of the project land was discharged. Thus the investment of the applicants in the defendant No.4 project even as per their claim is to the extent of approximately ₹130 crores which fact is also refuted by the plaintiffs according to whom the defendant Nos.1 to 3 hold Series B Non-Convertible Debentures of defendant No.4 for an amount of ₹17 crores only and not ₹130 corres as claimed. Thus the investment of the plaintiff No.2 in defendant No.4 being admittedly ₹190 crores is far more than that of the applicants. This Court finds that the reliefs as sought by the applicants/defendant Nos.1 and 3 cannot be granted either under Order XXXIX Rule 1(a) CPC or by way of equity - Application dismissed.

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• 2020 (6) TMI 272
  Custodian appointed under the Special Court (Trial of Offences Relating to Transactions in Securities) Act 1992 - diversion of large amounts from banks and financial institutions - Whether respondent no.1 proves that the claim in this petition is barred by law of limitation? - HELD THAT:- No submissions have been made on behalf of respondent no.1 on this aspect. Although Mr.Mehta did support the Respondent no.1 s plea of the claim being barred, the issues have not been recast but considering the defence in Respondent no.4 s written statement, although the claim against Respondent no.4 may appear to be barred, the issue as framed will have to be answered in the negative. Save and except for the 4th Respondents contention in the written statement no submissions with reference to facts have been made on this aspect on behalf of Respondent no.1 or Respondent no.4. The issue has not been seriously pursued by Respondent no.4 probably in view of the lack of evidence on behalf of respondent no.1 - Issue answered in negative. Whether the petitioner and/or respondents nos.2 and 3 prove that respondent nos.2 and 3 had advanced to respondent no.1 a loan of ₹ 3, 44, 12, 538/- as alleged in paragraph 9 of the affidavit dated 19.1.1996 on behalf of respondent no.2? - Whether the petitioner and/or respondents nos.2 and 3 prove that respondent nos.2 and 3 advanced the said amount to respondent no.1 against pledge of shares as alleged in paragraph 7 of the affidavit of respondent no.2 dated 2.6.2000? - HELD THAT:- The requirement of proving books of account is well recognized. The burden of proof lies on the party who would fail if no evidence was led by either side. It is also a cardinal rule of evidence and as embodied in Section 34 of the Evidence Act that entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability. In the case at hand merely producing the copy of the Cash Book will not suffice. Respondent no.2 was required to prove by leading evidence of the purported loan transaction - issues answered in negative. Whether respondent no.1 proves that respondent no.1 was doing business of discounting cheques with respondent nos.2 and/or 3 as alleged in paragraph 5(o) of the affidavit of respondents nos.1 dated 3.3.1999? - Whether respondent no.1 proves that respondent no.4 was the agent of respondent nos.2 and/or 3 as alleged in the affidavit-in-reply of respondent no.1 dated 3.3.1999? - HELD THAT:- The only material admission is the statement of cheques received from respondent no.2 and these are set out in Exhibit 1. The fact that these cheques were received cannot be disputed but the case of the respondent no.2 that these monies were advanced to respondent no.1 by way of a loan is seriously disputed. This loan had not been repaid. On the other hand the case of the 1 st respondent and the witness Rajen Vakil is that all these amounts were withdrawn in cash and paid over to respondent no.3 T.B Ruia through his constituent Suresh Jajoo. None of these statements in the affidavit otherwise assists the respondent no.2 in proving its case that the amounts were advanced as of loan and was repayable by M/s. T.H Vakil to DMPL. Indeed no advantage can be gained by the Custodian from this affidavit or the admissions therein - the Custodian was clearly handicapped for want of evidence from respondent nos.2 3. Vakil not having offered himself for cross examination cannot seek benefits of his deposition and to that extent his evidence must be ignored - the issues wherein the burden of proof is cast upon the 1st respondent must be answered in the negative since in my view respondent no.1 has failed to discharge this burden - issue answered in the negative. Whether respondent no.1 proves that respondent no.4 issued a writing acknowledging receipt of the cash amounts paid by respondent no.1 as alleged in paragraph 5(i) of the affidavit of respondent no.1 dated 3.3.1999? - HELD THAT:- There is absolutely no evidence on this aspect. The 1st respondent not having proved the document, it is not possible to accept this plea or come to any conclusion. The 1st respondent has not presented himself for cross examination. A bald statement to the effect that respondent no.4 had issued an acknowledgement would have to be tested by the 1st respondent being made available for cross examined by respondent no.4. This not having occasioned. It is not possible to hold in favour of the 1st respondent on this issue. Issue no.6 must and therefore is answered in the negative. Whether the petitioner proves that respondent no.1 illegally or fraudulently diverted moneys from respondent no.2 and paid them over to respondent no.2 and/or 3 and if so, whether such illegal transaction would not give a valid discharge to respondent of his liability to respondent no.2 as alleged in paragraph 6 of the petition? - HELD THAT:- The 2nd respondent has not led any evidence. The affidavits of Dangarwala filed in these proceedings are of no avail. The only attempt in all these affidavits is to obfuscate and that will not help the petitioner to prove the allegations of illegal fraudulent diversion of monies from DMPL and its payment if any to respondent nos.2 or 3. The question of the 1st respondent therefore getting a valid discharge based on these averments cannot arise - issue answered in negative. Whether the petitioner is entitled to recover any amount from respondent no.1 and if so, what amount? - HELD THAT:- There is no favour of the petitioner -Custodian on this issue - the petitioner is not entitled to recover any amount from the 1st respondent. Whether respondent no.1 received the cheques drawn by respondent no.2 in favour of respondent no.1 as set out in the annexure to Exhibit B to the petition aggregating in all to ₹ 3, 44, 12, 538/- for discounting or as an advance/loan repayable with interest at 24% p.a.? - HELD THAT:- There should be no difficulty in answering this issue in affirmative. Since the respondent no.1 as in his Advocate s reply dated 3rd September, 1994 to the demand notice by the Custodian admitted receipt of these cheques - Furthermore, even in the affidavits filed in reply to the petition particularly affidavits dated 3rd March, 1999 of Rajen C. Vakil and in the affidavit of evidence dated 14th November, 2006 admitted the fact that cheques had been received and enchased in his current account. This admission also inures to the benefit of respondent no.2 to the limited extent that receipt of the cheques and encashment of the cheques is not in dispute. That being the case the deposition and the affidavit to the extent of such admission can be read in evidence in view of what I have observed above, however, the fact whether the amount was received for discounting or as an advance/ loan repayable with interest at 24% p.a. has not been established. It is only receipt of ₹ 3, 44, 12, 538/- that has been established. Whether respondent no.4 was an agent/representative of respondent no.2? - HELD THAT:- Ruia himself being a party respondent to the present proceedings. This respondent as the agent of disclosed principal is therefore not personally liable for the debts of respondent no.3. (emphasis supplied). This limited admission helps in establishing the fact that respondent no.4 was indeed an agent to the extent admitted. However the consequences of such agency are something that we will have to consider - issue answered in affirmative. Whether respondent no.1 after encashing the said cheques paid or repaid the amounts of the respective cheques to respondent no.4 less discounting commission of 1%? - Whether respondent no.1 paid or repaid the said amounts to respondent no.4 as an agent/representative of respondent no.2? - HELD THAT:- The 1st respondent has not proved payment or repayment of the amounts, so also apart from his bare statement that the discounting commission at 1% was deducted by him, there is nothing to show what had actually transpired. This is not to suggest that 1st respondent is still holding on to these funds. There is no evidence of that either. Respondent no.2 or 3 have not led evidence or assisted the Custodian in this respect - Issues answered in the negative. Whether respondent no.4 paid the said amounts alleged to have been received by him from respondent no.1 to respondent no.2 and/or to respondent no.3 as director of respondent no.2 or in any other capacity? - HELD THAT:- Only if respondent no.1 establishes payment of cash to respondent no.4 to the extent withdrawn by him from the proceeds of the cheques said to have been issued to the respondent no.1 firm by respondent no.2 would the second part of issue no.13 arise inasmuch as, if such payment was established respondent no.4 would be require to establish the utilization of those funds but in the case at hand, there is no evidence of respondent no.4 having received these funds. Thus, in this petition, absent any such direct evidence it is not possible to hold that respondent no.4 paid over the amounts to respondent nos.2 and/or 3 in any capacity - the issue is answered in the negative for want of any evidence. Whether the respondent no.1 is entitled in law to contend that respondent no.1 had paid/repaid the respective amounts of the said cheques to respondent no.2 in cash in view of the prohibition contained in Sec.269T of the Income Tax Act against repayment in cash? - HELD THAT:- There is no evidence of such amounts being paid in cash. There being no factual basis the issue is rendered academic and hence Issue no.14 in my view does not fall for consideration on facts - issue does not arise. Does respondent no.1 prove that respondent no.2 or respondent no.3 had appointed respondent no.4 as the authorized signatory or agent of respondent nos.2 and 3 and that respondent no.4 had been engaged to collect cash amounts upon the cheques in question being discounted? - Does respondent no.1 prove that the cheques in question were received from respondent no.4 on behalf of respondent nos.2 and 3 for the purpose of cheque discounting? - HELD THAT:- The presumption of contract to the contrary may not arise in view of disclosure as aforesaid. There is no evidence on record to establish that respondent no.4 had been engaged to collect amounts in cash from the cheques being discounted - the discounting of cheques itself has not been established by the 1st respondent. It was incumbent upon 1st respondent to establish that he had indulged in cash discounting business at the instance of Suresh N. Shah Others and in that process had paid over the proceeds of the cheques admittedly received by the respondent no.1 from respondent no.2 to respondent no.4 in cash - This has not been established and hence issue is answered in the negative. Is it proved that the disputed transactions are fraudulent and a mode of diverting monies from respondent no.2 to respondent no.3? - HELD THAT:- The entire scheme of operations does allude to a plan which has not been fleshed out in evidence and in fact there is not even an attempt to establish the case that the transactions were fraudulent. No doubt the transactions were questionable and do not appear to be regular arms-length transactions. The receipt of cheques by respondent no.1 is admitted but thereafter the trail has gone cold. Respondent no.1 has failed to establish his case against respondent nos.2, 3 or 4 in this petition. Respondent nos.2 and 3 also have failed to establish their case against respondent no.1. It is the case of respondent no.2 that the Custodian is concerned about and in view of the fact that the respondent no. 2 appears to have distanced itself from the transaction and the initial claim and the disclosure made by them, it appears that the attempt to obfuscate operates across the board - the disputed transactions have not been established - issue answered in negative. Does the petition disclose a cause of action against respondent no.4? - HELD THAT:- This issue though inappropriately worded requires respondent no.1 to prove that the cheques were received from respondent no.4 on behalf of respondent no.2 3 for cheque discounting. This arises from the contention of the respondent no.1 that the cheques were handed over by respondent nos.2 to Suresh Jajoo respondent no.4 who would then hand over the cheques to respondent no.1 for being encashed through his bank accounts, for the cash to be withdrawn and paid over to respondent no.4. There is absolutely no evidence to support this plea and for want of evidence this issue is liable to be answered in the negative and is accordingly answered. Whether in view of the petitioners contentions in para 6 of the petition that the transactions were illegal, the petitioner/ respondent no.2 are entitled to see for the monies under such illegal transactions? - HELD THAT:- The issue requires proof that the disputed transactions are fraudulent and a mode of diverting monies from the 2nd respondent to the 3rd respondent. Absent any evidence on behalf of 1st respondent and or on behalf of respondent nos.2 3 there is no occasion to come to the conclusion that the disputed transactions were fraudulent and for diverting monies. The entire scheme of operations does allude to a plan which has not been fleshed out in evidence and in fact there is not even an attempt to establish the case that the transactions were fraudulent. No doubt the transactions were questionable and do not appear to be regular arms-length transactions. The receipt of cheques by respondent no.1 is admitted but thereafter the trail has gone cold. Respondent no.1 has failed to establish his case against respondent nos.2, 3 or 4 in this petition. Respondent nos.2 and 3 also have failed to establish their case against respondent no.1. It is the case of respondent no.2 that the Custodian is concerned about and in view of the fact that the respondent no. 2 appears to have distanced itself from the transaction and the initial claim and the disclosure made by them, it appears that the attempt to obfuscate operates across the board - the disputed transactions have not been established - issue answered in negative. Whether the present petition is maintainable and is not barred by the principles of res-judicata or constructive res- judicata? - HELD THAT:- The petition does disclose a cause of action against respondent no.4 since the funds are allegedly routed through respondent no.4 who was reportedly the last recipient of these funds. The fact that Jajoo himself has denied the transaction is of no consequence. Pleadings do point to the possible involvement of Suresh Jajoo and hence, the issue must be and is answered in the affirmative. Notwithstanding the respondent no.2 never having claimed a sum of ₹ 3, 44, 12, 538/- as being outstanding and receivable by respondent no.2 from respondent no.4 whether the petitioner can still claim the said amount from respondent no.4? - HELD THAT:- The affidavit of evidence to the extent it concerns admission in favour of the respondents or any of them can only be considered since the evidence affidavit has been filed in Court and having been taken on record forms part of the evidentiary record. However, his positive case that the amounts had been paid over in cash to the other respondents have not been established - the petitioner and/or respondent no.2 are not entitled to sue on the basis of such a plea that the transactions were illegal specially since the transactions have not been clearly established. There is no evidence of what the transaction really was. The true nature of the transaction is not brought out, apparently in order to layer and shield purpose of routing of funds - issue answered in the negative. Whether the petitioner is entitled to any relief, and if so, what relief? - HELD THAT:- A specific role has been attributed to respondent no.4, however, in the absence of evidence, it is not possible to indict the 4th respondent in the facts of the present case. In the facts of the case no effective relief can be granted to the Custodian, on that basis for want of evidence. The issue is now academic and is answered in the affirmative for that limited purpose only. In view of the above I am of the view that the petitioner is not entitled to any relief - issue answered in the negative.

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