Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 15, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Validity of assessment - order passed u/s 143(3A) & 143(3B) - Petitioner is also right in his contention that the CBDT notification dated 31.03.2021, to which, we have made a reference hereinabove, also says, in effect, the same thing, i.e., that after 01.04.2021, the assessment order could have only have been passed in consonance with the provisions of Section 144B of the Act. - HC
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Validity of assessment - non issuance of a show cause notice-cum-draft assessment order; which is a mandatory requirement u/s 144B - The impugned assessment order dated 30.04.2021, as also the notice of demand issued under Section 156 of the Act, and notice for initiation of penalty proceedings issued under Section 270A of the Act, of even date, shall stand set aside. - HC
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Reopening of assessment u/s 147 r.w.s. 148 - We reject the argument of AR that even in the case where there is no assessment made by the AO or the return is processed merely u/s 143 (1) of the income tax act, there is a requirement of having any tangible material with the assessing officer to reopen the case of the assessee. We hold that in such cases, there is no requirement of tangible material for reopening of assessment. - AT
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Addition as income from on money - Year of assessment - addition based on seized material emanating out of the search - Since the nature and source of credit being on- money receipt received from sale of flats had been duly accepted by the ld.AO in the remand report, the same would construe only business receipt and not cash credit u/s.68 of the Act - AT
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Addition u/s 68 - In this case, the AO has made additions only on the basis of statement recorded from third party ignoring various evidences filed by the assessee to prove unsecured loans taken from said parties. Therefore, AO was erred in making addition towards unsecured loans and consequent interest paid on said loans u/s.68 - AT
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Validity of assessment order passed u/s.153A - ACIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed additions with reference to incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be considered as actual approval in law. - AT
Customs
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In the event of non-filing of an appeal, the litigants are not only deprived of an opportunity, but the High Court cannot appreciate those facts culled out with reference to the documents and evidences. The appellate authority in the event of passing an order, with reference to the facts and the grounds raised, it would be convenient for the High Court to consider the further proceedings, if any in the light of the findings by the original authority as well as by the appellate authority. These aspects are vital in order to form a clear opinion, which would be of paramount importance to render justice - Thus, the importance of an appeal under a statute cannot be undermined by the High Court by dispensing with the appellate remedy. - HC
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The petitioner, instead of preferring an appeal, has chosen to move the present writ petition and such an approach cannot be appreciated by this Court, in view of the fact that the Appellate authority namely, the Commissioner of Customs (Appeals) is competent to deal with all the legal grounds raised in the present writ petition by the petitioner - Even legal practitioners are allowed before the Commissioner of Customs (Appeals) and therefore, the interest of the litigants are to be protected and their representatives or learned counsels can contest the appeal by following the procedures as contemplated. - HC
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Demand of arrears of amount payable towards Cost Recovery Charges - Container Freight Licence - implementation of the VI Pay Commission as a result of which the salaries of the Central Government Employees were increased drastically - unless there is an appropriate amendment to the provisions and the Customs Act,1962 and the Rules made thereunder which fall within the four corners of Part XIV of the Constitution of India Cost Recovery Charges equivalent to the Salaries packs paid to such officials of the Customs Department cannot be justified. - In absence of any direct notification/government order specifying the rates to be levied towards Cost Recovery Charges under the aforesaid Regulation for deploying its officers the collection of Charges on Cost Recovery basis from the petitioner has been made contrary to the above Regulation - HC
Indian Laws
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Dishonor of Cheque - petitioners were neither signatories to the cheque nor parties to the agreements - Partner of the partnership firm - territorial jurisdiction - Since no mandatory enquiry was undertaken in clear terms under Section 202 of the Code even through the accused resided beyond the territorial jurisdiction of the learned Trial Court, the order issuing process and the subsequent orders passed by the learned Trial Court are set aside - HC
IBC
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Initiation of CIRP - If the parties fail to file any documents, inspite of opportunity being granted, then the Tribunal is perforce required to arrive at a conclusion based on the documents available on record and cannot arrive at a conclusion on premises and suppositions. - The debt as claimed by the Financial Creditor is time barred and the Financial Creditor has failed to place on record any shred of document recognized under the law to substantiate that the debt falls well within the period of limitation - Tri
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CIRP proceedings - Fraudulent activity on the part of Corporate Debtor - the e-mail communications being exchanged between the parties, it is seen that the Corporate Debtor has acted in violation of the terms and conditions of the purchase order and as such the Corporate Debtor is not entitled for any further payment to be made by the Respondent in this regard as claimed in the Application. - Tri
VAT
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Refund of excess tax paid - It is upon the petitioner approaching this Court and filing the above Writ Petition, the respondents have set in motion the process of according approval to withhold the refund by invoking Section 40(2) of the Act, as admittedly, the proceeding of the 3rd respondent is dt. 28.11.2020 - the 3rd respondent had admittedly not exercised powers under Section 40(2) of the Act and could not have issued proceedings on 28.11.2020, while this Court is seized of the matter. - The respondents are hereby directed to refund the amount - HC
Case Laws:
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GST
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2021 (6) TMI 431
Profiteering - seeking eight weeks time be given for submitting the explanations in view Covid-19 pandemic situation prevailing in the country - HELD THAT:- These two Writ Petitions are also disposed of directing the respective petitioners to submit explanations to the notices dated 16.12.2019 and 24.12.2019 issued by the 4th respondent within a period of eight (8) weeks from today. The petitioners are also permitted to take all defences available to them at law in the said explanations. The 4th respondent is directed to consider the same and pass a reasoned order in accordance with law and communicate it to the petitioners. Petition disposed off.
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Income Tax
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2021 (6) TMI 433
Validity of assessment - order passed u/s 143(3A) 143(3B) - challenge to the assessment order is made on the ground that it was passed without jurisdiction - HELD THAT:- In this particular case, the reason that we are proceeding ahead with the matter, is that, we are persuaded by the arguments advanced by Mr. Vohra that the impugned assessment order dated 15.04.2021 could not have been passed under Section 143(3A) and 143(3B) after March 31, 2021, having regard to the provisions of Section 143(3D) of the Act. Petitioner is also right in his contention that the CBDT notification dated 31.03.2021, to which, we have made a reference hereinabove, also says, in effect, the same thing, i.e., that after 01.04.2021, the assessment order could have only have been passed in consonance with the provisions of Section 144B of the Act. We are inclined to set aside the impugned assessment order dated 15.04.2021 as also the notice of demand issued under Section 156 of the Act and the notice for initiating penalty proceedings issued under Section 274 read with Section 270A of the Act. The respondent/revenue will have liberty to proceed with the assessment process, albeit, under the provisions of Section 144B.
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2021 (6) TMI 430
Validity of assessment - non issuance of a show cause notice-cum-draft assessment order; which is a mandatory requirement under Section 144B - HELD THAT:- Since this aspect of the matter is not in dispute, we are of the view that the prayers made in the petition have to be allowed. It is ordered accordingly. The impugned assessment order dated 30.04.2021, as also the notice of demand issued under Section 156 of the Act, and notice for initiation of penalty proceedings issued under Section 270A of the Act, of even date, shall stand set aside. Liberty is, however, given to the respondents/revenue to pass a fresh assessment order, albeit, after adhering to the statutory requirements, inter alia, contained in Section 144B of the Act.
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2021 (6) TMI 422
Correct head of income - income from letting out of some of business assets - Business Income or income from house property - HELD THAT:- As perused the order passed by co-ordinate bench of Tribunal in assessee s own case for A.Y. 2011-12 [ 2020 (2) TMI 69 - ITAT DELHI] wherein proposition mooted out by the assessee that the rental income from letting out steel units and quarter situated in the steel units is to be treated as income from house property has been accepted. As revenue has failed to bring on record any change in the facts and circumstances of the case to treat the income by way of rental income earned by the assessee from letting out of steel units and quarters situated therein to be treated as business income. When there is no change in the facts and circumstances of the case, and this rental income has been accepted as income from the house property in earlier assessment years for 2007-08, 2009-10, 2010-11 and 2011-12, there is no ground to depart from the principles of Consistency . So finding no illegality or perversity in the impugned order passed by Ld. CIT(A), the appeal filed by the revenue is hereby dismissed.
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2021 (6) TMI 421
Reopening of assessment u/s 148 - deduction u/s 54EC - HELD THAT:- In the computation of the total income the assessee has claimed deduction with respect to 2 properties claimed as a residential property located in two different cities, where the income tax act provided for a residential house property. On the basis of the computation of the total income furnished by the assessee, the learned assessing officer is of prima facie of the view that assessee has claimed deduction u/s 54 of the act with respect to 2 properties situated at two different places, which is not permissible.We find that ld AO did not err in reopening of assessment. Argument of the AR that in absence of any tangible material, the reopening cannot be made by the learned assessing officer, admittedly in this case the assessment was not made but the return was processed u/s 143 (1) of the act - the question that the learned authorised representative is posing before us is whether in case of no assessment or merely processing of the return u/s 143 (1) the learned assessing officer should have a tangible material necessarily to reopen the case of the assessee is wrong. We reject the argument of AR that even in the case where there is no assessment made by the AO or the return is processed merely u/s 143 (1) of the income tax act, there is a requirement of having any tangible material with the assessing officer to reopen the case of the assessee. We hold that in such cases, there is no requirement of tangible material for reopening of assessment. In view of this, we do not find any infirmity in the reasons recorded by the learned assessing officer for reopening of the assessment. Whether fair market value of the property sold during the year as on 1/4/1981 is required to be taken as per the report of the registered valuer produced by the assessee before the assessing officer or the value adopted by the learned assessing officer is required to be taken? - There is a stark difference between the facts before the coordinate bench as well as the facts before us. In the case before that bench, the valuation report by the registered valuer was also having the comparable sale instances. Further, in that particular case, the higher value as on 1/4/1981 was also supported by the fact that even at the time of sale, also, the property was sold at much higher rates than circle rates and the valuation as on 1/4/1981 was higher than the market rates. However, before us the learned assessing officer has given a specific instance about land rates prevailing as on 1/4/1981 which is far less then valuation rates adopted by the registered valuer and further there is no corroboration of the same with the rates at the time of sale. Further base of valuation of sale instances after four years were taken. The basis for land rates was taken on pin code Numbers. However, in principle we agree that assessing officer is not a valuation officer and departmental valuation officer is officer who is technically competent to value a property. Here in this case the valuation report of authorised valuer also does not inspire any confidence. In view of this, the decision relied upon by the learned authorised representative vehemently, we also set-aside this issue back to the file of the learned assessing officer but with a direction to refer the matter to the departmental valuation Officer for determining fair market value of the property as on 1/4/1981 and thereafter the assessing officer, based on that report, compute the fair market value of the property for indexation purposes accordingly. Assessee must be afforded an opportunity of hearing and assessee may support valuation by further evidences. In view of this Ground no 1 of the appeal is allowed with above directions. Deduction u/s 54 of the Act for more than one residential House - We hold that assessee is entitled for deduction u/s 54 of the act of more than one residential house property and lower authorities were not correct in denying the deduction of flat purchased in Mumbai. Deduction u/s 54EC - Deduction u/s 54 EC of the income tax act we find that issue is squarely covered in favour of the assessee by the above decision.Even otherwise the tax effect involved in the appeal of the ld AO is below ₹ 50,00,000/- , therefore also it is not maintainable.
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2021 (6) TMI 420
Addition as income from on money - Year of assessment - addition based on seized material emanating out of the search - CIT(A) holding that the cash received by the assessee was in the nature of business receipt and could not be treated as income u/s.68 - whether CIT(A) erred in restricting the disallowance @25% of the cash received when no evidence of expenditure of balance 75% of the cash was produced by the assessee and therefore genuineness and allowability of the same could not be examined? - HELD THAT:- As decided in M/S. TULIP LAND DEVELOPERS P. LTD. VERSUS DY. CIT, CENTRAL CIRCLE-6 (2) , MUMBAI [ 2021 (2) TMI 1170 - ITAT MUMBAI] as duly mentioned by the ld. AO in the remand report and merely because PAN was not mentioned and the confirmation from those parties for making payment of on-money to the assessee was not available, the ld. AO had not accepted to the contentions of the assessee in the remand report. CIT(A) on these facts and circumstances accepted to the plea that the on-money receipts should get taxed only as business receipt of the assessee as it is admittedly received from the sale of flats to various parties by the assessee and thereafter, proceeded to estimate the profit element thereon @25% as against 100% adopted by the ld. AO. While doing so, we find that the ld. CIT(A) had categorically stated that the provisions of Section 68 cannot be made applicable to the said on-money receipt. Since the nature and source of credit being on- money receipt received from sale of flats had been duly accepted by the ld.AO in the remand report, the same would construe only business receipt and not cash credit u/s.68 of the Act and accordingly, the ground No.1 raised by the Revenue for both the years on this limited aspect, deserves to be dismissed.t. Addition equal to 25% of the on money received - At what rate of the on money should be brought to tax? - Following Tribunal case in the sister concern cases of the assessee group [ 2021 (2) TMI 1095 - ITAT MUMBAI] on identical facts and circumstances emanating out of the same seized material and same search, we direct the ld. AO to add only 12% of the on-money receipts as undisclosed income of the assessee. Accordingly, the grounds raised by the Revenue are dismissed and the grounds raised by the assessee are partly allowed.
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2021 (6) TMI 419
Deduction u/s 80lB - appellant is processing sweet corn which is vegetable - HELD THAT:- As relying on assessee's own case [ 2021 (5) TMI 657 - ITAT HYDERABAD] we hold that the assessee is eligible for deduction on the profit derived from processing, preservatives and packing of fruits and vegetables as contemplated in section 80(B(11A) of the IT Act. However, on perusal of computation of income placed in paper book at page No. 2, the entire net profit has been taken, whereas, on examination of financial statements, the assessee has shown gross receipts in Trading and Profit Loss Account In our considered opinion, some of the income/receipts shown are, prima-facie, not eligible for deduction. Therefore, we remit the issue to the file of the AO with a direction to recalculate the eligible profit for deduction as per section 80IB(11A) and the assessee is directed to provide all necessary details before the AO in support of its claim of deduction and cooperate in completing the correct profit element for eligible for deduction u/s 80IB(11A) . Appeal of the assessee is partly allowed
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2021 (6) TMI 418
Unexplained cash deposited in the bank account - gifts receipt from parents - HELD THAT:- AO himself has accepted the receipt from supply of building materials at ₹ 7,08,320/-. So far as the other items are concerned, however, they are not fully substantiated in absence of maintenance of any regular books of account as assessee has opted for the presumptive taxation scheme u/s 44AF. The opening cash balance of ₹ 2,50,256/- in my opinion cannot be accepted in toto. At the same time, it cannot be said that there is no opening cash balance. Therefore, adoption of opening cash balance at ₹ 2 lakh on estimate basis may be adopted for explaining the source of deposit in the bank account. Although the parents have filed the confirmations of gifts and they are very senior citizens and the father is deriving income from agriculture, at the same time, the gift was received in cash and, therefore, in absence of any other documentary evidence, the source of the parents to extend gift of ₹ 2,50,000/- to the assessee remains doubtful. However, some funds must be available with the parents who are very senior citizens to extend gift to their son. Therefore, gift of ₹ 1 lakh each by both the parents to the assessee under the facts and circumstances may be considered as reasonable to be explained as available to the assessee for deposit. Therefore, the claim of the assessee that he has received gifts from parents to the tune of ₹ 2,50,000/- is not accepted in full and gifts only to the tune of ₹ 2 lakh is accepted as explained for depositing in the bank account. So far as the cash available for deposit in the bank out of earlier withdrawals is concerned, here also the same is on estimation basis. An amount of ₹ 3,50,000/- may be accepted for earlier cash withdrawals eligible for re-deposit in the bank account as against ₹ 3,92,330/- since the assessee has estimated his personal withdrawals only for eight months. Thus, in effect, an amount of ₹ 1,42,330/- remains unexplained to be deposited in the bank account. Therefore, considering the totality of the facts of the case, I am of the considered opinion that an amount of ₹ 1,50,000/- on estimate basis is the unexplained cash deposited in the bank account which requires addition. Accordingly, the order of the CIT(A) is modified and the AO is directed to restrict the addition to ₹ 1,50,000/- to the returned income. The grounds raised by the assessee are partly allowed.
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2021 (6) TMI 417
Validity of assessment passed u/s.143(3) r.w.s. 153C - proof of incriminating material found as a result of search or not - addition u/s 68 - HELD THAT:- In this case, the AO has made additions on the basis of statement recorded from one Shri V.K. Keshari without providing said statement to the assessee and also without providing an opportunity of cross examination, even though the assessee has sought for such cross examination, in contravention of principles of natural justice. Therefore, on this count additions made by the AO cannot be sustained. Addition u/s 68 - As per the findings of the ld.CIT(A), the assessee has filed name, address and PAN card of the company and its Directors. The assessee has also filed financial statements of loan creditors and their bank statements. As per financial statements, creditors are having sufficient source of income to establish creditworthiness of loan transactions with the assessee. Further, all loan transactions are routed through proper banking channels - the assessee has repaid said loans along with interest much before the date of initiation of search proceedings in the case of the assessee. As also an admitted fact that the assessee has obtained loans through Shri K.K. Parsuramka, a Chartered Accountant by profession and said loans are backed by equitable mortgage of immovable properties in favour of Shri K.K. Parsuramka, the person who arranged loans. From the above findings of the ld.CIT(A), it is very clear that the assessee had discharged its burden cast upon u/s.68 of the Act. In this case, the AO has made additions only on the basis of statement recorded from third party ignoring various evidences filed by the assessee to prove unsecured loans taken from said parties. Therefore, AO was erred in making addition towards unsecured loans and consequent interest paid on said loans u/s.68 - Appeal of revenue dismissed.
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2021 (6) TMI 416
Validity of assessment order passed u/s.153A - mandatory approval as required u/s.153D - as argued statutory and mandatory approval as required u/s.153D has not been obtained and the approval sought and granted was totally mechanical and ritualistic only - HELD THAT:- From the said approval u/s 153D, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination/investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. The sanctioning authority has, in effect, abdicated his statutory functions and delightfully relegated his statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. ACIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed additions with reference to incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be considered as actual approval in law. Hence, we quash the assessment framed u/s. 153A of the Act on this additional ground alone. - Decided in favour of assessee.
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Customs
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2021 (6) TMI 437
Seeking permission to travel abroad - seeking release of passport - smuggling - Foreign Currency - right to travel - Fundamental Rights - offence punishable under Section 135 of the Customs Act 1962 - HELD THAT:- There is no serious challenge to the medical grounds made by the petitioner in the application which was filed before the Chief Metropolitan Magistrate, on the basis of which petitioner was allowed to travel abroad. In the reply filed by the respondent, it appears that respondent is not averse to the foreign travel of the petitioner if the petitioner is directed to deposit 50% of the amount recovered from her in the form of Indian currency. In the instant case, according to the respondent, amount of USD 90000 was recovered from the petitioner which was around ₹ 65,00,000/- in Indian currency. The petitioner in the instant case is a lady, aged about 54 years, and there is nothing on record to show that she has previously involved in these types of activities. The condition to deposit 50% of the recovered amount to my opinion would be quite onerous. The petitioner is allowed to travel abroad to her country, i.e. Taiwan, for a period of six months i.e. from 12.06.2021 to 11.12.2021 on deposit of amount of ₹ 15,00,000/- lakhs in the form of an FDR in the name of Registrar General of this Court, and subjects imposed.
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2021 (6) TMI 436
Maintainability of petition - availability of alternative remedy - petition is filed on the ground that the impugned order has been passed without awaiting the decision of the licensing authority based on the letters sent by the writ petitioner, stating that they have fulfilled the export obligations - HELD THAT:- In the present case, the appeal lies before the Commissioner of Customs (Appeals) before whom the legal practitioners are permitted to test the cases. When the litigants are having the benefit of legal assistance through the legal practitioners, then such a remedy must be exhausted by the aggrieved persons before approaching the High Court under Article 226 of the Constitution of India as stated above. Disputed facts cannot be adjudicated by the High Court nor a finding can be given in a writ proceedings without exhausting the appellate remedy and therefore, the petitioner is bound to approach the appellate authority under the Act. The introductory portion of the impugned order reveals that an appeal against the impugned order lies with the Commissioner of Customs (Appeals), 5th Floor, Customs House, Chennai, under Section 128(1) of the Customs Act, 1962, within 60 days of the communication of the impugned order. In the event of non-filing of an appeal, the litigants are not only deprived of an opportunity, but the High Court cannot appreciate those facts culled out with reference to the documents and evidences. The appellate authority in the event of passing an order, with reference to the facts and the grounds raised, it would be convenient for the High Court to consider the further proceedings, if any in the light of the findings by the original authority as well as by the appellate authority. These aspects are vital in order to form a clear opinion, which would be of paramount importance to render justice - Thus, the importance of an appeal under a statute cannot be undermined by the High Court by dispensing with the appellate remedy. Petition dismissed.
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2021 (6) TMI 435
Maintainability of appeal - fulfilment of conditions for maintaining the appeal - rejection of petition mainly on the ground that the procedures as contemplated are not followed and the Principles of Natural Justice has been violated - principles of natural justice - HELD THAT:- This Court is of the considered opinion that statutory appellate remedy provided under the Act is a valuable right conferred on a litigant - such a right cannot be dispensed with in a routine manner, even by the High Court under Article 226 of the Constitution of India. Facilitating an aggrieved person to prefer an appeal, has got a definite meaning and an opportunity is provided to consider the original documents and the grounds raised by the aggrieved parties. Therefore, the appellate remedy contemplated under the statute cannot be dispensed with in a routine manner in a writ proceedings. In all such cases, the appeal remedy is to be exhausted by the aggrieved person by following the procedures as contemplated. The appellate authorities are competent to grant even the interim orders and consider the appeal on merits by affording opportunity to all the parties. In the present case, the impugned order itself reveals that the petitioner, if aggrieved, has to prefer an appeal before the Commissioner of Customs (Appeals), Custom House, 5th Floor, Chennai 600 001, under Section 128(1) of the Customs Act, 1962, within 60 days of communication of the impugned order. The petitioner, instead of preferring an appeal, has chosen to move the present writ petition and such an approach cannot be appreciated by this Court, in view of the fact that the Appellate authority namely, the Commissioner of Customs (Appeals) is competent to deal with all the legal grounds raised in the present writ petition by the petitioner - Even legal practitioners are allowed before the Commissioner of Customs (Appeals) and therefore, the interest of the litigants are to be protected and their representatives or learned counsels can contest the appeal by following the procedures as contemplated. Petition dismissed.
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2021 (6) TMI 432
Jurisdiction - Proper Officer u/s 28 of the Customs Act, 1962, or not - Officers of the Directorate of Revenue Intelligence - power to issue demand notice - HELD THAT:- In the case of the Commissioner of COMMISSIONER OF CUSTOMS, TUTICORIN VERSUS CESTAT, CHENNAI, M/S. SRI RAJENDRA MANSUKHLAL SHAH, SHRI. MOHAMMED AZAM, M/S. VISAL TRIBOTECH (P) LTD., SHRI. R. PARRIVALLAL AND M/S. SHRI. TARUN SALOT [ 2019 (12) TMI 249 - MADRAS HIGH COURT ] a Division Bench of this Court, to which one of us (T.S.SIVAGNANAM, J.) was a party, had an occasion to test the correctness of an identical order passed by the Tribunal and by a common Judgment, dated 04.10.2019, set aside the order of the Tribunal and restored the appeals to the file of the Tribunal to be kept pending and await the decision of the Honourable Supreme Court. It was also made clear that the appellant Department shall not initiate any coercive action against the respondents / assessees. The appeals are restored to the file of the Tribunal with a direction to keep the appeals pending and await the decision of the Honourable Supreme Court - Appeal allowed.
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2021 (6) TMI 429
Demand of arrears of amount payable towards Cost Recovery Charges - Container Freight Licence - implementation of the VI Pay Commission as a result of which the salaries of the Central Government Employees were increased drastically - HELD THAT:- There is ample power vested with the Central Government and the Central Board of Excise and Customs as the case may be to make regulations for levying fees in respect of applications, amendment of documents, furnishing of duplicates of documents, issue of certificates, and supply of statistics, and for rendering of any services - there is no difficulty in arriving at a conclusion that both the Central Government and the Central Board of Excise and Customs have power to make a regulation Handling of Cargo in Customs Areas Regulations, 2009 and to levy Cost Recovery Charges from service providers to whom it deputes its officer. The practice of levy and payment of Cost Recovery Charges (CRC) from Custom Cargo Service Providers such as Container Freight Stations (CFS) and Internal Container Depots, (ICDS) is to be viewed from the historical perspective. Private participants were encouraged to develop them near the ports to relieve the congestion at ports for proper storage and Faster clearance of the import and export goods - the concept of a CFS is known as Off Dock Container Yard (CY), which acts as an extended arm of the port to facilitate the clearance of the goods to reduce the congestion and delay in the Ports. There is no question of the Customs Department deploying any person who is not an employee of the Customs Department or was already in the Public Service of the Union. Though, section 158(2) of the Customs Act, 1962 permits the Central Government or the Central Board of Excise and Customs to frame Rules for rendering of any services by officers of the Customs, under the provisions of the Customs Act, 1962, it cannot permit recovery of the entire salary to be paid to the such amounts are payable by the Central Government. Cost Recovery Charges (CRC) can be only in proportion to the excess amount that may be required to be paid to officers on being deployed in such facilities on special occasions - unless there is an appropriate amendment to the provisions and the Customs Act,1962 and the Rules made thereunder which fall within the four corners of Part XIV of the Constitution of India Cost Recovery Charges equivalent to the Salaries packs paid to such officials of the Customs Department cannot be justified. In absence of any direct notification/government order specifying the rates to be levied towards Cost Recovery Charges under the aforesaid Regulation for deploying its officers the collection of Charges on Cost Recovery basis from the petitioner has been made contrary to the above Regulation - Since the petitioner has reportedly paid an amount ₹ 45,01,960/- in the past amounting. Neither the aforesaid amount nor the excess amount that was demanded would have been payable by the petitioner had a proper notification/order been issued. The amount collected also cannot be directed to be refunded back to the petitioner as the petitioner would have passed on incidence of such amount to the customer who had availed of services of the petitioner. Therefore, there can be no order for refunding of the amount. Therefore, only way out is to regularize the amounts already paid collected in the past. While disposing these writ petitions in favour of the petitioner by directing the respondents to regularize the payments already made by the petitioner and by directing the respondents to grant waiver to the petitioner for the period after the petitioner has achieved the required benchmark/criteria as per the CBEC Circular dated 12.09.20-5 bearing Reference F.No.434/17/2004 - it is directed to issue appropriate notifications for the benefit of Trade and Public within a period of 6 months specifying the rates /charges payable by a Customs Cargo Service Providers on Cost Recovery Charges(CRC)basis operating under the Provisions of the Handling of Cargo in Customs Areas Regulations, 2009 in consonance with the provisions of the Customs Act, 1962 and the Constitution of India. Petition disposed off.
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2021 (6) TMI 425
Seeking grant of Regular Bail - Smuggling - Gold - Section 439 (1) (b) Cr.P.C. - HELD THAT:- Section 439 (1) (b) Cr.P.C. deals with special powers of High Court or Court of Session regarding bail and that any condition imposed by a Magistrate when releasing a person on bail be set aside or modified. As stated above, the respondent-authorities have completed the investigation and filed charge sheet and the same was taken on file vide C.C.No.14 of 2020. In view of the fact that the respondent has already filed charge sheet and the same is taken on file vide C.C.No.14 of 2020, only remedy available to the petitioner is to file application under Section 451 Cr.P.C. in the said C.C. seeking interim custody of her passport before the Court below. It is relevant to note that the petitioner has not filed any application under Section 451 Cr.P.C. seeking interim custody of her passport after filing of charge sheet in C.C.No.14 of 2020. She has filed the said application under Section 451 Cr.P.C. vide Crl.MP.No.15 of 2020 at crime stage. The only recourse left to the petitioner in accordance with law is to file an application under Section 451 Cr.P.C. in C.C.No.14 of 2020 seeking interim custody of her passport - Petition dismissed.
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Insolvency & Bankruptcy
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2021 (6) TMI 415
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- Section 3 of the Limitation Act, 1963 states that subject to the provisions contained in sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence. In the present case, the Corporate Debtor has prima facie set up the Limitation as a defence in the present Application - From Part - IV of the Application, it is seen that the Financial Creditor has failed to state the Date of Default in the Application. Further, no pleadings as such has been made by the Financial Creditor as to how the present Application falls well within the period of limitation. The Respondent has mentioned the 'Date of Default', however has failed to come up with any pleading in support of the same, and the Hon'ble Apex Court, in the absence of any pleading or averment in regard to the Date of Default and the acknowledgments being made subsequent to it, has stated that the debt is barred by limitation. As to the facts of the present case, the Financial Creditor, has failed to mention the 'Date of Default' in Part - IV of the Application, let alone any averments being made in relation to the acknowledgment of debt - In order to arrive at a conclusion and in order to ascertain the 'debt' and 'default', the Adjudicating Authority has to come to the conclusion only based upon the documents which are filed by the parties. If the parties fail to file any documents, inspite of opportunity being granted, then the Tribunal is perforce required to arrive at a conclusion based on the documents available on record and cannot arrive at a conclusion on premises and suppositions. The debt as claimed by the Financial Creditor is time barred and the Financial Creditor has failed to place on record any shred of document recognized under the law to substantiate that the debt falls well within the period of limitation - this Adjudicating Authority, based on the documents filed by the Financial Creditor, comes to an irresistible conclusion that the debt on the part of the Respondent/Corporate Guarantor is time barred and as such the Application filed by the Financial Creditor is liable to be dismissed - Application dismissed.
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2021 (6) TMI 414
CIRP proceedings - fraudulent activity on the part of Corporate Debtor - whether the Respondent is liable to pay a sum of ₹ 39,08,034/- to the Corporate Debtor is required to be decided in the present Application as per the documents being placed by Learned Counsels for both the parties? - HELD THAT:- There has been a gross violation in relation to adhering to the terms and conditions prima facie by the Corporate Debtor in relation to the goods to be supplied by it and as such the Applicant, being a Resolution Professional of the Corporate Debtor and being appointed by this Tribunal and having taken charge only from 10.10.2019 cannot be in a position to explain as to what transpired between the parties and also being ignorant of the series of e-mails being exchanged between the parties and thus from the e-mail communications being exchanged between the parties, it is seen that the Corporate Debtor has acted in violation of the terms and conditions of the purchase order and as such the Corporate Debtor is not entitled for any further payment to be made by the Respondent in this regard as claimed in the Application. Application dismissed.
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PMLA
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2021 (6) TMI 428
Money Laundering - scheduled offences - Material present to constitute offence - amendment of PML Act in the year 2009 - applicability of schedule offences is concerned to an act committed prior to amendment - HELD THAT:- Part B of the Schedule provides that in Paragraph one, besides several offences under the Indian Penal Code, Sections 120-B, 419 and 420 are included vide Section 13 of the Prevention of Money Laundering (amendment) Act, 2009 (since repealed by Repealing and Amending Act, 2019 (31 of 2019) - It is apt to note that the Complaint of the ED in S.C.No.1 of 2019 impugned and is challenged under Section 482 of the Cr.P.C., simply adopts the Charge Sheet contents/accusations against the Accused No. 13 therein who is the Petitioner/Accused No. 12 in this Criminal Petition. There was a Charge Sheet and Supplementary Charge Sheet filed by the CBI. The offences cited against the Petitioner herein (A13 in that charge sheet) in that original Charge Sheet are Sections 120B, 420, 409 and 477-A IPC. Interestingly, the accusations made in that charge sheet against A-13 therein (petitioner herein) are replica of the allegations made in the impugned complaint filed before the Special Court by the ED under the PML Act. This Court finds reasons to accept the contentions of Sri Mukul Rohatgi, learned Senior Counsel for the Petitioner that according to the findings in Crl.P. No. 3995 of 2016, the scheduled offences are not made out and the Charge Sheet is quashed against the Petitioner and therefore, and in consequence thereof, there cannot exist any more scheduled offences for the purpose of prosecution under Sections 3 and 4 of PML Act, 2002 (as amended) - there is no material to proceed against the petitioner under Sections 3 and 4 of Prevention of Money Laundering Act, 2002 and that there are no schedule offences committed by him to proceed under the provisions of PML Act in view of the Order of this Court in Crl.P. No. 3935 of 2016 dated 5.1.2018. Whether the amendment of PML Act in the year 2009 so far as schedule offences is concerned, can be applied to an act committed prior to amendment? - HELD THAT:- Certain High Courts have already taken a view that the amendment to PML Act in 2009 has no retrospective effect. Those decisions are challenged by the ED before the Supreme Court and an interim order has been passed by the Supreme Court in favour of the ED. According to Article 20 of the Constitution of India, as observed by the Supreme Court referred to above, the general power of legislature to make law with retrospective effect is not available in case of criminal law. These conflicting views are yet to be finally decided by the Apex Court - But whether the amendment in 2009 would make the acts committed in the period earlier to amendment falls within the purview of the PML Act or not cannot be answered because the question is pending for final decision before the Apex Court. Petition allowed.
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2021 (6) TMI 427
Grant of anticipatory bail - Constitutional validity of Section 45 of the Prevention of Money Laundering Act, 2002 - two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act - Money Laundering - scheduled offence - HELD THAT:- By Act 13 of 2018 Section 45(1) of the PMLA was sought to be amended w.e.f. 19.04.2018. Through such amendment the words punishable for a term of imprisonment of more than three years under Part A of the Schedule as occurring in Section 45(1) before the judgment of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. [ 2017 (11) TMI 1336 - SUPREME COURT] were substituted with the words under this Act . As per learned ASG, after such amendment, the defect on the basis of which the Supreme Court had declared Section 45(1) of the PMLA to be unconstitutional was cured and consequently the twin conditions prescribed in Section 45(1) stood revived. The declaration by the Supreme Court in Nikesh Tarachand Shah's case would render the twin conditions prescribed in Section 45(1) of the PMLA for release of an accused on bail to be void in toto; such conditions have to be disregarded of any legal force from its inception; they cease to be law; the same are rendered inoperative and that they are to be regarded as if they had never been enacted. That being so, the twin conditions for grant of bail under Section 45(1) of the PMLA as are now sought to be pressed into service by the ED cannot be considered to have revived or resurrected only on the prospective substitution of the words punishable for a term of imprisonment of more than three years under Part A of the Schedule with the words under this Act especially without there being any amendment with regard to the twin conditions for grant of bail which had specifically been declared to be unconstitutional as also in the absence of any validating law in this regard with retrospective effect. This Court has no hesitation to hold that as on date the twin conditions for grant of bail, as sought to be pressed by the learned ASG, are liable to be ignored and that the present petitions are required to be considered under Section 438 Cr.P.C. In the light of the above conclusion, this Court considers it unnecessary to delve into the issues raised by the learned ASG with regard to the observations of the Supreme Court in Nikesh Tarachand Shah's case (supra) that Section 45(1) of the PMLA would not apply to anticipatory bails being per incuriam. The ED is in the midst of analysing the exact role of each of the petitioners qua the offences they are accused of. Grant of anticipatory bail to the petitioners at this stage would certainly result in putting a spoke in the wheel of the investigating agency and dampen their efforts in elucidating the required information from the petitioners - Petition dismissed.
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2021 (6) TMI 426
Bank accounts were opened fraudulently - misuse of account without knowledge - shell companies where the cash deposits were transferred from the bank accounts of petitioner and other dummy accounts - HELD THAT:- No allegation of any fraud with State Exchequer or affecting any Govt. policy like demonetization. Neither any allegation nor any material to suggest that money was acquired by cheating anyone, by defrauding anyone, being ransom for kidnapping, proceeds of any dacoity, obtained from any corrupt practice or embezzlement of Govt. fund-sets. The only allegation is that its source was not disclosed in income tax before the cash was deposited in Muzaffarpur. The money belonged to the clients for accommodation entry; petitioner has admitted this fact in the statement given under Section 50 of PML Act. The ED has not stated that the money was arranged or collected by commission of any Scheduled offence to become proceeds of crime. In the charge-sheet filed by the ED, it is stated that because all the unaccounted cash has been deposited / placed into normal banking channels by use of this criminal modus operandi through the bank accounts opened through fraudulent means, thus, the same became proceeds of crime . The ingredients of crime offence are based on fact and not an inference or interpretation - offences alleged, if proved, may jeopardize the economy of the country. At the same time, I could lose sight of the fact that the investigating agency has already completed the investigation agency has already completed investigation and the charge sheet has already been filed before the Special Judge, ED, Patna. Therefore, his presence in the custody may not be necessary for further investigation. The petitioner is entitled to the grant of bail pending trial on stringent condition in order to ally the apprehension expressed by the ED - bail granted subject to conditions imposed - application allowed.
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2021 (6) TMI 424
Seeking grant of Regular Bail - siphoning of funds - scheduled offences - bogus purchase invoices - Constitutional validity of Section 45 of the Prevention of Money Laundering Act, 2002 - two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act - HELD THAT:- Assuming that the twin conditions of section 45 of the PMLA Act still remain in the Statute Book, in that eventuality also the observations of the Supreme Court do not get obliterated. The Schedules attached to the PMLA Act still continue. The insertion of the words under this Act by deleting offence punishable for a term of imprisonment of more than three years under Part-A of the Schedule only makes an ostensible change. The offence of money laundering as stipulated under section 3 of the PMLA Act stems out of the offences prescribed in the Schedules. The defects which the Supreme Court in Nikesh Tarachandra Shah [ 2017 (11) TMI 1336 - SUPREME COURT ] had pointed out while invalidating the existing law are not substantially removed by the amendment. The Supreme Court has asserted that, the twin conditions prescribed in Section 45 of the PMLA Act would have no nexus whatsoever with a bail application which concerns itself with the offence of money laundering, for if Section 45 of the PMLA Act is to apply, the Court does not apply its mind to whether the person prosecuted is guilty of the offence of money laundering, but instead applies its mind to whether such person is guilty of the scheduled or predicate offence. It is observed that Section 45 of the PMLA Act is a drastic provision which affects the fundamental right of personal liberty guaranteed by Article 21 of the Constitution of India and turns on its head the presumption of innocence which is fundamental to a person accused of any offence. Burden or proof on the person charged as envisaged in section 24 of PMLA Act - HELD THAT:- In the present case, the applicant is charged with scheduled offences as defined under section 2(u) of the Act. An F.I.R. is registered for the offence under Sections 465, 468, 471, 420, 120B of the IPC which are specified in Paragraph No. 2 of Part-A. The maximum punishment prescribed for the offences for which the applicant is charged is seven years. The applicant has been granted bail for the IPC offences on the condition of depositing ₹ 50,00,000/-. The applicant is ordered to be released on regular bail - Application allowed.
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2021 (6) TMI 423
Provisional attachment order - seeking grant of interim relief - violation of the statutory provisions as contained in FEMA, 1999 - HELD THAT:- In the present case, the contentions canvassed before this Court can certainly be looked into by the Adjudicating Authority and the date has already been fixed by the Adjudicating Authority. The present appellant-Trust is certainly free to participate in the proceedings before the Adjudicating Authority. Hence, in the considered opinion of this Court, keeping in view the totality of the circumstances of the case and as the matter is pending before the Adjudicating Authority, this Court does not find any reason to interfere with the order of the learned Single Judge as substantial relief has been granted by the learned Single Judge in permitting the operation of two bank accounts in order to cater the day-today need of the appellant-Trust - the present writ appeal is disposed of with a liberty to the appellant to argue all the grounds before the Adjudicating Authority.
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CST, VAT & Sales Tax
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2021 (6) TMI 434
Refund of excess tax paid - ongoing works contract - composition scheme - HELD THAT:- In the facts of the present case, such independent consideration by the 2nd or 3rd respondents was necessary, having regard to the fact that, in the third counter affidavit deposed to by the 1st respondent, it is stated that he had failed to mention about the amounts, which are claimed to be due from the petitioner as a ground for recommending to withhold the refund, have already been recovered by initiation of Garnishee proceedings from the third parties. Since, the 2nd and 3rd respondents have acted on such recommendation of the 1st respondent, who has failed to discharge his function as a tax administrator, the action of the 2nd and 3rd respondents in approving such recommendation of the 1st respondent, is no less a failure and the 3rd respondent had acted in abdication of the powers conferred on the said authority under the Act. The action of the 3rd respondent in seeking to accord approval to withhold refund is an afterthought, is evident from the fact that the petitioner has filed the present writ petition on 12.11.2020, after serving copy of the same on the learned Standing Counsel as required under the Writ Rules of this Court. It is upon the petitioner approaching this Court and filing the above Writ Petition, the respondents have set in motion the process of according approval to withhold the refund by invoking Section 40(2) of the Act, as admittedly, the proceeding of the 3rd respondent is dt. 28.11.2020, - viz., 15 days after the filing of the Writ Petition, and after Notice Before Admission was ordered by this Court, and the learned Standing Counsel appearing for the respondents sought time to get instructions in the matter on 18.11.2020. Thus, till 18.11.2020, the 3rd respondent had admittedly not exercised powers under Section 40(2) of the Act and could not have issued proceedings on 28.11.2020, while this Court is seized of the matter. This Court is of the view that the action of the 1st respondent in falsely deposing to the counter affidavits filed into this Court as an act of perjury; that the proceeding dt. 28.11.2020 issued by the 3rd respondent without independent exercise of mind and recording reasons therein, as held to be mandatory by this Court in PULP N PACK PRIVATE LIMITED [ 2009 (4) TMI 844 - ANDHRA PRADESH HIGH COURT ] and BHARAT SANCHAR NIGAM LTD. VERSUS STATE OF ANDHRA PRADESH AND ANOTHER [ 2009 (7) TMI 1157 - ANDHRA PRADESH HIGH COURT ] cannot be sustained, apart from being in contempt, liable to be proceeded against. Further, even the infractions, as recorded by the 1st respondent vide letter dt. 09.09.2019, seeking permission to withhold the refund under Section 40(2) of the Act, are unacceptable. The respondents are hereby directed to refund the amount of ₹ 4,44,62,188/- as determined by the 1st respondent under Revised Assessment Order dt. 15.05.2019, pursuant to the order of the Tribunal dt. 18.02.2019, by crediting the above said amount to the petitioner s bank account, within 15 days from the date of receipt of a copy of this order, along with interest due thereon at the rate of 1% per month, as provided under Section 39 of the Act, till the date of credit of the said amount - Petition allowed.
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Indian Laws
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2021 (6) TMI 438
Dishonor of Cheque - petitioners were neither signatories to the cheque nor parties to the agreements - Partner of the partnership firm - territorial jurisdiction of the Learned Magistrate - Section 138 read with Section 141 of the Negotiable Instruments Act - Whether the averments made in the petition of complaint are sufficient to arraign the present petitioners as accused? - HELD THAT:- In the present case, averments were made at paragraph 3 of the petition of complaint that all the accused including the present petitioners were partners of the said firm looking after its day to day business affairs and responsible for each and every business conducts at the relevant time when the offence was committed. Looking after its day to day business affairs as partners and responsible for each and every business conducts of the firm at the relevant time are clearly equivalent to being in charge of and responsible to the concern for the conduct of its business - after going through the petition of complaint and reading it as a whole, this Court is of the view that sufficient averments of facts were made in the instant petition of complaint so as to arraign the present petitioners as accused in this case. Compliance of Section 202 of the Code of Criminal Procedure - HELD THAT:- It appears that no enquiry, in clear terms, was undertaken by the learned Trial Court as per the amended provision of Section 202 of the Code despite the fact that the accused petitioners were admittedly staying beyond the territorial jurisdiction of the learned Trial Court. As the law requires that an enquiry be held under Section 202 of the Code if the accused stayed outside the Court s jurisdiction, such enquiry has to be undertaken in clear terms and the Learned Trial Court, after making such enquiry whether by taking evidence on affidavit or by restricting the enquiry to examination of documents or not, is required to decide whether there are sufficient grounds to issue process against the accused - the order issuing process and the subsequent orders passed by the learned Trial Court in the present case ought to be set aside and the matter remanded back so that the learned Trial Court can proceed afresh from the stage of enquiry under Section 202 of the Code. Since no mandatory enquiry was undertaken in clear terms under Section 202 of the Code even through the accused resided beyond the territorial jurisdiction of the learned Trial Court, the order issuing process and the subsequent orders passed by the learned Trial Court are set aside and the matter is remanded back to the learned Trial Court for proceeding afresh from the stage of enquiry as contemplated under Section 202 of the Code - Appeal allowed by way of remand.
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