Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 19, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Petitioner's appeal accepted despite delay in filing. Court orders remittance to Appellate Commissioner.
The High Court restored the petitioner's appeal due to a delay in filing. The appeal was filed before the second respondent, 14 days after the limitation expired. The court held that despite the marginal delay, the impugned order was set aside. The matter was remitted back to the Appellate Commissioner for disposal on merits and in accordance with the law, with the condition that the petitioner deposit an additional 20% of the disputed tax u/s 107 of the respective GST enactments. The impugned order was quashed, and the third respondent was directed to instruct the Tamil Nad Mercantile Bank Ltd. to unfreeze the petitioner's account after deducting 20% as pre-deposit. The petition was allowed.
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Petitioner's refund claim rejected due to discrepancies in filings. Court seeks reasons for denial. Case sent for re-consideration.
The High Court dealt with a case involving the rejection of a refund claim due to discrepancies between the petitioner's GSTR 1 statement and GSTR 3B return. The Court found that no reasons were given for determining that the claim did not meet the requirements of u/s 77. Additionally, the Court noted that although it was concluded that there was no excess payment, the petitioner's detailed response on this issue was not considered, and proper reasons were not provided for this conclusion. As a result, the Court disposed of the petition by remanding the matter for further consideration.
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High Court: Impugned order wrongly issued in wrong name but correct GSTIN. Petitioner can appeal within 30 days, deposit 10% disputed tax. Appeal to be heard within 3 months.
In a case before the High Court, the issue was the correctness of an order that was issued in the wrong name but with the correct GSTIN of the petitioner, Srinivasan Charitable and Educational Trust. The Court held that the petitioner can file a statutory appeal u/s 107 of the GST Act within 30 days, upon depositing 10% of the disputed tax. The Appellate Commissioner must then hear and decide the appeal within three months. The petitioner must also be given an opportunity to be heard. The petition was disposed of accordingly.
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Petitioner gets another chance to challenge tax demands. Must pay 10% of disputed tax within 2 weeks. Notification No.11/2027 relied on.
The High Court addressed a challenge to assessment orders where the petitioner lacked a reasonable opportunity to contest tax demands due to discrepancies in returns. The petitioner did not respond to a show cause notice. The court found that the petitioner relied on a notification for GST exemption. The impugned orders were set aside with a condition for the petitioner to remit 10% of disputed tax demands within two weeks, after crediting a specific amount already paid. The writ petition was disposed of, granting the petitioner an opportunity to contest the tax demands on merits.
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Petitioner unable to participate in proceedings due to cancer. Order set aside for reconsideration with condition to remit 10% of disputed tax demand.
In a High Court case, the petitioner challenged an order due to inability to respond to show cause notice or participate in proceedings because of cancer diagnosis. Discrepancy in GSTR 3B returns and auto-populated GSTR 2A noted. Court found tax proposal confirmed as petitioner didn't respond or attend hearing. Court held justice requires giving petitioner chance, so remand ordered with condition to remit 10% of disputed tax demand within two weeks. Impugned order set aside, matter remanded for reconsideration, and petition disposed of.
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Advance Ruling Authority says UKPSVEN is not 'local authority' but 'governmental authority'. Construction service for water supply is tax exempt.
The case concerned the classification of UKPSVEN as a local authority u/s CGST Act. The AAR ruled that UKPSVEN does not qualify as a local authority as it lacks control over a municipal fund. It was established as a governmental authority u/s UPWSS Act, making it eligible for exemption u/s Notification No. 12/2017-Central Tax. UKPSVEN, providing water supply services, falls under construction service exempt from tax, related to functions of Municipalities and Panchayats u/s the Constitution of India.
Income Tax
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Petitioners, farmers, challenged notice for attachment of joint account - uncle primary holder, they're secondary. Notice valid, no separate notice needed for joint holders.
The High Court considered a challenge to a notice u/s 226(3) for attachment of joint saving accounts. The petitioners, secondary account holders, argued they were farmers who jointly cultivated land with their uncle and sold crops. They claimed no notice u/s 226(3)(iii) was given before attaching the account. The Court found that since the primary account holder was a defaulter, no separate notice was required for the secondary account holders. The notice must be sent to the defaulter, not joint account holders. The petition was dismissed, suggesting the petitioners seek legal recourse if they disagree with the attachment.
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The court rejected the request for a "Nil" withholding tax certificate for FY 2023-24. Petitioner can reapply for FY 2024-25.
The High Court addressed the validity of a certification issued u/s 197 for FY 2023-24, where a "Nil" withholding tax certificate was sought but a 15% withholding tax rate was prescribed. Since FY 2023-24 has ended, the petition was disposed with liberty to apply u/s 197 for FY 2024-25. Any new application will be reviewed independently. The petitioner may claim benefits as per CBDT Circular if successful. The petitioner retains the right to challenge the impugned order to safeguard its interests. All rights and contentions of parties are preserved.
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Appellate Tribunal ruled sale of edible oil not speculative. Actual delivery made to buyer. Interest income addition deleted.
The Appellate Tribunal addressed two key issues. Firstly, regarding speculative transactions u/s 43(5), it was determined that the transactions of purchasing and selling canola oil on high seas did not qualify as speculative as actual delivery of goods occurred to the ultimate buyer. Citing precedents, the Tribunal emphasized that physical delivery to the ultimate purchaser exempts transactions from being deemed speculative. Secondly, concerning the addition as interest income u/s 36(1)(iii), the Tribunal ruled in favor of the assessee. It was noted that the audited balance sheet substantiated the availability of interest-free funds, which were deemed adequate to cover the interest-free advances made. Following a Supreme Court decision, the addition made by the AO was deleted.
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Investments generating taxable income not exempt. Disallowance not valid w/o recording dissatisfaction. Cess deduction allowed.
The ITAT held that disallowance u/s 14A r/w rule 8D was not justified as the AO did not record dissatisfaction u/s 14A(2) before invoking Rule 8D. The disallowance of the Assessing Officer was not sustainable as the investments did not generate exempt income. Regarding deduction u/s 37 for education cess, the retrospective amendment to Sec. 40(a)(ii) by the Finance Act, 2022 was discussed. The assessee can withdraw the claim subject to paying taxes if application in Form No.69 is made within the prescribed period. The AO must address the application made by the assessee as per the directions given by the ITAT.
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Exemption denied for late form filing, but auditor report filed before notice. Income application claim allowed. No late fee for filing return on time.
ITAT held that denial of exemption u/s 11 due to late filing of form 10B was unjustified as the audit report was submitted before intimation u/s 143(1). Lack of mala fide intent was noted. Fee u/s 234F for delayed filing was deemed inapplicable as the return was filed before the due date u/s 139(1). Thus, the appeal of the assessee was allowed.
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Issues on bank interest addition u/s 153A of IT Act - Alleged HSBC London documents not admissible as electronic evidence.
The ITAT held that alleged documents of bank account with HSBC London were genuine as the assessee accepted and revised the return. Absence of incriminating material in search operation supported revenue's actions. Indo-UK DTAA Article 23(3) not applicable as source of deposits not established. AO's reference to FT&TR for info from UK valid. Accrued interest additions not sustainable due to lack of evidence beyond sourced statement. Penalty u/s 271(1)(c) not justified as no misreporting found. Increased penalty by CIT(A) also deleted. Other penalties on interest income deleted. Addition based on loose sheets dismissed as lacking evidentiary value. All grounds raised by assessee allowed.
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Assessment issues discussed - Assessee status as "State" considered - Assessor's duty to assist taxpayers
The case involves issues related to exemption u/s. 11, 12 & 13. The appellant lacked registration u/s. 12A, and no pending appeal existed. The status of the appellant as a "State" was scrutinized. The ITAT found the Assessing Officer's interpretation of limiting examination to registration u/s. 12A as flawed. The appellant, a renowned government hospital, was denied benefits due to lack of registration, despite eligibility under other provisions. The ITAT restored the case for fresh assessment, permitting the appellant to raise new claims. Citing Goetze (India) Limited case, the AO was directed to consider any fresh claim, even if not previously raised. The appeals were partly allowed for statistical purposes.
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Delay in filing appeals condoned due to bonafide belief in tax authorities' action. Protective additions deleted, no tax impact.
The Appellate Tribunal considered the issue of condonation of delay in filing appeals, which exceeded 400 days, due to unexplained cash deposits and protective additions made in the hands of the assessee. The assessee believed the protective addition would be deleted after the substantive addition was removed by the tribunal. The delay was attributed to bonafide reasons, as the assessee acted on advice and filed a rectification application, showing no malafide intention. The Tribunal held that the income from unexplained cash deposits should be assessed in the hands of the society, not the individual, and deleted the protective additions made in the assessee's hands.
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Assessee's purchase not 'without consideration' due to post-dated cheques issue. Unjustified additions deleted by tribunal.
The Appellate Tribunal held that the addition u/s 56(2)(vii) or 28(iv) was unjustified, as the purchase was made with consideration, cheques were given to sellers with some not cleared due to property litigation. The addition u/s 69 for unexplained deposits was deleted, as cash withdrawals from one bank provided a source for deposits in another, AO's reasons were vague. The addition for cash-receipts as unexplained was also deleted, as taxable receipts were part of sale-proceeds duly assessed. Addition on account of cash-receipt for Godamaru was deleted, as money was refunded due to deal cancellation. The issue of advance for Badwai was remitted to AO for verification in a subsequent assessment year.
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Appellate Tribunal ruled TPO can't look at Section 37 issues. Report from TPO is binding. Case sent back to TPO for ALP determination.
The Appellate Tribunal reviewed a case involving Transfer Pricing (TP) Adjustment for management service fee paid to Associated Enterprises. It was held that the Transfer Pricing Officer (TPO) has jurisdiction limited to determining the arm's length price (ALP) and cannot examine matters under section 37 of the Act. The TPO plays a crucial role in assessing international and specified domestic transactions, with reports being binding on the Assessing Officer. The Tribunal found that the TPO's order lacked proper determination of ALP and directed a reassessment, allowing the taxpayer to present transfer pricing study report and comparables. The case was sent back to the TPO for a thorough ALP determination in compliance with the law.
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Dispute on stamp duty value vs actual consideration paid. Tribunal rejects AO's rectification order. No error found.
The Appellate Tribunal considered a case involving rectification u/s 154 related to income from other sources u/s 56(2)(vii)(b). The issue revolved around the variance between sale consideration and stamp duty valuation. The respondent's assessment was initially accepted u/s 143(3) after scrutiny on investments in movable properties. Subsequently, u/s 154 was invoked to apply section 56(2)(vii)(b) on the purchase of immovable property due to a disparity in stamp duty value and actual consideration. The Tribunal noted that the matter of stamp duty valuation was debatable, indicating a change in opinion. It was established that errors requiring extensive reasoning on debatable legal points do not constitute apparent errors. Consequently, the order u/s 154 was annulled, and the Revenue's appeal was dismissed.
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Tax tribunal overturned denial of registration to a Trust based on specific community. Section 13 can't apply at registration stage.
The Appellate Tribunal addressed the denial of registration u/s 12AA by invoking Section 13(1)(b) due to the Trust's perceived restriction to benefit a specific religious community or caste. It was held that Section 13 can only be applied during assessment, not at the registration stage. Citing a relevant case, it emphasized that Section 13 is relevant at assessment, not registration. The matter was remanded to the CIT (E) for reevaluation with a directive to not reject registration based solely on the mentioned grounds. The assessee's appeal was allowed for statistical purposes.
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Exemption u/s 11: The tribunal remitted the issue back to the tax officer for fresh review due to missing important documents.
The ITAT, an Appellate Tribunal, addressed the issue of denial of exemption u/s 11 due to a violation u/s 13(1)(c)(ii) involving an interest-free advance to a 'specified person' u/s 13(3). The assessee had made an advance to Divine Real Build Pvt. Ltd. for a land purchase agreement, intending to increase FAR with DDA. The AO found the land to be agricultural with no construction permission. The AR argued that crucial documents supporting the assessee's intentions were not available earlier. The ITAT allowed admission of these documents for fair adjudication, remitting the issue back to the AO for fresh consideration in both assessment years. The assessee's appeal was partly allowed for statistical purposes.
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Trust denied registration u/s 12A due to religious ties. ITAT says registration should focus on charity.
The Appellate Tribunal (ITAT) addressed the issue of denial of registration u/s 12A by invoking Section 13(1)(b) due to the trust institution being created for the benefit of a particular religious community. The trust's activities were stated as "charitable" with objects related to "medical relief" for a specific community. Previous ITAT cases clarified that Section 13 is applicable during assessment, not registration. The Tribunal emphasized that Section 13 should not be used to deny registration under Section 12A. The matter was remanded for re-consideration without disentitling the applicant. The appeal was allowed for statistical purposes.
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Claim for tax deduction u/s 80GGC denied as contribution to unrecognized political party; lacks verification and credibility.
The ITAT denied deduction u/s 80GGC for contributing to an unrecognized political party lacking recognition by the Election Commissioner of India and infrastructure. The assessee failed to address doubts on the contribution's genuineness or provide necessary details. Lack of verification and certification of submitted documents led to dismissal of appeal. The claim was rejected due to the political party's unrecognized status.
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Additional depreciation on plant or machinery: ITAT clarified that amendments can be retrospective based on legislative intent.
The case concerns the retrospective nature of an amendment to u/s 32(1)(ii) by the Finance Act, 2015, relating to additional depreciation on plant or machinery. The Tribunal held that the correct approach is to interpret the unamended law to determine if the subsequent amendment is clarificatory. Legal precedents, such as CWT v. B.R. Theatres & Indl. Concerns P. Ltd., establish that a retrospective effect is warranted if the unamended provision can be construed in line with the amendment's intent. The legislative intent of providing additional depreciation under s. 32(1)(iia) is to boost the industry, subject to conditions like asset usage for over 180 days. The amendment rectifies restrictions on additional depreciation, removing discrimination between assessees based on asset usage days. The qualifying conditions for additional depreciation were met in the relevant year, supporting the assessee's claim.
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Transfer pricing issue: US & non-US transactions adjustment by TPO. Assessing Officer to review domestic operations inclusion - legal clarity needed
The Appellate Tribunal (ITAT) considered a case involving Transfer Pricing (TP) adjustments for both US and non-US transactions. The Tax Authorities computed TP adjustment on the total cost base, including domestic operations, despite resolution of US-related adjustments through Mutual Agreement Procedure. The question was whether domestic operations fall u/s Indian TP provisions. ITAT held that TP should be determined for international transactions u/s Chapter X of Income Tax Act, and domestic TP adjustments must comply with law. The matter was remanded to Assessing Officer/TPO for reassessment of domestic TP adjustments to ensure compliance with law. The appeal was allowed for statistical purposes.
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ITAT decision: No addition on jewellery; reasonable gold holding considered. Cash addition deleted as explained by assessee.
In the case, ITAT decided on two main issues: 1. Addition on account of Gold and Silver Jewellery u/s 69A: Assessee disclosed Rs. 70,00,000 as unexplained investment during search. ITAT found the disclosed gold and silver quantities reasonable based on CBDT guidelines. Assessee declared gold ornaments and silver items in HUF for deduction. ITAT directed AO to delete Rs. 28,96,104 addition. 2. Addition of cash found u/s 69A: Assessee explained Rs. 1,50,000 belonged to M/s. Sarvodaya Agrotech. AO added Rs. 3 lac cash found. CIT(A) sustained Rs. 2 lac addition, considering savings of Rs. 2 lac. ITAT found no merit in sustaining Rs. 2 lac addition, as assessee cooperated, disclosed income, and had wealth tax history. ITAT directed AO to delete the Rs. 2 lac cash addition.
Customs
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Customs Authorities can seize goods outside their area if they have jurisdiction. No application for release made. Ownership of goods in question remains disputed. Petition dismissed.
The High Court addressed the issue of seizure of goods u/s 110 of the Customs Act, 1962 by Customs Authorities outside their designated area. The jurisdiction of concerned Officers to seize "gold bullions" was questioned as the Customs House did not fall within the jurisdictional area of the Commissioner of Customs (Preventive) West Bengal. The Court noted the absence of an application for release or provisional release u/s 110A. The ownership of the goods was in dispute, and the petitioner failed to establish ownership. The seizure order by Customs Officers was found to be without jurisdictional error, leading to the dismissal of the petition.
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Applicant's bail denied due to lack of proof of ownership of recovered items. Court finds complicity evident.
The High Court considered a bail application u/s seeking release in a case involving recovery of smuggled gold and cash. The applicant claimed ownership of the recovered items, but the court found no evidence to support this. The court noted the large quantity of recovered cash and gold, indicating potential involvement in smuggling. The applicant failed to prove residency in Mumbai or employment status with supporting documents. The court observed inconsistencies in salary payment records, casting doubt on the applicant's claims. Due to prima facie evidence of complicity, bail was denied, and the application rejected for the applicant.
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CESTAT ruled in favor of a Customs Broker in a case involving misuse of Transfer of Residence facility. Email evidence not admissible without certification.
The case involved revocation of a Customs Broker (CB) license, forfeiture of security deposit, and penalty imposition due to misuse of Transfer of Residence (TR) facility by some cargo companies in collusion with the Appellant. The Adjudication authority admitted email communication as evidence despite non-compliance with Section 138C of the Customs Act, citing quasi-judicial proceedings principles. However, the Tribunal held that evidence must comply with Section 138C. The Tribunal found the alleged violations of CBLR 2018 Sections 10(d) and 10(e) unsustainable due to lack of evidence and knowledge. The penalty under Regulation 18(1) was reduced to Rs. 40,000, and the revocation of the CB license and forfeiture of security deposit were set aside. The appeal was partially allowed.
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CESTAT ruled in favor of importers of Round Ridge Cement Tiles, allowing free import under DGFT Notification. Customs Dept objection overruled.
The case involved a dispute u/s DGFT Notification No.77(RE-2008)/2004-2009 regarding the import classification of Round Ridge Cement Tiles. The issue was whether the tiles should be treated as 'processed tiles' subject to a minimum value requirement of US$ 50 per square meter. The appellant sought clarification from DGFT, which confirmed that the tiles were free for import under a specific HS code. The Tribunal held that the clarification from DGFT was valid, and the tiles could be imported free of restrictions, overturning the previous decision that imposed restrictions on the import. The impugned orders were set aside, and the appeal was allowed.
Corporate Law
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Ex-Directors found guilty of fraud & misappropriation in company's winding up. Ordered to pay Rs. 3,60,000 + interest.
The High Court held ex-directors guilty of fraudulent concealment and misappropriation u/s 433(e) and 435 of the Companies Act, 1956. They failed to disclose sale consideration in company accounts. Third-party rights existed before winding-up. No collusion found. Ex-directors ordered to pay Rs. 3,60,000 with 12% penal interest to Official Liquidator within 30 days. Application disposed of.
Indian Laws
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Court quashes criminal case for cheque dishonour due to civil dispute, calling it malicious prosecution.
The High Court quashed the criminal proceedings u/s 138 of the Negotiable Instruments Act arising from a complaint case. The petitioners were accused of criminal conspiracy to encash cheques by forging bills despite no material being supplied. The Court held that the cheque issued as security in a financial transaction matures for presentation if not repaid as agreed, leading to consequences u/s 138. The Court found the complaint to be malicious prosecution to shortcut civil proceedings, quashing the entire criminal case. The decision was influenced by a Supreme Court judgment emphasizing the legal consequences of dishonored cheques used as security.
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A cooperative society in Tamil Nadu is not bound by RTI Act. Impugned order quashed.
The High Court considered the applicability of the Right to Information Act, 2005 to a cooperative society registered under the Tamil Nadu Co-operative Societies Act. It held that the cooperative society is not a "public authority" u/s 2(h) of the RTI Act and is not obligated to provide information requested by a citizen. Consequently, the court quashed the impugned order and allowed the Writ Petition.
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Cheque dishonored due to signature variance. Failure to cross-examine witness. Additional evidence allowed u/s 391 Cr.P.C.
In a case involving dishonour of a cheque due to variance in signature, the petitioner failed to cross-examine the respondent, leading to invocation of Section 391 of Cr.P.C. The High Court held that evidence must include cross-examination to be complete, especially in cases under Section 138 NI Act where statutory presumption against the accused must be dislodged. Referring to Rambhau vs. State of Maharashtra, the Court emphasized that Section 391 Cr.P.C. allows for additional evidence to secure justice. As the respondent was not cross-examined and crucial transaction details required clarification, the Court allowed the criminal revision petition, highlighting the necessity of examining the respondent's mother as an additional witness.
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CHIT: Court rules in favor of respondents in dishonored cheque case. Appellant failed to prove legally enforceable debt. Burden of proof on appellant.
The High Court considered whether dishonored cheques were given for a legally enforceable debt. The appellant failed to prove the existence of a default by the respondents or that the cheques were for a valid debt. Without meeting the burden u/s 138, the appellant couldn't rely on u/s 139 presumption. The appellant must provide detailed account statements to establish a legally enforceable debt for a successful u/s 138 case. The respondents disputed the debt amount and claimed misuse of security cheques. Without proper evidence, the dishonor of cheques doesn't trigger u/s 138. The court upheld lower courts' decisions as the appellant failed to provide sufficient evidence. The appeal was dismissed.
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Court held that interim compensation under Section 143A of NI Act is discretionary. No proof of payment or written agreement in this case. Petition dismissed.
HC dismissed a petition seeking interim compensation u/s 143A of the NI Act for dishonour of cheque. Court clarified that the power to order interim compensation is discretionary and not a right. Petitioner alleged payment of Rs.20 lacs to respondent without lawful consideration, lacking proof or written agreement. Court held that discretion under u/s 143A can be interfered with only if found perverse or unreasonable. Not sitting as Court of Appeal against Trial Court's order. Petition dismissed for lack of merit.
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High Court decision: Cheque dishonored, but settled amicably. Compounding allowed. Justice served.
The High Court addressed the issue of dishonour of cheque and compounding of the matter. Referring to a Supreme Court case, it discussed the scope of Section 138 of the Negotiable Instruments Act and compounding under Section 147. The court recognized that proceedings u/s 138 are civil in nature with criminal implications. It noted that once the accused settled the liability, compounding under Section 147 was a genuine step towards justice. The court found that the accused and complainant had resolved the dispute, with the complainant having no further grievances as the accused had fulfilled his liability u/s 138. Consequently, the petition was disposed of.
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Court dismisses accused's petitions to recall witnesses and produce bank documents in cheque dishonour case. Accused must be able to rebut presumption.
The High Court dismissed petitions u/s 91 Cr.P.C, 311 Cr.P.C, and 254(2) Cr.P.C by the accused in a cheque dishonor case. The court held that statutory presumptions can be rebutted. The accused's petitions to recall witnesses and produce bank documents were denied by the trial court. The High Court found that recalling witnesses and confronting contradictions is necessary for proper evaluation. The trial court's dismissal of petitions u/s 311 Cr.P.C and 91 Cr.P.C was set aside, but the dismissal of petitions u/s 254(2) Cr.P.C was confirmed. The accused's right to rebut presumptions cannot be hindered by withholding necessary documents.
IBC
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Court rules in favor of bidder seeking refund from auction sale in bankruptcy proceedings. Bid amount to be released promptly.
In a High Court case involving an auction sale in Corporate Insolvency Resolution Process (CIRP) u/s IBC, the issue was the refund of bid amount by the successful bidder. The Recovery Officer set aside the auction proceedings and sale in favor of the bidder. The Court held that the corporate debtor had no legal right over the bid amount, which was to be refunded to the successful bidder. The Court directed the Recovery Officer to release the amount to the bidder promptly. The Court disposed of the petitions without expressing an opinion on the merits, considering the NCLT's order.
Service Tax
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CESTAT ruled against refund claim due to service classification. Appellant can't challenge provider's classification. Appeal dismissed.
The case involved a dispute u/s CESTAT regarding the rejection of a refund claim based on the classification of services. The Appellant argued that the service provided was not "renting of immovable property" but "construction services." However, the Tribunal held that the Appellant cannot challenge the classification chosen by the service provider, who treated it as "renting of immovable property" and paid Service Tax accordingly. The Appellant failed to provide evidence to support their claim, leading to the rejection of the refund. The appeal was dismissed, and the request for remand was denied.
VAT
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Petitioners suspended from service for accepting illegal gratification. Court allows them to continue working during ongoing disciplinary proceedings.
The High Court suspended petitioners from service for allegedly accepting illegal gratification. The suspension orders were stayed by the Court twice. As more than eight months had passed without the suspension taking effect, petitioners were allowed to continue in service pending disciplinary proceedings. The charge memos were issued, and disciplinary actions initiated. Petitioners not affected by suspension were permitted to work, subject to ongoing proceedings. The suspension orders were deemed ineffective, and petitioners could continue in service with possible reassignment. The Tribunal's challenged orders were not enforced. Petitioners' service continued with posting orders. Petition disposed of.
Articles
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (6) TMI 747
Violation of principles of natural justice - petitioner's reply was not considered - HELD THAT:- On perusal of the impugned orders, it is noticeable that the petitioner's reply to the show cause notice is referred to therein but no findings are recorded in respect of reasons for rejecting such reply. The petitioner has placed on record the replies to the show cause notice. The petitioner has replied separately to each defect. On examining the reply, for instance in respect of defect no.1 relating to the difference between the petitioner's GSTR 3B and GSTR 1 statement, it is noticeable that the petitioner has explained the discrepancy in considerable detail. I find no discussion on the explanation of the petitioner. Instead, it is recorded that the reply is not in order. On account of the failure of the respondent to duly consider the petitioner's reply and record reasons for rejecting such reply, orders impugned herein cannot be sustained. The impugned orders in original are set aside and these matters are remanded for reconsideration - petition disposed off by way of remand.
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2024 (6) TMI 746
Rejection of petitioner's appeal due to delay in filing - petitioner has filed the appeal before the second respondent, 14 days after the limitation expired for filing the appeal - HELD THAT:- Considering the fact that the delay is only a marginal delay, though beyond the statutory period of limitation, this Court is of the view that the impugned order is set aside and the matter is remitted back to the Appellate Commissioner to dispose of the same on merits and in accordance with law, subject to the petitioner depositing additionally 20% of the disputed tax over and above 10% is as contemplated under Section 107 of the respective GST enactments. Since the impugned order is quashed, the third respondent is directed to issue suitable directions to the Tamil Nad Mercantile Bank Ltd. to de-freeze the account of the petitioner, after deducting 20% from the petitioner's account towards pre-deposit. Petition allowed.
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2024 (6) TMI 745
Rejection of Refund of amount paid in excess - difference between the petitioner's GSTR 1 statement and the GSTR 3B return - HELD THAT:- It appears that no reasons have been recorded for concluding that the claim does not fall within the ambit of sub-section (1) of Section 77. Even as regards the issue relating to excess payment, while a conclusion is drawn that there is no excess payment, the petitioner's reply in such regard, wherein specific details are set out, was not engaged with and proper reasons were not assigned for the conclusion that there is no excess payment. Consequently, the matter requires re-consideration. Petition disposed off by way of remand.
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2024 (6) TMI 744
Correctness of impugned order - the impugned order, which preceded the impugned SCN, issued in the wrong name though with the correct GSTIN of the petitioner herein namely, Srinivasan Charitable and Educational Trust - HELD THAT:- The Court is of the view that a liberty can be given to the petitioner to file statutory appeal before the Appellate Commissioner within a period of 30 days from the date of receipt of a copy of this order, subject to the petitioner depositing mandatory 10% of the disputed tax within such period. Subject to such compliance, the petitioner s appeal shall be entertained by the Appellate Commissioner under Section 107 of the GST Act, 2017 and disposed of on merits and in accordance with law, within a period of three months thereafter. Needless to state, the petitioner shall also be heard. The petition is disposed off.
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2024 (6) TMI 743
Levy of goods and service tax on the transfer of leasehold property of the Gujarat Industrial Development Corporation - Challenge to SCN - HELD THAT:- Issue Notice returnable on 03.07.2024. The respondent authority may proceed with the adjudication of the Show Cause Notice, however, no final order shall be passed without permission of this Court during the pendency of this petition. Direct service through email is permitted.
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2024 (6) TMI 742
Challenge to assessment orders - petitioner did not have a reasonable opportunity to contest the tax demands on merits - discrepancy between the petitioner's GSTR 3B returns and Form 26AS - petitioner did not reply to the show cause notice - HELD THAT:- The petitioner relies on Notification No.11/2027 to contend that a part of the services provided by the petitioner are exempt from GST. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary to provide an opportunity to the petitioner to contest the tax demands on merits. The impugned orders are set aside subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period as agreed to after giving credit to the sum of Rs.4,44,025/- appropriated from the petitioner's bank account. Such remittance shall be made within a period of two weeks from the date of receipt of a copy of this order. The writ petition is disposed off.
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2024 (6) TMI 741
Challenge to order and proceedings - petitioner was unable to respond to the show cause notice or participate in proceedings due to the petitioner being diagnosed with cancer - discrepancy between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A - HELD THAT:- On examining the impugned order, it is evident that the tax proposal was confirmed on the ground that the petitioner did not respond to the show cause notice or attend the personal hearing. Upon consideration of the averments in the affidavit and the submissions of learned counsel, the interest of justice warrants that the petitioner be provided an opportunity by putting the petitioner on terms. Learned counsel submits, on instructions, that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand. The impugned order dated 01.09.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (6) TMI 740
Applicability of Reverse Charge Mechanism or Forward Charge - UKPSVEN can have Dual Status i.e. for some purposes it may be deemed to be Local Authority while for others it may not? - HELD THAT:- The term local authority is defined in Section 2(69) of CGST Act, 2017. The definition of local authority in the CGST, Act includes within its ambit any other authority legally entrusted by the Central Government or any State Government with the Control or Management of a municipal or local fund . Thus, for the purpose of the GST Laws, any authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund qualifies as a 'Local Authority' - the UKPSVEN, is not satisfying some of the conditions for qualifying as a local authority . The Apex court in the UNION OF INDIA ORS. VERSUS RC. JAIN ORS. [ 1981 (2) TMI 200 - SUPREME COURT] has held that the main requirement to qualify as a local authority' is that the authority must be legally entitled to or entrusted by the Government with, the control and management of a Municipal or local fund. In case of UKPSVEN, there is no local fund entrusted by the Government with UKPSVEN, but the Act would reveal that no municipal or local fund has been entrusted by the Government. The fund of UKPSVEN is its own fund and cannot be equated with a fund entrusted by the Government. Thus, the important requirement in order to qualify as a local authority viz. control and management of a municipal/local fund is absent in the present case. The UKPSVEN is a body corporate formed by the State legislature under UPWSS Act enacted by the UP State Legislature. Further, as per section 3 of the Uttaranchal (The Uttar Pradesh Water Supply and Sewerages Act, 1975) Adaptation and Modification Order, 2002 read with UPWSS Act, UK Peyjal Nigam is a body corporate established by the Government of Uttarakhand, as such, the requirement of governmental authority has been fulfilled in the present case - the service provider in the instant case i.e. UKPSVEN (M/s Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam) is not a 'local authority', within the meaning and ambit of the provisions of the CGST/SGST Act, 2017, but is a governmental authority . The provider of services in the instant case i.e. UKPSVEN (M/s Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam) is not a 'local authority' within the meaning and ambit of the provisions of the CGST/SGST Act, 2017, but falls under the category of a Governmental Authority and in view of the provisions of the Notification No. 12/2017-Central Tax (Rate), dated 28.6.2017, as amended, the instant work is a construction service and pertains to supply of water which is an activity in relation to a function entrusted to a Municipality Panchayat under article 243W 243G respectively of the Constitution of India and is exempted from payment of tax.
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Income Tax
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2024 (6) TMI 739
Challenge to notice u/s 226(3) for attachment of joint saving accounts - case of the petitioners that the petitioners are farmers and are doing agricultural activities and they have sold agricultural goods out of the produce from the joint holding land with their uncle as they collectively cultivated the land and sold the seasonal crops - petitioners submitted that no notice under Section 226(3)(iii) of the Act was issued by the respondents upon the petitioners before attaching the account. HELD THAT:- When we inquired from the petitioner as to whether the petitioners are primary account holders or secondary, it was informed that the petitioners are secondary account holders and their uncle is primary account holder in the said joint saving account. In view of such facts, when the impugned notice is issued for recovery of the outstanding dues of Kiritbhai Bachubhai Gamit, who is defaulter in making payment of dues to the department, merely because the petitioners are joint account holders, no separate notice is required to be issued to the petitioners for having joint account as secondary holder in view of provisions of Section 226(3)(iii) of the Income Tax Act, 1961. Notice is required to be forwarded to the assessee from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee. Meaning thereby notice is required to be issued, as per aforesaid provisions, from whom amount is due and not to joint account holder. If the petitioners have any grievance against recovery of the above dues in the account of their uncle along with them, they can initiate necessary proceedings in accordance with law before appropriate forum. Present petition is not entertained.
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2024 (6) TMI 738
Validity of the certification issued u/s 197 for Financial Year 2023-24 - prayer for the grant of a Nil withholding tax certificate, the respondent has on due consideration provided and prescribed for a withholding tax at the rate of 15% - HELD THAT:- FY 2023-24 has already come to an end. In view of the aforesaid and since the writ petitioner would have the right to apply afresh for the grant of a Nil withholding tax certificate, which would necessarily have to be examined independently, we do not find any justification to continue the instant writ petition. We accordingly dispose of the instant writ petition with liberty to the writ petitioner to apply afresh under Section 197 of the Act for FY 2024-25. Any such application that may be made shall be examined and disposed of independently. All rights and contentions of respective parties are kept open. As further provided that in case the petitioner were to succeed in the fresh application, it would undoubtedly be entitled to claim the benefit of the CBDT Circular No.E/257 [CPC (TDS) Advisory to deductors making TDS payment through multiple challans in a month] dated 12 September 2014. So that the interest of the writ petitioner is not prejudiced, we reserve liberty to it to assail the order impugned here afresh.
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2024 (6) TMI 737
Speculative Transactions u/s 43(5) - transactions of purchase and sale of edible oil [(canola oil - involving high sea sales) by the assessee were speculative as no actual delivery of goods was received by the assessee - whether, in the instant transaction, there has been actual delivery of goods or whether the transaction has been ultimately settled, otherwise than by actual delivery? - HELD THAT:- Hon ble Andhra Pradesh High court in the case of Lakshmi Narayan Trading Company [ 1995 (3) TMI 20 - ANDHRA PRADESH HIGH COURT] while dealing with identical situation that where there are successive sales of same commodity coupled with delivery or transfer of the commodity and the physical delivery is only taken by the ultimate purchaser, the transaction does not fall within the sweep of speculative transaction. Also in case Sripal Satyapal [ 2007 (1) TMI 627 - RAJASTHAN HIGH COURT] held that there is no requirement in the provisions of section 43(5) for actual delivery or the transfer of commodity by the assessee or is agent but the emphasis is on that whether transactions entered into by the parties were settled by delivery of goods, (and for determining the speculative transaction in terms of 43(5) is that whether the transactions entered into by the assessee has been settled otherwise by way of actual delivery of the goods). It is not a case, where delivery of the goods were not contemplated at all , but it is a case where goods where physically purchased by the importer from the foreign seller, who loaded the goods on the ship , and thereafter , the assessee has purchased the goods from the importer while on the high seas in transit , and thereafter, the assessee sold the goods by handing over and transfer of title documents, in favour of the ultimate buyer, which includes handing over the sale invoice, High Seas sales agreement, copy of original import invoice, and copy of bill of lading to the purchaser , while the goods were still on high seas in transit and finally , the ultimate buyer has taken delivery and physical possession of the goods by filing the bill of entry at the port of delivery in India, and complied with all the custom formalities. Thus we hold that the ultimate settlement of the transactions entered into by the assessee has been settled by the actual delivery of the goods to the ultimate buyer and thus the transactions of sale and purchase in the instant case does not fall within the provisions of section 43(5) of the Act 61 and are not speculative transactions . Decided against revenue. Addition as interest income u/s 36(1)(iii) - AO has made a proportionate disallowance of interest on interest free advances and added back the same to total income - HELD THAT:- DR has not disputed or controverted the arguments of the assessee on the aspect of availability of interest free funds, as shown to have been reflected in the audited balance sheet. We are of the opinion that there is neither any reason nor any material to disbelieve the figures contained in the audited balance sheet, more so, the availability of unsecured loans (free of interest) duly reflected in the balance sheet amounting to Rs. 19.80 crores on 31st March 2016 and Rs. 20 crores on 31st March 2017, which is sufficient to meet the advance of Rs. 9.25 crores, given to M/s Diamond Traxmein Pvt Ltd, and respectfully following the decision of Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT] we delete the addition sustained by the CIT(A) u/s 36(1)(iii) - Decided in favour of assessee.
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2024 (6) TMI 736
Disallowance u/s 14A r/w rule 8D - HELD THAT:- It is seen that the assessee made investments of Rs. 12,50,000/- in Kalupur Commercial Co-operative Bank Ltd. and the dividend received on such shares is taxable in nature and does not generate any exempt income. Further, the assessee had share capital, Reserve Surplus to the extent of Rs. 357 crores, whereas the investments in mutual funds is to the extent of Rs. 284 crores. Thus, the interest free funds are far in excess to the investments made by the assessee, which are generating exempt income not forming part of the total income. Thus we hold that, the AO having not recorded his dissatisfaction u/s 14A(2) of the Act before invoking Rule 8D, he could not have made any disallowance u/s 14A of the Act. Thus, the disallowance made by the Assessing Officer is not sustainable in law and the same is liable to be deleted. Deduction claimed u/s 37 for education cess and higher secondary education cess - Scope of amendment made to Sec.40(a)(ii) by the Finance Act, 2022 retrospectively - assessee, submitted that the assessee has been visited with additions on the ground that though the claim of the assessee was legitimate at the time of the filing of the return of income, however, because of the retrospective introduction of the Explanation (3) to the Act, the same becomes an inadmissible expenditure and the provisions of Section 155(18) which came to be introduced with effect from 01.04.2022 provided that where the assessee is desirous of withdrawing the claim, he can do so subject to the payment of taxes - HELD THAT:- Where the application in Form No.69 has been made in the prescribed format and within the prescribed period, the claim would not be deemed to be under-reported income for the purpose of Section 270(A)(3) of the Act. Copy of the acknowledgement of receipt of the IT Form No.69 was furnished by the assessee before ld. CIT(A) so as to ascertain this fact as mentioned in the order of the ld. CIT(A); however, no orders have been passed by the AO regarding the application made by the assessee and the ld. CIT(A) has also not addressed this issue. Thus, the ground No.1 raised by the assessee is hereby allowed with the direction to the Assessing Officer to dispose of the application in Form No.69 made by the assessee and pass the order in accordance with law.
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2024 (6) TMI 735
Exemption u/s 11 denied through Order/intimation u/s 143 (1) - form 10 B had not been filed by the assessee within the due date - audit report is filed before the assessment order - HELD THAT:- Notice u/s 143 (1) (a) was issued on 19-12-2019. The audit report of the assessee trust was filed on the income tax portal by the auditors of the assessee trust on 20-01-2020. Intimation u/s 143 (1) denying the claim of the application of income was issued by CPC, Bengaluru on 08-02-2020. Therefore, what can be seen is that as on the date on which the intimation/order under section 143(1) of the Act was passed by CPC, Bengaluru, the auditor of the assessee trust had already filed the audit report in form 10B, before such order/intimation under section 143 (1) of the Act was issued. From the facts placed on record before us, we see no deliberate/mala fide intention on the part of the assessee or it s auditor to file the audit report in form 10B belatedly. We are of the considered view that the claim of application of income cannot be denied to the assessee only on the ground that the assessee/the auditor of the assessee omitted to file form 10 B (auditor s report) along with return of income, when the same was submitted to the tax authorities before the order/intimation under section 143 (1) of the Act was issued. Levy of Fee u/s 234F - delayed filing of the income tax return - HELD THAT:- We observe that as per Explanation 2(a)(ii) of section 139(1) of the act, the due date for filing the Income-tax return in case of a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force, is 30th day of September of the assessment year. Accordingly, due date for filing the Income-tax return in the case of appellant-trust, for AY 2018-19, as per section 139(1) of the act, is 30th September, 2018. Further, from the facts of the case, we observe that appellant trust had filed its return of income as on 26th September, 2018 (i.e. before 30th September, 2018). Thus, we understand that the return of income of appellant trust was duly filed within the prescribed time limit u/s 139(1) of the act. As per section 234F of the act, fees is payable by a person when such person is required to furnish a return of income u/s 139 of the Act and the person fails to do so within the time prescribed in section 139(1) of the act. Now, as observed above, the appellant-trust had filed its return of income before the prescribed time limit u/s 139(1) of the act. Thus, in our view, section 234F is not applicable in the case of appellant trust. Appeal of assessee allowed.
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2024 (6) TMI 734
Assessment u/s 153A - Addition of Notional Bank Interest - Alleged documents of bank account with HSBC London - Reliance on loose paper containing bank statement - As AR submitted that the alleged documents of bank account with HSBC London belongs to the assessee is not admissible as electronic evidence considering the fact that the revenue has not made efforts to corroborate the contents of the documents under section 65B of the Indian Evidence Act, 1872. Therefore, it cannot be admitted as electronic evidence. It is mandatory on the part of the revenue authorities to follow the conditions laid down u/s 65B(2) and (4) of the IE Act. HELD THAT:- After careful consideration of facts on record, we are of the view that the relevant documents were confronted before the assessee and the assessee after considering the various contents in the bank account received from the foreign bank, it does not matter how it was acquired, the assessee has accepted the same and proceeded to revise the return of income shows that the documents collected by the revenue from the foreign authorities are genuine and no need to follow the procedure laid down in the section 65B of IE Act considering the fact that the assessee has not retracted the acceptance on the contents of the statement of bank account produced before him neither before revenue authorities in the revision proceedings or appellate proceedings. Therefore, we do not see any reason to consider the above submissions of the Ld AR. Absence of any incriminating material found during the search operation - The search was initiated on the basis of information which was confirmed by the assessee in the search assessment proceedings, further, the assessee has not retracted means he has accepted, it goes to prove that the information with the revenue is substantially correct. Hence the material with the revenue has to be considered proper and the action of the AO to accept the revised return of income and proceeded to complete the assessment goes to prove that the material with the revenue can be assessable u/s 153A of the Act. Therefore, we have no choice but to reject the contentions of the assessee. Whether sum in question is not taxable in view of Article 23(3) of Indo-UK DTAA on the expression may be taxed employed therein? - As detailed submissions made by the Ld AR that in case of income declared under the head Income from other sources, the relevant article 23(3) of Indo-Uk is applicable and as per the concept of may be taxed , the various courts have held that it should be taxed only in the other country of source. We are not in dispute with the above submissions and he has relied on several case law. By acknowledging the various case law on this subject, the facts in this case is quite different to the facts of other cases relied by the assessee. Therefore, the facts in this case is that the assessee has disclosed the deposits in the HSBC London account as income from other sources, since the assessee was not in a position to disclose the sources of such cash deposits. It is the assessee who has disclosed the income voluntarily in its revised return of income and the same was accepted by the AO. It does not mean that the income actually falls in the category of income from other sources. Therefore, we are of the view that the assessee has not actually established or disclosed the sources of the deposits in the above said bank account. There is nothing coming out of the submissions made by the assessee. Merely because the income was declared by the assessee as income from other sources and the same was accepted by the AO, the article 23 will not be invoked automatically. The assessee first has to establish the source of income declared in the UK relevant to the bank deposits or establish that the bank deposits are not generated in India and earned outside India, further the income is falling under the category of other income without considering the fact that global income is chargeable to tax in the case of Indian resident. Therefore, the case of SBI, Patna branch,[ 2001 (7) TMI 997 - ITAT PATNA] is not applicable in the present case and distinguishable. As discussed above, the assessee itself declared the income under the head income from other sources without clearly disclosing the nature of income earned by the assessee in the source country in this case, UK. Merely because the AO accepted the same as such, it does not mean that the article 23(3) will automatically apply. Therefore, this contention of the assessee also dismissed. Impugned assessment was completed with extended period due to reference to FT TR division of CBDT calling for certain information - AO made the reference to FT TR division for collecting information from the UK counterpart for the simple the reason that the information relevant for the case under consideration is from UK and not from Swiss even though the original information from Swiss authorities however, in this case the relevant information required from UK. There is no bar on the part of the AO to seek information from FT TR division. This contention also cannot be accepted at this stage. Assessee appeal dismissed. Additions proposed by the AO on the basis of accrued interest on the outstanding amount in the bank account maintained by the assessee in the HSBC bank, UK - We observed from the record that the AO proceeded to make the addition in AY 2006-07 and 2007-08 only on the basis of bank statement obtained from the data contained in pen drive forwarded by the French Authorities relating to the various account maintained in the HSBC. The information contained in the above sourced information which contained the details of account held by the assessee and his family members for the period Nov 2005 to Oct 2006. Further the relevant information contained in the above statement itself shows that the account was in closed status. Therefore, in our considered view, the AO cannot presume that the account was in existence beyond the period mentioned in the above statement. The information with the department was only the above said statement, beyond that they do not have any information nor they recovered any information during the search or subsequent proceedings. Therefore, the AO cannot apply the concept of presumption to tax the notional income. Hence, we are inclined to allow the grounds raised by the assessee in the AYs 2008-09 to 2012-13. Penalty u/s 271(1)(c) - We have to interpret the provision literally in order to invoke the provisions of penalty whereas in the quantum appeal, certain information can be interpreted in order to confirm the quantum owing to the situation. In the given case, the assessee had accepted the existence of bank account in order to buy peace and the situation was such that the search was initiated based on the information already existed with department. In the search they could not find any material to substantiate the same. Only because the assessee had accepted the bank account only in the search assessment proceedings. In our view the penalty can be imposed only on the basis of material found during the search in order to invoke the explanation 5A of section 271(1)(c) of the Act. Therefore, in our view the AO had accepted the revised return of income and had not found any misreporting or concealment of income or even inaccurate particulars of income. Therefore, we are inclined to dismiss the penalty levied by the AO in the present case for the AY 2006-07 and AY 2007-08. Further, Ld CIT(A) has increased the quantum of penalty from 100% to 200% of Tax sought to be evaded. Since we have already deleted the penalty levied by the AO, the enhancement of above said penalty by the Ld CIT(A) also deserves to be deleted. Accordingly, the grounds raised by the assessee in AYs 2006-07 to 2007-08 are allowed. Other penalties levied by the AO, in the quantum appeals - AO had applied the presumptions to make the addition of interest income with the belief that the assessee had maintained the funds in the HSBC Account in the subsequent years also. Since, we have deleted the above additions, imposing the penalty on the above interest income is not proper. Accordingly, we direct the AO to delete the penalty levied for the AY 2008-09 to AY 2012-13. Addition on the basis of loose sheets - Officers found a loose sheet having certain details of expenses, which may or may not have any relevance to the accounts. The loose sheet never have a evidentiary value unless it is brought on record that these were having direct link with the financials or to the activities of the assessee. In this case, it is only certain probable expenses were recorded by the accountant, which is only a projected expenses and the assessee has already recorded the actual expenses on cash basis in its books of account, therefore, this loose sheet cannot be the basis of any addition. Hence, we do not see any reason to interfere with the findings of the Ld CIT(A). Accordingly, the grounds raised by the revenue are dismissed.
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2024 (6) TMI 733
Exemption u/s. 11, 12 13 - assessee did not have registration u/s. 12A nor was any appeal against such order pending - Status of the assessee as a State under Article 12 of the Constitution of India - HELD THAT:- Assessing officer did not consider any of the said claims but interpreted the order of the Tribunal to say that he can examine only the issue in regard to registration u/s. 12A of the Act. With this in mind, when one is to see the facts of the present case, it is noticed that the picture being given is that the Income Tax Officer is only a tax collector. This presumption of the Assessing Officer unfortunately is erroneous. As early as in April, 1955 vide Circular No. 14 (XL-35) dated 11/04/1955 specifically mentions that the Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Now, in the present case, clearly in the initial stage, the assessee had not claimed all the benefit of deduction u/s. 10(23C) nor the status of State . But the facts were very much before the Assessing Officer. SCB Medical College and Hospital and the impugned Swastyhha Bikas Samiti functions at Cuttack as one of the biggest and primary and specialist Govt. hospital doing novel work in the field of medicine. In case of any untoward incident in the State, patients are rushed to SCB Medical College Hospital. It has created a name for itself and it is also well-known as one of the best Govt. hospital in the State. When so much is known and it is also well known that it is a Government Organisation, and to deny such organization, just because it has not got registration u/s. 12A, but it is entitled to deduction under other relevant provisions of the Act, it would be nothing but travesty of justice. As is evident that the lower authorities have not considered various beneficial claims available to the assessee. Therefore, the issues in this appeal are restored in its entirety to the file of the AO for denovo adjudication. We may make it clear that all the issues are left open and the assessee is at liberty to raise any fresh claim as is available to the assessee. We also make it clearly that in view of the decision of case of Goetze (India) Limited [ 2006 (3) TMI 75 - SUPREME COURT] has held that the Assessing Officer shall consider the fresh claim if any raised by the assessee, even if such claim has not been claimed or made in the return of income. Further, we may mention here that the assessee shall make such claim in the form of a letter at least specifying the claim - Appeals of the assessee are partly allowed for statistical purposes.
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2024 (6) TMI 732
Condonation of delay in filing appeals - inordinary delay of more than 400 days - Unexplained cash deposit in the bank account - protective addition made in the hands of the assessee when substantive addition was deleted - HELD THAT:- The assessee has acted on the bonafide advice and believed that the protective addition made in the hands of the assessee would be deleted by tax authorities after substantive addition was deleted by tribunal and the income was directed to be assessed in the hands of the society. All these facts as explained by the assessee as a cause of delay in filing the appeal are not in dispute and therefore, there was a bonafide reason with the assessee to believe that the protective addition having no tax impact would be deleted by the AO in pursuant to the order of the tribunal deleting substantive addition in the hands of Shri Manish Kothari and directing the assessment of the said income in the hands of the society. The assessee also took steps in this respect by filing a rectification application u/s 154 before the AO but no avail. Thus, it is clear that by filing these appeals belatedly there was no malafide intention to take any undue advantage by assessee. The assessee has acted on the advice of the tax consultant for not filing the appeal within the period of limitation. Addition on protective basis made by the assessee on account of cash deposit transactions with Society [Vardhman Sakh Sahkarita Maryadit Ujjain] - AO made protective addition of the amounts found in the pocket diary during the survey proceedings in case of society and the substantive addition was made in the hands of President of the said society but tribunal said income on account of unexplained cash deposit is liable to be assessed in the hands of the society by taking peak credit and not in the hands of President of the society - HELD THAT:- When the substantive addition in the hands of Shri Manish Kothari was deleted by Tribunal then the protective addition in the hands of these individuals would not survive. Accordingly the protective addition made in the hands of the assessee for all these years is deleted.
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2024 (6) TMI 731
Stay of recovery of outstanding demand - primary issue in reassessment proceedings is salary paid to seconded employees reimbursed by Shimizu India Pvt. Ltd and held reimbursement of salary expenses as fee received for technical services - AO and DRP held that, the reimbursement received by the assessee is taxable in India as the assessee is having project office in India which constitutes a Permanent Establishment (PE) in India - assessee contended that the aforesaid assessment order is unsustainable as it suffers from limitation and further submitted that the AO has erred in come to the conclusion that the payments received by the assessee from Shimizu India is taxable as business income on which tax is to be computed in accordance with provisions of Section 44BBB of the Act. The provisions of Section 44BBB are not applicable to the assessee HELD THAT:- After having preliminary look at the issues raised in appeal, prima facie, we are of view that the assessee has good case on jurisdictional issue as well as on merits. A specific query was made to the ld. Counsel for the assessee during the course of hearing regarding deposit of 20% of the outstanding demand. After seeking instructions from the assessee, he made statement at Bar that the assessee is willing to furnish indemnity bond cum undertaking to the extent of 20% of the total outstanding demand. Taking into consideration entire facts, the recovery of outstanding demand in the impugned assessment years is stayed subject to assessee furnishing security in the form of indemnity bound cum undertaking to the satisfaction of Assessing Officer equal to the amount of 20% of the outstanding demand. Subject to assessee furnishing security as aforesaid for each of the assessment years under appeal, the recovery of balance amount in the respective assessment years shall remain stayed for a period of 180 from the date of this order or till the disposal of appeal(s), whichever is earlier. Stay applications of the assessee are allowed.
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2024 (6) TMI 730
Addition u/s 56(2)(vii) or 28(iv) - Non-clearing of post-dated cheques - case of purchase without consideration - HELD THAT:- From these facts and documents, firstly it is clear that the assessee has not only agreed consideration with the sellers but also paid the same through cheques and secondly there is a merit in assessee s submission that part of the cheques given to the sellers have not been cleared for payment because of the litigation or uncertainty attached with the property. Hence, the assessee is very much correct in claiming that it cannot be said to be a case of purchase without consideration . The assessee s claim gets further strength from the assertion by Ld. AR that in the event the decision of High Court or BDA does not materialize in favour of assessee, there would be cancellation of deal only and still if the assessee keeps the deal, the assessee would necessarily release the amounts of postdated cheques to the sellers. Therefore, in the situation, the purchase is made for consideration and the unpaid amount is only a liability of assessee. Hence, without any lengthy deliberation, it can be easily concluded that the purchase done by assessee cannot be said to be without consideration . Accordingly, it is neither a case of section 56(2)(vii)(b) nor of section 28(iv) as perceived by the lower-authorities. Hence, the addition made by AO and confirmed by CIT(A) is not justified. We, therefore, delete the addition made by AO. Addition u/s 69 on account of unexplained deposits in bank a/c. - HELD THAT:- As in the situation, when the assessee has undisputed cash-withdrawals from one bank, there is a source available for making deposits in another bank. AO has, however, rejected assessee s submission on certain reasons which are not substantial and more in the nature of conjecture or surmise. For instance, the AO has stated that the cash-book is not a sufficient evidence to explain that the source of deposits was the withdrawals. This itself is a vague point taken into account by AO. Then, the AO says that there is a time-gap between withdrawals and deposits or the amounts of withdrawals and deposits are not same but by raising this point, one cannot say that the money withdrawn by assessee was not available for re-deposit unless the AO could point out any other utilization of money. It is nowhere a case of AO that the assessee has utilized money for any other purpose. Even the time-gap in withdrawals and re-deposits is a few days only. Then, the AO has made comparison of turnover/profit of assessee with the quantum of withdrawals/deposits but that comparison is also wrong when the assessee claims that the moneys withdrawn were re-deposited. It is nobody s case that the business turnover was deposited. We also agree with Ld. AR that there are numerous decisions wherein the cash-withdrawals from bank have been accepted as source for re-deposit in bank and additions have been deleted. Taking into account all these aspects, we are of the considered view that the addition made by AO and upheld by CIT(A) is not correct. Consequently, we delete the same. This ground is also allowed. Addition towards cash-receipts as unexplained - HELD THAT:- We find that the assessee has shown taxable receipts and not claimed deduction of any expenditure on the basis of those agreements. Undisputably, those receipts are part of sale-proceeds of the lands and the profit resulting therefrom has been offered in assessee s return as business income and duly assessed by AO. AO has not doubted the cost, sale-proceeds and profits from those lands. An additional fact in case of land at Pura Chindwara is such that the major portion of sale-proceed has been received through cheques and only a small portion of Rs. 4,00,000/- is received in cash. As further noteworthy that the AO has not made any effort from purchasers so as to dislodge the impugned receipts declared by assessee. Therefore, in such a case, even if the sale-agreements were on plain paper and not registered but when the substantial profit arising therefrom is assessed by AO without any questioning, the impugned cash-receipts forming part of sale-proceeds giving rise to the very same profit cannot be treated as ingenuine. In any case, when the impugned receipts are part of the sale-proceeds, it amounts to double taxation of the transactions when the AO has assessed profits arising therefrom and at the same time added cash-receipts separately. This, in our considered view, is not justified. Being so, we delete the additions of Rs. 9,00,000 + 4,00,000 made by AO. Receipt on account of agreement for Godamaru - AO has, however, made addition on account of cash-receipt alone without giving any finding in assessment-order on other side of refund. We find that the addition made by AO is not in order when the assessee has refunded money back to the giver immediately within a period of four days due to cancellation of deal. Consequently, we delete the addition. Receipt on account of advance for Badwai - Relying upon this letter of assessee to AO, Ld. AR requested that no addition was warranted in present AY 2012-13 when the same has already been taxed in AY 2015-16. Since the point raised by assessee is a matter of record, we remit this issue back to the file of AO for verification of record of AY 2015-16 qua the claim of assessee and therefore make adjudication afresh. We direct the assessee to provide necessary assistance when called upon by AO. This issue is thus allowed for statistical purpose.
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2024 (6) TMI 729
TP Adjustment - payment of management service fee to Associated Enterprises - Reference to Transfer Pricing Officer - HELD THAT:- As analysed the provisions of section 92CA of the Act and observed that once a matter is falling in the jurisdiction of the TPO {apparently only for determining the arm s length price (ALP) by applying appropriate method}, we do not see any authority vested with the TPO for examining the matter with reference to section 37 of the Act. Once a matter is referred to the TPO by the Assessing Officer ( AO ) to determine the ALP of an international transaction or specified domestic transaction ( SDT ) (hereinafter collectively referred to as covered transactions ) entered into by the taxpayer during the given financial year under review, he would then examine the facts and circumstances surrounding the covered transactions. Transfer Pricing Officer (TPO) is an integral part of the whole assessment proceedings where international transaction or specified domestic transaction ( SDT ) is involved. Although role of the TPO is, certainly limited upto the Covered Transactions only. The intention of the legislature is to examination of covered transaction by a specific authority established solely for those transaction, this view further fortify by the fact that, report of the TPO on specific transactions are binding in nature on jurisdictional AO and he can t have any deviation from the same. In that case, once report of TPO is limited upto determination of ALP only, a challenge by the assessee can be there that the report of TPO is meant for determination of ALP only and not beyond. As gone through the order of TPO and observed that no exercise relating to determination of ALP with reference to method adopted by the assessee along with records submitted by him has been carried out. Rather, his questionnaire is there on record which he issued keeping in view the provisions of section 37 of the Act, which certainly not in his domain. The whole order is silent on the working of ALP and rather determined the benchmarking value at Rs. NIL. This is not possible from any angle of accounting or the intention of the statute also. We find force in the grounds taken by the assessee. In these terms Ground Nos. 2.1 and 2.2 raised by the assessee are allowed and matter is restored back to the file of TPO for determination of ALP as per the scheme of law after giving a reasonable opportunity to the assessee to present its transfer pricing study report alongwith documents and comparables relied upon.
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2024 (6) TMI 728
Rectification u/s 154 - Income from other sources u/s 56(2)(vii)(b) - difference between the sale consideration and the stamp duty valuation - HELD THAT:- We find that the case of the respondent assessee was selected for limited scrutiny for verification of investments made in agricultural lands i.e. movable properties. After detailed scrutiny an assessment order u/s 143(3) of the IT Act was passed accepting the returned income. Later the case was reopened u/s 154 of the IT Act for applying the provisions of section 56(2)(vii)(b) of the IT Act on the transaction of purchase of immovable property by the assessee, as the stamp duty value for the purposes of registration was more than the value of actual consideration paid by the assessee. We find LD CIT(A)/NFAC has also held that the issue of stamp duty valuation is debatable one there is a change of opinion hence the action of the AO cannot be upheld therefore the order passed u/s 154 of the IT Act has been quashed. It is the settled proposition of law that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two options cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record. Appeal filed by the Revenue is dismissed.
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2024 (6) TMI 727
Denial of registration u/s 12AA by invoking Section 13(1)(b) - CIT(E) rejected the application filed by the assessee on the ground that the objects of the Trust are restricted to the benefit of a particular religious community or caste i.e. Leuva Patel Community - HELD THAT:- We are of the considered view that the provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration u/s 12A of the Act. Our view is further supported by the decision of the Hon'ble jurisdictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT] wherein on the issue of denial of grant of registration u/s 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. Thus the matter is restored to the file of CIT (E), for de novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order for rejecting the application filed by the assessee trust Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 726
Denial of Exemption u/s 11 holding that there is a violation u/s 13(1)(c) (ii) - interest free advance had been made to Divine Real-build Pvt. Ltd. which was specified person within the meaning of Section 13(3) - It was the case of the assessee that the assessee had entered into an agreement with Divine Real Build Pvt. Ltd. for purchase of plot of land in respect of which land documents which was an agriculture land and the assessee had applied for increasing FAR to DDA which was delayed and advance given for construction was received back in installments - AO brought on record that the plot of the land for which the advanced has been made was an agricultural land on which there is no permission for construction of building or any allied activities which could be undertaken by the Assessee for the year under consideration. HELD THAT:- AR made a plea before us that the documents relied to support the argument that the Assessee s intention were not produced before the lower authorities as they were not available at that point of time and sought for consideration of the above documents to support the argument of the Assessee's Representative, which are very much necessary to render justice. Accordingly, prayed that these evidences to be admitted and appreciated in the interest of justice. In our opinion, these documents are not available at the time of proceedings before lower authorities and these are very much required for fair adjudication of dispute between the parties. Accordingly, these documents are admitted for adjudication. Since these documents are filed for the first time before this Tribunal and the lower authority have no occasion to examine these documents on earlier occasions, while the proceedings are going on, hence, it is appropriate to remit the entire issue in dispute to the file of ld. AO to consider these documents and decide the issue afresh in the light of above. Accordingly, the issue in dispute is remitted to the file of ld. AO in both assessment years for fresh adjudication. Assessee appeal partly allowed for statistical purpose.
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2024 (6) TMI 725
Denial of registration u/s 12A by invoking Section 13(1)(b) - trust institution created or established for the benefit of any particular religious community or caste - Applicants/assessee has stated the nature of activities as charitable and objects of the applicant has been stated therein as medical relief - Main clause of the objects states that the trusts will work for the Muslim Dini and Dundavi welfare, and for the same various works would be carried out like arranging library for circulation and expansion of Islamic teachings in the village, arranging medical help, arranging scholarship for persons studying in Madarsa etc HELD THAT:- We observe that in the case of Jamiatul Banaat Tankaria [ 2024 (3) TMI 376 - ITAT AHMEDABAD ] ITAT held that where objects of assessee-trust were primarily charitable rather than favouring any specific religious community, CIT(E) was not justified in denying registration under Section 12A, by invoking Section 13(1)(b) as said provisions would be attracted only at time of assessment and not at time of grant of registration. In the case of Malik Hasmullah Islamic Educational and Welfare Society [ 2012 (8) TMI 680 - ITAT, LUCKNOW ] ITAT held that since provisions of Sections 11, 12 and 13 are intended for exercise of jurisdiction by an AO in an assessment proceedings, Commissioner is not competent to invoke such provisions for purpose of declining registration under Section 12AA. In the case of St. Joseph Academy [ 2015 (2) TMI 495 - ITAT HYDERABAD ] ITAT held that provisions of Section 13 can be invoked by Assessing Officer while framing assessment and not by Commissioner while considering application for registration under Section 12AA. We are of the considered view that the provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration under Section 12A of the Act. Our view is further supported by the decision of the Hon'ble jurisdictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT ] wherein on the issue of denial of grant of registration u/s 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. The matter is restored to the file of CIT (exemptions), for de novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds.Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 724
Deduction u/s 80GGC for contributing to Rashtriya Komi Ekta party - Claim denied as said political party is an unrecognized political party and paper political party which is not recognized by Election Commissioner of India and have no address or infrastructure nor filed annual account to State Election Commissioner or Election Commissioner of India HELD THAT:- We find that the assessee has not replied to basic question and the objection raised by the assessing officer about his doubt on the genuineness of contribution to such political party, except claiming that it is not his duty to verify the affairs of such political party. It is not the case of the assessee that he is one of the main officer bearer or having any organisational post either at the District level or State level in the said political party. Even the assessee has not provided the details of his bank account or the bank account of such political party. Before us, the assessee has filed copy of the receipt of contribution/ donation to the said political party along with the bank statement. No certificate is furnished in the form of verification of list of documents, if such bank statement is filed before lower authorities. Filing of such documents which were not certified, if filed before lower authorities, is not permissible. In view of the aforesaid factual discussions, we do not find any merit in the grounds of appeal raised by the assessee. As the impugned political party is an unrecognized political party. Thus, grounds of appeal raised by the assessee are dismissed.
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2024 (6) TMI 723
Additional depreciation on plant or machinery used for less than 180 days and used for 180 days or more - Retrospective nature of amendment to section 32(1)(ii) by Finance Act, 2015 - HELD THAT:-Correct manner of proceeding in the matter is to read the unamended law, and to come to a conclusion as to the clarificatory or otherwise nature of the amendment, on that basis, as was also undertaken in TP Textiles Pvt. Ltd. [ 2017 (3) TMI 739 - MADRAS HIGH COURT] Reference in this context may also be made to the decision in CWT v. B.R. Theatres Indl. Concerns P. Ltd. [ 2003 (12) TMI 3 - MADRAS HIGH COURT] . The test to be applied for deciding as to whether a later amendment should be given a retrospective effect, despite the legislative declaration specifying a prospective date as the date from which the amendment is to come into force, it was explained therein, is as to whether without the aid of the subsequent amendment the unamended provision is capable of being so construed as to take within its ambit the subsequent amendment. If the unamended law could be held in a manner consistent with what the amendment seeks to achieve, the same is clearly clarificatory and, thus, retrospective, else not. This in fact represents settled law in the matter; the amended provision thereby clearly indicating of it being explanatory or declaratory of what the law always was. The sole premise of interpretation is to decipher the legislative intent consistent with it s object [Catholic Syrian Bank v. CIT [ 2012 (2) TMI 262 - SUPREME COURT] , CIT v. Baby Marine Exports [ 2007 (3) TMI 206 - SUPREME COURT] and Mahindra Mahindra Ltd. [ 1983 (9) TMI 1 - SUPREME COURT] The legislative intent per s. 32(1)(iia) is to provide additional depreciation (of 20%) qua the eligible plant and machinery, with a view to provide a fillip to the industry, where put to use for the purpose. The condition of acquire and put to use, stated in s. 32(1)(iia), is basic to a claim of depreciation and, therefore, is to be read in that context. The law, however, restricting depreciation to 50% of that eligible where the asset under reference is put to use for less than 180 days during the relevant year, puts an artificial curb thereon. This would not be of much consequence in the normal course as the assessee would be, for the following year, entitled to depreciation on the WDV computed by reducing from its cost, thus, the depreciation actually allowed. However, in the case of additional depreciation u/s. 32(1)(iia), a one-time allowance, the said restriction, though applicable inasmuch as the depreciation u/s. 32(1)(iia) is only by way of an addition to that exigible u/s. 32(1)(ii), has no correlation with the WDV, though operates to bar the claim for the balance 50% where the asset is put to use for less than 180 days during the year of it s acquisition, also rendering it discriminatory to the assessee who puts the asset to use for less than 180 days during the year of acquisition. Without doubt, that could not possibly be the legislative intent. And it is this that stands rectified per the amendment by way of third proviso, also removing the discrimination between the two sets of assessees, i.e., who acquire the asset, on the basis of the number of days it is put to use during the relevant year; clearly, an irrelevant criterion in the grant of additional depreciation. True, the words in s. 32(1)(iia) are acquired and installed , but then the same, as afore-noted, represent the twin conditions basic to a claim for depreciation, so that nothing turns thereon per se. That is, the same furnish the qualifying conditions for additional depreciation, since satisfied in the first year AY 2014-15 in the instant case, itself. We, therefore, subscribe to the view per the decisions cited by the assessee in it s favour.
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2024 (6) TMI 722
TP adjustment - adjustment proposed by TPO for both US and non-US related transactions - TPO/AO computing transfer pricing adjustment on aggregate cost base of the Appellant without excluding the cost pertaining to Appellant's domestic operations - assessee emphasized that the adjustment for US-related transactions had been resolved under Mutual Agreement Procedure (MAP) with the US entity and contention was that the adjustment made for domestic transactions, specifically with Indian entities, was not justified as they fall outside the purview of Indian Transfer Pricing provisions - Whether MGSI's domestic operations do not come under the ambit of Indian Transfer Pricing provisions and hence, the costs pertaining to the same should not be included while computing transfer pricing adjustments? HELD THAT:- As if we read paragraph 5 along with the MAP then it is clear that the assessee has transactions with US and domestic transactions. However, the law is fairly settled that the ALP should be determined in respect to the international transactions falling in Chapter X of the Income Tax Act. The determination of the TP adjustment for domestic transfer pricing is to be dealt in accordance with law. In our view, the assessee would be entitled to relief if on verification the Assessing Officer / TPO found that the adjustment with respect to the Microsoft Global Services Centre (India) Private Limited were not warranted in accordance with law. For the above said purposes, we are in agreement with the submissions of the ld.DR that the matter may kindly be remanded back to the Assessing Officer / TPO with the above said direction. In view of the above, we remand the matter back to the TPO for denovo examination of the facts and decide whether the addition as made by the TPO with respect to the domestic services as mentioned hereinabove are sustainable in the eye of law. Accordingly, the appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 721
Addition on account of Gold and Silver Jewellery and cash found in search and seizure proceedings - assessee filed the returned income u/s.153A comprises of the additional income on account of unexplained investment in jewellery and unexplained investment in construction of house - HELD THAT:- Assessee vide answer to question no. 47 to buy the mental peace at the time of search stated that he surrendered a sum of Rs. 70,00,000/- in respect of these valuables. The bench noted working placed on record by the assessee read with the CBDT guideline for not seizure of gold ornaments wherein it is stated that per person in a family a married women 500 gms and unmarried woman 250 gms and male member 100 gms be considered as reasonable holding. Thus, accordingly 3 married lady and two male member (500*3 + 100*2 = 1700 grams) 1700 grams holding be considered as reasonable as against this the assessee in the working submitted and reproduced here in above claimed 1450 grams which cannot be denied to the assessee and gold ornaments declared in the HUF also claimed as deduction from the total gold ornaments / valuable found and the balance amount of Rs. 38,02,030/- is offered for tax by the assessee and in respect of silver items / valuation the weight of the found items comes to 26,983/- out of which 17,400/- declared in wealth tax return and balance amount of Rs. 3,01,865/- considered as income and offered for total value for which we do not find any infirmity in the working provided by the assessee as the value and quantity was not disputed and only the grams were disputed which we found to be in order and we are of the considered view that considering these factual aspect of the matter there is no need to sustained the addition merely on the reasons that the assessee has at the time of recording of statement u/s.132(4) admitted lumpsum sum as unexplained investment which we do not found correct and the working which is based on the evidence and guidelines of the CBDT cannot be ignored and therefore, we direct the ld. AO to delete the addition of Rs. 28,96,104/- made in the assessment order. In terms of the discussion so recorded the ground no. 1 raised by the assessee is allowed. Addition of cash found from the premises searched - The bench noted at the time of search the assessee was confronted about the source of cash found for an amount of Rs. 5,41,000/-. Wherein the assessee while answering the question no. 35 submitted that Rs. 1,50,000/- belong to M/s. Sarvodaya Agrotech India Limited. AO considering the submission of the assessee and made the addition of Rs. 3 lac in the hands of the assessee - CIT(A) sustained the addition of Rs. 2 lac though he has hold that the assessee may be considered to have savings of Rs. 2 lac considering the stature and payment of wealth tax even in past but while doing so out of the total addition of Rs. 3 lac he sustained the addition of Rs. 2 lac. Thus, in fact though the ld. CIT(A) considered the saving of the assessee at Rs. 2 lac but in fact given the relief for addition of Rs. 1 lac only. Thus, considering the overall facts of the present case of the assessee the bench noted that the assessee has explained that out of total cash of Rs. 5,41,000/- found Rs. 1,50,000/ claimed to have been belonging to the M/s. Sarvodaya Agrotech and seizure of Rs 3 lac made which the ld. AO has added in the income of the assessee. CIT(A) has already granted the relief to Rs. 2 lac to the assessee considering the income of the assessee, number of family members in the family and the social status of the assessee we do not find any reason to sustained even the addition of Rs. 2 lac in hands of the assessee when the assessee has fairly disclosed the disclosed income and has co-operated to the revenue and thus considering the overall aspect of the matter and considering the fact that in past the assessee is filling the wealth tax return also, thus we are of the considered view that the assessee is found to have been residing with his mother, wife, son and son s wife the holding of cash and there sustaining the addition of Rs. 2 lac does hold found merits and therefore, we do not agree with finding of the lower authority and direct the ld. AO to delete addition on account of cash. Ground no. 2 raised by the assessee is allowed.
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2024 (6) TMI 698
Disallowance of trading loss treating the same as bogus loss - As per the assessee, whatever transactions of purchases and sales were carried out by him in the script of M/s Prraneta Industries were duly recorded in the books of accounts and matched with the date of the stock exchange. All the transactions were carried out through the registered stockbrokers which were not connected with SCS - HELD THAT:- It is the admitted position that the core business of the assessee was dealing in shares. The assessee during the year under consideration has shown total purchases of different scripts at a value of Rs. 80,78,04,800.00 against the gross sales of ₹ 93,19,71,306.00. Assessee has also shown the closing inventory at ₹ 5,67,62,457.00. Assessee has filed the return of income u/s 139(1) of the Act declaring an income of Rs. 8,33,83,875.00 before adjusting the set of the brought forward losses. Even assuming but without admitting, the loss in dispute is bogus in nature, yet there was sufficient brought forward losses capable of absorbing impugned loss without inviting any extra tax burden on the assessee. Had the assessee been involved in manipulating the prices, then there would not have been declared any profit in the script in the given facts and circumstances. Thus, the conduct of the assessee suggests that he was not involved in manipulating the trading in the script of the company. It is difficult to register in mind that a person maintaining such a portfolio shall enter any bogus transactions to bring down the profit so as to avoid the tax liability in a situation where he has sufficient brought forward losses. As such, considering the magnitude of the business of the assessee, the loss in dispute is miniscule and no prudent person will enter into such bogus transactions. As alleged by the revenue that the assessee has carried out the transactions in the script of M/s Prraneta Industries in connivance with SCS. The basis for holding so was that it was discovered during the search proceedings at the premises of SCS and M/s Prraneta Industries that the company namely M/s Prraneta Industries is engaged in providing accommodation entries through the involvement of SCS. However, on the contrary we find that all the transactions were carried out by the assessee at the stock exchange through the involvement of registered/ stockbrokers. But the Revenue has not established any link between SCS/ M/s Prraneta Industries viz a viz the registered stockbrokers which in our considered view was necessary for carrying out manipulation in the script in dispute. There was nothing on record suggesting that there was any enquiry conducted either by the SEBI or the stock exchange with respect trading in the script of M/s Prraneta Industries. Similarly, there was no complaint filed by any of the party either to the SEBI or the stock exchange about the assessee or brokers or M/s Prraneta Industries that it was involved in the manipulation of the prices of the shares. Similarly, the AO has not conducted an enquiry from the SEBI or BSE about the company whether it was engaged in the frivolous activities as alleged. We also note that in the investigation carried out by the investigation wing of Kolkata/ Mumbai, it was unearthed that there were numerous companies involved generating bogus long-term capital gain, eligible for exemption under section 10(38) of the Act. However, there was no information available on record whether the name of the company i.e. M/s Prraneta Industries was appearing in the investigation carried out by the investigation wing of Kolkata/ Mumbai or any other investigation carried out by the income tax department. An alleged scam might have taken place in the trading of the script M/s Prraneta Industries. But it has to be established in each case, by the party alleging so, that this assessee in question was part of this scam. The chain of events and the live link of the assessee s action giving his/her involvement in the scam should be established. Just the modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to prove that the assessee was involved in the collusion with the entry operator/ stockbrokers for such a scam. In the absence of such finding how is it possible to link their wrong doings with the assessee. Further the case laws relied by the AO are with regard to test of human probabilities which may be of greater impact but the same cannot be used blindly without disposing off the evidence forwarded by the assessee especially without bringing any evidence from independent enquiry corroborating the allegation. As SMT. KRISHNA DEVI, HARDEV SAHAI GUPTA (GARG) , SMT. BINDU GARG [ 2021 (1) TMI 1008 - DELHI HIGH COURT] we hold that in absence of any finding specifically against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated as far as trading loss claimed by the assessee in the scripts of M/s Prraneta Industries. Hence the ground of appeal of the assessee is hereby allowed.
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2024 (6) TMI 697
Taxability of income in India - Taxability of System Fund support fee and Technology Services Fees - receipts on account of Marketing, Distribution Marketing, Frequency Marketing Programme (i.e. IHG Rewards) and SCHI Facility charges - DRP following the orders of earlier years held that marketing and reservation related receipts are ancillary and subsidiary to Royalty received by the group entity for the use of brand name and taxable as FIS under Article 12(4)(a) of India-USA DTAA - HELD THAT:- HELD THAT:- AO/DRP in the Assessment order(s) for A.Y. 2006-07 to A.Y. 2011-12 held that Marketing and reservation related receipts is not taxable as Royalty / Fees for Technical Services , following the aforesaid orders of the ITAT. Mumbai ITAT in their combined order dated [ 2024 (2) TMI 582 - ITAT MUMBAI] for A.Y. 2012-13 to A.Y. 2015-16 again held that Marketing and reservation related receipts is not taxable as Royalty / Fees for Technical Services under India-USA DTAA and deleted the additions made in the assessment order(s). . Keeping in view of the above, the issue of taxability of marketing and reservation related receipts as Royalty/FTS is squarely covered by the decision of ITAT, the appeal of the assessee on this ground is allowed. Taxability of Travel Agent Commission (TACP) - taxable as FTS/FIS under the Act and India-USA DTAA - HELD THAT:- The services were rendered by the travel agents to the Indian Hotels i.e. the Assessee did not render any service to the Indian hotels, as envisaged under section 9(1)(vii) of the Act, The Assessee made payments to travel agents on behalf of the Indian hotels; and Subsequently, the Assessee recovered such payments made to distribution channels from Indian hotels on costto-cost basis without any element of income. Thus, it can be found that the Assessee has rendered services in relation to booking of hotel rooms to the Indian Hotels in consideration of commission, it cannot be treated as FTS under the Act. The following judicial precedents held that commission charged by commission agents outside India is not taxable in India like Panalfa Autoelektrik Ltd [ 2014 (9) TMI 706 - DELHI HIGH COURT] , Group Ism (P.) Ltd. [ 2015 (6) TMI 10 - DELHI HIGH COURT] , Model Exims [ 2014 (6) TMI 290 - ALLAHABAD HIGH COURT] and Le Passage to India Tours and Travel (P.) [ 2015 (2) TMI 983 - ITAT DELHI] Thus it can be concluded that the amount charged by the Assessee as TACP for booking hotel rooms for third-party Indian Hotels cannot be said to be in the nature of managerial, technical or consultancy in nature for treating the same as FTS under the provisions of section 9(1)(vii) of the Act. Decided in favour of assessee.
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Customs
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2024 (6) TMI 720
Seizure of goods u/s 110 of the Customs Act, 1962 by Customs Authorities outside their designated area - jurisdiction of concerned Officers who have seized the goods being gold bullions to seize the same, as the Customs House at Strand Road does not fall within the jurisdictional area of the Commissioner of Customs (Preventive) West Bengal, under whom the Officers are working - HELD THAT:- Though, in this case the petitioner did make any application for release of the goods, there is no application for provisional release in terms of Section 110A of the said Act. The purported tax invoice and supporting documents disclosed herein creates more than an element of suspicion as regards ownership of the petitioner in respect of the goods in question. The petitioner has not been able to establish its right of ownership over the goods and the same appears to be a disputed, however, without going into such an issue at this stage, the order of seizure passed by the Inspector of Customs (Preventive) and the Superintendent of Customs (Preventive) do not suffer from any jurisdictional error. No case for interference has been made out. Petition dismissed.
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2024 (6) TMI 719
Seeking grant of bail - Recovery of smuggled gold and cash - Applicant's employment and ownership of recovered items - Applicant is owner of recovered items or not - HELD THAT:- Apparently, the quantity of gold and gold ornaments and cash have been recovered and this fact is not disputed by the learned counsel for the applicant that the applicant and the co-accused Lalmohan Panja were in possession of the items recovered. Even though it is submitted that the said items belonged to the employer of the applicant but the fact remains that insofar as the recovery is concerned that in itself is not disputed. It is prima-facie evident that huge quantity of cash, gold and gold ornaments were recovered. Whether the said gold or the gold ornaments have been made from the smuggled gold of foreign origin is a subject matter to be tested in trial. This Court finds that the instant bail application has been moved by the applicant, who claims himself to be an employee of the firm and is shown to be an ordinary resident of Mumbai as he usually works in Mumbai. However, no document has been brought on record to indicate that the applicant is an ordinary resident of Mumbai. No identity document, no bank statement, no residence proof, lease document/rent agreement has been filed which could indicate that the applicant is a resident in Mumbai. From the perusal of the said statement all that can be seen is that there are certain random entries which is corresponding to the name of the applicant and allegedly the family members of the applicant but insofar as the payment of salary is concerned, there is no statement indicating the consistency and regularity of time and amount which is attached to the payment of salary. In absence of any such clear material, it cannot prima-facie be ascertained at this stage that the applicant was the employee and was sent by his employers to sell the ornaments/gold and collect cash toward the sale proceeds. Prima-facie, complicity of the applicant is evident and at this stage and this Court is not inclined to enlarge the applicant on bail. Consequently, the bail application of the applicant Harekrishna Paria is rejected.
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2024 (6) TMI 718
Revocation of the Customs Broker (CB) license - forfeiture of security deposit - levy of penalty - inadmissible evidences - some cargo companies in collusion with the Appellant and other customs brokers were misusing the Transfer of Residence (TR) facility extended to NRIs - recovery of several incriminating documents regarding clearance of non bonafide baggage - HELD THAT:- As per the impugned order, the Adjudication authority concluded that email communication relied in the Show cause Notice is admissible evidence even in the absence of the certification under the provisions of Section 138C of the Customs Act, 1962. Such finding is given on the ground that proceedings under CBLR, 2018 are quasi-judicial proceedings and in quasi-judicial proceedings, the evidence is appreciated on the principles of preponderance of probability and quasi-judicial authority does not have to prove things beyond doubt as in the case of criminal proceedings and for this reason, adjudication authority held that the rigors of provisions of the Indian Evidence Act, 1882 are not applicable to quasi-judicial proceedings as held by Supreme Court in the matter of CC Vs M/s Orient Enterprise [ 1996 (12) TMI 389 - SC ORDER] . Non-compliance with the provisions of Section 138C of the Customs Act, 1962 - HELD THAT:- Unless the requirement of Section 65B of the Evidence Act is satisfied, such evidence cannot be admitted in any proceeding. Since Section 138C of the Customs Act is pari materia to Section 65B of the Evidence Act, the evidence in the form of computer printouts, etc., recovered during the course of investigation can be admitted only subject to the satisfaction of the sub-section (2) of Section 138C - There is no reason forth coming in the impugned order specifying the reason for rejecting request of cross examination of these two employees, who had given statements as well as furnished documents retracted from the computer belongs to Appellant which are relied by Adjudication Authority to give finding against the appellant. Such documents cannot be considered as admissible evidence specially in the absence of certification as per Section 138C of Customs Act, 1962 and when no opportunity extended for cross examination as per Section 17 of CBLR 2018. Violation of section 10(d) of CBLR 2018 - HELD THAT:- As per section 10 (d), Customs Broker shall advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; Thus a duty is cast on the Customs Broker to advise his clients to comply with the provision of law and in case the client failed to comply with the provision, it should have been brought to the notice of the Customs Authority - In the present case, there is no way for the Customs broker to find out whether the baggage brought by the passenger belongs to them or any other person. It is revealed only at the time of inspection. If the overseas agency had induced the passenger to carry the goods belongs to other NRIs though unaccompanied baggage of a passenger by offering any amount, in the absence of any knowledge regarding such offer till the filing of baggage declaration, the proceedings initiated against the appellant is unsustainable. Thus, the finding regarding alleged violation of the provision of Regulation of 10(d) of the CBLR 2018 is unsustainable. Violation of section 10(e) of CBLR 2018 - HELD THAT:- Though the document retrieved from the email communication of the appellant cannot be considered as admissible evidence in the absence of compliance with 138C of the customs Act, 1962, in the absence of the categorical denial regarding presence of such document in email of the appellant, only presumption can be drawn that though the appellant was not knowing about the content of the mail/communication made on behalf of the appellant, there is an omission on the part of appellant in proper supervision of the activities of its staff, which amount to non exercise of due diligence as contemplated under section 10(e) of CBLR 2018. However, harsh provisions of CBLR,2018 cannot be invoked for such omission and appropriate penalty under the provisions of Section 18(1) is sufficient in such case. Thus, the revocation of the Customs Broker license and forfeiture of Security deposit under section 14 of the CBLR, 2018 are unsustainable. Penalty under Regulation 18(1) of the CBLR, 2018 - HELD THAT:- Considering the suspension of the Customs Broker license since January, 2024, a lenient view can be taken regarding penalty. Thus, the penalty imposed on the appellant under Regulation 18(1) of the CBLR, 2018 is reduced to Rs. 40,000/-. The impugned order is modified and appeal is partially allowed by setting aside revocation of the Customs Broker license and forfeiture of security deposit under section 14 of the CBLR, 2018. The penalty imposed on the appellant under Regulation 18(1) of the CBLR is reduced to Rs. 40,000/-. Appeal allowed in part.
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2024 (6) TMI 717
Misinterpretation of DGFT Notification No.77(RE-2008)/2004-2009 - import of Round Ridge Cement Tiles declaring its value as US$ 6.98/- - to be allowed free or is to be considered as processed tiles / slabs of agglomerated / artificial stones and subjected to the restrictions prescribed under DFGT NN. 77(RE-2008)/2004-2009 dated 09.01.2009 - whether its importation can be allowed only if the value is US$ 50 and above per square meter? HELD THAT:- It is found that after the objection of the Customs Department in assessing the Bills of Entry filed during the period March 2013 about applicability of the said notification to the imported goods, the appellant wrote to DGFT seeking for clarification on the stand of the Customs Department on the applicability of N/N. 77(RE-2008)/2004-2009 dated 09.01.2009 to imported Round Ridge Cement Tiles. The DGFT communicated its opinion through letter dated 27.12.2013 observing that the import of cement tiles under ITC(HS) Code No.68101990 is free for import and such cement tiles would not come within the ambit of N/N. 77(RE-2008)/2004-2009 dated 09.01.2009. It is found that in the impugned orders, the learned Commissioner(Appeals) did not have the opportunity to examine the said clarification issued by the DGFT after the order was passed, whereas in the subsequent order dated 22.01.2015 before the learned Commissioner(Appeals) the said opinion of the DGFT was placed by the Appellant. However, it was discarded by the learned Commissioner(Appeals) observing that in absence of issuance of any amendment or clarification to the said Notification, the opinion is not binding on the Department. Consequently, adopting the said opinion of DGFT on the applicability of the said Notification No.77(RE-2008)/2004-2009 dated 09.01.2009 and applying to the facts of the present case, it can safely be held that the appellants are entitled to import the Round Ridge Cement Tiles free and the restriction applicable to processed tiles as held in the impugned orders cannot be sustained. The impugned orders are set aside - appeal allowed.
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Corporate Laws
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2024 (6) TMI 716
Prayer for rejection of plaint - absence of joint family nucleus - declaration of rights - HELD THAT:- The suit is instituted and the principal averment in the plaint is existence of joint family properties. Joint family properties, sought to be partitioned, include immovable properties mentioned in Schedule B of the plaint, as well as movable properties and companies registered under the Companies Act 2013. Whether the companies can be subject matter of partition is a questionable issue. But there are immovable properties too. It is argued that the plaint failed to disclose genesis of the joint family fund or any particulars on it. Whether the properties were purchased out of joint family fund or not and the question of jointness of movable and immovable properties are question of fact to be established in trial. It is too early to say at this stage, that the suit does not disclose cause of action. Joint fund is averred in the plaint, as stated above; purchase of properties out of joint fund is also averred, which is sought to be partitioned. The question of existence of nucleus of fund is also a matter of fact to be established in evidence. But at this stage it cannot be said that the suit does not disclose cause of action or barred by Companies Act 2013 or Benami Transaction Prohibition Act, 1988. A conclusion at this stage that the suit is barred under the laws, as mentioned above, would be inappropriate. The suit is one for partition. The National Company Law Tribunal has no authority to consider partition suit of immovable properties. This Court is of opinion that the instant application filed under Order VII Rule 11 of the Code of Civil Procedure, 1908 is not tenable and stands dismissed.
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2024 (6) TMI 715
Winding up of company - Prosecution of the Ex-Directors - guilty of fraudulent concealment and have misappropriated the funds - Failure to discolse sale consideration in the company's bank accounts - Section 433(e) and 435 of the Companies Act, 1956 - HELD THAT:- It is categorically brought out that the true and correct information had not been supplied by respondent Nos. 1 to 4 during the course of winding up proceedings by the Official Liquidator in as much as the aspect of the sale and its consideration, that had been deposited in the Bank of Rajasthan, Karol Bagh Branch, New Delhi, was not disclosed. All said and done, it stares on the face of the record that in so far as the property in question is concerned, third party rights have already been created much before the initiation of the instant winding up proceedings. There is no iota of allegations by the Official Liquidator that there was any collusion between the Ex-Directors of the company (in liquidation) and respondent No.5 and/or for that matter, the respondent Nos.6 and 7 in any manner and by all means, that they bonafidely purchased the property in question when there was pending no winding up petition. It is directed that the aforesaid respondent Nos. 1 to 4 are held accountable and liable to pay Rs. 3,60,000/- with penal interest @ 12% per annum from the date of execution of the Sale Deed i.e. 10.03.1999, jointly and severally, which shall be paid to the Official Liquidator within 30 days from today. Application disposed off.
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Insolvency & Bankruptcy
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2024 (6) TMI 714
Auction sale - CIRP proceedings under IBC - Refund of bid amount deposited by the successful bidder - Seeking possession of property u/s 14 of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- There is no merit in the objection raised by learned counsel for IRP appointed by learned NCLT qua the prayer for release of bid amount by respondent No. 9. Factual aspect of auction having been conducted on 05.11.2021, subsequent decision on the objections by Recovery Officer and setting aside of auction proceedings as well as sale in favour of respondent No. 9 vide order dated 24.04.2023 passed by Recovery Officer, is also a matter of record. With passing of order dated 24.04.2023, which as per information provided to us, stands unchallenged as on date, sale of property in question in favour of respondent No. 9 clearly does not exist. It is a matter of record that refund of the amount in question has been ordered vide order dated 24.04.2023. It is to be noted that any money, amount or property which may be for the benefit of corporate debtor can doubtlessly not be directed to be released or dealt with by this Court at this stage in view of proceedings before NCLT. However, in the present given factual matrix, it cannot be held by any stretch of imagination that corporate debtor has any legal right or beneficial interest qua the bid amount which has been deposited by the auction purchaser (respondent No. 9) in respect to auction/sale which has admittedly been set aside with refund thereof being ordered and the said order not being challenged till date. No right over the same vests in respondent No. 9 and conversely corporate debtor or the Bank also do not have any right to claim money deposited towards bid amount, admittedly lying with Recovery Officer. Said money/amount cannot be stated to be for the benefit of corporate debtor. Once that be the position, it cannot be said that this Court would not have jurisdiction to direct release of said amount. It would indeed be imminently unjust towards respondent No. 9 to insist that application should now be filed by it before learned NCLT. It is, thus, held that respondent No. 9 is entitled to release of the amount deposited by it in terms of order dated 24.04.2023. It is directed that amount deposited by respondent No. 9 be released by Recovery Officer expeditiously in terms of order dated 24.04.2023. With the said direction, both writ petitions are disposed of as infructuous at this stage, without expression of opinion on the merit of the matter or even entertainability thereof, keeping in view the passing of order dated 14.05.2024 by learned NCLT, Chandigarh Bench. Petition disposed off.
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Service Tax
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2024 (6) TMI 713
Levy of Service Tax under the provisions of the Finance Act, 1994 as in force and still 13.06.2017 for the finance years 2016-17 and 2017-18 up to 30.06.2017 - failure to respond to the SCN - HELD THAT:- On consideration of the N/N. 8/2008-ST, dated 01.03.2008 as amending N/N. 6/2005 dated 01.03.2005 and also considering the fact that the petitioner is a small entity engaged in cable network connection, this Court is of the view that the petitioner may have the case on merits and therefore, a liberty can be given to the petitioner to file statutory appeal. This Writ Petition is disposed of by permitting the petitioner to file statutory appeal before the Appellate Commissioner within 30 days from the date of receipt of a copy of this order together with the deposit of 25% of the disputed amount, as a condition for entertaining the appeal.
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2024 (6) TMI 712
Refund of Service Tax amounts collected from various chitty transactions of the petitioners in different branches of the Kerala State Financial Enterprises Limited - HELD THAT:- When the petitioners have made the applications individually in pursuance to the judgment dated 14.03.2018 passed by this Court, within one year from the date of the judgment, their applications ought not to have been rejected on some technical issue. These applications are in time and the authority, on examination, finds that they are eligible for a refund of the service tax amount paid by them as per the judgment dated 14.03.2018 passed by this Court, their applications ought to have been considered and the refund could have been credited to their accounts, if such refund is to be made under the judgment of this Court. The matter is remitted back to the Original Authorities to process the petitioners applications for refund of the service tax amount in pursuance of the judgment dated 14.03.2018 passed by this Court and pass fresh orders expeditiously, preferably within a period of two months - petition allowed by way of remand.
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2024 (6) TMI 711
Reverse charge mechanism - service tax demand on the foreign remittances received by different units of the appellant - HELD THAT:- An amount of Rs. 6,56,79,014/- was paid under Foreign Consultancy head. Copies of the respective challans have also been enclosed in the appeal memo. Though these challans are for a consolidated amount including service tax payable by the appellant on other services also, but, the relevant entries are separately indicated under accounting code 00440057 relating to 'consulting engineers' services received by the appellant from service providers established outside India. Thus, it is clear that the appellant and different units of appellant had paid service tax amounting to Rs. 6,56,79,014/- on the foreign remittances towards services received from service providers established outside India. The Commissioner committed an error in not accepting the contention advanced by the appellant by merely observing that the payment of service tax of Rs. 6,56,79,014/- includes payment by other units of the appellant also, but the demand of service in the show cause notice is based only on foreign remittances of the appellant only. It is, therefore, necessary to remit the matter to the Commissioner to examine this contention of the appellant and not exclude the payments made by other units of the appellant. Appeal disposed off by way of remand.
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2024 (6) TMI 710
Rejection of refund claim based on classification of service - Appellants have taken the view that the service provided by the service provider is not that of renting of immovable property , but it is that of construction services - HELD THAT:- The Appellant is not allowed to question the classification adopted by the service provider. The service provider in this case has treated the service as renting of immovable property and has collected the Service Tax @ 12.36% (as per the Appellant himself) and has also filed the ST-3 Returns accordingly with their jurisdictional office. The service provider has, at no point of time claimed that this has been done by him by way of mistake and actually they are providing only the service of construction of commercial property . In such a case, the Appellant as a recipient of service is precluded from agitating the classification adopted by the service provider to claim the present refund. As a matter of fact, the refund cannot be claimed by him and the Appeal basically fails on this count itself. Both the lower authorities have clearly held that no evidence in a proper form has been provided by the Appellant to satisfy these queries and the Adjudicating Authority has rejected their refund claim on this ground and even the lower Appellate Authority has dismissed their Appeal only on this ground. The request for remanding the matter to the Adjudicating Authority is rejected - appeal dismissed.
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2024 (6) TMI 709
Time Limitation - service tax demand on the services received by the appellants from outside India - in relation to business or commerce or not - sovereign function - no proper examination of documentary evidences - HELD THAT:- The appellants nowhere contended against applicability of the service tax on them; rather their representative at the time of personal hearing had admitted that there is short payment and they are factually required to make the payment. The statement furnished by the appellant before the audit wing was also recorded in paragraph 6 of the impugned order. It is surprising that how the appellant s representative had made the statement, that they are liable to pay the service tax, inasmuch as in paragraph 6, the authorized signatory s statement was recorded, which is to the effect that he is not aware about the billing pattern and had acted as per the direction of the Corporate Office and accounting instructions and that they had accounted SDC charges separately in the invoices. Further, it is not the case of Revenue that the appellants had not entered into any written contracts with the overseas entities for provision of requisite services. The original authority has not examined the documentary evidences including the contracts, to conclude that the appellants had really received the taxable services and were liable for payment of service tax as recipient of service under the Reverse Charge Mechanism (RCM) - the original authority should properly examine the material evidences for a conclusion regarding leviability of service tax on the appellants or otherwise, for provision of the taxable service under the category of Management, maintenance or repair service . The matter is remanded to the Original Authority for passing of denovo adjudication order upon due consideration of the available documentary and other evidences and those to be submitted by the appellants - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2024 (6) TMI 708
Suspension of petitioners from service - habitually accepting illegal gratification - HELD THAT:- The orders of suspension had been kept in abeyance pursuant to the interim order passed by this Court and connected matters by its order. Thereafter, the matter was heard by the Tribunal and the impugned order was passed on 05.10.2023. The same was challenged before this Court and this Court had again issued interim order staying the suspension as against the petitioners herein. It is also admitted by the learned counsel appearing on either side that the charge memos have been issued to all the petitioners in these batch of writ petitions and that the disciplinary proceedings have been initiated against them. In view of the fact that more than eight months have elapsed from the date of the order of suspension and since suspension had not been given effect to due to orders passed by this Court on two occasions, it is opined that at present all that requires to be done is to permit the petitioners, who had not suffered the consequence of the orders of suspension, to continue in service subject, of course, to the continuation of the disciplinary proceedings which have been initiated against them. In case any of the writ petitioners are still working in the posts from which they were suspended it will be open to the respondents to consider whether they require to be moved out of the said posts. The suspension orders which were under challenge before the Tribunal shall not be given effect to. The petitioners shall be permitted to continue in service, subject to posting orders - Petition disposed off.
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Indian Laws
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2024 (6) TMI 707
Dishonour of Cheque - insufficient funds - Prayer for leave to defend the suit unconditionally - only defence of the defendant is that the defendant has issued the cheques for security but the plaintiff is illegally withholding the original title deeds and due to such act, the defendant has suffered severe loss and damages - HELD THAT:- In the present case, the defendant has no defence and the defence set up by the defendant are illusory and sham. This Court finds that the plaintiff do get decree against the defendant for a sum of Rs. 7,23,63,548/-. The plaintiff also entitled to get further interest at the rate of 12% per annum from 13th April, 2017, on Rs. 4,05,00,000/- till the realization to the amount. Application allowed.
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2024 (6) TMI 706
Dishonour of Cheque - Quashing of the entire criminal proceeding arising out of Complaint Case - Criminal conspiracy to encash the cheques provided to the petitioners under the agreement by forging and fabricating bills of huge amount despite no material having been supplied - HELD THAT:- It is an admitted fact further that the cheque was issued as security pursuant to financial transaction by M/s New City Agency, which is admitted in the complaint petition itself and that cheque cannot be considered as worthless piece of paper under every circumstance. A reference may be made to the judgment passed by the Hon'ble Supreme Court in the case of SRIPATI SINGH (SINCE DECEASED) THROUGH HIS SON GAURAV SINGH VERSUS THE STATE OF JHARKHAND ANR. [ 2021 (11) TMI 66 - SUPREME COURT] (Since Deceased) through his son wherein, it has been held that ' If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.' In view of the above, when the case under Section 138 of the Negotiable Instruments Act was already filed by the petitioner-company, opposite party no. 2 was having all the opportunity to defend the case in that pending complaint case and without doing so, he has filed the present complaint case implicating the petitioners. The Court comes to a conclusion that the present case is arising out of an agreement and the dispute, if any, is there, that is civil in nature and for that complaint case has been filed only to cut short the civil proceeding where some delay take place in deciding the cases and the present case has been filed after knowing about filing of the complaint case by the petitioner-company in the State of Chhattisgarh, which clearly suggests that this is a malicious prosecution against the petitioners, as such, the entire criminal proceeding arising out of Complaint Case No. 379 of 2019 including the order taking cognizance dated 24.07.2019, pending in the Court of the learned Judicial Magistrate, 1st Class, Bokaro are, hereby, quashed. Petition allowed.
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2024 (6) TMI 705
Applicability of Right to Information Act, 2005 - public authority within the meaning of Section 2(h) of the Right to Information Act, 2005 or not - HELD THAT:- A cooperative society registered under the Tamil Nadu Co-operative Societies Act is not bound by the RTI Act to provide the information requested by a citizen and that the co-operative society does not fall within the definition of public authority as defined under Section 2(h) of the RTI Act. Therefore, the impugned order passed by the 1st respondent in S.A.No.6082/A/2022 dated 04.05.2022 is liable to be quashed. The impugned order is quashed and this Writ Petition is allowed.
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2024 (6) TMI 704
Dishonour of Cheque - cheque dishonoured for variance in signature - failure to cross examine witness - Section 391 of Cr.P.C. - HELD THAT:- In the complaint and in the proof affidavit there is no reference to the cheque drawn in Punjab National Bank bearing Cheque No.169684 dated 20.11.2020 for a sum of Rs.20,00,000/- issued by the respondent's mother and how the cheque, reached the petitioner's hand needs explanation, for which, necessarily the petitioner has to examine the respondent's mother as well as to cross examine the respondent. The petitioner failed to cross examine the respondent before the Trial Court will not be a reason to come to a conclusion that there is no cross examination required and the petitioner had committed the offence. It is to be seen that the evidence includes examination-in-chief, cross examination, re-examination and the evidence would be complete when it is tested by cross examination. In this case, admittedly the respondent/complainant was not cross examined. Further, in a case under Section 138 NI Act, statutory presumption against the accused has to be dislodged by way of materials and cross examination. In the present case, the case is at the appellate stage and hence, Section 391 Cr.P.C. had been invoked by the petitioner. In the case of Rambhau vs. State of Maharashtra [ 2001 (4) TMI 937 - SUPREME COURT] , the power under Section 391 Cr.P.C. had been elaborated and the Apex Court held that there are no fetters on the power under Section 391 Cr.P.C. of the Appellate Court and the ultimate object of judicial administrative is to secure ends of justice, the Court exists for rendering justice to the people. The Apex Court further held that additional evidence must be necessary not because it would be impossible to pronounce judgment but because there would be failure of justice without it. The power must be exercised sparingly and only in suitable cases. Once such action is justified, there is no restriction on the kind of evidence which may be received. It may be formal or substantial. The respondent/complainant was not cross examined, further in the complaint and in the proof affidavit the transaction between the petitioner and the respondent's mother reiterated and Ex.P9 marked, this Court finds that cross examination of the respondent and examination of respondent's mother Mrs.D.Kuzhalamani as additional witness is necessary - the criminal revision petition stands allowed.
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2024 (6) TMI 703
Dishonour of Cheque - legally enforceable debt or not - debt on account of a default alleged to have been committed in the payment of chit - HELD THAT:- A careful perusal of the various documents produced by the appellant in the respective complaints against the respondents show that, but for the account statement for the said period, there is no other material to show that there is a default committed by the respondents. Further, there is also no material to show that the appellant had called upon the respondents to pay the said sum towards the chit default by giving the requisite details with regard to the non-payment of monthly chits by the respondents. In the case on hand, it is the case of the respondents that the cheques, which are the subject matter of the present appeals/petitions, were not given for the discharge of a legally enforceable debt, which has been accepted by the courts below on the ground that neither the appellant has proved that the cheques were given for the purpose of discharging a legally enforceable debt nor any materials have been placed by the appellant to show that there existed a legally enforceable debt towards which the cheques in issue were given. Without the appellant discharging his share u/s 138, the appellant cannot fall back on Section 139 to show that the presumption would have to be given to the appellant and the ball would have to be placed in the court of the respondents to prove that the cheques were not given towards the discharge of a legally enforceable debt or other liability. The appellant ought to discharge their burden by giving the requisite details with regard to the statement of account and all the other details, which have been noted above and without giving the aforesaid details, placing a cheque, which is alleged to have been dishonoured, which is alleged to have been given by the respondents cannot be the basis to hold that a case u/s 138 of the Act is made out. The whole case of the respondents is on the ground that they dispute the amount shown by the appellant and that the cheque, which was given for security purpose was misused by the appellant and, therefore, the amount having not been established to be a legally enforceable debt, the dishonour of the cheque would not attract the wrath of Section 138 of the Act. Therefore, the aforesaid decision also does not in any way aid the appellant - If the appellant is able to provide all the details and place materials to establish the same, then there would be no impediment for the court below to look into the issue u/s 138 of the Act. Without placing the aforesaid materials, it would not be justified for this Court to interfere with the well considered orders passed by the courts below in the respective petitions. The impugned orders passed by the respective courts in the petitions does not deserve interference and the same stands affirmed - Appeal dismissed.
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2024 (6) TMI 702
Dishonour of Cheque - seeking interim compensation u/s 143A of the NI Act - rebuttal of presumption - HELD THAT:- The Court adjudicating upon a Complaint under Section 138 of the NI Act 'may' order the drawer of the cheque in question to pay any amount, not exceeding twenty per cent of the amount of the cheque, as interim compensation to the complainant in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint or in any other case, upon the framing of charges. It is no longer res integra that the said power of the Court to direct the drawer to pay interim compensation under Section 143A of the NI Act, is a discretionary power, to be exercised judiciously after considering the facts and circumstances of each case and cannot be claimed as a right, mandating the Court to grant interim compensation to the complainant. In the present case, the petitioner alleges that he has given an amount totalling to Rs.20 lacs to the respondent for the purpose of securing a lease/license for a canteen at Sena Bhawan by the respondent and securing employment of the petitioner's children, son- in-law, friend of his daughter, and a friend of his son-in-law at the said canteen. The respondent is stated to be working as an official at Sena Bhawan. Therefore, prima facie, the consideration of the above payment does not appear to be lawful - That apart, there is no proof of such payment filed with the complaint. There is also no written agreement. All that the petitioner has to show are the cheques. The power under Section 143A of the NI Act being discretionary in nature, the order can be interfered with by this Court only if it is found to be perverse or so unreasonable so as to conclude that discretion could not have been exercised in the said manner. This Court is not sitting as a Court of Appeal against the Order passed by the learned Trial Court in exercise of its powers under Section 143A of the NI Act. There are no merit in the challenge of the petitioner to the Impugned Order - petition dismissed.
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2024 (6) TMI 701
Dishonour of Cheque - maintainability of proceedings against the petitioner, inasmuch as the same have been instituted without following the legal principles surrounding part-payment of debt - HELD THAT:- The effect of the Section 56 of the NI Act is that where certain amount under the cheque has been paid, a note to that effect may be endorsed on the cheque, which may thereafter be negotiated (and by extension, presented) for the balance. It is clear that in case a cheque is issued for a certain amount, and before its presentation, part of the said amount is paid by the drawer of the cheque, then the drawee has to necessarily/mandatorily make an endorsement of the aforesaid part-payment upon the cheque and only then the cheque can be presented for encashment. If the said endorsement is not made, then even if the said cheque is dishonoured upon presentation, the same does not make out an offence under Section 138 NI Act, since the cheque does not represent legally enforceable debt at the time of its presentation/encashment. In the present case, the factum of part-payment of Rs.7,50,000/- is not disputed. However, the subject cheque, which has been presented for encashment, is for the entire amount payable under it i.e. Rs.22,40,000/-, which is evidenced by the return memo dated 12.06.2020, which mentions the cheque amount as Rs.2240000 and which fact is also acknowledged by learned counsel for the respondent. Failure of the respondent to endorse the part-payment on the subject cheque is fatal to his case, as one of the essential ingredients for the offence under Section 138 NI Act i.e., presentation of cheque for legally enforceable debt is not fulfilled. This Court is of the considered opinion that continuation of the legal proceedings against the petitioner would be an abuse of process of law. Consequently, the petition is allowed and the complaint case bearing No.310/2021 is quashed. As a necessary sequitur, the summoning order dated 19.02.2021 is also set aside. Petition disposed off.
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2024 (6) TMI 700
Dishonour of Cheque - compounding of the matter - HELD THAT:- The Hon ble Apex Court while dealing with the object of the scope of Section 138 and the provision of compounding in Section 147 of the Negotiable Instruments Act, has held in P. Mohanraj and Others versus Shah Brothers Ispat Private Limited [ 2021 (3) TMI 94 - SUPREME COURT] . The Hon ble Apex Court has discussed the scope of Section 138 of the Negotiable Instruments Act Section 147, regarding compounding of offence, under the aforesaid Act, holding that ' even after issuance of notice if the payee or holder does not make the payment within the stipulated period, the statutory presumption would be of dishonest intention exposing to criminal liability.' Once the proceedings under Section 138 have been held to be proceedings in the form of a civil sheep in a criminal wolf s clothing, therefore, once the petitioner - accused has amicably decided to settle/liquidate/ discharge his liability, though, the transactionproceedings have a tinge of criminal liability, then, on settling the entire liability in view of Section 147 of the Negotiable Instruments Act, the compounding of offences, on discharge of liability, appears to be genuine, is certainly is a step towards securing the ends of justice. It is relevant to observe that once the Respondent- Complainant who had initiated the proceedings under Section 138 of the Negotiable Instruments Act, 1881, has received his cake then, no useful purpose will be achieved in continuing the criminal proceedings against the accused-petitioner despite having discharged/ liquidated his liability. This Court on the basis of the material placed on record is satisfied that the petitioner-accused [Budhi Singh] and Respondent No.2-Complainant have settled the dispute and Respondent No.2-Complainant has no grudges against the petitioner-accused, who has liquidated/ discharged/remitted his liability in favour of the complainant in the proceedings under Section 138 of the Act. Petition disposed off.
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2024 (6) TMI 699
Dishonour of Cheque - dismissal of petitions filed by the accused under Section 91 Cr.P.C, Section 311 Cr.P.C and Section 254(2) Cr.P.C respectively - rebuttal of statutory presumptions - HELD THAT:- It is relevant to note that, after dismissal of these two sets of petitions, one to recall PW-1 and another to produce documents, the petitioner/accused had filed another set of petitions under Section 254(2) Cr.P.C to summon Managers of his Banks, where he maintains his accounts, to prove, how much money really transferred from the complainants into his account. The trail Court had dismissed these petitions also on 03/02/2024 on the ground that these facts can be established by the accused by examining himself as defence witness. The trial Court has opined that, summoning the Bank Managers to give evidence is not necessary, when there is nothing to indicate that the Bank Managers refused to given the bank statements of the accused. The dismissal of the petitions filed under Section 254(2) Cr.P.C is also under challenge in the third set of Criminal Original Petitions. This Court is of the view that, when the complaint lack details about the manner in which the liability arose to issue the subject cheques and when the complainants admit that they are income tax assesses and they maintain bank accounts through which portion of the loan amount was transferred, then for proper appreciation of the facts can be done, only if the witnesses are recalled and confronted why they contradict their earlier admission and why they refuse to produce the documents as sought for by the accused. Expecting the accused to rebut the presumption, withhold the documents necessary for the proof of foundational facts will be unfair. Hence, the impugned order dismissing petitions filed under Section 311 Cr.P.C and Section 91 of Cr.P.C, dated 27/09/2023 is set aside. This Court confirms the order of the trial Court dismissing the petitions filed under Section 254(2) of Cr.PC and the petitions filed challenging the said order dismissed.
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