TMI Tax Updates - e-Newsletter
June 20, 2022

Case Laws in this Newsletter:

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

Articles

1. CLASSIFICATION OF DRONES – CUSTOMS ADVANCE RULING

   By: DR.MARIAPPAN GOVINDARAJAN

2. No Service Tax payable on the liquidated damages received in the nature of penalty

   By: Bimal jain

News

1. After a 9-year lull, India and EU re-launch negotiations for India-EU Free Trade Agreement

2. Delhi Customs Preventive seizes more than 37 lakhs cigarette sticks; 7.10 lakhs of foreign origin worth Rs. 1 crore.

3. Income Tax Department conducts searches in J&K and Delhi

Notifications

Companies Law

1. G.S.R. 456 (E) - dated 17-6-2022 - Co. Law

National Financial Reporting Authority Amendment Rules, 2022

GST - States

2. Order No. PWR-GST/2017/01/ADM-8/(II) - dated 15-6-2022 - Maharashtra SGST

Orders for power delegation & area jurisdiction in case of DCST-INV & ACST-INV

3. ERTS (T) 65/2017/Pt. III/84 - dated 26-5-2022 - Meghalaya SGST

Seeks to waive off late fee under section 47 for the period from 01.05.2022 till 30.06.2022 for delay in filing FORM GSTR-4 for FY 2021-22

Income Tax

4. 66/2022 - dated 17-6-2022 - IT

Safe Harbour Rule - Income-tax (18th Amendment) Rules, 2022 - Amends Rule 10TD

SEBI

5. S.O. 2810 (E) - dated 17-6-2022 - SEBI

Jurisdiction as Special Court in District Leh and District Kargil in the Union territory of Ladakh

6. S.O. 2809 (E) - dated 17-6-2022 - SEBI

Jurisdiction as Special Court - Seeks to amend Notification No. S.O. 3997(E), dated, the 16th August, 2018

Highlights / Catch Notes

GST

• Adjudication Order Invalidated for Denying Personal Hearing; Remanded for Reissue within 8 Weeks to Ensure Fair Process.

  Case-Laws - HC : Validity of adjudication order - opportunity of personal hearing not provided - violation of principle of natural justice - The impugned order dated 9th May, 2021 is set aside and the matter is remanded back to the Adjudicating Officer concerned to pass a fresh order after giving an opportunity of hearing to the petitioners or their authorised representative within eight weeks from the date of communication of this order - HC
  Visit to Get Source

  ---

Income Tax

• Supreme Court Affirms Prosecution for Non-Compliance with TDS Deposit u/s 279(1); High Court Decision Upheld.

  Case-Laws - SC : Prosecution proceedings u/s 279(1) - TDS not deposited in the government treasury within the prescribed statutory time - once there was a non-deposit, the necessary consequences shall follow including the prosecution. - when the petitioner(s) approached the High Court to set aside the sanction order under Article 226 of the Constitution of India by the time the learned Magistrate had already taken the cognizance and issued summons to the petitioner(s). Therefore, the High Court was justified in observing that the Company and the person in charge are required to face the trial. We are in complete agreement with the view taken by the High Court. - SC
  Visit to Get Source

  ---

• Supreme Court Upholds High Court Ruling: Assessing Officer Can Order Special Audit Under Sec 142(2A) Without Prior Approval.

  Case-Laws - SC : Special audit u/s 142(2A) - AO Jurisdiction to give directions for a special audit - necessary approval of the Principal Commissioner of the Income Tax or not? - As per HC Assessing Officer does have the jurisdiction to give directions for a special audit under Section 142(2A) - SLP against the decision of HC dismissed - SC
  Visit to Get Source

  ---

• Assessment Reopening Needs Valid Reasons, Not Opinion Change; Clerical Errors Addressed u/s 154, Not Section 147.

  Case-Laws - HC : Reopening of assessment u/s 147 - eligibility of reasons to believe - change of opinion - nowhere AO has been able to make out a case that there was any omission or failure on the part of the petitioner to disclose fully and truly the necessary material facts - if at all there was any clerical/arithmetical mistake apparent from record then recourse was available to the assessing officer by way of rectification under Section 154 of the Income Tax Act, 1961 and that cannot be a ground of reopening of an assessment for correcting a mistake in calculation of an amount of disallowance causing alleged escapement of income. - HC
  Visit to Get Source

  ---

• Petitioner Challenges Search Validity and Transfer Order u/s 127 of Income Tax Act; No Interim Relief Granted.

  Case-Laws - HC : Assessment u/s 153A - Validity of search proceedings - validity of the order of transfer passed u/s 127 - The ground taken by the petitioner of pendency of the litigation in the Allahabad High Court is of no assistance since the cause raised therein is regarding legality and validity of the order of transfer passed u/s 127 of the IT Act. Assuming without admitting that the said petition is allowed by the Allahabad High Court, even then the search and seizure operation which led to the passing of impugned order herein would not be adversely affected. More so, Allahabad High Court has not granted any interim order in favour of the petitioner. - HC
  Visit to Get Source

  ---

• High Court Upholds ITAT's Decision: Agricultural Operations on Clonal Plants, Sugarcane, and Coconuts u/s 10(1) Valid.

  Case-Laws - HC : Expenditure u/s 10(1) - proof of agricultural operation being carried out in raising clonal plants, Sugarcane and coconuts - CIT(A) and ITAT allowed the relief - The circular will not have any effect on the assessee’s case as on facts, the Commissioner Appeals has noted the submission of the assessee that in order to cultivate the seeds the assessee engages in the activities of preparing of land, levelling, preparation of beds, sowing of seeds, planting etc. and after a certain stage the best responsive plant is earmarked as the mother seed. Therefore, de hors the circular issued by CBDT, the conclusion arrived at by the Tribunal, affirming the view taken by the Commissioner of Income Tax (Appeal), cannot be faulted. - HC
  Visit to Get Source

  ---

• Court Rules Writ Jurisdiction Can't Challenge Reason Sufficiency for Reopening Assessments Under Income Tax Act Section 147.

  Case-Laws - HC : Reopening of assessment u/s 147 - Writ jurisdiction of this Court under Article 226 of the Constitution of India or supervisory jurisdiction of this Court under Article 227 of the Constitution of India cannot be invoked to attack the sufficiency of the reasons assigned for re-opening of a case of escaped income so long as the power exercised and the reasons assigned therefore are traceable to any statutory provision. Thus, it cannot be said that the impugned notice of the assessment and re-opening of the case u/s 147 of the IT Act is bereft of jurisdiction. - HC
  Visit to Get Source

  ---

• Court Upholds Validity of Assessment Notice u/ss 147 and 148A; No Jurisdictional Overreach Detected.

  Case-Laws - HC : Reopening of assessment u/s 147 - Scope of new section 148A - it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. - there is no reason to warrant interference by this Court - HC
  Visit to Get Source

  ---

• High Court overturns assessment order u/s 147 due to inadequate response time in Show Cause Notice.

  Case-Laws - HC : Reopening of assessment u/s 147 - Lack of full disclosures - Time given vide SCN dated 13.09.2021 is too short - To be noted, vide paragraph 3 of the SCN, writ petitioner-assessee was called upon to respond by 23:59 hours on 16.09.2021. 13.09.2021 is a Monday and obviously 16.09.2021 is Wednesday and that fairly three working days. It is clearly insufficient. - the impugned assessment order made by the first respondent is set aside on the grounds of lack of opportunity / specificity - Matter restored back - HC
  Visit to Get Source

  ---

• Loan to Substantial Interest Holder Not Deemed Dividend u/s 2(22)(e) of Income Tax Act; Appeal Allowed.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - Substantial interest in lending company - common shareholder - The definition of shareholder is not enlarged by any fiction. - under no circumstances the assessee could be treated as shareholder, member receiving dividend. Hence, the assessment of this loan received by assessee cannot be treated as deemed dividend u/s.2(22)(e) of the Act. Hence, we delete the addition and allow this issue of assessee’s appeal. - AT
  Visit to Get Source

  ---

• Assessing Officer Fails to Provide Evidence for Income Additions Post-Section 133A Survey; No Income Added.

  Case-Laws - AT : Admission of income pursuant to survey operation u/s 133A - If the assessee did not adhere to the surrender made during the survey, it was for the AO to bring on record cogent material or other evidence to support the additions rather than rely on the statements simpliciter. We do not find any cogent material or other evidence brought in by AO to support the admissions made during survey. - No additions - AT
  Visit to Get Source

  ---

• Assessee's Section 10AA Exemption Denied Due to Insufficient Assets and Manpower; Case Remitted for Reassessment.

  Case-Laws - AT : Disallowance of exemption u/s.10AA - assessee did not have adequate and sufficient fixed assets, manpower and power/ fuel to carry out any manufacturing or processing activity to the extent shown by the assessee - The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly. Therefore, we set aside the order of ld CIT(A) and remit this issue back to the file of the assessing officer to examine the conditions of section 10AA of the Act and SEZ Act and adjudicate the issue afresh in accordance with law. - AT
  Visit to Get Source

  ---

• Taxpayer's Property Rights Compensation Assessed as Capital Gains, Not Other Income, Confirms CIT(A) Decision.

  Case-Laws - AT : Capital gain computation or Income from other sources - compensation received by the assessee on extinguishment of his right in property - transfer of asset u/s 2(47) - what was received by the assessee by virtue of MOU is consideration received for transfer of rights in property and thus, same is assessable under the head ‘income from capital gains’. The learned CIT(A), after considering relevant facts has rightly held that the Assessing Officer has erred in assessing compensation under the head ‘income from other sources’. - AT
  Visit to Get Source

  ---

• Lessee Can Deduct Gross Lease Rental Payments as Revenue Expenditure; Foreign Exchange Loss Claims to Be Re-evaluated.

  Case-Laws - AT : Revision u/s 263 - Depreciation on lease payment - The assessee as a lessee would be entitled for deduction of gross lease rental payments. The assessee’s methodology is to be accepted. The lease payments made by the assessee would be revenue expenditure for the assessee. We order so. The alternative claims as allowed by Ld. AO shall stand reversed. The claim of foreign exchange loss on these transactions shall be re-considered / re-adjudicated by Ld. AO in the light of our above adjudication. - AT
  Visit to Get Source

  ---

• Reassessment Invalid u/s 147: No New Information Justifies Reopening, Original Assessment Facts Reapplied.

  Case-Laws - AT : Reopening of assessment u/s 147 - No new information was received by the Assessing Officer at the time of initiation of reassessment proceedings, and it was merely a fresh application of mind to the same set of facts as were available at the time of original scrutiny assessment proceedings. - the reopening of assessment under section 147 of the Act, in the present case, is bad in law and therefore is set aside. - AT
  Visit to Get Source

  ---

• Co-operative Society Wins Deduction u/s 80P(2)(a)(i) After Compliance with Tamil Nadu Co-operative Rules.

  Case-Laws - AT : Deduction of claim u/s. 80P(2)(a)(i) - claim denied on interest - The Assessee being a Primary Agriculture Credit Society is a Co-operative Society. The primary object of which is to provide financial accommodation to its members - the Assessee’s case is out of the provisions of Section 80P(4) of the Act. In relation to the Associate members, we are of the view that the provisions of Section 22 read with Rule 32 of the Tamil Nadu Co-operative Societies Act, 1983 and Tamil Nadu Co-operative Societies Rules clearly determine the procedure to admit Associate members and accordingly in the present case, the Assessee’s Cooperative Society has admitted the same. In view of the above finding, we hold that the Assessee is entitled for the claim of deduction u/s.80P(2)(a)(i) of the Act. - AT
  Visit to Get Source

  ---

Customs

• High Court Rejects Petition to Waive Demurrage Charges Beyond Waiver Period in Confiscation Case, Refer to Customs Commissioner.

  Case-Laws - HC : Concession of demurrage, detention and rental charges - since confiscation and redemption was possible only after 11.02.2022 Order-in-Original order, thereafter if at all the petitioner wanted to take the goods, whether beyond 13.01.2022 till the petitioner approaches the fourth and fifth respondents, whether that kind of demurrages can also be waived is the question - from the point of view of the customs, beyond the waiver period that was permitted up to 13.01.2022, it was possible for the petitioner to seek for further period waiver, for which request should be made by the petitioner with the Commissioner of Customs before expiry of 30 days. - the claim made by the petitioner through the prayer sought for in these writ petitions are untenable, hence, it is liable to be rejected. - HC
  Visit to Get Source

  ---

• Court Denies Petition for Gold Return After 39 Years; No Justification for Delayed Enforcement of 1983 Order.

  Case-Laws - HC : Seeking return of Gold seized and confiscated 40 years ago - request to release the gold on payment of redemption fine in lieu of confiscation - the petitioner is seeking enforcement of order dated 22.11.1983, i.e., after 39 long years. - no case is made out warranting interference after 41 years of seizure of gold and 39 years of order dated 22.11.1983. - HC
  Visit to Get Source

  ---

• Customs Broker Found Guilty of Regulation 10(n) Violation; License Revocation Ruled Disproportionate by High Courts.

  Case-Laws - AT : Revocation of Customs Broker License - the enquiry officer has more reasonably concluded in the matter, and the appellant CB can at the most be held guilty for contravention of the Regulation 10 (n). Various High Courts have held that punishment for the offences should be proportionate to the gravity of offence. In the present we do not find that appellant was in any way responsible for any act of misconduct but is vicariously responsible for the acts of their employees, hence the punishment of revocation of licence is much harsh and disproportionate to the offences committed. - AT
  Visit to Get Source

  ---

IBC

• Cheque Dishonor Proceedings Stand Despite CIRP Moratorium; High Court Upholds Validity u/s 138 of NI Act.

  Case-Laws - HC : Dishonor of Cheque - Validity of proceeding u/s 138 of NI act when CIRP proceedings has started and moratorium has been declared - applicability of moratorium to Directors or Corporate Debtors - when the petitioners themselves have admitted before this Court that the cheques were issued in the year 2016, merely because the different date is mentioned in the complaint, it is the matter of evidence. In such a view of the prosecution initiated by the respondent cannot be quashed - HC
  Visit to Get Source

  ---

Central Excise

• Penalty u/r 26 Not Dependent on Actual Confiscation; Awareness and Evasion Support Liability for Personal Penalty.

  Case-Laws - AT : Levy of penalty u/r 26 - Personal penalty for abatement in evasion of duty - a plain reading of Rule 26 indicates that imposition of the penalty therein is not tied to a condition that excisable goods have to be placed under confiscation under the Act/Rules - Only, the person implicated/concerned should have the knowledge of “possible confiscation” of the impugned goods. From the facts on record, the appellant have played crucial role in commission of offence by the manufacturer. Appellant is liable to penalty under Rule 26 of the Central Excise Rules.- AT
  Visit to Get Source

  ---

VAT

• Court Upholds Penalty for Misclaiming Concessional Tax Rate Under TNGST Act Sections 3(3) and 23; No Relief for Petitioner.

  Case-Laws - HC : Levy of penalty - when the petitioner is not entitled to claim concessional rate of tax under section 3% of the TNGST Act, they are liable to pay penalty under section 23 of the TNGST Act, for violation of the provision of section 3(3). Accordingly, the assessing officer levied penalty and the same was affirmed by the appellate authorities, which in the opinion of this court, warrants no interference, as the issue relating to claim of concessional rate of tax under section 3(3), is decided against the petitioner. - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (6) TMI 815
  Validity of adjudication order - opportunity of personal hearing not provided to the petitioners in spite of specific request from the petitioners in their reply to the show-cause-notice - violation of principle of natural justice - HELD THAT:- On perusal of the impugned adjudiction order it appears that though the Adjudicating Authority concerned has recorded that the impugned order has been passed after considering the reply filed by the petitioners but nowhere it appers that the petitioners request for personal hearing was either considered or rejected. The impugned order dated 9th May, 2021 is set aside and the matter is remanded back to the Adjudicating Officer concerned to pass a fresh order after giving an opportunity of hearing to the petitioners or their authorised representative within eight weeks from the date of communication of this order - petition allowed by way of remand.

  ---

• Income Tax

• 2022 (6) TMI 814
  Correct head of income - Lease rent received - to be treated as business income or as income from other sources - HELD THAT:- Both the Income Tax Appellate Tribunal (ITAT) as well as the High Court have rightly held that the rental income to be treated as income from other sources . We are in complete agreement with the view taken by the ITAT as well as the High Court. Regarding the Decision on quality loss and on penalty/stores and spares , we are in complete agreement with the ITAT as well as the High Court. We see no reason to interfere with the impugned judgment and order(s) passed by the High Court in exercise of powers under Article 136 of the Constitution of India. The Special Leave Petitions stand dismissed.

  ---

• 2022 (6) TMI 813
  Prosecution proceedings u/s 279(1) - TDS not deposited in the government treasury within the prescribed statutory time - defaults were in respect of salary as well as non-salary TDS deductions - Company and the person in charge faced the trail - Refund paid towards TDS arrears - HELD THAT:- As huge amount of Rs.3,52,99,059/-, though was deducted by the petitioner-Company as TDS, was not deposited in the Government treasury within the prescribed statutory time. It was deposited after 11 months (may be before 12 months). Therefore, once there was a non-deposit, the necessary consequences shall follow including the prosecution. Whatever the submissions are made on behalf of the petitioner-assessee are all defences which are required to be considered by the trial Court in the trial. Even the same is also observed by the High Court in the impugned judgment and order. It is also required to be noted that when the petitioner(s) approached the High Court to set aside the sanction order under Article 226 of the Constitution of India by the time the learned Magistrate had already taken the cognizance and issued summons to the petitioner(s). Therefore, the High Court was justified in observing that the Company and the person in charge are required to face the trial. We are in complete agreement with the view taken by the High Court. No interference of this Court is called for in exercise of powers under Article 136 of the Constitution of India. Hence, the Special Leave Petition stands dismissed.

  ---

• 2022 (6) TMI 812
  Deduction u/s 80IB - HELD THAT:- An amendment was made to Section 801B (10) by the insertion of Clauses (e) and (f). Hence, for assessment year 2011-2012, pertaining to the same assessee, Leave has been granted in SLP(C) ( 2021 (8) TMI 1317 - SC ORDER ) The above amendment however came into effect from 1 April 2010 and has no application for Assessment Year 2010-11 corresponding to financial year 2009-2010. Since the assessment year in the present case is 2010-2011, the present Special Leave Petition stands on a distinct footing. Having considered the judgment of the High Court and in view of the above legal position, we are not inclined to entertain the Petition under Article 136 of the Constitution. The Special Leave Petition is dismissed.

  ---

• 2022 (6) TMI 811
  Special audit u/s 142(2A) - AO Jurisdiction to give directions for a special audit - necessary approval of the Principal Commissioner of the Income Tax or not? - As per HC Assessing Officer does have the jurisdiction to give directions for a special audit under Section 142(2A) - Period during which both the petitions remained pending i.e. from the date of issuance of notice on 14.6.2021 till the date of pronouncement of judgement, shall be excluded while counting the period prescribed in the proviso to Sub-section (2C) of Section 142 - HELD THAT:- We see no reason to interfere with the impugned judgment and order(s) passed by the High Court, which is a well reasoned and well considered judgment. Hence, the Special Leave Petitions are dismissed. Pending applications stand disposed of.

  ---

• 2022 (6) TMI 810
  Reopening of assessment u/s 147 - eligibility of reasons to believe - change of opinion - Proceedings initiated after expiry of four years from the end of the relevant assessment year - HELD THAT:- The impugned notice under Section 148 and the proceedings under Section 147 of the Act is bad in law since it does not fulfil the criteria for reopening of reassessment after expiry of four years from the end of relevant assessment year that in addition to escapement of income additional duty cast upon the assessing officer is to establish that the escapement was due to omission or failure on the part of the assessee to disclose fully or truly necessary material facts necessary for the assessment and that some new material facts have come to his possession which was not made available by the assessee at the time of regular assessment. It is also admitted position that in this case regular assessment under Section 143(3) of the Act was made and it is not a case of summary assessment. It also appears on perusal of the recorded reasons that the successor of the assessing officer who intends to invoke the provisions of Section 147 of the Act on the ground and by taking a view that the disallowance which was made under Section 36(i)(iii) of the Act in course of regular assessment should have been more than the amount which has been disallowed in the original assessment made by his predecessor. In our considered view, this is a clear case of change of opinion. Furthermore from the recorded reasons it appears that nowhere assessing officer has been able to make out a case that there was any omission or failure on the part of the petitioner to disclose fully and truly the necessary material facts on the basis of which predecessor of the assessing officer has formed an opinion for disallowing lesser amount under Section 36(i)(iii) of the Income Tax Act in the assessment order under Section 143(3) of the Income Tax Act, 1961. Assessing officer in his recorded reasons also could not make out a case that the basis of reopening the assessment in question is some new material which came into his possession subsequently and which was not available or was undisclosed or suppressed by the assessee/petitioner in course of regular assessment. From the recorded reason it appears that one of the grounds for reopening of the assessment is that in regular assessment there was mistake of calculation in disallowance under the aforesaid provisions of the Act to which we are of the view that if at all there was any clerical/arithmetical mistake apparent from record then recourse was available to the assessing officer by way of rectification under Section 154 of the Income Tax Act, 1961 and that cannot be a ground of reopening of an assessment for correcting a mistake in calculation of an amount of disallowance causing alleged escapement of income. - Decided in favour of assessee.

  ---

• 2022 (6) TMI 809
  Assessment u/s 153A - Validity of search proceedings - validity of the order of transfer passed u/s 127 - As argued no due and sufficient opportunity was afforded to the petitioner during the proceedings of search and seizure operations conducted u/s 132 of the IT Act on nine residential premises, one business premises and seven bank lockers - HELD THAT:- A bare perusal of the impugned assessment order reveals that notice was issued to the petitioner during the conduction of search and seizure operations which were duly responded to by the petitioner by contending that the returns already filed by him be treated as returns for the purpose of search and seizure proceedings. More so, the said return of computation of income and reply of the petitioner were taken into account before the impugned assessment order was passed. During the search and seizure operations, discrepancies were found which indicated towards tax evasion. The ground taken by the petitioner of pendency of the litigation in the Allahabad High Court is of no assistance since the cause raised therein is regarding legality and validity of the order of transfer passed u/s 127 of the IT Act. Assuming without admitting that the said petition is allowed by the Allahabad High Court, even then the search and seizure operation which led to the passing of impugned order herein would not be adversely affected. More so, Allahabad High Court has not granted any interim order in favour of the petitioner. As regards the ground of penalty notice having been issued without passing an assessment order, the same further does not assist the petition since the impugned order is an order of assessment arrived at after conduction of detailed search and seizure operation of assessment proceedings which found the petitioner to be involved in tax evasion and therefore it was well within the jurisdiction of the Assessing Officer to have issued notice for penalty. In the conspectus of above discussion and the failure of the petitioners to make out a case of denial of reasonable opportunity of being heard, this Court declines interference, especially when the petitioner has an alternative statutory remedy under the IT Act which has not been availed yet. Thus, this Court declining interference extends liberty to the petitioners to avail the alternative remedy before the appropriate Appellate Authority which if availed within a period of 60 days from today shall be considered and decided on its own merits without being dismissed on limitation alone, provided the petitioner complies with all other statutory requirements.

  ---

• 2022 (6) TMI 808
  Expenditure u/s 10(1) - onus to prove basis of agricultural operation being carried out in raising clonal plants, Sugarcane and coconuts in relation to assessment year 2007-08 - Whether Tribunal has correctly interpreted Explanation to Section 2(1A) in holding the same as retrospective in nature by disregarding that neither Finance Act, 2008 nor Explanatory Circular No. 1 of 2009 dated 27.3.2009 specifically express retrospectivity of the same ? - HELD THAT:- So far as substantial question of law Nos. 1 and 2 are concerned the issue stands squarely covered by the decision in Commissioner of Income Tax Vs. Soundarya Nursery [ 1998 (8) TMI 37 - MADRAS HIGH COURT] as well as the decision in Commissioner of Income Tax Vs. Green Gold Tree Farmers (P) Ltd. [ 2007 (2) TMI 160 - UTTARAKHAND HIGH COURT] . That apart we note that in assessee s own case for the assessment years 2005-06 and 2006- 07 these questions were answered in favour of the assessee. Apart in CBDT Circular No. 1 of 2009 dated 27th March, 2009 the scope of the expression agriculture income was widened to hold that if the nursery is maintained independently without resorting to basis operations of law then the income from such nursery would not be agriculture income and would be liable to be included in total income. This circular will not have any effect on the assessee s case as on facts, the Commissioner Appeals has noted the submission of the assessee that in order to cultivate the seeds the assessee engages in the activities of preparing of land, levelling, preparation of beds, sowing of seeds, planting etc. and after a certain stage the best responsive plant is earmarked as the mother seed. Therefore, de hors the circular issued by CBDT, the conclusion arrived at by the Tribunal, affirming the view taken by the Commissioner of Income Tax (Appeal), cannot be faulted. Deduction under Section 80IA - two captive power under takings at Bhadrachallam - As per AO assessee was not entitled to the aforesaid deduction since it had supplied power only to the paper undertakings belonging to the assessee itself and not to any outsider? - HELD THAT:- It is not in dispute that the said question is covered in favour of the assessee and against the revenue in assessee s own case for the assessment year 2002-03 as held unable to hold that the benefit under Section 80IA is not available to the assessee because the power generated was consumed at home or by other business of the assessee. It is now well-settled that a statute granting incentives for promoting growth and development should be construed liberally so as to advance the objective of the provision and not to frustrate it. Deduction u/s 80IC - captive undertaking is not entitled to deduction under the said provision for the notional profit since the products have only been supplied to the Food Business Division (FBD) of the assessee and not to outsider - HELD THAT:- As in certain special category states. It is not in dispute that the said eligible undertaking was not manufacturing any of the goods as listed in 13th schedule to the Act. The principle which was laid down in the assessee s own case in the issue relating to Section 80IA as reported in [ 2015 (7) TMI 450 - CALCUTTA HIGH COURT] will equally apply to the claim of deduction under Section 80AC - CIT-A rightly took note of the fact that Section 80AC (7) specifically provides that the provisions of sub-Section 5 and sub-Section 7 to 12 of Section 80IA will equally apply to Section 80IC, and therefore, the eligibility for claiming deduction under Section 80IA in respect of captive undertaking will, therefore, also apply to Section 80IC. - That apart we should take note of the fact that the provision is a special provision conferring certain benefits on undertakings in certain special category states. In the assessee s case as reported [ 2015 (7) TMI 450 - CALCUTTA HIGH COURT] the Hon ble Division Bench while considering the scope of Section 80IA pointed out that Statute grating incentives for promoting growth and development should be considered liberally so as to advance the objective of the provision and not to frustrate it - Tribunal decided the correctness of the said finding and in paragraph 5.1 of the impugned order took note of the Section 80IA (8) and held that the said provision is applicable to Section 80IC and accordingly approved the finding recorded by the CITA. Deduction under Section 43B - amount of employees contribution towards PF/ESI paid after the expiry of due date prescribed under the respective PF/ESI - HELD THAT:- We are conscious of the fact that certain appeals have been admitted by this Court on the very same issue. But, however, we note that the tax implication on the said issue is far lesser than the threshold limit fixed by CBDT for filing of the appeal. Since all four substantial question of law have been answered against the revenue the solitary question which remains is with regard to the claim for deduction under Section 43B. We have perused the assessment year and we find that the disallowance on the said head is Rs.4,06,052/-. This being below the threshold limit fixed by the CBDT for pursuing the appeal, the appeal fixed by the revenue on this ground has to be dismissed on the ground of low tax effect. Consequently, the substantial question of law has to be left open.

  ---

• 2022 (6) TMI 807
  Reopening of assessment u/s 147 - notice beyond period of four years - as submitted that Explanation-1 vests Assessing Officer with the authority to invoke Section 147 of the IT Act in respect of cases pertaining to assessment year more than four years old when it is found that their account books or other material furnished by the assessee were insufficient for the AO to discover escaped income despite exercise of due diligence - HELD THAT:- Explanation-1 circumscribes the aforesaid exception (ii) that if the material and account books produced by the assessee for the relevant assessment year are such where despite exercise of due diligence, the Assessing Officer could not discover escaped income then such disclosure would not provide immunity to assessee from the clutches of Section 147 of the IT Act. The reasons assigned by the Assessing Officer in Annexure P/7 dated 04.02.2022 is that the material and accounts books furnished qua the relevant assessment year were insufficient despite exercise of due diligence to discover escaped income. The contents of Explanation-1 to proviso of Section 147 of the IT Act vests the Assessing Authority with ample power to invoke Section 147 of the IT Act qua assessment year more than four years old. This Court cannot go into the sufficiency of reasons assigned specially when the case is pending before the Assessing Authority to adjudicate upon in regard to alleged escaped income of year 2013-14. Writ jurisdiction of this Court under Article 226 of the Constitution of India or supervisory jurisdiction of this Court under Article 227 of the Constitution of India cannot be invoked to attack the sufficiency of the reasons assigned for re-opening of a case of escaped income so long as the power exercised and the reasons assigned therefore are traceable to any statutory provision. Thus, it cannot be said that the impugned notice of the assessment and re-opening of the case u/s 147 of the IT Act is bereft of jurisdiction.

  ---

• 2022 (6) TMI 806
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - change of opinion - HELD THAT:- The two fundamental errors can be noticed. Firstly, by notice dated 29 March 2004 the assessment in respect of year 1997-98 was sought to be reopened, however, there is not even an assertion that there is failure on the part of the Petitioner to disclose fully and truly all material facts which is a mandatory requirement for the Respondent to assume jurisdiction. Secondly, the Respondent No.1 seems to proceed on the ground that the Petitioner has applied wrong method in respect of depreciation. This is a clear change of opinion. There is absolutely no failure on the part of the Petitioner to disclose the facts. Therefore, in the light of settled law governing exercise of powers under Sections 147 and 148 of the Act, the Petitioner is entitled to succeed.

  ---

• 2022 (6) TMI 805
  Reopening of assessment u/s 147 - Scope of new section 148A - Whether at this stage of notice under Section 148, writ Court should venture into the merits of the controversy when AO is yet to frame assessment/re-assessment in discharge of statutory duty casted upon him under Section 147 ? - HELD THAT:- The debate is not new. While dealing with the similar situation under the old Act i.e. Indian Income Tax Act, 1922, Division Bench of this Court in Lachhman Das Nayar and others vs. Hans Raj Puri, Income- Tax Officer [ 1952 (9) TMI 45 - HIGH COURT OF PUNJAB AND HARYANA] as held a particular machinery has been set up under the Act by the use of which alone total assessable income for the purposes of the Income-tax is to be ascertained and jurisdiction to question the assessment otherwise than by the use of this machinery is incompatible with the scheme of the Act. The challenge of the action of the Income-Tax Officer by a writ prohibition or mandamus is, therefore, not available to the assessee. Thus, the consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence, the writ petition stands dismissed.

  ---

• 2022 (6) TMI 804
  Validity of Faceless Assessment - application for extension of time - Violation of natural justice - on receipt of the proposal for completing the assessment based upon the draft assessment order, petitioner sought for a breathing time to respond and requested for a further four days time - HELD THAT:- The statutes contemplates an application for extension of time and even the grant of extended time to furnish a response. Thus when the petitioner sought for a further four days time to respond, citing the reason to gather necessary materials from different sources, the assessing officer was bound to give a response, intimating either the rejection or its acceptance of request for time. Such a response is part of the basic requirements of the principles of natural justice. When there was a lack of response, it is only probable that the petitioner would have expected his request for adjournment having been accepted. Therefore, the assessing officer ought not to have proceeded with the assessment on 24.04.2021, as originally mentioned. In view of the above, there is a clear evidence of violation of principles of natural justice and hence, Ext.P8 is liable to be set aside on this count alone. Notwithstanding the setting aside of Ext.P8, the respondents must be granted an opportunity to pass fresh orders of assessment and accordingly, there will be a direction to the respondents to accept objections to Ext.P6 show cause notice, if any filed by the petitioner within a period of thirty days from the date on which the respondents open up a link for filing objections, since, presently, the Faceless Assessment regime is in place. If such an objection is filed by the petitioner within the time stipulated above, respondents shall, necessarily, consider the same and pass appropriate orders, after granting an opportunity of hearing to the petitioner, as expeditiously as possible, at any rate, within a period of two months from the date of opening of the link to file the objections as mentioned.

  ---

• 2022 (6) TMI 803
  Reopening of assessment u/s 147 - Lack of full disclosures - whether purported lack of reasons for reopening can be raised more so as a ground in support of a challenge to assessment after the assessee has fully participated in the assessment proceedings post reopening, invited an assessment order and has challenged the same, i.e., impugned assessment order? - HELD THAT:- To be noted, Chapter XIV of Income Tax Act. 1961 captioned PROCEDURE FOR ASSESSMENT consists 20 sections, i.e., Sections 139 to 158. Section 139 talks about assessee filing return of income, section 142 talks about inquiry before assessment . Assessment thereafter is under section 143. The scheme of the statute also is of relevance as in the case on hand, writ petitioner assessee has responded to reopening notice, filed his returns and thereafter even sent what according to him his objections qua notices in this regard. The details of the trajectory together with dates have already been captured supra elsewhere in this order where there is a narrative capturing factual matrix and the trajectory the matter has taken. This court reminds itself of a judgment of a Constitution Bench of Hon ble Supreme Court in the celebrated Padma Sundara Rao [ 2002 (3) TMI 44 - SUPREME COURT] case, wherein the manner of referring to a case law (precedent) and as to how the fact setting even owing to minor differences can make a world of difference in a case as a precedent has been dealt with. Though we are concerned with the issue as to whether reopening order can be assailed after assessment, on a demurer even if Kelvinator principle is applied [ 2002 (4) TMI 37 - DELHI HIGH COURT] (in Kelvinator , facts are not available), this Court interfering in writ jurisdiction will arise only when foundational fact for reopening itself is unacceptable. In this case, prima facie lack of full disclosure ingredients is present as DRP has examined all three aspects, namely (I) Transfer Pricing (ii) Railway Siding Charge (whether capital or revenue expenditure) and (iii) interest from debenture, tax impact of same and after examining all three aspects has held in favour of assessee only with regard to Transfer Pricing. This cannot be completely ignored. This is in the light of Padma Sundara Rao principle. To be noted, Padma Sundara Rao case was rendered by Hon ble Constitution Bench and it has been elevated from the status of ratio to that of declaration of law. Assessee seeking details - Learned Senior Counsel pointed out that the Department has not even given the details of the immovable property said to have been purchased by the writ petitioner which is now going to be made subject matter of Section 80IA of IT Act addition /variation. The answer of the learned Revenue Counsel that these details should emanate from the assessee is not very convincing. Therefore, this Court would be interfering to that limited extent in this matter. This will be set out in the latter portion of this order infra. This douses the second point. Time given vide SCN dated 13.09.2021 is too short is clearly acceptable - The reason is the 13.09.2021 SCN has been digitally signed at 13:55:35 IST, assuming it was uploaded immediately, half a day would have gone by as it was in the afternoon of 13.09.2021. To be noted, vide paragraph 3 of the SCN, writ petitioner-assessee was called upon to respond by 23:59 hours on 16.09.2021. 13.09.2021 is a Monday and obviously 16.09.2021 is Wednesday and that fairly three working days. It is clearly insufficient. Under the normal circumstances, this Court would have been inclined to send the matter back to the Assessing authority to proceed from the SCN stage but in this case, as the argument that it is a scrutiny assessment and that even the details of the immovable property said to have been purchased by assessee / writ petitioner have not been given has some force and therefore, going into the facts and circumstances of the case, this Court is of the considered view that this is a matter where it can be sent back to the Department to proceed from the first of 142(1) notices. The above notice vide the Annexure more particularly Serial No.8 calls upon the writ petitioner to furnish details of immovable property purchased by the writ petitioner firm or by any partners of the firm qua said AY with source. Nothing prevents the writ petitioner-assessee to responding to this. Equally it is open to the Department to issue the additional notice giving particulars of the immovable property. This course will balance the rights of the writ petitioner and interest of the Revenue. In the light of the discussion and dispositive reasoning set out supra, the following order is passed: a) the impugned assessment order made by the first respondent is set aside on the grounds of lack of opportunity / specificity; b) though obvious, the basis of the above limb is this Court has not expressed any view or opinion on the merits of the matter; c) the Department shall now proceed from the stage of notice under Section 142(1) of the IT Act dated 10.08.2021 (scanned and reproduced supra); d) When the Department proceeds from the 10.08.2021 notice under Section 142(1), it is open to the respondents to issue an additional notice giving more details with specificity, if so advised; e) all questions are left open and therefore, the writ petitioner s purported objections and the writ petitioner s contentions raised in the captioned writ petition can well be raised in response to the 142(1) notice;

  ---

• 2022 (6) TMI 802
  Exemption u/s 10(2A) being share of profit received from LLP of which the appellant was a partner - Proportionate claim of exempt income - higher variable contribution - transactions of the assessee with the Adiman Finance Consultants Ltd. LLP. exemption u/s 10(2A) made by the assessee for the 95% share of profit from Adiman Finance Consultants Ltd. LLP denied - Revenue doubted the arrangement made by the assessee with the other company by way of which the assessee contributed merely 2.78% of the capital but the assessee was able to get 95% of the share of profit and ld. D/R alleged it to be a mere arrangement of funds in the guise of tax evasion - HELD THAT:- As we find that the assessee holds a post-graduate degree from Indian Institute of Management, Kolkata and is an expert in the field of investments in shares securities and has an experience of 20 years working in global and Indian financial institutions. Since the assessee was having an expertise in this field the other person i.e. Enam Shares Securities Pvt. Ltd. approached and together formed an LLP namely Adiman Finance Consultants Ltd. LLP vide agreement dated 01.03.2012. In terms of LLP agreement dated 01.03.2012 fixed capital was Rs.50,000/- which was contributed in the ratio of 95:5 by the assessee and Enam Shares Securities Pvt. Ltd. In the very same agreement it was, further, agreed that any additional capital if any required shall be contributed by Enam Shares Securities Pvt. Ltd. only. Thereafter variable contribution i.e. contribution other than the fixed capital was made and the maximum of such investment was made by Enam Shares Securities Pvt. Ltd. So much so that the total of capital and variable contribution as on 31.03.2016 which was at Rs.9,25,81,498/-, assessee s contribution was only 2.78% i.e. 25,78,223/- and that of Enam Shares Securities Pvt. Ltd. at 97.22% i.e. Rs.9,00,03,275/-. LLP is regularly assessed to tax and return for AY 2016-17 was e-filed on 29.07.2016. The copy of assessment order u/s 143(3) of the Act for AY 2014-15 framed on 02.02.2016 also forms part of the record and no adverse view has been taken by the ld. AO with regard to the capital contribution and profit-sharing ratio of the assessee and Enam Shares Securities Pvt. Ltd. It is not in dispute that the Adiman Finance Consultants Ltd. LLP disclosed its profit after tax at Rs.2,04,30,723/-. The same is duly forming part of audited financial statements of the Adiman Finance Consultants Ltd. LLP. The assessee has only received the share of profit from LLP at the agreed rate of 95% of the profits. Since the identity of the LLP is not in dispute, it s constitution, agreement, sharing ratio, capital contribution ratio and the audited financial statements are not in dispute before us, we find no justification in the finding of the ld. AO disallowing the proportionate claim of exempt income of Rs.1,98,32,856/-. Decisions referred and relied on by ld. D/R merely deals with preponderance of human probabilities which in our view are not applicable to the current state of facts which speaks loud and clear that the assessee being an expert in the field of management and investments joined hands with the company having funds and together after forming the LLP, they are carrying on business activity regularly since AY 2012-13. The present appeal is in AY 2016-17 of which books of accounts are maintained and duly audited and the assessee has received its legitimate share of profit as per the terms of LLP agreement. - Decided against revenue.

  ---

• 2022 (6) TMI 801
  Levying late filing fee under section 234E - order under 154 r.w.s. 200A levying late filing fee u/s 234E - whether late fee under section 234E can be levied for F.Y. 2012-13? - HELD THAT:- This issue is covered in favour of the assessee. The ITAT Pune in the case of Medical Superintendent Rural Hospital [ 2018 (10) TMI 1587 - ITAT PUNE] - thus we hold that the levy of late fee under section 234E of the Act for Quarter-2 of F.Y. 2012-13 is bad in law. Therefore, the Assessing Officer is directed to delete the said late fee. Accordingly, the appeal of the assessee is allowed.

  ---

• 2022 (6) TMI 800
  Unexplained cash deposits - Specified Bank Notes (SBNs) deposited into assessee s savings bank account with Andhra Bank during the demonetization period as unexplained money u/s.69A - HELD THAT:- As ld.counsel then took us through the cash book balance as on 17.11.2016, wherein cash balance is Rs.60,83,257/- and out of this cash, these cash was deposited on various dates and he correlated these entries with the deposits i.e., 36.73 lakhs.- assessee also clarified that in assessee s case deposits was to the tune of Rs.35.53 lakhs and Rs.1.20 lakhs was in the name of assessee s son. But, however he explained the entire cash is out of cash generated out of rental income and other incomes. When a specific query was raised by the Bench, as regards to noting made by AO as well as CIT(A) that the closing cash as on 31.03.2006 is nil as per ITR, as explained that in ITR the assessee is declaring business cash in hand and not the cash in hand kept in individual capacity and earned out of rental income. He explained that the assessee is maintaining personal accounts in his individual capacity and business account in his proprietorship capacity for business purposes in which, the cash in hand is nil . When these facts were confronted to ld. Senior DR, she could not reply anything about the cash balance available in the cash book and the rental income earned by the assessee month-wise and tenant-wise and rent earned in cash. The complete paper-book was confronted to ld. Senior DR but she could not controvert the above fact situation. After going through the facts in entirety, we noted that the source of cash is rental income from where the assessee has generated cash to which was deposited in the bank accounts as mentioned above. Hence, we treat the cash as explained and allow the appeal of the assessee on this issue.

  ---

• 2022 (6) TMI 799
  Deemed dividend u/s 2(22)(e) - Substantial interest in lending company - common shareholder - assessee company has received a loan of Rs.71 lakhs from M.Ct.M Corporation P Ltd. As the assessee company s shareholders who are having substantial interest are having 10% voting power in the above said company, the loan is to be treated as deemed dividend in the hands of the assessee company - Assessee argued that none of the shareholders who beneficially hold more than 10% of the shares carrying voting rights in lending company beneficially hold more than 20% of shares carrying voting rights in the assessee company - HELD THAT:- Such loan or advance, in the first place, is not an income. Such a loan or advance has to be returned by the recipient to the company, which has given the loan or advance. Precisely, for this very reason, the Courts have held that if the amounts advanced are for business transactions between the parties, such payment would not fall within the deeming dividend under Section 2(22)(e) of the Act. Insofar as reliance upon Circular No. 495 dated 22.09.1997 issued by CBDT is concerned, such observations are not binding on the Courts. Once it is found that such loan or advance cannot be treated as deemed dividend at the hands of such a concern which is not a shareholder, and that is the correct legal position, such a circular would be of no avail. The definition of shareholder is not enlarged by any fiction. We are of the view that this issue is covered by the decision of Hon ble Supreme Court MADHUR HOUSING AND DEVELOPMENT COMPANY [ 2017 (10) TMI 1279 - SUPREME COURT] wherein it is held that as per provisions of section 2(22)(e) of the Act, the concern like the assessee which has received loan from M.Ct.M Corporation P Ltd., which is giving loan or advance is not a shareholder or member of the receiver company. Therefore, under no circumstances the assessee could be treated as shareholder, member receiving dividend. Hence, the assessment of this loan received by assessee cannot be treated as deemed dividend u/s.2(22)(e) of the Act. Hence, we delete the addition and allow this issue of assessee s appeal. Disallowing VRS payment claimed - As argued this amount was added back by the AO notwithstanding the fact that the assessee itself disallowed the same in computing the taxable income for assessment year 2000-01 - HELD THAT:- After hearing both the sides, we remand this matter back to the file of the AO who will verify the fact that the assessee himself disallowed in the computation of income or not and accordingly, will decide the same. This issue of assessee s appeal is set aside and allowed for statistical purposes.

  ---

• 2022 (6) TMI 798
  Admission of income pursuant to survey operation u/s 133A - Assessee voluntarily agreed to admit towards unaccounted sales - purchases of 10.3 Kgs of bullion from SVBV Gold and RK Gold -Double addition - HELD THAT:- We note from the records available before us that there is no material evidence for the unaccounted purchases for effecting the sales of Rs. 3 Crores that was found during the time of survey. Further, the survey team has found a deficit stock of 696.787 grams at the time of survey which includes the unaccounted sales admitted by the assessee for 8786.872 grams. The assessee also admitted that this cash sales amount was deposited into the bank account and alongwith the balance available in the bank account, the assessee has utilized for the purchases of 10.3 Kgs of bullion from SVBV Gold and RK Gold. The explanation of the Ld. AR that the payments were made through bank account and the purchases were disclosed and included in the stock, in the books of account, cannot be denied. We also observe that these purchases were made before the date of survey i.e on 25.11.2016. Therefore, we are of the view that the purchases are already recorded in the books of account and also accounted for in the stock of gold at the time of survey, and we note that only the sale of 8786.872 grams amounting to Rs. 3,10,69,393/- remains unaccounted in the books of account at the time of survey. We disagree with the contention of the Ld. AO that there are unaccounted purchases for making these unaccounted sales based on the fact that if unaccounted purchases are included in the stock at the time of survey the deficit stock would have been far more higher than 696.787 grams at the time of survey. In view of the above findings, we are of the considered view that a separate addition of unaccounted sales is not required. If the assessee did not adhere to the surrender made during the survey, it was for the AO to bring on record cogent material or other evidence to support the additions rather than rely on the statements simpliciter. We do not find any cogent material or other evidence brought in by AO to support the admissions made during survey. In view of the above, we find that there is no infirmity in the order of the Ld. CIT(A) and no interference is required on this ground. Revised return u/s 139(5) - Admission of additional ground by the Ld. CIT(A) - AR submitted that since the due date of filing the revised return was time barred, the assessee could not file the revised return and hence raised the additional ground raised before the Ld. CIT(A) - DR submitted that the additional ground admitted by the Ld. CIT(A) is not in accordance with law - HELD THAT:- We find from the arguments of Ld.AR, that the assessee on the inability to file the revised returns u/s 139(5) of the Act could not revise the original return where the income was wrongly admitted. We have heard the rival contentions and we find merit in the arguments of the Ld. AR that since the due date of filing the revised return of income U/s. 139(5) was time barred, the assessee has raised the additional ground before the Ld. CIT(A). The Ld.CIT(A) considering the merits has rightly allowed this additional ground of the assessee, and hence the ground raised by the Revenue is dismissed. Addition as per the income returned by the assessee at the time survey u/s. 133A - AR argued that this amounts to double taxation ie., once on the basis of unaccounted sales and again taxing the same amount based on the admission by the assessee during the survey proceedings is not valid in law - HELD THAT:- We have considered the rival contentions and we disagree with the contention of the Ld. DR that there are unaccounted purchases for making these unaccounted sales. If unaccounted purchases are included in the stock at the time of survey the deficit stock would have been far more higher than 696.787 grams at the time of survey. Therefore we are of the considered view that this these grounds raised by the Revenue is not sustainable and since the issue have already been adjudicated in earlier para, needs no further adjudication.

  ---

• 2022 (6) TMI 797
  Disallowance of exemption u/s.10AA - assessee did not have adequate and sufficient fixed assets, manpower and power/ fuel to carry out any manufacturing or processing activity to the extent shown by the assessee - CIT-A deleted the disallowance - whether CIT(A) is not justified in holding that provisions of the SEZ Act have overriding effect over provision of section 10AA of the Income-tax Act? - HELD THAT:-From the above findings of CIT(A) it is vivid that provisions provided under the SEZ Act overrides the provisions of section 10AA of the Act and the SEZ Rules includes trading to be services - DR pointed out that SEZ Rules can not override the provisions of section 10AA of the Income Tax Act, as these SEZ Rules do not have mandatory force as that of main provisions of the Act. He further pointed out that Rules can not override the main provisions of the Act. Even SEZ Rules cannot override the main provisions of the SEZ Act.Therefore, ld DR prays the Bench that matter may be remitted back to the file of the assessing officer to examine the facts of the assessee`s case in the light of main provisions of SEZ Act and Income Tax Act. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly. Therefore, we set aside the order of ld CIT(A) and remit this issue back to the file of the assessing officer to examine the conditions of section 10AA of the Act and SEZ Act and adjudicate the issue afresh in accordance with law. Therefore, statistical purposes, the appeal of the Revenue is treated to be allowed.

  ---

• 2022 (6) TMI 796
  Revision u/s 263 - As per CIT original asset in question was not of HUF and therefore directed the AO for clubbing as per provisions of section 64(2)(b) - HELD THAT:- As assessee before us stated that the returns of income of HUF were filed for assessment year 1998- 99 and the statement of affairs were filed from assessment year 2002-03 with the Department - assessee mainly harped on the fact that he got married on 07.07.1975 and HUF is formed on that very date. We may agree that the HUF might have formed on the day they got married but what is the nucleus available with the HUF. Assessee categorically denied having any nucleus till assessment year 1998- 99. The properties purchased by individual in their individual name and from the individual source of income cannot be treated as property of HUF. Even the assessee could not prove any nucleus. Once this is the position, as the assessee is unable to prove its case, it is presumed that it has rightly been held that these properties belong to these two individuals i.e., Smt. Bhavani Mahadevan and Shri R. Mahadevan in their individual capacity and not of the HUF. PCIT s finding is supported by evidences that these properties by Smt.Bhavani Mahadevan and Shri R. Mahadevan are all in their individual capacities purchased in the year during 1994 1995. There is no evidence that these properties were purchased by assessee HUF i.e., Mahadevan HUF and in the absence of any evidence, we cannot reverse the findings of PCIT. Secondly, the assessee has claimed the sale consideration out of these properties as long term capital gain in the hands of HUF and claimed deduction u/s.54F of the Act in respect of purchase of house property at Abiramapuram i.e., residential house or flat. We noted that PCIT has rightly held the assessment order as erroneous as well as prejudicial to the interest of Revenue. But, we noted that the PCIT has set aside the assessment order and directed the AO to reframe the assessment as per the provisions of law after considering the submissions and evidences, if any as per law. We find no infirmity in the order of PCIT revising the assessment and setting aside the matter to the file of AO. - Appeal of assessee dismissed.

  ---

• 2022 (6) TMI 795
  Deduction u/s 80P - disallowance of interest income of the assessee society out of its investments with other co-operative banks is not eligible for deduction either uls 80P(2)(a)(i) or u/s 80P(2)(d) - CIT-A allowed the claim - HELD THAT:- We find in a recent decision of Pune Tribunal [ 2018 (11) TMI 1589 - ITAT PUNE] and [ 2019 (4) TMI 682 - ITAT PUNE] held that interest itself is eligible for deduction u/s.80P of the Act, the compulsion of the assessee to offer certain amount in order to enable the completion of the assessment, cannot be stretched so far so as to bring the entire amount of interest received from bank to tax which is otherwise deductible - we are of the considered view that there is no reason to interfere with the findings of the ld. CIT(A) and the relief provided to the assessee is sustained. - Decided against revenue.

  ---

• 2022 (6) TMI 794
  Capital gain computation or Income from other sources - compensation received by the assessee on extinguishment of his right in property - transfer of asset u/s 2(47) - whether relinquishment of right in property is transfer within definition of section 2(47)? - HELD THAT:- In this case the assessee had acquired right in a property and said right has been extinguished in favour of the builder and received compensation. The builder has paid compensation through proper banking channel after deducting necessary TDS as per law. The parties have confirmed transactions. AO has never disputed these facts, however, denied benefit of long term capital gain only for reason that authenticity of stamp paper purchased by the assessee to enter into MOU is doubtful. In our considered view, reasons given by the AO to reject claim of the assessee on the basis of authenticity of stamp paper is not correct, because if at all, the AO is having any doubt on authenticity of stamp paper, the A.O. should have conducted necessary inquiries to ascertain facts whether stamp paper purchased by the assessee is genuine or fake one. In absence of any inquiry, the AO cannot come to a conclusion that stamp paper purchased is not genuine one and consequently, on that basis the transaction between the parties cannot be questioned, more particularly, when other evidences filed by the assessee, including confirmation from buyer reveals that transaction took place between the parties. Extinguishment of rights therein also includes within definition of capital asset and consequently, comes under transfer as defined u/s.2(47) Thus what was received by the assessee by virtue of MOU is consideration received for transfer of rights in property and thus, same is assessable under the head income from capital gains . The learned CIT(A), after considering relevant facts has rightly held that the Assessing Officer has erred in assessing compensation under the head income from other sources . Hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the Revenue

  ---

• 2022 (6) TMI 793
  Revision u/s 263 - Depreciation on lease payment - HELD THAT:- Under the provisions of the Act, depreciation is admissible under section 32 of the Act only to the owner of the asset. Lease charges paid for the use of the asset, without acquiring any ownership rights in the same, are allowable as revenue expenditure u/s 37 - Thus, what AS-19 provides is the accounting treatment to be given to the two types of leases. It is not determinative of the tax treatment of the lease which has to be computed in accordance with the provisions of the Act. It is trite law that book entries are not determinative of tax liability as per the ratio laid down in Sutlej Cotton Mills Ltd. [ 1978 (9) TMI 1 - SUPREME COURT] as well as in Kedarnath Jute Mfg. Co. Ltd. [ 1971 (8) TMI 10 - SUPREME COURT] - The said proposition has also been reiterated in CBDT Circular No.2 of 2001 dated 09.02.2001 which state that accounting standard issued by ICAI creating distinction between finance lease and operating lease will have no implications under the provisions of the Act. The assessee as a lessee would be entitled for deduction of gross lease rental payments. The assessee s methodology is to be accepted. The lease payments made by the assessee would be revenue expenditure for the assessee. We order so. The alternative claims as allowed by Ld. AO shall stand reversed. The claim of foreign exchange loss on these transactions shall be re-considered / re-adjudicated by Ld. AO in the light of our above adjudication. The appeal stand partly allowed in terms of our above order. Disallowance u/s 40(a)(i) for want of TDS on lease rental payments - HELD THAT:- CIT(A) held the principal component of lease rental would be capital expenditure and the same is not allowable u/s 37. Therefore, the issue of disallowance u/s 40(a)(i) was held to be academic in nature. Facts being pari-materia the same as in AY 2012-13, our adjudication as contained therein shall mutatis mutandis apply to this year also. The directions of Ld. CIT(A), with respect to foreign exchange loss, stand reversed. Having said so, the issue of disallowance u/s 40(a)(i) shall be restored back to the file of Ld. AO for fresh adjudication since the expenditure has been held by us to be revenue in nature. The assessee is directed to substantiate its case in terms of the provisions of Sec.40(a)(i). The appeal stands partly allowed. Disallowance of forex losses, lease rentals - HELD THAT:- Facts being pari-materia the same as in other years, the principal component of lease rental shall be allowed as revenue expenditure. The depreciation on capitalized principal portion shall stand reversed. The issue of forex loss shall stand remitted back to the file of Ld. AO for re-adjudication. The profit on sale of containers would be brought to tax. No interference is required on club expenses. The appeal stands partly allowed.

  ---

• 2022 (6) TMI 792
  Reopening of assessment u/s 147 - Notice issued before the expiry of 4 years from the end of the relevant assessment year - HELD THAT:- It is neither in the reasons recorded for reopening the assessment nor during the proceedings before us, Revenue has pointed out as to what new or tangible material came to the knowledge of the Assessing Officer on the basis of which the impugned reassessment proceedings were initiated. From the perusal of reasons recorded for reopening the assessment, it is evident that the only basis available with the Assessing Officer for initiating the impugned reassessment proceedings was verification/observation of the case records i.e. the information which was already considered and examined during the course of original scrutiny assessment proceedings. We find that even the factual narration in respect of the issues on which reassessment proceedings were initiated, in the present case, does not tally with the information as available on record and forming part of the paper book. Loss on sale of asset - As upon perusal of financials of the assessee, which are forming part of the paper book, it is amply evident that during the year under consideration, assessee did not undertake any transaction in respect of its fixed assets and rather profit was earned on sale of motor cars. There is also no variation in the inventories /stock of flats. Levy tax on annual letting value of unsold property by treating the same as income from house property - As pertinent to note that Hon ble Delhi High Court s decision dated 31/10/2012 in Ansal Housing Finance and Leasing Co Ltd [ 2012 (11) TMI 323 - DELHI HIGH COURT] on which reliance has been placed by the Assessing Officer to support the aforesaid levy, was already available in public domain at the time of passing of the assessment order dated 26/11/2012 under section 143(3) No details of dividend earned and short term capital loss incurred are available on record also appears to be another pretext to initiate reassessment proceedings in the present case, as during the original scrutiny assessment proceedings the Assessing Officer made disallowance of Rs. 34,59,553 under section 14A of the Act after perusing all the details filed by the assessee. Thus, upon perusal of all these aspects, we are of the considered view that the impugned reassessment proceedings were initiated only on the basis of re-appreciation of facts already available on record without any new or tangible material coming into existence and also to conduct roving and fishing enquiry in the case of the assessee for the year under consideration. No new information was received by the Assessing Officer at the time of initiation of reassessment proceedings, and it was merely a fresh application of mind to the same set of facts as were available at the time of original scrutiny assessment proceedings. Thus, in view of the above, we are of the considered opinion that the reopening of assessment under section 147 of the Act, in the present case, is bad in law and therefore is set aside. Accordingly, the impugned order passed by the learned CIT(A), inter-alia, upholding the order passed under section 143(3) r.w.s. 147 of the Act is set aside. - Decided in favour of assessee.

  ---

• 2022 (6) TMI 791
  Delay in payment towards employee s contribution to Provident Fund (P.F.) under section 36(1)(va) r/w section 2(24) - intimation under section 143(1) - HELD THAT:- As relying on kALPESH SYNTHETICS PVT LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CPC BENGALURU. [ 2022 (5) TMI 461 - ITAT MUMBAI] the said disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1) - we are of the considered view that the impugned adjustment in the course of processing of return under section 143(1) is vitiated in law, and we delete the same. Assessee appeal allowed. Disallowance as personal expenditure incurred on motor cars, salary and bonus to driver and depreciation on motor car - HELD THAT:- From the perusal of audited report, forming part of the paper book, it is evident that the auditor had treated the entire expenditure pertaining to motor car as personal expenditure. However, the assessee while filing its return of income only disallowed 20% of motor car expenditure as personal in nature. As, entire expenditure was treated as personal in the audit report and the same was not disallowed by the assessee while computing the total income in the return, CPC Bengaluru vide intimation disallowed the entire motor car expenditure as per section 143(1)(a)(iv) of the Act. Vide impugned order, learned CIT(A) has also confirmed the disallowance so made. Thus, in the present case, from the perusal of material available on record, it is evident that the impugned disallowance is merely based upon the report of the auditor and the details pertaining to the expenditure were not examined by any of the lower authorities. The assessee though has suo-moto disallowed 20% of motor car expenditure as personal in nature, however, no details pertaining to same were furnished. Thus, in view of the above, we deem it appropriate to remand this issue to the file of the jurisdictional AO for de novo adjudication after verification of all the details pertaining to the motor car expenditure. Upon verification, if it is found that any expenditure is pertaining to the business of assessee, the Assessing Officer is directed to allow the expenditure to that extent. Needless to say that the Assessing Officer shall have the liberty to call for all the details as may be required for complete adjudication of this issue. Accordingly, ground raised in assessee s appeal is allowed for statistical purpose.

  ---

• 2022 (6) TMI 790
  Deduction u/s.80IA(4) - AO denied the benefit only on one ground that assessee is a partnership firm where as sec 80IA(4) (i)(a) specifies that it is applicable only for a company or consortium of company - HELD THAT:- It is a fact that assessee is a firm in which three companies are partners. As relying own case [ 2018 (2) TMI 2073 - ITAT PUNE] it is an undisputed fact that the assessee is a partnership firm consisting of 3 companies namely Rohan Builders (India) Pvt. Ltd, Rajdeep Buildcon Pvt., Ltd and Rajdeep Road Developers Pvt., Ltd with a profit sharing ratio of 50:40:10 respectively. It is also a fact that in the case of assessee apart from the aforesaid 3 partners, there are no other non-corporate entities, who are partners. It is also a fact that the partnership firm came into existence on 11.04.2001 and the same partners continued in the year under consideration without any change in the constitution. It is a fact that according to provisions of Sec 80IA(4)(i)(a), the section applies to an enterprise which is a company registered in India or a consortium of companies or by an authority ir a board or a corporation or any other body established or constituted inder any Central or State Act. It is also a fact that the word consortium used in the provision has not been defined in the Income Tax Act. As per the Merriam Webster dictionary, the word consortium means fan agreement, combination, or group (as of companies) formed to undertake an enterprise beyond the resources of any one member . As per the Collins English Dictionary, a Consortium is a group of people or firms who have agreed to cooperate with each other . In ORG INFORMATICS LTD. VERSUS M.P. STATE ELECTRONICS DEV. CORP. [ 2011 (4) TMI 1536 - MADHYA PRADESH HIGH COURT] observed that a consortium is akin to a partnership where each partner is liable for action of other partners. In the present case it is not the case of the Revenue that in the partnership firm, there are other non corporates, who are partners or the firm is not for the purpose of business. It is seen that the assessee has been granted the benefit of deduction u/s 80IA(4) in earlier years and in 2 assessment years i.e., A.Y. 2006-07 and A.Y. 2010-11, the benefit of Sec.80IA(4) was denied to the assessee by the AO for a different reason and not for the reason that the assessee was a firm and not a consortium of companies. The claim of deduction was subsequently allowed by the Coordinate Bench of Tribunal [ 2013 (4) TMI 758 - ITAT PUNE] for A.Y. 2006-07 [ 2017 (3) TMI 1896 - ITAT PUNE] for A.Y. 2010-11. Thus, the claim of deduction u/s 80IA(4) of the Act has been allowed to the assessee in past from A.Y. 2004-05 onwards. Further, Revenue has not brought on record any new facts in the year under consideration due to which the claim of deduction u/s 80IA(4) could be denied to the assessee. Reopening of assessment u/s 147 - HELD THAT:- We have heard both the parties and perused the record. It is observed from the Original Assessment Order passed/s 143(3) on 18/3/2013 that assessee is a firm. The names of the partners of the firm are mentioned in para 4. Thus at the time of original assessment order, the AO was aware of the fact that the assessee is a Firm having three partners. In spite of that the AO has not denied the deduction u/s 80IA(4) on the ground that assessee is a firm. During the original assessment , the AO has allowed assessee s claim of deduction u/s 80IA(4) for the project Terna Bridge, and denied deduction u/s 80IA(4) for other two projects holding that those two projects are not new infrastructural facility. It means AO after considering the fact have concluded that the assessee, though firm was eligible for deduction for Terna Bridge Project. In this fact , we are of the opinion that the reopening is based on change of opinion. On perusal of the reason recorded , it is observed that the AO has not brought any new material on record for reopening. In the assessment order passed u/s 147, in para 4, it is clearly mentioned that there was Audit Objection.Therefore, we are of the opinion that the reopening is not valid. Depreciation treating the right of toll collection as intangible asset - AO has amortized the opening WDV over the remaining concession period following the CBDT Circular No.9/2014 - HELD THAT:- As relying on own case [ 2018 (2) TMI 2073 - ITAT PUNE] we hold that assessee s claim of depreciation shall be allowed. Thus, the Ground No.2 of Revenue is dismissed.

  ---

• 2022 (6) TMI 789
  Reopening of assessment u/s 147 - Non considering objections raised by the assessee - HELD THAT:- It is an undisputed fact that the assessee has raised objection for reopening of assessment and the Assessing Officer has not passed any speaking order in respect of the objections raised by the assessee. It is contrary to the decision of the Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd.[ 2002 (11) TMI 7 - SUPREME COURT ] As we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer directing to consider the objections raised by the assessee in respect of reopening of assessment and pass speaking order. Thus, the appeal filed by the Revenue is allowed for statistical purposes.

  ---

• 2022 (6) TMI 788
  Disallowance of expenses - interest payment or salary payments - HELD THAT:- It is an undisputed fact that the assessee was a working partner in three firms viz., M/s. Ganesh Metal Industries, M/s. Muthalamman Metal Industries and M/s. Ramana Metals. In order to cope up with the firms activities and as per allocation of work to the assessee-partner, such as, day-today banking operations, collections from parties in and around Chennai, staff management, production supervision, stock management control and general office administration, etc., the assessee has engaged employees and made payments from her own remuneration. In fact, as per work allocation, the assessee-partner was permitted to hire personnel to assist her in clerical works by way of paying salary to them out of her share of partner salary received by her without any further delegation from the firm. On perusal of the details of employees engaged by the assessee and confirmation letters of having receipt of salary and also proved identity of the employees beyond doubt for the assessment year 2013-14, which is similar to the assessment year 2010-11 as has been submitted by the ld. Counsel for the assessee, we are of the considered opinion that the assessee should be allowed to claim the expenses incurred by her as the firms have already debited all expenses in their books of accounts in respect of the business activities. The assessee was not prohibited from making such claim of expenditure, which she has actually incurred and directly related to the income earned. Under the above facts and circumstances, the expenditure claimed by the assessee is allowed. Revision u/s 263 - AY 2013-14 - HELD THAT:- Similar claim of expenses for the assessment year 2010-11 has been accepted by the Tribunal, herein above, in lieu of furnishing confirmation from the employees and their identity for the assessment year 2013-14. Since the Tribunal has accepted similar claim of expenses for the assessment year 2010-11, the claim of expenses for the assessment year 2013-14 is also accepted and the revision order passed by the ld. PCIT for the assessment year 2013-14 is quashed.

  ---

• 2022 (6) TMI 770
  Deduction of claim u/s. 80P(2)(a)(i) - claim denied on interest income received from category A members and category B members, i.e. Associate Members - Assessee is a Co-operative Society registered under the Tamil Nadu Co-operative Societies Act, 1983 under the name and style as Tamil Nadu Cooperative State Agriculture and Rural Development Bank Limited - HELD THAT:- As per case-laws of the Hon ble Supreme Court in the case of Mavilayi Service Cooperative Bank Limited vs. Commissioner of Income Tax, Calicut [ 2021 (1) TMI 488 - SUPREME COURT ] we are of the view that the Assessee is a Co-operative Society under the name and style as Tamil Nadu Co-operative State Agricultural and Rural Development Bank Limited and it is not engaged in the banking activities. It is also clear that in view of Section 3 read with Section 56 of the Banking Regulation Act, 1949, the Assessee cannot be considered as a Primary Cooperative Bank but it is a Primary Agricultural Credit Society because Co-operative Bank must be engaged in the business of Banking as defined in the Section 5(b) of the Banking Regulation Act, which means accepting, for the purpose of lending or investment of deposits of money from the public. Similarly, u/s.22(1)(b) of the Banking Regulation Act, as applicable to Cooperative Societies, no Co-operative Society shall carry on in banking business in India, unless it is a Co-operative Bank and holds license issued on this behalf by the Reserve Bank of India. As there is no banking activity and it is not registered as a Bank and it does not hold any license issued by the Reserve Bank of India. The Assessee being a Primary Agriculture Credit Society is a Co-operative Society. The primary object of which is to provide financial accommodation to its members, i.e. members as well as Associate members for agriculture purposes or for purpose connected with the agricultural activities. Further, we are of the view that the provision of Section 80P(4) of the Act is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in the banking business, i.e. engaged in lending money to members of the public, which have a license in this behalf from the Reserve Bank of India. Clearly, therefore, the Assessee s case is out of the provisions of Section 80P(4) of the Act. In relation to the Associate members, we are of the view that the provisions of Section 22 read with Rule 32 of the Tamil Nadu Co-operative Societies Act, 1983 and Tamil Nadu Co-operative Societies Rules clearly determine the procedure to admit Associate members and accordingly in the present case, the Assessee s Cooperative Society has admitted the same. In view of the above finding, we hold that the Assessee is entitled for the claim of deduction u/s.80P(2)(a)(i) of the Act. Thus, we reverse the orders of the lower authorities and allow these three appeals of the Assessee.

  ---

• 2022 (6) TMI 769
  Undisclosed investment in land in the name of spouse - HELD THAT:- We have heard both the parties and perused material on record. Assessee has not placed any evidence on record to show that the above amount was duly accounted in the books of account of the assessee. As such, it is to be considered as amount of Rs.24,09,135 is unaccounted transaction carried out by assessee. The same was sustained by the CIT(A) and we do not find any infirmity in the action of the lower authorities. The same is confirmed. This ground of appeal assessee is dismissed. Validity of digital evidence procured during the course of search action - Whether CIT(A) is correct in accepting the ground of validity of digital evidence based on VC Shukla case [ 1998 (3) TMI 675 - SUPREME COURT] rendered in 1998 however, the same has been overridden by provision of Information Technology Act 2000 and Section 2(22AA) of the I.T. Act and Section 292C of the IT Act? - HELD THAT:- As the judgment in the case of V.C. Shukla (supra) is not in relation to Income-tax Act, it was relating to criminal proceedings and there was no application of section 292C of the I.T. Act in that case. In Income Tax proceedings, strict rule of evidence is not applicable as rightly pointed out by the ld. DR. The CIT(A) should not have placed reliance on the above judgment and he should have independently examined each seized material and ought to have decided the issue on the basis of weightage of those evidence. Accordingly, this ground of revenue Allowed. Undisclosed investment in site at Ramanahalli - AO made addition being undisclosed investment at Ramanahalli based on digital evidence. This amount has been invested in purchasing a site at Ramanahalli, which is the farm house in which assessee is residing - HELD THAT:- In this case, there is a seized material in form of CD recovered from the assessee s place and it is the duty of assessee to explain the contents therein. However, the assessee failed to discharge the burden cast upon him.On the other hand, the plea of the assessee is that there was no corroborative material in the hands of AO to make such addition. Also the addition is made in the hands of Smt. Pallavi Ravi substantively. In our opinion, if the addition is sustained in the hands of Smt. Pallavi Ravi, there cannot be any addition in the hands of the assessee on this unexplained investment. The issue is required to be verified at the end of the AO whether there is any addition sustained in the hands of Smt. Pallavi Ravi and to decide thereupon. Accordingly, the issue is remitted to the AO for fresh consideration. Unexplained cash deposits - AO noticed huge cash deposits into the bank account of the assessee and sought explanation which are not satisfactory - HELD THAT:- CIT(A) deleted the addition on the reason that assessee has shown income at Rs.97,85,000 and that is sufficient to deposit cash to bank account. In our opinion, on the basis of gross receipt, the addition cannot be deleted and he must have seen the cash/fund flow statement of assessee for the relevant financial year before deleting the addition and accordingly we remit this issue to the file of AO with a direction to the assessee to explain the cash deposits in the bank account by producing the complete cash flow statement / fund flow statement for the relevant financial year. On that basis, the AO has to decide the issue afresh. Undisclosed Election related receipts - AO based on the data retrieved from CD found at the residence belonging to Smt. Pallavi Ravi, has brought amounts to tax holding the same to be undisclosed election Receipts - HELD THAT:- The addition is made by AO on the basis of CD found in the premises of assessee. However, the CIT(A) placed reliance on the judgment of V.C. Shukla (supra) and deleted addition by passing very cryptic order. In our opinion, it is appropriate to remit the issue back to the file of AO to examine the issue in the light of each independent evidence brought on record by way of seized material and decide the issue afresh. Unexplained miscellaneous Receipts - HELD THAT:- There should be independent seized material to sustain the addition. If there is only uncorroborative entry in the CD, it cannot be basis for addition. The AO has to establish the live link between CD and other collateral evidence collected during the course of search action. Accordingly, the issue is remitted to the AO for fresh consideration and decision. Disallowance of expenses claimed as deduction u/s 57 - CIT(A) computed profit from this transaction @ 20% and restricted the addition - HELD THAT:- CIT(A) estimated income @ 20% of the gross turnover which itself is very high as compared to the nature of business carried out by the assessee. Accordingly, we do not find any infirmity in the findings of CIT(A) and same is confirmed. Addition of loan - assessee has shown these loans in its statement of affairs. According to AO, assessee has not proved the receipt of this loan amount - DR submitted that the assessee has not proved the credit worthiness of the transaction and prayed that addition is to be sustained - HELD THAT:- In this case, the CIT(A) observed that the lender is an income tax assessee and capacity to lend the money to assessee. Being so, there is no infirmity in the order of CIT(A). The same is confirmed. This ground of appeal of the revenue in both the AYs is dismissed. Disallowance of depreciation claim on JCB - Assessee claimed depreciation on JCB which was let out on hire - assessee not able to produce the bills and the depreciation is denied - CIT(A) allowed depreciation by observing that assessee has let out the same on hire and offered income from same to tax - HELD THAT:- As in all this four assessment years, i.e. 2009-10 to 2012-13, the assessee claimed depreciation without proving the ownership of the JCB. U/s. 32 of the Act, the assessee has to prove the ownership of the asset and usage of the same for the purpose of business. In the present case, assessee has not produced the valid invoices for purchase of JCB or registration documents. Accordingly, we remit this issue to the AO for fresh consideration. Undisclosed income from sale Of property - CIT(A) remitted the issue to the file of AO to verify whether asset sold is not a capital asset u/s. 2(14) of the Act, whether land is long term capital asset or not and allowance for cost and indexation if applicable - HELD THAT:- In this case, the CIT(A) only remitted the issue to AO for fresh consideration, though he has no power to remit the issue to the AO for fresh consideration. In our opinion, the issue has to be examined at the end of the AO. As such, he should have called for the remand report to decide himself. Instead of this, he remitted the issue to the AO for fresh consideration. We vacate that findings of CIT(A) and remit the issue to the file of AO for de novo consideration. Undisclosed Investment in land - HELD THAT:- In our opinion, on the basis of gross receipt from sale of agricultural land, the addition cannot be deleted and he must have seen the cash/fund flow statement of assessee for the relevant financial year before deleting the addition and accordingly we remit this issue to the file of AO with a direction to the assessee to explain the payment of sale proceeds to various parties by producing the complete cash flow statement / fund flow statement for the relevant financial year. On that basis, the AO has to decide the issue afresh. Unsubstantiated liability - HELD THAT:- We have heard both the parties on the issue. In our opinion, the assessee has to reconcile the assessee account with Conc Shade Constructions P. Ltd. Accordingly the issue is remitted to the AO for fresh consideration. Undisclosed investment Residential house in Basavanahalli - HELD THAT:- CIT(A) deleted addition in wholesome manner by passing cryptic order without going through the actual seized material. In our opinion, the issue to be examined by AO by co-relating the seized material to the investment made by the assessee in the residential house in Basavanahalli. Accordingly, in all these 3 AYs, the issue is remitted to the AO for fresh consideration. Alleged income arising of undisclosed sale os stone crusher unit and hot mix unit - HELD THAT:- CIT(A) deleted the addition only on the proposition that jelly movement register is a record for movement of tar mixed jelly and pure jelly. Tar mixed jelly is used in the business of sister concern, Conc Shade Constructions P. Ltd. There is no basis for such conclusion and also his finding is contradictory in nature as he observed that only gross profit to be taxed in A.Y. 2008-09. However, in the A.Y. 2011-12 he deleted the addition. Hence, we vacate his findings and remit the issue to the file of AO with a direction to assessee to establish how the undisclosed turnover is not relating to his business and it is disclosed in the books of accounts of sister concern. Thereafter the AO has to decide the issue accordingly. Profits from contract receipts - AO mentioned in his order that assessee did not produce books of account and relevant vouchers in support of income declared from his contract business - HELD THAT:- The plea of the assessee is that the assessee is maintaining regular books of accounts and it was subject to audit u/s 44AB of the Act. In view of this, the assessee s income has to be computed as per books of accounts subject to verification. Further, the assessee is entitled for depreciation on assets if the conditions laid down u/s 32 of the Act were satisfied. Accordingly, this issue is remitted to AO for fresh consideration in accordance with law. Unconfirmed liability - CIT(A) deleted the addition holding that the income has been estimated @ 8% on a substantive basis - HELD THAT:- The main grievance of the department is that assessee has not produced the books of account so as to compute the income. In our opinion, the issue to be examined by AO after going through books of account. Accordingly issue is remitted to AO with a direction to assessee to produce books of accounts. Thereafter AO has to decide the issue afresh in accordance with law. Unexplained expenses - addition of expenses payable on the reason that there is no confirmation from the concerned parties - HELD THAT:- The main grievance of the department is that assessee has not produced the books of account so as to compute the income. In our opinion, the issue to be examined by AO after going through books of account. Accordingly issue is remitted to AO with a direction to assessee to produce books of accounts. Thereafter AO has to decide the issue afresh in accordance with law and there cannot be any double addition one as sundry payables and other as sundry creditors. Undisclosed loan advances - AO relying solely upon the contents of an excel Sheet to make the addition - HELD THAT:- The addition is deleted by CIT(A) there is no corroborative evidence to support the addition. However, this finding is not based on the examination of the seized material. The AO has to examine the parties concerned and confront the same to the assessee. Thereafter he shall decide the issue afresh in accordance with law. Accordingly the issue is remitted to AO for fresh consideration. Cash deposit in Name of Benami - HELD THAT:- CIT(A) deleted the addition on the basis of submission of assessee without calling for comments from the AO. In our opinion, it is appropriate to remit the issue to AO to examine the books of account along with the bank account and decide the issue accordingly. Undisclosed contract receipts - HELD THAT:- CIT(A) in certain years estimated income @ 20% and in this AY he estimated 8% which are contradictory. In our opinion, to meet the ends of justice, it is appropriate to remit the issue to the file of AO to decide the issue after examining books of accounts. Undisclosed Investment - AO has then come to infer that the Assessee had a modus operandi where he would enter into agreements thro Anil Kumar and finally purchase the property by a sale deed made directly from the concerned vendor - HELD THAT:- The addition made cannot be made u/s 153 A in as much the same is not forming part of any seized material. Further if it is gathered during the course of search conducted on another person, the same could only be added in a proceeding u/s 153C initiated separately in accordance with law and not under the present proceeding u/s 153 A. The AO is not justified in making this addition based on oral statement made by Anil Kumar, which has no evidentiary value, and which is not corroborated by any other evidence. The statement is a self-serving statement made by Anil Kumar and cannot be used to make an addition in the hands of the Assessee in the absence of any supporting and corroborating evidence. As additions cannot be made merely based on data found at the time of search in the absence of corroborative evidence. In the case on hand there is no single evidence in support of the addition. We remit the issue to the file of AO to confront the evidence collected by him to the assessee. Thereafter, he has to decide the issue afresh. Ordered accordingly.

  ---

• Customs

• 2022 (6) TMI 787
  Concession of demurrage, detention and rental charges - mis-declaration of the description of goods and and also quantity - walnut imported besides, wet dates (which was declared) - issuance of detention certificates - whether the petitioner would be entitled to seek for any waiver of demurrage or detention charges from the fourth and fifth respondents respectively in both the cases beyond 13.01.2022? - whether such claim is justifiable within the meaning of the provisions of the Customs Act as well as the two Regulations, namely 2009 Regulations and 2018 Regulations? HELD THAT:- Section 49(b) makes it clear that, in case of any imported dutiable goods, entered for warehousing, the customs authorities, if they satisfied on the application of the importer that the goods cannot be removed for deposit in a warehouse within a reasonable time, the goods may be pending clearance or removal, as the case may be, permitted to be stored in a public warehouse for a period of not exceeding thirty days - Only invoking the said provision for storing the said goods, which were imported by the petitioner, in a public warehouse, the said permission order was passed by the Customs authorities on 13.01.2022. There are two Regulations, namely 2009 Regulations, called Handling of Cargo in Customs Areas Regulations, 2009 and 2018 Regulations, called Sea Cargo Manifest and Transhipment Regulations, 2018 - Under Regulation 6(1)(l), the Customs Cargo service provider like the private respondents shall not charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer - Here in the case in hand, since the goods were seized and detained and if the same is put in warehouse like the warehouse of the respondents herein, they cannot charge any rent or demurrage on the goods seized. However, the definite case of the respondents 4 and 5 in both the cases as projected by them by way of counter affidavit as well as the arguments advanced by the learned respective counsel appearing for them was that, no doubt from 08.11.2021 to 13.01.2022, there was an advice by the authorities, i.e., from Customs for waiver of rent / demurrage / detention charges, however beyond 13.01.2022 absolutely there was no advice and no such advice infact could have been given by the Customs authorities beyond 13.01.2022, because of the specific proviso contained in clause 10(l) of 2018 Regulations that, beyond 60 days, such kind of waiver cannot be made, hence the petitioner is liable to pay the rent, demurrage and detention charges from 14.01.2022. Here in the case in hand, since confiscation and redemption was possible only after 11.02.2022 Order-in-Original order, thereafter if at all the petitioner wanted to take the goods, whether beyond 13.01.2022 till the petitioner approaches the fourth and fifth respondents, whether that kind of demurrages can also be waived is the question - from the point of view of the customs, beyond the waiver period that was permitted up to 13.01.2022, it was possible for the petitioner to seek for further period waiver, for which request should be made by the petitioner with the Commissioner of Customs before expiry of 30 days. Therefore this Court is of the considered view that, the claim made by the petitioner through the prayer sought for in these writ petitions are untenable, hence, it is liable to be rejected.

  ---

• 2022 (6) TMI 786
  Seeking return of Gold seized and confiscated 40 years ago - request to release the gold on payment of redemption fine in lieu of confiscation - the petitioner is seeking enforcement of order dated 22.11.1983, i.e., after 39 long years. - Smuggling - submission made by the counsel for the petitioner that all the time, respondent No. 2 was expressing that an appeal is pending before the Appellate Authority, therefore, the gold was not redeemed, cannot be accepted because it is not the case of the petitioner that any appeal was ever filed against the order dated 22.11.1983 by any of the parties - HELD THAT:- The Supreme Court in KARNATAKA POWER CORPORATION LTD. THRU ITS CHAIRMAN MANAGING DIRECTOR ANR. VERSUS K. THANGAPPAN ANR. [ 2006 (4) TMI 494 - SUPREME COURT] has held that The High Court does not ordinarily permit a belated resort to the extraordinary remedy because it is likely to cause confusion and public inconvenience and bring, in its train new injustices, and if writ jurisdiction is exercised after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on third parties. It was pointed out that when writ jurisdiction is invoked, unexplained delay coupled with the creation of third-party rights in the meantime is an important factor which also weighs with the High Court in deciding whether or not to exercise such jurisdiction. The Supreme Court in the case of M.P. RAM MOHAN RAJA VERSUS STATE OF TAMIL NADU ORS [ 2007 (4) TMI 714 - SUPREME COURT] has held that So far as the question of delay is concerned, no hard-and-fast rule can be laid down and it will depend on the facts of each case. In the present case, the facts stare at the face of it that on 8-10-1996 an order was passed by the Collector in pursuance of the order passed by the High Court, rejecting the application of the writ petitioner for consideration of the grant of mining lease. The writ petitioner sat tight over the matter and did not challenge the same up to 2003. This on the face of it appears to be very serious. A person who can sit tight for such a long time for no justifiable reason, cannot be given any benefit. Thus, no case is made out warranting interference after 41 years of seizure of gold and 39 years of order dated 22.11.1983. Petition dismissed.

  ---

• 2022 (6) TMI 785
  Smuggling - Gold Bars - Indian Currency - town seizure - non-submission of legal documents evidencing the legal possession of the said goods as required under Section 123 of the Customs Act, 1962 - HELD THAT:- Admittedly it is a case of town seizure. Further, neither there is any record of the appellant having entered into India from any foreign country during the recent past, nor any allegation that he was actively involved in smuggling of gold. Admittedly, it is a town seizure from the residence where the two gold bars in question were lying in the cupboard in the bedroom. As the two gold bars are having foreign marking, the onus is on the appellant to prove the licit source of acquisition. Admittedly, the appellant has produced the copy of will at the time of adjudication proceedings. Under such facts and circumstances, it s found that the Court below have erred in rejecting the will arbitrarily. It is found that the cogent explanation given by the appellant as regards receipt of the two gold bars by way of inheritance under will, have not been found to be untrue. As under the same will, late father of the appellant has also bequeathed immovable property to the mother of the appellant, thus there is hardly doubt as regards the will being not genuine. The documentary evidence is supported by oral evidence, have more weight and legality and overrides the oral statement with regard to source of the gold bars, stated initially. The appellant have reasonably explained the licit possession of the two gold bars, as received by way of succession under the will of his father. But still the source of licit acquisition by father of appellant is not on record, neither the same is mentioned in the will dated 15.02.1999 - the order of confiscation is upheld under Section 111(m) with option to redeem on payment of duty and redemption fine of Rs.1,00,000/- - Confiscation under Section 111(l) is set aside - penalty under Section 112(a) is reduced to Rs. 50,000/- - penalty under Section 114AA is set aside. Appeal allowed in part.

  ---

• 2022 (6) TMI 784
  Revocation of Customs Broker License - Forfeiture of security deposit - levy of penalty - act of substitution and smuggling of red sanders - allegation of lack of negligence on the part of appellant in not undertaking the proper verification of the exporter/ IEC Holder - HELD THAT:- The entire case made against the appellant is on account of their failure not to properly and completely verify the antecedents of the person/ client entrusting them with the paper and consignment for export. In view of the judgements relied upon by the Appellant and those referred in the inquiry report there was no need for physical visit to the premises and meeting with the client before taking the job. Principal Commissioner has relied upon the statement recorded during the course of investigation. These statements have not been corroborated. Even the statutory documents produced by the appellant for undertaking the KYC of the exporter (IEC Holder) have not been verified and found to fake etc. It is not even the case of revenue that these documents were not taken by the Appellant for undertaking KYC. The only allegation that has been made the ground for not complying/ discharging the obligations casted under CBLR, 2018 is that CB had not physically met and physically verified their premises. The CB was require to do the KYC on the basis of the documents prescribed. Undisputedly such KYC was done by the appellant, only what was not done was physical meeting and physical verification of the premises. There are no merits in any of the findings recorded by the Principal Commissioner, in respect of any of the charges framed against the appellant under regulation 10 (a), (d) (n), 13 (12) whereas the findings recorded by the enquiry officer are more justifiable and logical. It is also not the case of revenue that appellant was in any way involved in abetting or colluding with the alleged fraudsters in the substitution of export consignments after their clearance from CFS. If the fact of not involvement with the act of smuggling the Red Sanders, is to be held in favour of the Appellants than in our view the punishments inflicted by the impugned order on the appellants are excessive and not proportionate to the violations committed if any. This is also to be viewed in light of the fact that the inquiry officer has in his report held that none of the alleged violations can be established against the appellant during the inquiry proceedings - just for failure to physically visit and verify the antecedents of the client, revocation of the licence of the CB broker has been held to be not justified. Thus, the enquiry officer has more reasonably concluded in the matter, and the appellant CB can at the most be held guilty for contravention of the Regulation 10 (n). Various High Courts have held that punishment for the offences should be proportionate to the gravity of offence. In the present we do not find that appellant was in any way responsible for any act of misconduct but is vicariously responsible for the acts of their employees, hence the punishment of revocation of licence is much harsh and disproportionate to the offences committed. The impugned order stands modified to extent of setting aside the order of revocation of the license of CB and forfeiture of the security deposit - the penalty imposed on the CB reduced from Rs 50,000/- to Rs 10,000/- - appeal allowed in part.

  ---

• Insolvency & Bankruptcy

• 2022 (6) TMI 783
  Dishonor of Cheque - Validity of proceeding u/s 138 of NI act when CIRP proceedings has started and moratorium has been declared - applicability of moratorium to Directors or Corporate Debtors - HELD THAT:- It is relevant to note that Section 17 (b) of the Insolvency and Bankruptcy Code, 2016, makes it very clear that once interim resolution professional is appointed, the powers of the Board of Directors or the partners of the corporate debtor shall stand suspended and be exercised by the interim resolution professional - Similarly, Section 33 particularly, sub-clause (7) of Section 33 of the Code makes it very clear that when the order of liquidation is passed, it is deemed to be notice of discharge to the officers, employees and workmen of the corporate debtor, except when the business of the corporate debtor is continued during the liquidation process by the liquidator. The above provisions makes it clear that the powers of the Board of Directors shall be suspended on the appointment of the Interim Resolution Professionals by the liquidator. But the question herein is whether the prosecution initiated against the company and directors maintainable in view of the above moratorium. The Apex Court in a judgment reported in P. MOHANRAJ ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [ 2021 (3) TMI 94 - SUPREME COURT] after dealing with various judgements of the Apex Court, it was held that for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instrument Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act. In such a view of the matter, the petitioners being the directors of the company, have to be prosecuted as per the above judgment. In such a view of the matter, when the petitioners themselves have admitted before this Court that the cheques were issued in the year 2016, merely because the different date is mentioned in the complaint, it is the matter of evidence. In such a view of the prosecution initiated by the respondent cannot be quashed - petition dismissed.

  ---

• 2022 (6) TMI 782
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The case of the applicant precisely is that the corporate debtor had availed financial facility from the financial creditor, Remotebullion And Jewels Private Limited by way of loan agreement. The corporate debtor has agreed to repay the amount but the corporate debtor has defaulted in payment of the said loan. Therefore, as per part IV of the application it is claimed that a sum of Rs. 2,03,39,000/- is due and payable by the respondent company. Needless to say, that an application under Section 7 of the Code is maintainable if the debt is proved to be due and there is default. In view of the Section 4 of the Code, the moment default is of Rupees one hundred lakhs or more, an application to trigger Corporate Insolvency Resolution Process under the Code is maintainable - The applicant clearly comes within the definition of Financial Creditor. The material placed on record as stated in the paras above further confirms that respondent has debt due and has committed default in repayment of the outstanding financial debt. On a perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional. The present application is complete in all respect. The applicant financial creditor is entitled to move the application against the corporate debtor in view of admitted outstanding financial debt and default of the same by the corporate debtor. The default in repayment of the financial debt is not refuted by the Corporate Debtor - Application admitted - moratorium declared.

  ---

• 2022 (6) TMI 781
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Admittedly, the Memorandum of Undertaking was executed between M/s. ABW Infrastructure Limited and the present Application and the respondent was in no way connected to the MOU. There is no evidence on record to show that the money in question was in fact paid to present respondent out of the said agreement. Further, the provision in Section 4 of the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 clearly stipulates that the District Magistrate is empowered to pass only an order of attachment and he cannot pass any order for recovery of the money. On perusal of orders passed by the District Magistrate which clearly shows that an order of attachment has been passed in terms of Section 4 of the Haryana Act. The Applicant has failed to make out a case under Section 7 of IBC, 2016 - Application dismissed as not maintainable.

  ---

• 2022 (6) TMI 780
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is pertinent to mention that the FIR relied upon by corporate debtor is against some boy working in the office of corporate debtor and no allegation is there in the FIR against the Operational Creditor. Hence, the said FIR does not have any evidentiary value in the present case. Firstly, the corporate debtor has raised the issue regarding limitation. It is seen from the records that the corporate debtor has issued the cheques and same dishonoured on 07.05.2018 and the present petition is filed on 09.01.2020. Therefore, the petition is filed well within the limitation. The Corporate Debtor has raised the objection regarding existence of pre-existing dispute. This Adjudicating Authority has to look whether there is pre-existing dispute actually exist or not. The Corporate Debtor has relied upon the letter dated 16.04.2018. It is pertinent to discuss the content of the said letter dated 16.04.2018. On perusal of the said letter, it is clear that the said letter was not accompanied by any evidence. Furthermore, the corporate debtor did not follow-up with the operational creditor regarding the issue raised in the letter dated 16.04.2018. Rather on the other hand, corporate debtor has issued the cheques dated 25.04.2018 amounting to Rs. 1,96,30,000/- to discharge its liability - this Adjudicating Authority is of the opinion that such argument in not maintainable in the eyes of law as corporate debtor has failed to produce any satisfactory evidence to show the existence of pre-existing dispute. Hence, this tribunal is inclined to initiate the CIRP of Corporate Debtor as a result the Petition is admitted. Application admitted - moratorium declared.

  ---

• 2022 (6) TMI 779
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - Service of demand notice - HELD THAT:- The service not received and publication has been done to that effect. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of corporate debtor despite repeated service and is set ex parte vide order dated 22.12.2021. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 15.11.2019 vide Diary No. 6358. Therefore, this Adjudicating Authority finds that this application was filed within limitation. On going through the contents of the application filed in the Form 5, the same is found to be complete. There is a total unpaid operational debt (in default) of Rs. 8,83,275(Principal Amount). The operational creditor has supplied goods to the corporate debtor and raised invoices attached as Annexure A-4. Ledger accounts maintained by the operational creditor have been attached at Annexure A-4. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident that from the abovementioned facts that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is above threshold limit - all the aforesaid requirements have been satisfied. It is seen that the petition preferred by petitioner is complete in all respect. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. Petition admitted - moratorium declared.

  ---

• 2022 (6) TMI 778
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repaymnet of its dues - Operational creditors - existence of debt and dispute or not - HELD THAT:- It has been shown that the Corporate Debtor has failed to make payment of the aforesaid amount due to date as mentioned in the statutory notice. It is also observed that the conditions under Section 9 of the Code stand satisfied. Hence, this Adjudicating Authority is inclined to commence CIRP against the Corporate Debtor as envisaged under IBC, 2016. Application admitted - moratorium declared.

  ---

• 2022 (6) TMI 777
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- On perusal of the documents of the Operational Creditor, the two letters one by Operational Creditor to the Corporate Debtor written on 22nd December, 2017 and the reply thereto dated 30th December, 2017 are the main planks of the case and the third important document i.e. required to be considered is the agreement executed between the Corporate Debtor and ESAB India Limited along with a receipt and memo of consideration whereby a sum of Rs. 2,50,00,000/- has been transferred by the Corporate Debtor to the vendor/land owner ESAB India Limited vide cheque no. 050595 dated 9th March, 2017 (drawn on IDBI Bank). It is clear that once the Corporate Debtor has authorized the Operational Creditor and admittedly confirmed the letter dated 22nd December, 2017 sent by the Operational Creditor, vide letter dated 30th December, 2017 written by the Director of the Corporate Debtor and pursuant thereto admittedly entered into an agreement along with their receipt, duly executed by the land owner after accepting part payment of Rs.2,50,00,000/-, there is hardly anything left to be doubted. The Operational Creditor has duly complied with all the procedural formalities in filing the petition and has filed affidavit under section 9(3)(b), the petition is complete in all respects. Pre-existing dispute - HELD THAT:- Even though the Corporate Debtor has tried to convince this Adjudicating Authority as regards some pre-existing disputes and has raised certain frivolous grounds of defence but any of the grounds of defence taken by the Corporate Debtor, is not convincing. Application admitted - moratorium declared.

  ---

• Service Tax

• 2022 (6) TMI 776
  Rejection of refund claim against pre-deposit - compliance to Section 35F (Pre 2014 amendment) - HELD THAT:- For the purpose of filing an appeal, confirmed duty demand in the order to be appealed against alongwith interest and penalty are to be deposited with the adjudicating authority. Accordingly, letter under reference i.e. Appellant s letter dated 21.08.2009 has been sent that borne testimony to the fact that such amount was deposited in confirmation of the order dated 27.07.2009 with its annexure issued on 12.08.2009 and it is a clear revolution of the fact that Appellant was to file an appeal against such order before the Commissioner of Central Excise Customs (Appeals), Pune. There was a noting in it that such payment as full settlement of the amount demanded was without prejudice to the appeal to be filed. This being the facts and evidence on record, there is no second opinion that can emerge that such payment made by the Appellant towards discharge of duty confirmed alongwith interest and penalty was in the form of pre-deposit so as to acquire right of appeal and therefore the Circular of the CBEC Board referred by the Appellant namely Circular Nos. 1053/2/2017-CX, 984/8/2014-CX, 275/37/2k-CX.8A would clearly apply wherein it was stipulated that a simple application would be sufficient for the purpose of processing the refund and Appellant would not be subjected to the process of refund of duty as contemplated under Section 11B of the Central Excise Act, 1944. There is no such authority that would show that any amount being shown as expenditure would automatically get credited in the income side as if it is realised from a third party/person. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (6) TMI 775
  Refund of the unutilized CENVAT credit - input services consumed in exporting services - rejection of refund claim on the ground that since the appellant is located in SEZ, they ought to have filed refund claims as per the procedure and conditions laid down under SEZ refund notification instead of claiming refund under Rule 5 of CENVAT Credit Rules, 2004 - period April 2010 to June 2010, July 2010 to September 2010, October to December, 2010 and January 2011 to March 2011 - HELD THAT:- After going through the provisions under CENVAT Credit Rules, 2004, it is found that it does not restrict or bar an SEZ to file refund claim of unutilized credit. The ground stated by the authorities below to reject the refund claim does not appear to be legal or proper. The rejection of refund claim cannot be justified. The impugned order is set aside. Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2022 (6) TMI 774
  Levy of penalty u/r 26 - Personal penalty for abatement in evasion of duty - evasions of huge amount of Central Excise Duty by fraudulent availment of Cenvat Credit - fake and forged central excise invoices - non-existent goods - main contention of the appellants were that no goods were handled by the Appellants - HELD THAT:- Rule 26 of the Central Excise Rules are applicable to any person who acquires possession of or in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in any other manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation. It is noticed that in the present matter Shreeji Aluminium have shown the sale of goods to M/s G.K. Founders Pvt. Ltd. without actual delivery of the goods, the transporter in his statement also admitted the said facts. Further, during the course of investigation Shri Paresh Babubhai Patel, Director of M/s Shreeji Aluminium Pvt. Ltd. admitted the facts that invoices were prepared and issued in favour of M/s G.K. Founders Pvt. Ltd. without actual delivery of goods to M/s. G.K. Founders Pvt. Ltd. The person who proposed to sell the goods cannot say that he was not a person concerned with selling of goods and merely issued the invoices. Another submission of the learned counsel was that the show cause notice or the impugned order does not propose confiscation of the goods or held liable to confiscation of such goods, this position cannot be appreciated. Appellants were concerned with such cenvatable invoices wherein they shown the clearance of goods without delivery and were in the knowledge that such goods are liable to confiscation. Thus, under the facts and circumstances, the penalty imposed on them is correct. Hon ble High Court of Gujarat in the case of SANJAY VIMALBHAI DEORA VERSUS CESTAT [ 2014 (11) TMI 620 - GUJARAT HIGH COURT] , has held that a person would render himself liable for penalty for indulging in activities mentioned in Rule26 of the Central Excise Rules, 2002, even if goods are not confiscated or had not been rendered liable for confiscation. Further the contention of the appellant that penalty under Rule 26 cannot be invoked on company is also not tenable - Hon ble Supreme Court in the case of MADHUMILAN SYNTEX LTD ORS VERSUS UNION OF INDIA ANR [ 2007 (3) TMI 670 - SUPREME COURT] held that the company is not a natural person but legal or juristic person, cannot be ordered to suffer imprisonment, other consequences but would ensue e.g., payment of fine, etc. Role of M/s Steel Metal, trading firm - HELD THAT:- The said trading firm have played a crucial role in the commission of the offence by M/s G.K. Founders. Appellant were concerned with such cenvatable invoices wherein they shown the clearance of goods without delivery and were in the knowledge that such goods are liable to confiscation. Revenue has been able to prove that the appellants were engaged in the activity of issuance of invoices without movement of the goods. Further, a plain reading of Rule26 indicates that imposition of the penalty therein is not tied to a condition that excisable goods have to be placed under confiscation under the Act/Rules - Only, the person implicated/concerned should have the knowledge of possible confiscation of the impugned goods. From the facts on record, the appellant have played crucial role in commission of offence by M/s G.K. Founder. Appellant is liable to penalty under Rule 26 of the Central Excise Rules. Appellant M/s B.S. Roadways and Shri Saleem Saheb Patel, transporter - fictitious LRs without actual delivery of goods - HELD THAT:- There are no reason to set aside such a reasoned orders for the imposition of penalty. However, imposing penalty on M/s. B.S Roadways as well as a separate penalty on Proprietor Shri Saleem Saheb Patel, the submission is agreed upon and it is held that the proprietary concern is not a different legal entity from the proprietor. The separate penalty imposed on Shri Saleem Saheb Patel proprietor of M/s B.S. Roadways is set aside. Appeal allowed in part.

  ---

• 2022 (6) TMI 773
  Levy of penalty u/r 26 of Central Excise Rules - recovery of incriminating records relating to the period May, 2011 to September, 2012 to August, 2014 - receipt of certain input from other manufacturers without proper bills and /or without payment of duty - clearance of certain output /finished goods without payment of duty - HELD THAT:- The appellant have settled their dispute for the same period under the SVLDR Scheme, 2019. Further, for the same period, the appeal of the said supplier M/s Shree Balaji Furnaces Pvt. Ltd., this Tribunal had allowed their appeal holding that there is insufficient evidence with respect to the allegations. Accordingly, it is deemed fit and proper to allow this appeal and set aside the penalty under Rule 26 of the Central Excise Rules. Appeal allowed.

  ---

• CST, VAT & Sales Tax

• 2022 (6) TMI 772
  Concessional rate of tax - purchase of tin containers, for packing purposes, against Form XVII declaration - levy of penalty under section 3(3) of the TNGST Act - quantum of penalty at 150% imposed on the petitioner by the assessing officer, which was restricted to 100% by the appellate authority - assessment years 1990-91, 1991-92 and 1992-93 - HELD THAT:- Considering the fact that prior to amendment of section 3(3), the packing materials were excluded from the concessional rate of tax against form XVII declaration and there is no material to prove that the tin containers purchased by the petitioner were used in the manufacturing activity, this court finds no good reason to interfere with the well considered findings of the Authorities below, disallowing the concessional rate of tax under section 3(3), against issuance of form XVII declaration, during the material point of time - thus, concessinal rate of tax is not available to the petitioner. Levy of penalty - HELD THAT:- As rightly held by the third respondent, when the petitioner is not entitled to claim concessional rate of tax under section 3% of the TNGST Act, they are liable to pay penalty under section 23 of the TNGST Act, for violation of the provision of section 3(3). Accordingly, the assessing officer levied penalty and the same was affirmed by the appellate authorities, which in the opinion of this court, warrants no interference, as the issue relating to claim of concessional rate of tax under section 3(3), is decided against the petitioner. The issue regarding levy of penalty is also answered against the petitioner. Quantum of penalty at 150% determined by the first respondent / assessing officer, which was subsequently, restricted to 100% by the second respondent / appellate authority as affirmed by the third respondent / Tribunal - HELD THAT:- In the facts and circumstances of the case, the penalty is slightly on the higher side and hence, the same is reduced to 50%, in the opinion of this court. Accordingly, the issue raised herein is answered in favour of the petitioner. Petition allowed in part.

  ---

• Indian Laws

• 2022 (6) TMI 771
  Dishonor of Cheque - Maintainability of appeal - requirement of deposit as a condition for admission of appeal, in terms of Section 148 of the Negotiable Instruments Act - HELD THAT:- It is true that prior to the introduction of Section 148 of the Negotiable Instruments Act, present appeal was preferred, but it does not mean that the appellate court s hands are tied to ask the convict appellant to deposit certain percentage of the compensation amount as a condition for admitting the appeal. Convict appellant is directed to deposit 20% of the compensation amount before the trial court within two weeks from the date of the communication of this order as a condition precedent for admission of the appeal. On such deposit the appeal may be admitted and execution of the sentence awarded by the trial court may be stayed. Failing which accd will surrender before Trial Court and Ld. Trial Court will pass appropriate directions for execution of the sentence, after two weeks of the communication of the order. Application disposed off.

  ---