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TMI Tax Updates - e-Newsletter June 22, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles THE ISSUANCE OF FORM 16A/ 16 SHOULD BE DONE AWAY FOR EASE OF COMPLIANCE UNDER INCOME TAX ACT CONSOLIDATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS News India expands its cereals exports footprints through shipping rice, wheat and other cereals to newer destinations ; Auction for Sale (Re-issue) of ‘4.26% GS 2023’, and ‘5.85% GS 2030’ and ‘6.76% GS 2061’ Notifications GST - States 38/1/2017-Fin(R&C)(202)1494 - dated 16-6-2021 - Goa SGST Seeks to provide relief by lowering of interest rate for a specified time for tax periods March, 2021, April, 2021 and May, 2021 32/GST-2 - dated 21-6-2021 - Haryana SGST Notification to amend notification No.48/GST-2, dated 31.03.2019 under the HGST Act, 2017 31/GST-2 - dated 21-6-2021 - Haryana SGST Notification to amend notification No.46/ST-2, dated 30.06.2017 under the HGST Act, 2017 30/GST-2 - dated 21-6-2021 - Haryana SGST Notification to amend notification No.35/ST-2, dated 30.06.2017 under the HGST Act, 2017 29/GST-2 - dated 21-6-2021 - Haryana SGST Notification to amend notification No.101/GST-2, dated 15.12.2020 to extend the due date for FORM GSTR-1 for tax period of May, 2021 under the HGST Act, 2017 636-F.T. - dated 14-6-2021 - West Bengal SGST Seeks to rationalize late fee imposed under section 47 of the CGST Act, 2017 for late filing of return in FORM GSTR-4 from FY 2021-22 onwards (amendment to notification No. 2311-F.T. dated 29.12.2017) 635-F.T. - dated 14-6-2021 - West Bengal SGST Seeks to rationalize late fee imposed under section 47 of the WBGST Act, 2017 for late furnishing of the statement of outward supplies in FORM GSTR-1, from tax period of June, 2021 onward (amendment to notification No. 118-F.T. dated 24.01.2018) 634-F.T. - dated 14-6-2021 - West Bengal SGST Seeks to rationalize late fee imposed under section 47 of the CGST Act, 2017 for late filing of return in FORM GSTR-3B from June, 2021 onwards; and to provide one time relief by conditional waiver of late fee for delay in filing FORM GSTR-3B from July, 2017 to April, 2021; and to provide waiver of late fees for late filing of return in FORM GSTR-3B for specified taxpayers and specified tax periods 633-F.T. - dated 14-6-2021 - West Bengal SGST Seeks to provide relief by lowering of interest rate for a specified time for tax periods March, 2021, April, 2021 and May, 2021 04/2021–C.T./GST - dated 14-6-2021 - West Bengal SGST Seeks to extend the due date for FORM GSTR-1 for tax period of May, 2021 by 15 days Highlights / Catch Notes GST Seeking Bail - Passing of fake input tax credit - issued fake invoices/bills without receipt of goods - Considering the nature and gravity of the accusation, the nature of supporting evidence, availability of prima facie case against the petitioner, coupled with the fact that a huge amount of public money has been misappropriated and also the fact that further investigation of the case is under progress and taking into account the apprehension of the petitioner in tampering with the evidence, in the larger interest of society, the petitioner is not allowed to be released on bail - HC Visit to Get Source Income Tax Disallowance of project expenses - Addition on the ground as no project-wise accounting was available and no work-in-progress was reported - As the assessee is engaged in the business of consultancy services definitely there can be some overlap of the expenses between two years. However that does not give any rise to the AO to disallow the expenditure @10% and treat it as work in progress. - AT Visit to Get Source Exemption u/s 54 / 54F - While section 54 of the Act deals with capital gains arising out of transfer of buildings or lands appurtenant thereto and being residential house, section 54F of the Act deals with capital gain arising out of transfer of any long term capital asset not being a residential house. Otherwise, in all other aspects of the matter, the two provisions namely sections 54 and 54F are in pari materia. Therefore, the interpretation of 'a residential house' occurring in section 54F cannot be any different for the same phrase 'a residential house' occurring under section 54 of Act. In this regard what applies to section 54F would apply in equal and full force to section 54 also. - AT Visit to Get Source Addition of sales of flats - suppression of sale price of the flats in order to evade the tax - The maxim Falsus in uno and falsus in omnibus has an obligation in India and it has not received any acceptance or approval by the higher courts. It is therefore clear that the action of the AO in calculating the so-called understatement of the cost of the flats for all the 3 years and making addition is accordingly cannot be justified. - AT Visit to Get Source Reopening of assessment u/s 147 - unexplained cash payment - Two notices issued u/s 148 - it is a case where pending conclusion of the first reassessment proceedings, fresh reassessment proceedings have been initiated which cannot be sustained in the eyes of law and on this reason alone, the present reassessment proceedings initiated by way of notice u/s 148 dated 28.03.2014 are vitiated and same deserve to be set-aside. - AT Visit to Get Source Customs Refusal to issue customs clearance to the High Alumina Refractory Cement imported - demand for production of BIS certificate for the goods imported by the petitioners - the respondents have not produced such a legislation or Gazette notification issued by the Central Government mandating that the standard established by BIS for IS:15895:2018 shall be compulsorily followed. - HC Visit to Get Source Duty Drawback - non realisation of export proceeds - violation of principles of natural justice - Such legal grounds can be adjudicated by the appellate authority namely the Commissioner of Customs (Appeals) and therefore entertaining the writ petition at this juncture would deprive the litigant from availing the benefit of appellate remedy which is undoubtedly valuable and important. - HC Visit to Get Source Enhancement of declared value - baby garment woolen knitted top - The claim of the importer for coverage of the imported goods under tariff item 6111 30 00 may not, necessarily, have been in conformity with the description in the bill of entry. Nevertheless, it is in consonance with the composition as indicated by testing of the samples; the claimed classification pertains to garments made ‘of synthetic fibres’ which, though wool may not be, ‘polyester’ is nothing but. There was, thus, no reason to allege misdeclaration, either on the count of size or of composition, with the detrimental consequences of revising the rate of duty and the assessable value. - AT Visit to Get Source Indian Laws Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - Even though the accused is required to probabalise his defence to rebut the presumptions, he has failed to do so. Therefore, the accused is liable to be convicted - the trial Court has erred in acquitting the accused ignoring the settled proposition of law on the subject and wrongly placing the burden on the complainant to prove the existence of legally recoverable debt in spite of the accused admitting issuance of the Ex.P.1-cheque with signature. - HC Visit to Get Source IBC Approval of the resolution plan - dissenting financial creditor - order of priority among the creditors as also the priority and value of the security interest of a secured creditor - The extent of value receivable by the appellant is distinctly given out in the resolution plan i.e., a sum of INR 2.026 crores which is in the same proportion and percentage as provided to the other secured financial creditors with reference to their respective admitted claims. - the business decision taken in exercise of the commercial wisdom of CoC does not call for interference - SC Visit to Get Source Service Tax Intent to evade service tax or not - extended period of limitation for demanding of service tax - The focus of the organizations like the respondent-NRSA is definitely not on either resorting to tax evasion or tax planning which would benefit the establishment, but is focused in its core activity of research and assisting the other agencies of Government in various projects. The said fact was completely lost sight by the appellant-Revenue while passing the Order-in-Original, which however, has been rightly taken note by the Tribunal. - HC Visit to Get Source Refund of service tax paid by utilizing the Cenvat credit denied - Retrospective exemption - In the present case while taking the Cenvat credit the output service were not exempted and the Cenvat credit was utilized for the payment of service tax therefore, neither any Cenvat credit was lying accumulated nor the service at the relevant time was provided under exemption particularly issued under section 93 of the Finance Act, 1994. In the present case during the relevant period the services were very much taxable therefore, the availment of Cenvat credit and utilization thereof and also payment of service tax on the output service was correct. Hence, the of sub- rule (4) of Rule 11 of the Cenvat Credit Rules is not at all applicable in the facts of the present case. - AT Visit to Get Source Central Excise Where criminal proceedings ended in acquittal but simultaneous departmental proceedings continued, the result of the criminal proceedings will not have any bearing on the departmental proceedings, as judgment of the criminal Court is not binding in civil or departmental proceedings. However, in the instant case, when the departmental proceedings ended in favour of the accused and moreover, when the prosecution launched is on the same set of facts and allegations, the continuance of prosecution would be gross abuse of process of law. - HC Visit to Get Source Empowerment to deny availment of exemption extended to indigenously manufactured goods - The essence of optimal sourcing being the disregarding of customs frontiers, the enumeration of goods entitled to exemption from duties of customs does not bear replication in the exemption notification under Central Excise Act, 1944 and the condition prescribed therein should not have to be expanded beyond that limited purpose. It would be stating the obvious to point out that domestic procurement is not subject to the same risks or the verification of eligibility so burdensome as to warrant that the facilitative procedures of the notification issued under Customs Act, 1962 be replicated in the notification issued under Central Excise Act, 1944. - AT Visit to Get Source VAT Cancellation of the Sales Tax Eligibility Certificate - Entitlement for sales tax incentive - entitlement to priority industry status - Industrial Policy Resolution 1996 - With the Petitioner satisfying all the requirements of the applicable notifications, there appears to be no justification in the Opposite Parties seeking to revoke the sales tax exemption thereby cancelling the certificate issued for that purpose. - HC Visit to Get Source Case Laws: GST 2021 (6) TMI 686 Permission for withdrawal of application - application is filed without due payment of the fees required to be paid by the applicant and on calling for the said details, the applicant has requested withdrawal of the application - classification of supplies - HELD THAT:- In the case at hand, it is found that the applicant has submitted the form without the proper payment as required under the above rule and when asked to clarify, has requested for withdrawal of the application. As the application cannot be admitted, the request for withdrawal of the application is permitted. Application allowed. 2021 (6) TMI 685 Classification of manufactured goods - Automotive Seating System - classified under CH 87089900 attracting GST @28% or under CH 940199990 attracting GST @18%? - HELD THAT:- It is seen that the chapter heading 9401 covers only seats and parts thereof. So only such items, which constitute as specific parts of a seat such as backs, bottoms, armrests etc can be termed as parts of seats - CTH 8708 covers 'Parts and accessories of Motor Vehicles' and CTH 9401 covers 'Parts of seats of Motor vehicles' - From the definitions, 'parts' are an amount or section which when combined with others makes up the whole of something. Hence part is an essential component of the whole without which the whole cannot be complete or cannot function. It is an integral component of the whole. Accessories are not an essential component without which the whole cannot be complete or function, but it is a component which when added improves the utility, efficiency or appearance of the whole thing. In this case, it is stated that the Track Assembly is fitted to the floor of the car and it enables the forward and backward movement of the seat. The seat is manufactured and is complete before fixing it on the said assembly. The seat is fixed on this track assembly only to facilitate the movement of seat forward and backward. Thus it is clear that the seat and track assembly are two individual, independent products, manufactured separately and fixed together to make the seat movable for a comfortable position of the driver and the front co passenger - the track assembly which only improves the efficiency and convenience of the seat goes to prove that it is not in the nature of 'Parts' of Vehicle seats' and would not merit classification under CH9401. When seats are fixed on the TRACK ASSY it can slide back and forth with the operation of a lever for varying the positions of the seats, which is basically intended to improve the comfort and efficiency of the persons sitting thereon. This mechanism enables the passengers and drivers of the automobile to adjust seat positions for their comfort and convenience. Thus the Track assembly manufactured and supplied by the applicant is an adjunct to the car seat. Therefore, it is clear that the 'Track assembly' is an accessory to the Motor vehicle and is covered under CTH 8708-'Parts and accessories of Motor vehicles' provided the three conditions mentioned is satisfied - the 'Track assemblies' are identified as being suitable for use solely or principally with the Motor Vehicles and the first condition is satisfied - The said goods are not excluded under Section Note 2 to Section XVII, which is the second condition - Track assembly being an accessory which provides add-on-value, in terms of comfort for the driver/front passenger in terms of leg room, seating position, etc is not a 'Part of vehicle seat' as has been arrived at above, and is not specifically mentioned elsewhere in the nomenclature and thereby the third condition is also satisfied - Track assembly being an accessory which provides add-on-value, in terms of comfort for the driver/front passenger in terms of leg room, seating position, etc is not a 'Part of vehicle seat' as has been arrived at above, and is not specifically mentioned elsewhere in the nomenclature and thereby the third condition is also satisfied. Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI VERSUS INSULATION ELECTRICAL (P) LTD. [ 2008 (3) TMI 22 - SUPREME COURT] has decided that Seat assembly cannot be held as 'Parts' meriting classification under Chapter heading 9401, rather they would be accessories to Motor vehicles and would merit classification under Chapter heading 8708 because they are fitted in the motor car for adjustment of the seats for convenience and comfort of the passengers - The case being similar, the Apex Court decision squarely applicable to the case at hand. Thus, the 'Track assembly' manufactured and supplied by the applicant, being accessory of the Motor vehicle, is aptly covered under the CTH 8708- Parts and accessories of the motor vehicles The product 'Track Assembly' manufactured and supplied by M/s. Daebu Automotive India Private Limited, is classifiable under CTH 8708 of the First Schedule to the Customs Tariff Act, 1975 as applicable to GST as per Explanation (iii) to Notification 1/2017-Central Tax (Rate) dt 28.06.2017 and G.O. Ms No. 59, Commercial Taxes and Registration (B1) dt 29th June 2017 - applicable rate of tax is CGST @ 14% as per entry Sl.No.170 of Schedule-IV of the Notification no.1/2017-Central Tax (Rate) dt. 28.06.2017 as amended and SGST @14% as per entry sl. No. 170 of Schedule-IV of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. 29.06.2017 as amended. 2021 (6) TMI 682 Grant of Anticipatory Bail - right to operate the locker - allegation against petitioner is that she operated the locker which was in the name of her husband Sahil Jain and removed certain crucial documents - HELD THAT:- Prime facie, there are serious and specific allegations leveled against the petitioner in the FIR in question for which her custodial interrogation would be imperative, more so, since she allegedly removed crucial documents having a direct link with the proceedings, which were pending against her and her husband under the CGST Act. Petition dismissed. 2021 (6) TMI 681 Seeking release of pending refund of IGST - HELD THAT:- The pre-conditions set out under Rule 96 of the Central Goods and Services Tax Rules, 2017, which are production of certificates and documents such as the export manifest or export refund covering, the number and date of the shipping bill or bills of export and a valid return in Form GSTR 3 or 3B as the case may be, have to be complied with by the assessee concerned. In this case the petitioner appears to, prima facie, have produced the above documents under cover of its communication dated 24.07.2018. In any event, this is a question of fact that would have to be verified by the Assessing Authority - while the legal issue stands decided in favour of the petitioner, let the factual aspect of production of documents in terms of Rule 96 of the CGST Rules be looked into by Assessing Authority and orders passed prior to the next date of hearing on representation of the petitioner dated 17.02.2020. Petition disposed off - List on 15.07.2021. 2021 (6) TMI 676 Seeking Bail - Passing of fake input tax credit - issued fake invoices/bills without receipt of goods - commission of economic offences - Offences under Sections 132(1)(b) 7 (c) of CGST Act, 2017 - HELD THAT:- As the law stands, in such type of offences, while granting bail, the Court has to keep in mind, inter alia, the larger interest of the public and State. The accused is active in creation and operation of the nonexistent business entities for availing and passing of bogus ITC thereby defrauding the state exchequer. Considering the nature and gravity of the accusation, the nature of supporting evidence, availability of prima facie case against the petitioner, coupled with the fact that a huge amount of public money has been misappropriated and also the fact that further investigation of the case is under progress and taking into account the apprehension of the petitioner in tampering with the evidence, in the larger interest of society, the petitioner is not allowed to be released on bail - bail application dismissed. Income Tax 2021 (6) TMI 669 Deduction u/s 54F - AO restricting the claim of the assessee u/s 54F to one flat as against the claim of the assessee for exemption in respect of the entire constructed area received - whether CIT(A) is justified in allowing the exemption claimed u/s 54F when the assessee received multiple flats located on different floors separated by different blocks of a gated community/ apartment complex? - HELD THAT:- As gone through the allotment of apartment, it is clear that some of the Blocks have been allotted fully to the assessee/assessees and some of the Blocks are partially allotted amongst the assessees and developers. Assessee has not submitted any documents or any allotment letter for ascertaining the number of flats allotted to the assessee/assessees by the developers which is root for determining the deduction u/s 54F - CIT(A) s decision is right if the assessee has been allotted a house or more than a house in a Block/Tower as per the decision cited supra. The said blocks consist of more than a floor i.e. 5 floors. We, therefore, remit this file back to the AO for verification for the allotment of flats, which have been allotted to the assessee in a Block/Tower or in different Blocks/Towers. If the AO is found that the assessee has been allotted residential units in more than Blocks/Towers, the AO will recompute the capital gain afresh in the hands of the assessee as per law after providing reasonable opportunity of hearing to the assessee. The assessee is also directed to substantiate its claim u/s 54F by producing necessary documents and avoid unnecessary adjournments. Accordingly, the grounds raised by the revenue are partly allowed for statistical purposes. 2021 (6) TMI 668 Deduction u/s 80IA - Claim restricted to extent of income from business and profession - AO be directed to allow the claim of deduction under section 80IA of the Act against the gross total income - HELD THAT:- The assessee is not eligible to claim the deduction u/s 80IA of the Act. The legislature has clearly spelt out in the deduction provisions that which incomes are eligible to claim deduction u/s 80IA, and therefore, the assessee cannot go beyond the provisions and claim deduction u/s 80IA. The deduction provisions should be interpreted strictly and if there is any ambiguity, it goes to in favour of revenue - See RAMNATH CO. VERSUS THE COMMISSIONER OF INCOME TAX [ 2020 (6) TMI 158 - SUPREME COURT] - Accordingly, the assessee is not eligible to claim deduction u/s 80IA from the income from house property as claimed. Thus, we dismiss the ground no. 1 raised by the assessee on this issue. Disallowance u/s 14A - HELD THAT:- It is a settled position that disallowance of expenditure u/s. 14A read with Rule 8D shall not exceed exempt income earned for the year as per case law Joint Investment Pvt. Ltd.[ 2015 (3) TMI 155 - DELHI HIGH COURT] . The assessee earned exempt income of ₹ 42,35,977/- as per computation of income. Therefore, we direct the AO to restrict the disallowance u/s 14A rwr 8D to ₹ 42,35,977/-. Disallowance u/s 14A rwr 8D(2)(ii) and (iii) - value of investments should be considered only on the investments from which the assessee has earned exempt income - HELD THAT:- As relying on TRANSPORT CORPORATION OF INDIA LTD. [ 2016 (11) TMI 245 - ITAT HYDERABAD] We direct the AO to recalculate the disallowance as per rule 8D as per the above guidance. We further direct the AO if the disallowance u/s 14A is higher in the recalculation made by the AO, the same shall be restricted to the extent of exempt income earned by the assessee as per the case law Joint Investment Pvt. Ltd[ 2015 (3) TMI 155 - DELHI HIGH COURT] Dividend income should be treated as income from other sources is also not correct - Assessing Officer himself has treated it as a dividend income which is exempt and on other hand, he has treated as daily dividend income and taxed under the income from other sources. While recalculating disallowance u/s 14A, we have restricted the disallowance to the extent of exempt earned by the assessee or less than the exempt income, whichever is lower and the same amount cannot be taxed as income from other source, which amounts double taxation in the hands of the assessee. The dividend amount received by the assessee is exempt as per section 10(35) of the IT Act. 2021 (6) TMI 667 Accrual of income in India - Income taxable in India - payments received by the assessee on account of Management Service Fees - Tax Treaty between India and Portual (referred to via protocol attached to Double Taxation Avoidance Agreement (DTAA) between India and Sweden - HELD THAT:- The fact as on date is that the issue in respect of Management Service Fees is well covered in favour of the assessee. The Revenue has preferred appeal before the Hon ble jurisdictional High Court on the substantial question of law on the same issue. That however, the matter has not yet attained finality at the High Court level nor we find any contrary direction given by the Hon'ble High Court in respect of the issue of Management Service Fees vis- -vis the ITAT orders in favour of the assessee. Therefore, it is clear that as on date, the issue decided is in favour of the assessee. Tribunal had analyzed the DTAA between India and Portuguese Tax Treaty rendered to (via protocol) attached to the Tax Treaty between India and Sweden and had held that the payments received by the assessee on account of Management Service Fees cannot be brought to tax in view of the principle of most favoured nation (MFN) clause in the Tax Treaty. In view of the aforesaid discussion, we are of the considered view that Management Service Fees cannot be brought to tax in India. Thus, grounds 1 and 2 are allowed. Tax receipts towards Leadership Training Fee - HELD THAT:- Since the assessee is a Sweden based company and SAPL has its registered office in India, basically they are covered by the India Sweden Tax Treaty. That however, in the said tax treaty, there is a special protocol with respect to the Most Favoured Nation (MFN) clause and there is DTAA entered into between India and Sweden and now the parties of original DTAA agreement between India and Sweden would be governed by the provisions of DTAA between India and Portuguese Republic which they entered into through MFN clause. As assessee submitted that let the matter be remanded to the file of Assessing Officer to re-adjudicate this issue after factual verification as per the legal proposition laid down by the order of the Tribunal [ 2021 (1) TMI 211 - ITAT PUNE] The learned Departmental Representative did not raise any objection. In view of the above facts, we set aside the findings of the DRP on this issue of Leadership Training Service Fees to the file of Assessing Officer to re-adjudicate while complying with the principles of natural justice and as per law as indicated hereinabove. Appeal of the assessee is partly allowed for statistical purposes. 2021 (6) TMI 665 Disallowance of project expenses - Addition on the ground as no project-wise accounting was available and no work-in-progress was reported - Addition towards unsubstantiated project expenses - CIT-A deleted the addition even though the assessee failed to bring any material before the Ld. CIT(A) to substantiate the genuineness of such expenses - HELD THAT:- It is undisputed that addition has been made by the Assessing Officer following the findings of his predecessor and the Learned CIT(A) has also deleted the addition following her predecessor s decision in AY 2012-13 wherein held that on our examination of the method of accounting applied by the assessee, it appears that when the assessee has received billing as per milestone and from the milestone till the close of the year there are no expenditure identified by the Id AO then there cannot be any work in progress in the business of the assessee. The Id AO could not find out that whether there is such expenditure exists or not. It was also not found by the Id AO that the assessee has incurred substantial expenditure. If the milestone before the close of the year. As the assessee is engaged in the business of consultancy services definitely there can be sum over lap of the expenses between two years. However that does not give any rise to the AO to disallow the expenditure @10% and treat it as work in progress. We do not find any reason to deviate from this reason given by the Id CIT(A) in deleting the above disallowance.Appeal of the Revenue is dismissed. 2021 (6) TMI 664 Disallowance on account of investment allowance u/s 32AC - Appellant is a State Government Public Sector Undertaking engaged in the business of generation of electricity - whether electricity is goods ? - WhHELD THAT:- We find force in the written submissions filed by the ld. AR of the assessee. In the case of Vedanta Ltd. [ 2020 (9) TMI 1010 - ITAT DELHI] relying on the judgement of Sesa Goa [ 2004 (11) TMI 14 - SUPREME COURT] and NTPC Ltd [ 2012 (5) TMI 127 - ITAT DELHI] directed the AO to allow the claim of deduction u/s 32AC of the Act. As held generation of electricity is a manufacturing activity decision cited supra, The electricity can be transmitted, transferred, delivered, stored, possessed etc. The Hon'ble Supreme Court in the case of the CST Vs. Madhya Pradesh Electricity Board [ 1968 (11) TMI 85 - SUPREME COURT] has held that electricity falls within the definition of goods under the provisions of Sale of Goods Act, 1930. Therefore, respectfully following the above judgements , we set aside the order of CIT(A) and direct the AO allow the assessee s claim of deduction u/s 32AC of the Act. Accordingly, the ground raised by the assessee on this issue is allowed. 2021 (6) TMI 663 Exemption u/s 54 - reinvestment of long term capital gain in acquisition of both the flats as one residential unit - HELD THAT:- Even though different flat numbers are given, both the flats in Flat No. 802A and Flat No. 802B are adjacent to each other and is a one residential property which has common passage/staircase, common kitchen and common entrance and common amenities as per the project of the builder.The assessee is entitled to claim deduction under section 54 of the Act for the reinvestment of long term capital gain in acquisition of both the flats as one residential unit. Against the alternate plea of the assessee that even if the Department treat the residential unit as two different residential units and the assessee is entitled to claim exemption under section 54 of the Act in view of the decision in the case of CIT v. V.R. Karpagam (supra), we find that even though in V.R. Karpagam's [ 2014 (8) TMI 899 - MADRAS HIGH COURT] , the claim was raised under Section 54F of the Act the said case law would certainly apply to a case under Section 54 of the Act also because a bare reading of Sections 54 and 54F of the Act would reveal that the two provisions are in pari materia with regard to those aspects of provisions of law which we are concerned with in the instant case. While section 54 of the Act deals with capital gains arising out of transfer of buildings or lands appurtenant thereto and being residential house, section 54F of the Act deals with capital gain arising out of transfer of any long term capital asset not being a residential house. Otherwise, in all other aspects of the matter, the two provisions namely sections 54 and 54F are in pari materia. Therefore, the interpretation of 'a residential house' occurring in section 54F cannot be any different for the same phrase 'a residential house' occurring under section 54 of Act. In this regard what applies to section 54F would apply in equal and full force to section 54 also. Therefore, the principles in V.R. Karpagam's case would certainly apply to the facts of the instant case. Thus, we are of the considered opinion that the ld. CIT(A) has rightly directed the Assessing Officer to allow deduction under section 54 of the Act for reinvestment of long term capital gain in acquisition of both the flats. Accordingly, the ground raised by the Revenue stands dismissed. 2021 (6) TMI 662 Taxability of on money - Addition u/s 68 - on-money transactions offered by the assessee‟s group concerns @12% of on-money receipts before the Hon‟ble Income Tax Settlement Commission - HELD THAT:- The issue of on money received by the assessee is proved beyond doubt from the records found during search proceedings and subsequent acceptance by the key personal of the Ahuja group. The issue before us is only consideration of the above said on money to be taxed under section 68 of the Act or Based on the findings of the CIT(A) that receipt of on money has to be taxed only on net income and estimated net income @25% of the gross on money received. Submissions of the assessee that the above said issues are already considered by the Co ordinate Bench in Tulip Land And Developers [ 2021 (2) TMI 1170 - ITAT MUMBAI] and Bhalchandra Trading P. Ltd.[ 2021 (2) TMI 1095 - ITAT MUMBAI] and decided the issue in favour of the assessee in the appeal filed by the assessee and dismissed the issues raised by the Revenue. The assessee had already pleaded that on-money transactions were offered by the assessee‟s group concerns @12% of on-money receipts before the Hon‟ble Income Tax Settlement Commission and the same has been accepted by the Settlement Commission. Hence, the data and information was indeed available with the ld. CIT(A) to have some rational basis to make profit estimation in the hands of the assessee herein by following 12% thereof from the order of Hon‟ble Income Tax Settlement Commission. Accordingly, we direct the ld. AO to add only 12% of on-money receipts as undisclosed income of the assessee for the year under consideration. Accordingly, the ground No.1 2 raised by the assessee is partly allowed. 2021 (6) TMI 661 Disallowance u/s 14A - HELD THAT:- We find that the Co ordinate Bench of the Tribunal in assessee s own case in assessment year 2015 16, has decided the issue of disallowance under section 14A of the Act [ 2021 (2) TMI 608 - ITAT MUMBAI] wherein the issue has been decided in favour of the assessee and against the Revenue. Disallowance of payment for non-compliance with RBI norms on KYC and under Information Technology Act treating the same as falling under Explanation-l to section 37(1) - HELD THAT:- We find that the Co ordinate Bench of the Tribunal in assessee s own case [ 2021 (2) TMI 608 - ITAT MUMBAI] has decided the issue of disallowance under section 37(1) wherein issue has been decided in favour of the assessee and against the Revenue by deleting the disallowance made by the Assessing Officer. Addition of non monetary perquisite in computing book profits under section 115JB - HELD THAT:- We find that the Co ordinate Bench of the Tribunal in assessee s own case [ 2021 (2) TMI 608 - ITAT MUMBAI] decided issue in favour of the assessee and against the Revenue by deleting the disallowance made by the Assessing Officer. Education cess and higher and secondary education cess - whether taxable as the same is covered under section 40(a)(ii) of the Act and accordingly allowable as deduction in computing the income from business or profession - HELD THAT:- We find that the issue raised by way of additional ground is squarely covered in favour of the assessee and against the Revenue by the decision of Sesa Goa Ltd. v/s JCIT, [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] and Chambal Fertilizers Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] . Respectfully following the aforesaid judicial pronouncements, we set aside the impugned order of the learned Commissioner (Appeals) and allow the additional ground raised by the assessee. Disallowance towards year end provision for expenses on which TDS was not deducted - HELD THAT:- We find that identical issue relating to deletion of disallowance towards year end provision for expenses on which TDS was not deducted, has been decided by the Co ordinate Bench in an appeal filed by the Revenue [ 2021 (2) TMI 608 - ITAT MUMBAI] for assessment year 2015 16, decided this issue against the Revenue and in favour of the assessee. Disallowance on account of provisions for expenses and write off - AO added the said amount both under normal provisions as well as under section 115JB - Commissioner (Appeals) observed that the Assessing Officer did not find any justification in deletion of disallowance made by the Assessing Officer and, hence, allowed the claim of the assessee - HELD THAT:- We find that the assessee has debited the amount of ₹ 817,81,448, as part of other provisions for expenses amounting to ₹ 26,80,85,106 in the Profit Loss Account and in the computation of book profit, it has added back the entire amount of ₹ 26,80,81,106 and being shown as provisions and has claimed the deduction of ₹ 817,81,448/-, being in the nature of expenses. We do not find any cogent reason to disturb the findings of the learned CIT(A) in observing that the said amount of ₹ 817,81,448/- is not in the nature of provision but are in the nature of allowable expenditure relating to running of business and relatable risk involved. The write off of loss due to theft of jewellery in one of the branches and write off of various charges relating to loan recovery expenses will fall within the banking business loss / expenses. Therefore, we decline to interfere warranting any interference at the instance of the Revenue. 2021 (6) TMI 660 Addition u/s 68 - unaccounted income - HELD THAT:- As relying on SHRI SHASHIKANT B. MHATRE (HUF) VERSUS INCOME TAX OFFICER 4 (4) , THANE [ 2019 (5) TMI 1846 - ITAT MUMBAI] has decided the issue in favour of the assessee and against the Revenue. Respectfully following the above decision, we allow the appeal filed by the assessee. 2021 (6) TMI 657 Penalty u/s 271(1)(c) - proof of concealment of income - HELD THAT:- Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by different High Courts as well the decision of the Co ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law. Even the learned Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the Commissioner (Appeals) was indeed justified in directing the Assessing Officer to delete the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty. Consequently, we uphold the order passed by Commissioner (Appeals) by dismissing the grounds of appeal raised by the Revenue. 2021 (6) TMI 656 Penalty u/s 271(1)(c) - Disallowance u/s 69C - HELD THAT:- Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the learned Commissioner (Appeals) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty. - Decided against revenue. 2021 (6) TMI 654 Penalty u/s 271(1)(c) - concealment of particulars of income or furnished inaccurate particulars - HELD THAT:- AO imposed penalty u/s 271(1)(c) of the Act on estimation basis without adducing any evidence on record for concealment of income. Penalty u/s 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. - Decided against revenue. 2021 (6) TMI 653 Addition of sales of flats - suppression of sale price of the flats in order to evade the tax - HELD THAT:- Except drawing inferences on the basis of the documents, AO did not refer to the prevailing market prices in the vicinity so as to conclude that there is an attempt to reduce the sale consideration for the sole purpose of evading the tax. No material was produced before the CIT(A) to reach a conclusion as to the actual cost of the plot in competition with the prevailing market value. In respect of this flat also, AO requires to make enquiry as to the prevailing market value of the plot vis- -vis the figures mentioned in the documents. Now coming to the omnibus additions made by the learned AO for all the 3 years, basing on these documents relating to 2 flats, AO while stating that there was understatement of the cost of the flats by 36% and 26.5% respectively the average of which comes to 24.5%, extrapolated the same in respect of all the sales of plots that took place between the assessment year 2009-10 and 2011-12. It remains an admitted fact that insofar as the other flats are concerned no material whatsoever, much less incriminating material is forthcoming. It is only the imagination of the AO that merely because there appears to be understatement in respect of one or 2 flats the same must have occurred in respect of all. Absolutely there is no material to support such an extrapolation of the inferences drawn by the learned Assessing Officer basing on the documents relating to two flats, to all the sales that took place for long three years. The maxim Falsus in uno and falsus in omnibus has an obligation in India and it has not received any acceptance or approval by the higher courts. It is therefore clear that the action of the AO in calculating the so-called understatement of the cost of the flats for all the 3 years and making addition is accordingly cannot be justified. Additions made by the AO in respect of all the sales that took place in all the 3 years cannot be sustained. While setting aside the impugned orders, we restore the issue for verification of the actual cost of the flats Nos. A-601 and A-802 with reference to the prevailing market value vis- -vis the figures mentioned in the seized documents. Assessee is free to put forth their contentions on these documents before the learned AO and the learned AO will take a fresh view in respect of those two flats alone. - Appeals of the Revenue are allowed for statistical purpose. 2021 (6) TMI 648 Reopening of assessment u/s 147 - unexplained cash payment - Two notices issued u/s 148 - whether the AO can issue second notice u/s 148 and initiate fresh reassessment proceedings before completion/conclusion of proceedings initiated by way of first notice u/s 148 either by way of dropping the first reassessment proceedings or completing the proceedings by passing the reassessment order u/s 147? - HELD THAT:- Both the notices u/s 148 have been served on the assessee and the assessee has in turn responded to these two notices individually vide his letter of even date 21.01.2015 and has filed his objections to the reasons so recorded by the Assessing officer. It is therefore not in dispute that both these notices u/s 148 have been issued by the AO and duly served on the assessee and thus, two separate proceedings have been initiated by the AO u/s 147 by virtue of these two separate notices issued u/s 148 carrying separate reasons in respect of independent transactions of purchase of property by the assessee and stating as to why the AO has formed the belief that income has escaped assessment. There is nothing on record that the AO has disposed off the objections so raised by the assessee and dropped the first reassessment proceedings either by way of passing a specific order or even by way of any noting in the ordersheet and in absence thereof, it cannot therefore be presumed that such proceedings have been concluded by the AO - AO has issued a fresh notice u/s 148 basis fresh reasons cannot by implication be read and held as conclusion of first reassessment proceedings. We therefore find that it is a case where pending conclusion of the first reassessment proceedings, fresh reassessment proceedings have been initiated which cannot be sustained in the eyes of law and on this reason alone, the present reassessment proceedings initiated by way of notice u/s 148 dated 28.03.2014 are vitiated and same deserve to be set-aside. Non-disposing off objections raised by the assessee before the AO - The fact that the assessee has raised his objections against such reassessment proceedings is a matter of record and we find that the AO has not disposed off the said objections by way of passing any specific order and has proceeded ahead by way of issuing a show-cause calling for further information/clarification and passing the reassessment order. The said act of the AO is in clear violation of the law declared in case of GKN Driveshaft India [ 2002 (11) TMI 7 - SUPREME COURT ] and in case of K.C Mercantile Ltd [ 2017 (11) TMI 1915 - RAJASTHAN HIGH COURT ] . Therefore, on account of non-disposing off the objections raised by the assessee, the present proceedings are again vitiated and deserves to be set-aside. Unexplained investment in land - capital gains so offered by assessee s HUF - CIT(A) has deleted the addition on account of capital gains in the hands of the assessee on compulsory acquisition of such land by RIICO holding that the capital gains has been declared and accepted by the Revenue by way of assessment order passed u/s 143(3) in the hand of appellant s HUF and therefore, the same cannot be taxed in the hands of the assessee in his individual capacity. And on perusal of the computation of capital gains of ₹ 87,91,732 so offered by assessee s HUF, we find that the assessee HUF has claimed the aforesaid amount of ₹ 50 lacs towards purchase of land besides other costs and which has been accepted and allowed by the AO while assessing the capital gains in the hands of assessee s HUF. Therefore, where the investment has been claimed and allowed as the cost in the hands of the assessee s HUF, any addition towards the source of such investment, where remain unexplained, can be made in the hands of assessee s HUF and not in his individual capacity. Further, we also note that the assessee has explained the source of such investment by way of will dated 20.03.2003 executed by assessee s father containing the fact that the amount of ₹ 50 lacs has been handed over by his father to him for purchase of land, and the source of such funds is the agriculture income and past savings of his father and which is reasonably demonstrated by the Jamabandi of the land holdings of the his late father. Therefore, even on merits, the addition so made and sustained by the ld CIT(A) is directed to be deleted. - Decided in favour of assessee. 2021 (6) TMI 645 Extension of time to dispose of the appeal pending before the tribunal - HELD THAT:- This is a matter moved by the revenue seeking extension of time to dispose of the appeal pending before the tribunal while the same could not be decided within stipulated period pursuant to order dated 20th January, 2021. Several aspects are being referred to by the learned Counsel for revenue. Having regard to the aforesaid, we deem it appropriate to extend the period by a further period of three months from today. Rest of the conditions to continue unaltered. Customs 2021 (6) TMI 683 Refusal to issue customs clearance to the High Alumina Refractory Cement imported - demand for production of BIS certificate for the goods imported by the petitioners - HELD THAT:- According to the scheme of the BIS Act and its Rules, the Bureau of Indian Standards is a National Standard Body having technical expertise to establish national standards for goods or articles, process, system or service etc. and it by itself has no power to enforce the implementation. On the other hand, the standards fixed under Section 10 by the Bureau, have to be notified by the Central Government and thereafter, if it considers that the standards established in respect of goods and articles mentioned in Section 14 or Section 16 shall require compulsory conformity, the Central Government shall make a legislation or issue specific order in that regard. Notification dated 14.05.2018 was issued in terms of Rule 7(1)(b) of the Bureau of Indian Standards Rules, 1987. Under Rule 7(1)(a), the Bureau is obligated to establish Indian standards in relation to any article or process and it can amend, revise or cancel the standards so established. As per Rule 7(1)(b), all standards, their revisions, amendments and cancellations shall be established by notification in the Official Gazette. So, in terms of Rule 7(1)(b), the standard earlier established in the year 2011 for IS:15895:2011 HARC was revised on 09.05.2018 and the same was notified in the Official Gazette by the Central Government. As per Rule 7(7)(b), this establishment of standard is only voluntary to make it available to the public, but its conformity is not mandatory unless it is referred to in a legislation or so pronounced by a specific order of the Government. As rightly contended by the learned senior counsel for the petitioners, the respondents have not produced such a legislation or Gazette notification issued by the Central Government mandating that the standard established by BIS for IS:15895:2018 shall be compulsorily followed. Hence, the notification dated 14.05.2018 will not advance the contention of the respondents. For the same reason, another contention of the respondents that the standard specification notification issued by BIS should be deemed to be part of Appendix III of Import Policy and thereby, the import of HARC shall be supported by BIS certification cannot be accepted. The respondent authorities are not legally justified in demanding production of BIS certificate for the goods imported by the petitioners in both the writ petitions - Petition allowed - decided in favor of petitioner. 2021 (6) TMI 675 Duty Drawback - non realisation of export proceeds - violation of principles of natural justice - HELD THAT:- This Court is of the considered opinion that even in such circumstances the grievances if at all exists the same can be exhausted by filing an appeal before the appellate authority under the provisions of the Customs Act. The introductory paragraph of the impugned order states that an appeal against the order lies with the Commissioner of Customs (Appeals), Custom House, 5 th floor, Chennai 600 001, under Section 128(1) of the Customs Act, 1962, within 60 days of communication of this order. Thus the petitioner is very much aware of the appellate remedy contemplated and such an appellate remedy is also informed to the petitioner even through the impugned order. However without exhausting the appellate remedy the present writ petition is filed by merely stating that the respondent has violated the principles of natural justice. Such legal grounds can be adjudicated by the appellate authority namely the Commissioner of Customs (Appeals) and therefore entertaining the writ petition at this juncture would deprive the litigant from availing the benefit of appellate remedy which is undoubtedly valuable and important. Petition dismissed. 2021 (6) TMI 672 Valuation of imported goods - Toyota Landcruiser - misdeclaration of goods by concealing evidence - Confiscation of goods - Penalty - HELD THAT:- It is clear from the conditions specified in public notice no. 3 (RE-2000)/1997-2002 dated 31st March-2000 of Director General of Foreign Trade that endorsement of no sale for two years was to be recorded by the competent authority in the registration certificate of the vehicle. The appellant, having entered into lease agreement with the importer, cannot be said to be ignorant of such condition. Nonetheless, we are unable to concur with the findings of the lower authorities that no sale restriction has been breached by taking possession of the vehicle on lease. The distinction between sale and lease is not only substantive but also legally unassailable - the appellant cannot be held liable as a willful participant in breaching conditions of import. Consequently, the penalty on the appellant does not sustain. Demand of differential duty - HELD THAT:- There is no doubt that the differential duty confirmed by the lower authorities under section 28 of Customs Act, 1962 cannot be fastened on the appellant as a substitute for the importer. Confiscation for misdeclaration of value - alleged breach of condition of no sale - HELD THAT:- Though the relative gravity of each has not been mathematically determined, the lack of challenge to the former in the present proceedings precludes erasure of confiscation under section 111 of Customs Act, 1962 and, thereby, retains fine, even in the lack of segregation, for redemption. In this peculiar circumstance of challenge restricted to one of the grounds of confiscation coupled with the absence of appeal by the person affected by the other, it would be inappropriate for us to contemplate alteration of the fine. In view of our findings supra, the appeal is allowed to the extent of setting aside the penalty imposed on the appellant with the clarification that the appellant may not be subjected to recovery proceedings for differential duty, redemption fine or penalty that devolves on the importer. 2021 (6) TMI 671 Valuation of imported goods - baby garment woolen knitted top - baby garments woolen knitted jacket - change in classification - classification be revised from tariff item no. 6111 30 00 to tariff item no. 6106 20 10 and tariff item no. 6203 33 00 of First Schedule to Customs Tariff Act, 1975 respectively or not - enhancement of declared value - HELD THAT:- The classification for baby woolen tops and baby woolen jackets , adopted by the importer, appeared to have been discountenanced by the Textile Committee for two reasons: that the articles were made of polyester fibre, and not of wool as described in the bill of entry, and that visual examination by the Textile Committee found these to be intended not for babies but for girls and boys. The boys jackets , found not to be knitted, was sought to be fitted within chapter 62 of First Schedule to Customs Tariff Act, 1975. On these bare facts, the defensibility of the conclusions may not offer cause for quarrel. The tariff schedule, however, is no streetside smorgasbord. Chapter 61 and 62 of the First Schedule to Customs Tariff Act, 1975 enumerate groupings of apparels designed for human wear and, under the broad categorisation as knitted/crocheted and those that are not, save for a single exception which is not material to this dispute, as mutually exclusive. In both, distinction of gender is the consistent dichotomy; the stages of human life though, are reduced to three in the interest of eliminating controversy - The claim of the importer for coverage of the imported goods under tariff item 6111 30 00 may not, necessarily, have been in conformity with the description in the bill of entry. Nevertheless, it is in consonance with the composition as indicated by testing of the samples; the claimed classification pertains to garments made of synthetic fibres which, though wool may not be, polyester is nothing but. There was, thus, no reason to allege misdeclaration, either on the count of size or of composition, with the detrimental consequences of revising the rate of duty and the assessable value. As the declaration is not in question as far as the goods for which bill of entry had been filed is concerned, the order for recovery of differential duty and confiscation of goods as well as imposition of penalty does not have the authority of law and must be set aside - Appeal allowed in part. Corporate Laws 2021 (6) TMI 659 Oppression and mismanagement - seeking extension of the term of appointment of P2 as Joint Managing Director and R2 as Managing Director of R1 for a period of three years - revival of one division - HELD THAT:- The Company is managed by the Board of Directors and overall there is representation for all the groups for a quite long time. However, the three divisions were micro managed by the respective groups - two of the divisions were doing well and one division is not doing well. However, the overall management is under the control of Board of Directors only and the Board is also conscious of the profitability or otherwise of each division and the Board has taken conscious decision then and there in the interest of the company. As far as the Gujarat Division is concerned, since it is not performing well, it cannot be solely attributable to the group which is managing the Gujarat Division. We have noticed that the Board is in full and effective control of all the divisions. However, the management of the Gujarat Division is not getting the required funds and hence, they have to go for high cost external borrowings and that has consistently contributed to the business losses. Already the division has not been doing well and the high cost of borrowing aggravated the situation. It is evident that the Board has asked for revival plan of the Gujarat Division. Apparently, the plans submitted by the Gujarat Division (meaning Kamdars) did not find favour with the Board. Nothing prevented the Board to formulate a revival plan for the Gujarat Division and give directions to the Gujarat Management to put things in order. The problem which we perceive is that the divisions were treated as companies within a company and while the Board took credit for profitable units, it blamed the local management for losses, without initiating proper remedial measures though empowered to do so. Whether the company is a quasi-partnership or not, cannot be decided at the interim stage. The prayers made in CA No. 1008 of 2020 are based on facts relating to the averments made in the Company Petition alleging oppression and mismanagement. Therefore, at this interim stage entire gamut of the allegations and counter-allegations cannot be gone into nor would it be prudent to do so. It is settled that reliefs which can be granted in the main Petition/Suit cannot be granted at the interim stage - the Board is empowered to take all decisions for setting things right in the Gujarat Division but without disturbing the present management pattern/directorship/shareholding of R1, as observed in the order dated 06.04.2018. There are no merits for the reason the Board is competent to take all tactical business decisions for revival of the Gujarat Division - application dismissed. 2021 (6) TMI 655 Oppression and mismanagement of the minority shareholders - Tribunal has not given any findings on the aspect - seeking urgent directions for appointment of an Interim Board of Management in the 1st Respondent Company - HELD THAT:- There appears to be deadlock between both the groups specially with the resignation of Dr. Errol Pinto from the Board of Directors and the Board now has 8 Directors split into 2 groups of 4 each, as seen from the Meeting dated 27.02.2021 the Chairman could not be elected and no other matters were discussed or approved. In fact, it is significant to mention that the Appellants together with the Applicant are contending that the group led by Dr. K. Mukund is falsely claiming that the Financial Statements for the year ending 2018-19 has been approved by the Board. It is also pertinent to note that the Applicant and Appellants made a request to the Auditor not to accept the fabricated Minutes and unapproved accounts of Auditing. In the light of this deadlock and taking into consideration that it is a Hospital and specially keeping in view that the Hospital is involved in the critical care of patients, pertinently in today s scenario, it can be concluded that such a deadlock is unhealthy both for the Companies, its shareholders and in the public interest and for all the aforenoted reasons, we allow this Application and direct the parties to file a Panel of three names/persons within 10 days - application allowed. Insolvency & Bankruptcy 2021 (6) TMI 684 Approval of the resolution plan - dissenting financial creditor - order of priority among the creditors as also the priority and value of the security interest of a secured creditor - Section 62 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As regards the process of consideration and approval of resolution plan, it is now beyond a shadow of doubt that the matter is essentially that of the commercial wisdom of Committee of Creditors and the scope of judicial review remains limited within the four-corners of Section 30(2) of the Code for the Adjudicating Authority; and Section 30(2) read with Section 61(3) for the Appellate Authority. The NCLAT was right in observing that such amendment to sub-section (4) of Section 30 only amplified the considerations for the Committee of Creditors while exercising its commercial wisdom so as to take an informed decision in regard to the viability and feasibility of resolution plan, with fairness of distribution amongst similarly situated creditors; and the business decision taken in exercise of the commercial wisdom of CoC does not call for interference unless creditors belonging to a class being similarly situated are denied fair and equitable treatment. The extent of value receivable by the appellant is distinctly given out in the resolution plan i.e., a sum of INR 2.026 crores which is in the same proportion and percentage as provided to the other secured financial creditors with reference to their respective admitted claims. Repeated reference on behalf of the appellant to the value of security at about INR 12 crores is wholly inapt and is rather ill-conceived - It needs hardly any emphasis that if the propositions suggested on behalf of the appellant were to be accepted, the result would be that rather than insolvency resolution and maximisation of the value of assets of the corporate debtor, the processes would lead to more liquidations, with every secured financial creditor opting to stand on dissent. Such a result would be defeating the very purpose envisaged by the Code; and cannot be countenanced. Appeal dismissed. 2021 (6) TMI 658 Application to consider Proof of claim along with condonation of delay before the Adjudicating Authority - grievance of the Appellant is that when the Adjudicating Authority passed the Impugned Order it did not take into consideration and include the claim made by the department for Operational dues - HELD THAT:- The Appellant was required to file claim in terms of IBC provisions but did not follow the procedure as laid down in the IBC read with the Regulations and did not duly file claim in proper format within time. Even when the time was over and the Appellant department was advised by the Resolution Professional to get delay condoned by moving Adjudicating Authority, the department instead of resorting to Section 60 of IBC and other enabling provisions only sent a letter, further with a wrong Format, that too addressed to Adjudicating Authority - The Learned Counsel for the Appellant has not been able to show anything that the Application as such was filed or was registered or taken up with the Adjudicating Authority for consideration on the judicial side. Sending off a letter cannot be said to be in compliance with Part III of NCLT Rules, 2016, or Section 60 of IBC or the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 or the Regulations. There are no fault with Respondent No. 1 for not including such operational debt so as to be part of the Resolution Plan as necessary procedure was not followed. In IBC delay affects maximization of Value, and time bound steps for CIRP are prescribed. Reversal of stages, affects progress. Timely and duly taking steps by all stakeholders is material - appeal dismissed. 2021 (6) TMI 652 Substitution of Legal Heirs in the appeal, on the death of original appellant - defaults were committed by the Corporate Debtor in repayment of financial facilities availed from the Applicant Bank - HELD THAT:- Considering the defaults committed by the Corporate Debtor in its repayment obligation, the applicant bank invoked the securities provided by the Corporate Debtor and its promoters. After invocation of securities, the Applicant Bank took actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and took symbolic possession of the Land in question along with Bank of Baroda on 22.09.2015 in accordance with Section 13(4) of the Act read with Rule 9 of the Security Interest (Enforcement) Rules, 2002. After this verification, it became absolutely clear to the Applicant Bank that the Corporate Debtor has no right over the said Land anymore and hence the said Land does not fall under the category of assets of the Corporate Debtor . Accordingly, the Applicant Bank requested the RP to hand over the Land to the Applicant Bank and not to the Corporate Debtor - the Applicant has decided to file the application seeking clarification of the Judgment dated 03.03.2021 in respect to the Land in question. Hence, the Applicant is filing the present application. There is urgency in the matter, as the RP is due to handover the Land to Corporate Debtor on 24.04.2021, who have no right and title over the property. The land does not form part of the Assets of the Corporate Debtor, and hence it is not liable to be returned to the Corporate debtor - Appeal not maintainable and is dismissed. 2021 (6) TMI 651 Financial Creditors claiming to be part of CoC - Financial Creditors claimed to be assignees of financial debt - It is claimed that the Appellants would constitute 68% of the CoC and thus they have an important stake involved - HELD THAT:- It appears that there are various disputes raised including issues relating to the admission of the claim of the Appellants are the issues. It also appears from Company Appeal (AT) (Insolvency) No. 385 of 2021 that the Interim Resolution Professional (IRP) had rather recorded that there were dues and recoverables from the Appellant. It also appears that there is dispute regarding the Appellants to be related parties. All these issues are yet to be decided one way or the other by the Adjudicating Authority. It would not be appropriate for us to entertain the present appeals against the impugned orders as stated above, on the basis that holding of CoC should have been stayed. When the Corporate Insolvency Resolution Process has already consumed so much of time considering the objects of the Insolvency and Bankruptcy Code, 2016, it would not be appropriate to stay the holding of meetings of the CoC. The Counsel for the Appellants claim that now the Applications before the Adjudicating Authority are fixed on 11th June, 2021. They request that the direction may be given to the Adjudicating Authority to decide the applications one way or the other on 11th June, 2021 - It was also claimed by the Learned Counsel for the Appellants that the CoC meeting has been held on 23rd May, 2021 and even if any further meetings take place whatever they decide should be subject to outcome of the applications filed by the Appellants. Although the Learned Counsel for the Appellants making such request, it is not necessary for us to deal with this particular subject as it remains matter of law to be looked into at appropriate stage. Appeal disposed off with a request to the Adjudicating Authority to consider and decide the applications which are pending at the earliest so that the Corporate Insolvency Resolution Process continues smoothly. 2021 (6) TMI 650 Payment of LCs were made by debiting the Cash Credit Account - GST refund - adjustment of the said amount to settle the liability on account of the LCs opened during pre-CIRP period - HELD THAT:- The agenda reveals that the Members of the PNB (Appellant herein) has agreed to revert the aforesaid amount. There are no illegality in the impugned order passed by Ld. Adjudicating Authority, National Company Law Tribunal, Special Bench, Chennai - appeal dismissed. 2021 (6) TMI 649 Approval of Resolution Plan by Adjudicating Authority - One Time Settlement already approved - whether Section 29A of IBC will be applicable with retrospective effect in Section 10 proceedings which were initiated prior to Section 29A coming into force and to decide the issue and any other question of law? - HELD THAT:- There is no doubt that at the time when Mr. Wig submitted the One Time Settlement to the Bank, which was converted by Respondent No.2 with the help of Appellant as a Resolution Plan, he could not have done so. The arguments of Respondent No.2 show that it had already approved the OTS of Mr. Wig on 27th March, 2018. It also appears that Mr. Wig had already paid ₹ 103 Lakhs to the Bank. This can be seen from the Impugned Order where it has referred to the compliance with Regulation 38 of CIRP Regulations in Para 14.1 of the Impugned Order. Thus, what appears is that the OTS was already approved by the Respondent No.2 Bank, which was the only Financial Creditor and thus the actions taken on 5th April, 2018 in third COC and 20th April, 2018 were only completion of formalities. The subsequent introduction of Section 240A of IBC and subsequent taking of certificate of being MSME will not cure the ineligibility at the time of submitting OTS-cum-Resolution Plan which was not permissible. The said Resolution Plan submitted by Mr. Wig could not have been acted upon and the Appellant erred in presenting the same before COC - matter is remitted back to the Adjudicating Authority. The Adjudicating Authority is required to pass Orders of liquidation of the Corporate Debtor under Section 33 of the IBC - Appeal allowed by way of remand. 2021 (6) TMI 647 Eligibility of Related Party to submit Resolution Plan - It is claimed by the Appellant that during the Corporate Insolvency Resolution Process of the Corporate Debtor, Respondent No.2 filed a resolution plan - Respondent No.2 is a a related party of Respondent No. 3 or not - Appealable order or not - Section 29A of IBC - HELD THAT:- Respondent No. 1 s claim that the retirement deeds should be accepted as Section 29A of IBC does not envisage any inquiry in the authenticity of retirement deeds is not sustainable because the retirement deeds have been, at the first instance, being disputed by the Appellant and the Appellant has placed documents in the form of GST and Income Tax returns which point towards the discrepancy in the retirement deeds. Moreover, none of the Respondents have disputed the GST and Income Tax returns, which are matters of public record. In the face of these documents the alleged retirement deeds appear suspect - it is seen that the Income Tax return for the Assessment Year 2018-19 filed by Tejinder Singh Kocher on behalf of M/s Prabh Films (attached at page 136 of the Appeal) include the name of Bhupinder Singh Mann as a partner of Prabh Films (pg. 139 of the Appeal). It is filed on 13.8.2018, much after 31.10.2017, the alleged date of retirement as claimed by Respondent No. 3. Similarly, the Income Tax return for the Assessment Year 2019-20 filed on behalf of M/s. Prabh Films by Tejinder Singh Kocher on 29.8.2019 includes the name of Bhupinder Singh Mann as a partner (attached at pages 192-193 of the Appeal). Tejinder Singh Kocher (Respondent No. 2) and Bhupinder Singh Mann (Respondent No. 3) were connected parties as per Section 29A of IBC at the time the Resolution Plan was submitted by the Respondent No. 2. This leads to the obvious and inevitable conclusion that Tejinder Singh Kocher was not eligible to submit the Resolution Plan and hence the Resolution Plan so submitted and approved by the Adjudicating Authority was bad in law. The Resolution Plan is rejected as it was submitted by a person hit by Section 29A of IBC. 2021 (6) TMI 646 Liquidation of Corporate Debtor - resolution of MSME - Corporate Debtor fall under the category of the MSME or not - Section 240 A of the IBC - eligibility of MSME to participate and submit a scheme, to avoid liquidation of the Corporate Debtor - HELD THAT:- From the perusal of the extracts of minutes it is seen that the Financial Creditors and the Appellant, the liquidator have participated in the meeting and resolved that the Promoters may submit the scheme and the scheme should be preferred over liquidation - In view of the discussions in the fourth Stakeholders meeting, the liquidator, before the Learned Adjudicating Authority seeking the permission of the Authority to allow this scheme of the Appellant. However, the Learned Adjudicating Authority passed the impugned order. It is settled law that the liquidation is only the last resort and as per the preamble of the IBC the main object of the Code is in resolving corporate insolvencies and not the mere recovery of monies due and outstanding - The Appellant being eligible to submit a scheme by virtue of an amendment to Section 7 of Micro, Small and Medium Enterprises Development Act, 2006 vide notification dated 01.06.2020. The Appellants are allowed to submit a scheme of arrangement to the liquidator of the Corporate Debtor and the liquidator shall consider the scheme of arrangement in accordance with the law - appeal allowed - decided in favor of appellant. Service Tax 2021 (6) TMI 680 Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - only part payment of amount declared - HELD THAT:- The petitioner cites the difficulties caused by the on-going COVID-19 pandemic to justify the delay in making the remittances. As far as W.P.Nos.14451 and 14497 of 2020, wherein Form 3 has been issued on 27.12.2019 and the 30 day period available for remittance is till January, 2020, the reliance upon the pandemic would not come to the aid of the petitioner. As far as W.P.No.14454 of 2020, wherein Form 3 has been issued on 27.02.2020 and time was available till the end of March, 2020, the lock down that was imposed on 25.03.2020 may come to the aid of the petitioner. W.P.Nos.14451 an 14497 of 2020 are dismissed - List W.P.No.14454 of 2020 on 21.06.2021 for further hearing. 2021 (6) TMI 679 Intent to evade service tax or not - activities during the period 16.07.2001 to 31.03.2005 - advances received during the period 16.06.2005 to 31.12.2005 - justification for invocation of extended period of limitation for demanding of service tax, as contended? - HELD THAT:- The respondent had applied and obtained registration under various categories of services as guided by the authorities of the appellant-Revenue. It is also evident that the authorities, who informed the respondent that its activities would get covered by photography service, scientific or technical constancy service and commercial training and coaching service etc., are guided by Revenue considerations alone and they have not kept in mind the nature of activity undertaken by the respondent- NRSA and area of operation of its activities, apart from the important role it plays in the affairs of this nation. The appellant-Revenue authorities initially directed the respondent-NRSA to obtain registration under the three categories which was duly adhered to by obtaining registration on 14.02.2005. Upon obtaining registration, the appellant-Revenue saddled the respondent-NRSA with the show cause notice for the period prior to registration by invoking the provisions of Section 73(1)(a) of the Finance Act. To justify the action of invocation of extended period of limitation, it has been stated that since, the respondent has been rendering taxable service and failed to observe statutory provisions for registration and payment of service tax, there was suppression of material fact - the Tribunal held that the extended period of limitation cannot be invoked in this case and the demand if any, can only be survived within the normal period of limitation. There is no incentive for the respondent-NRSA to resort to evasion of tax which could result either in the profits soaring higher or any individual being benefited. On the other hand if there existed a liability, the respondent could have factored the same in its budget proposals and sought for release of more funds from the Government to discharge its liability. Thus, it is only flow of funds from one pocket to the other pocket of the Government and would not result in any gain either to the organization or to any individual. In this view of the matter, it is absurd to even suggest that the respondent had suppressed facts with an intent to evade payment of tax, and mulct it with payment of service tax by invoking the extended period of limitation. The focus of the organizations like the respondent-NRSA is definitely not on either resorting to tax evasion or tax planning which would benefit the establishment, but is focused in its core activity of research and assisting the other agencies of Government in various projects. The said fact was completely lost sight by the appellant-Revenue while passing the Order-in-Original, which however, has been rightly taken note by the Tribunal. This court is of the view that in the given facts and circumstances, the Tribunal has given cogent reasons for holding that the extended period of limitation under Section 73(1)(a) of Finance Act, 1994 would not be invocable - the order of the Tribunal waiving all penalties by invoking Section 80 of the Finance Act, is also rightly justified. Appeal dismissed. 2021 (6) TMI 673 Refund of service tax paid by utilizing the Cenvat credit denied - denial on the ground that the output service was exempt under section 102 of Finance Act, 1994 - refund of interest - HELD THAT:- The learned Commissioner (Appeals) held that reversal of Cenvat credit under Rule 6 of Cenvat Credit Rules, 2004 would not arise. Despite this clear finding the learned commissioner (Appeals) denied the refund on the ground that it will lead to double benefit once through availment of Cenvat credit and another through refund of service tax which is not permissible at all. With the above finding it is settled that Rule 6 shall not apply in the present case. The revenue also not challenged this finding therefore, it attains the finality. Now the issue remains to be decided that when the output services has been exempted retrospectively with a rider that whatever duty was paid to be refunded to the assessee, whether the service tax paid through utilization of Cenvat credit should be refunded or otherwise. During the relevant period i.e. 01.04.2015 to 29.02.2016 the output services were very much taxable - The appellant was legally entitled for the Cenvat Credit on the input service received from the sub- contractors and used in providing the output service. As per the plain reading of section 102 legislature knowing well that service tax on the construction service obviously paid not only on cash but also by utilizing the Cenvat credit on input service. With this clear understanding provision of refund of service tax paid on output service was also provided in section 102. There is no provision to given a different treatment of service tax paid on output service that whether the entire service tax was paid from cash or partly paid from cash and partly from Cenvat credit. Therefore, in whatever manner the service tax paid irrespective partly from cash and partly from Cenvat credit, total tax paid by the assessee was mandated to be refunded to the service provider. Also, the provision of Rule 11 of the Cenvat Credit Rules, 2004, is applicable only in the case where the assessee has taken the Cenvat Credit on Input Service and the said credit is lying unutilized and the output service became exempted - In the present case while taking the Cenvat credit the output service were not exempted and the Cenvat credit was utilized for the payment of service tax therefore, neither any Cenvat credit was lying accumulated nor the service at the relevant time was provided under exemption particularly issued under section 93 of the Finance Act, 1994. In the present case during the relevant period the services were very much taxable therefore, the availment of Cenvat credit and utilization thereof and also payment of service tax on the output service was correct. Hence, the of sub- rule (4) of Rule 11 of the Cenvat Credit Rules is not at all applicable in the facts of the present case. Thus, in the present case there is no dispute in availment of Cenvat credit at the time of receipt of input service. Therefore, subsequent exemption by virtue of section 102 of Finance Act, 1994 will not make disentitle the appellant from the said Cenvat credit. Refund of interest - HELD THAT:- The said interest was paid on the service tax which is refundable under Section 102. When there is no levy of service tax the government cannot retain the interest paid on such non levy therefore, even though it is not specifically provided under Section 102. The interest paid on the service tax which is to be refundable is nothing but a piggy back of refundable service tax. Hence, the same is eligible for the refund to the appellant. The appellant is entitled for the refund of service tax paid through Cenvat credit and also the interest paid for delay in payment of service tax - appeal allowed - decided in favor of appellant. 2021 (6) TMI 666 100% EOU - Refund of unutilized CENVAT Credit - invoices in terms of Rule 4A of the Service Tax Rules, 1994 - HELD THAT:- The appellant is a 100% EOU and have availed various input services in the course of providing their output service. Denial of credit on account of non-availability of registration details of input service providers - HELD THAT:- It is seen from the order of the Commissioner (Appeals) that the credit of ₹ 67,446/- had been rejected for the reason that invoice copies do not contain the registration no. of the service provider - On perusal of the documents, it is seen that the registration details of the input service provider were available and therefore, the rejection of refund on the ground of non-availability of registration No. in the invoices is not maintainable. Consequently, refund amounting to ₹ 67,446/- covered by such input service invoices, are allowable. The appellants are eligible for the refund - Appeal allowed - decided in favor of appellant. Central Excise 2021 (6) TMI 677 Clandestine removal - cut tobacco - evidence to establish the guilt of the petitioners regarding evasion of excise duty or clandestine removal of goods, present or not - criminal proceedings ended in acquittal but simultaneous departmental proceedings continued - HELD THAT:- On a perusal of the complaint, it is to be noted that the averments therein are verbatim repetition of the averments in the show cause notice dated 05.12.1995. There cannot be any doubt that departmental proceedings and criminal prosecution can be initiated simultaneously. It is settled law that there cannot be any hard and fast rule as to whether the criminal proceedings have to be quashed after departmental proceedings are concluded in favour of the accused. It depends upon the fact situation arising in each case. The appeal has been allowed vide order dated 26.12.2013 by the CESTAT giving a clean chit to the accused - it was categorically held that the lower authority has not given any reasons to impose penalty on the accused and there is no evidence to that effect. The order of the appellate authority has attained finality. Thus, continuance of prosecution against the petitioners under self-same allegations contained in the departmental proceedings is an exercise in futility. In view of the fact that the Commissioner (Adjudication), directed the department to initiate further proceedings in law for time being in force, as the accused company was found to have evaded payment of duty under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11-A of the Act and confiscation was ordered and penalty was levied under the relevant Rules - It is settled law that the standard of proof in criminal proceedings is higher than the standard of proof in civil/departmental proceedings. In a reverse case, where criminal proceedings ended in acquittal but simultaneous departmental proceedings continued, the result of the criminal proceedings will not have any bearing on the departmental proceedings, as judgment of the criminal Court is not binding in civil or departmental proceedings. However, in the instant case, when the departmental proceedings ended in favour of the accused and moreover, when the prosecution launched is on the same set of facts and allegations, the continuance of prosecution would be gross abuse of process of law. The criminal petition is allowed. 2021 (6) TMI 670 Empowerment to deny availment of exemption extended to indigenously manufactured goods by notification issued under Central Excise Act, 1944 - non-compliance with conditions prescribed in parallel notification issued under Customs Act, 1962 for procurement from abroad - HELD THAT:- Tax liability under Customs Act, 1962 arises upon import of goods with the importer responsible for compliance with all requirements for clearance; the liability under Central Excise Act, 1944 is, though collected on clearance, a levy on manufacture that the manufacturer assumes responsibility for. With registered status under the statute, a manufacturer, supplying goods against an exemption notification, poses lesser risk than an importer in recovery of duty foregone in the event of misuse. The procedural prescriptions stipulated for exemption from duties of customs are intended to neutralize that additional risk without causing undue inconvenience to the transaction. Imports are effected by the designated agency or their subcontractors for implementation of the project and, to them, prescribed certification is of easy access; the role of a manufacturer is limited to supply which precludes direct access to such certification. While the intended deployment and procurement through international competitive bidding is, doubtlessly, ascertainable at the premises of the importer, the prescribing of certificate to be furnished eliminates such repeated verification of the threshold eligibility for each clearance of imports - The essence of optimal sourcing being the disregarding of customs frontiers, the enumeration of goods entitled to exemption from duties of customs does not bear replication in the exemption notification under Central Excise Act, 1944 and the condition prescribed therein should not have to be expanded beyond that limited purpose. It would be stating the obvious to point out that domestic procurement is not subject to the same risks or the verification of eligibility so burdensome as to warrant that the facilitative procedures of the notification issued under Customs Act, 1962 be replicated in the notification issued under Central Excise Act, 1944. The impugned order lacks legality for having ordered recovery of duty and imposed penalties despite the appellant having complied with conditions for availment of exemption - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2021 (6) TMI 674 Cancellation of the Sales Tax Eligibility Certificate - Entitlement for sales tax incentive - entitlement to priority industry status - Industrial Policy Resolution 1996 - HELD THAT:- While it is true that the Petitioner as a new unit was in the SSI category, it graduated to a Medium Scale industry after the expansion and modernization drive. It satisfied the description of an existing unit that had undertaken expansion and modernization - Once the Petitioner has been declared as a priority industry in terms of IPR 1996 Clause 2.7 (i) and (xii) Part-II, the Petitioner's unit was eligible to get an additional two years of sales tax exemption. The Petitioner is right in its contention that the Opposite Parties are mistaken in their stand that IPR 1996 was meant only for a New/SSI/Medium/Large industry. The notification issued by the Opposite Parties themselves belies this contention. SRO 475/96 dated 26th July 1996, referred to hereinbefore, envisages an existing industrial unit undertaking fixed capital investment and having commenced after 1st March, 1996. Clearly, this would include an existing unit, which undertakes expansion and modernization after 1st March, 1996. The certificate issued by the DoI on 7th March, 2002, in Form II-A, granting the Petitioner eligibility for sales tax concession on sale of finished products acknowledges both the new products as well as the existing product viz., air coolers . Indeed, the Opposite Parties have no answer to the above contention of the Petitioner that it was a unit in the pipeline in terms of SRO 141/2000. The Petitioner has also clarified how its agreement with M/s. Nilkamal Plastic Private Limited had no relevance to its claim for sales tax exemption. The machineries for the manufacture of moulded plastic furniture were purchased from M/s. Nilkamal Plastic Private Limited under proper invoices, challans and excise gate passes. It was the Petitioner that produced the finished products - With the Petitioner satisfying all the requirements of the applicable notifications, there appears to be no justification in the Opposite Parties seeking to revoke the sales tax exemption thereby cancelling the certificate issued for that purpose. It is held that the Petitioner, as a priority industry, is eligible to avail sales tax benefit as contemplated under IPR 1996 in terms of notification dated 2nd February, 1999 and, therefore, is entitled to sales tax exemption for an additional two years as claimed by the Petitioner - Petition allowed. Indian Laws 2021 (6) TMI 678 Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - burden on the complainant to prove each and every fact even after accused admitting the cheque - HELD THAT:- Accused admitted that Ex.P.1-cheque belongs to him and it bears his signature. Even though the accused taken up a defence that he was not knowing the complainant, he was not familiar with him, he had not borrowed any amount from the complainant nor issued Ex.P.1 in his favour, the moment he admits that the cheque relied on by the complainant belongs to him and it bears his signature, presumption under Section 139 of N.I. Act arises. Similarly, Section 118 of N.I. Act gives raise to presumption regarding the consideration, date, time of acceptance, endorsements and that the holder is a holder in due course until the contrary is proved. Therefore, once the accused admits the cheque in question and his signature found therein, the initial burden of proving the contention is discharged by the complainant and it is for the accused to rebut these presumptions by raising the defence and probabalising the same. The complainant has discharged his initial burden of proving Ex.P.1-cheque upon which the presumption under Sections 118 and 139 of N.I. Act arises. Even though the accused is required to probabalise his defence to rebut the presumptions, he has failed to do so. Therefore, the accused is liable to be convicted - the trial Court has erred in acquitting the accused ignoring the settled proposition of law on the subject and wrongly placing the burden on the complainant to prove the existence of legally recoverable debt in spite of the accused admitting issuance of the Ex.P.1-cheque with signature. The impugned judgment of acquittal passed by the trial Court is nothing but perverse and illegal. Criminal appeal is allowed.
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