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TMI Tax Updates - e-Newsletter
June 22, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Offence punishable u/s 276CC, 276C(1) and 277 of Income Tax Act - proof of concealment of income by the petitioner - The complaint allegations, if taken as it is, clearly make out a case for prosecuting the petitioner for the offences mentioned in the complaint. This Court is of the considered view that this case must go to trial and the trial Court has to take informed decision by recording the evidence of the parties. - HC
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Special audit - validity of Order under section 142(2A) - the order passed under Section 142(2A) of the Act was passed without giving an opportunity of hearing to the Petitioner - notice quashed - HC
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Penalty u/s 271(1)(c) - disallowance of excessive depreciation - cost of acquisition of wind mill - whether or not assessee is entitled to the benefit under proviso to Explanation 10 of Section 43(1)? - in order to entail liability for penalty, there has to be satisfaction based on material as required under Section 271(1)(c) of the Act, that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. - Department failed to prove that the assessee had submitted inaccurate particulars - No penalty - HC
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Offence u/s 276CC - sanction u/s 279(1) for launching prosecution u/s 276CC - offence alleged is compoundable or not? - Evasion of tax - concealment of taxable income - if one more opportunity is granted and compounding is permitted no prejudice would be caused to the Department. - HC
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Validity of orders under sec 201(1)/201(1A) - period of limitation - the limitation period for the financial year 2009- 10 relevant to assessment year 2010-11 expires on 31.03.2013 and for the financial year 2010-11 relevant to assessment year 2011-12 expires on 31.03.2014 whereas the assessment orders u/s 201(1)/201(IA) have been passed in last week of March 2017 and March 2018 respectively as noted above. - section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable in the instant case as limitation had already expired prior to amended section 201(3) as amended by Finance Act No.2 of 2014 w.e.f 1.10.2014. - AT
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Unexplained Cash Credit u/s 68 - share application money pending allotment treated as undisclosed money - The manner in which ld. CIT (A) passed the appellate order needs much to be desired. It was incumbent upon the ld. CIT(A) to give a finding upon the financial statements of the parties reportedly copies of which have been given to the ld. CIT (A). - The mystery of the parties responding through assessee and not coming or appearing before AO also needs to be solved. Ld. CIT (A)’s order is palpably wrong. - AT
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Revenue recognition - accrual of income - Estimation of income - Even if books have been rejected the estimation of income has to be done on a reasonable basis as per past performance or the prevalent industry norms. Devoid of any reasoning, addition of 20% of salaries and incentive to project account is solely based upon surmises and conjectures, hence not sustainable in law. - AT
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Disallowance of loss on reasons of non-set up of business - company has not at all completed set up of the business so as to commercially starts its operation. In such circumstances, lower authorities justified disallowing expenditure claimed by the assessee which is only a pre-operative expenditure and cannot be allowed as business expenditure in the assessment year under consideration. - AT
Customs
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Claim of interest on delayed refund - The Parliament has enacted this law to ensure that the refunds should carry interest. It would imply that any money belonging to the petitioner, which is with the possession of the respondents, requires to be returned along with the rate of interest mentioned therein. Therefore, whether it is a refund of claim of tax or payment in terms of the order of the Tribunal, the petitioner should be entitled for the interest. - HC
Corporate Law
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Cessation of directorship of the 3rd respondent - seeking approval of e-Form DIR-12 filed by the petitioner - The petitioner company, through its Board of Directors and Shareholders was well within its rights to appoint new directors or to confirm the Additional Director as Directors as per the applicable provisions of Companies Act, 2013 - it is considered fit to dispose of the writ petition directing the 1st respondent i.e., Registrar of Companies to consider the Form DIR-12 submitted by the petitioner company, if it is in accordance with law. - HC
Indian Laws
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Dishonor of Cheque - insufficiency of funds - existence of company after merger - When under a judicial order, merger of the Companies has taken place, the earlier Company cease to be in existence after its merger with another Company and the Company which emerges after merger would be entitled to all the rights and liabilities of the merged Company and subject to the terms of the merger. Thus, when the previous Company which had granted loan to the accused is shown to have been merged, it cannot be said that the present complainant-Company does not have locus standi to file the complaint - HC
IBC
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Approval of resolution plan - allegation of non consideration of undervalued transaction - reversal of effects of such avoidance transactions - The application under section 66 is to be filed only by the resolution professional or the liquidator. Moreover, the applicant herein is not a resolution professional and is only a dissenting financial creditor and in this capacity the Applicant has no right to file the present application - Tri
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CIRP - Prosecution proceedings - Failure to provide all the requisite information to the RP - violation of provisions contained in Sections 70, 73 (b) and 19(1) r/w Section 235A of I&B Code - this Court is satisfied that prima facie the aforesaid offences under the Insolvency & Bankruptcy Code, 2016 have been committed by the accused person. Thus, cognizance of said offences is taken - DSC
Service Tax
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SVLDRS - Rejection of petitioner’s declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Since respondent No.4 had issued Form-2 indicating certain amount as payable by petitioner and petitioner had accepted the same by submitting Form-2A on 25th December, 2019, respondent No.4 shall issue Form-3 namely statement in electronic form indicating the amount payable by petitioner in accordance with subsection 4 of Section 127 of the Finance Act, 2019. - HC
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Rejection of application under the SVLDR Scheme - delay in filing present application - steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant, were not duly followed - the Petitioner has failed to show any cause why the relief sought by him under the SVLDR Scheme should be granted once the Scheme and all its proceedings have been closed. - HC
Central Excise
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CENVAT Credit - denial of Cenvat Credit on the ground that the appellant have taken the Cenvat Credit suo-moto as they have also filed the refund claim - The appellant had two option either to pursue the refund or to take the credit which is permissible as per Cenvat Credit Rules, 2004. Since the appellant’s claim stand rejected and on that submission their appeal also disposed of by this tribunal. According they have taken the Cenvat Credit after disposal of the appeal there is nothing survive in the department’s case. - AT
Case Laws:
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GST
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2022 (6) TMI 907
Issuance of SCN - issuance of notice under Section 73 of the Act when show cause notice is already issued and adjudicated under Section 74, for the same cause of action - HELD THAT:- Issue notice to the Respondent, through all permissible modes, returnable on 05.08.2022 before the Roster Bench. Till the next date of hearing, the impugned Demand Notice dated 02.06.2022 [Form GST DRC 01A] Reference Number: ZD070622001486M issued by the Respondent, is stayed.
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Income Tax
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2022 (6) TMI 906
Offence punishable u/s 276CC, 276C(1) and 277 of Income Tax Act - proof of concealment of income by the petitioner - HELD THAT:- As the concealment of income by the petitioner came to light only after a survey operation under Section 133(A) on 20.10.2004, 14.12.2004 and 15.12.2004. After finding concealment of income, a statutory notice under Section 148 was given. Then the petitioner filed his return of income. The tax payable was determined. It is not in dispute that in all the cases, the return of income was filed in consequence of survey operation under section 133(A) of the Act and in response to notice u/s 148 with the delay of several months, as indicated earlier. It is the claim of the learned counsel for the petitioner that there is no specific allegation of suppression of income in the complaint - reading of the complaint shows that there is a specific allegation that the petitioner concealed the income, but for the survey operation, would not have filed the return of income and paid the taxes. By concealing the income, petitioner deprived the exchequer, payment of tax for several months. Thus, this Court is of the view that there are enough and specific allegations made with regard to concealment of income by the petitioner. As the amount of income suppressed is substantial. The concealment/suppression of income came to light only after the survey. If the survey was not conducted, the concealment of income would not have come to light at all. Only after the statutory notice under section 148 was issued, petitioner filed return of income and then, it was assessed. The wilful and deliberate concealment of true and correct income by not filing the return of income within the time stipulated is clearly and plainly evident from the facts of this case. From the case laws pressed into service, it was found that there was no wilful intention to conceal the income and there was no wilful delay in filing the return. However, facts of this case are totally different and therefore, this Court is of the view that the judgments relied by the learned counsel for the petitioner are not applicable to the facts and circumstances of this case. The complaint allegations, if taken as it is, clearly make out a case for prosecuting the petitioner for the offences mentioned in the complaint. This Court is of the considered view that this case must go to trial and the trial Court has to take informed decision by recording the evidence of the parties. In this view of the matter, this Court finds no merit in all these petitions and all these six Criminal Original Petitions are dismissed.
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2022 (6) TMI 905
Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- Reasons do not give any particulars as to what was the failure on the part of the Petitioner. On the contrary, the Reasons state that it is on the perusal of the assessment record that figure of only Rs.1271375/- could be seen. It is nowhere stated that, which is sought to be contended now, the second page of Note-15 was not part of the assessment record. Furthermore, what is sequator of this position is not explained as to how the second page came to be missed. Even when this fact was pointed out by the Petitioner, while disposing of the objections, the Respondent Officer did not state that the second page of the Note was not available. As in light of this factual position, the argument of the Petitioner that the impugned notice and the order proceeds on the erroneous factual ground, without looking at the relevant page, will have to be accepted. Since the foundation of the Reasons for reopening the assessment on facts, apart from various other legal challenges that arise, does not survive, the impugned notice and consequent order will have to be quashed and set aside.
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2022 (6) TMI 904
Special audit - validity of Order under section 142(2A) - the order passed under Section 142(2A) of the Act was passed without giving an opportunity of hearing to the Petitioner - whether the observations made in the case of Rajesh Kumar would apply in every case where the Assessing Officer issues a direction under Section 142(2A)? - HELD THAT:- Reference was considered by the bench of three judges of the Supreme Court in the case of Sahara India (Firm) [ 2008 (4) TMI 4 - SUPREME COURT] - The Bench in the case of Sahara India confirmed the law laid down in the case of Rajesh Kumar. It was held that the assessee has to be given the opportunity of being heard before passing the order u/s 142(2A) of the Act. The Supreme Court thus held that if no show cause notice is given to the Assessee before passing orders under Section 142(2A) of the Act, the orders were vitiated by failure to observe the principles of natural justice. As held by the Supreme Court in the case of Rajesh Kumar, on account of the special audit, the assessee has to undergo the process of further accounting despite the fact that a qualified auditor has audited accounts in terms of section 44AB of the Act, who is a professional person and in case of misconduct liable to be proceeded against. The assessee has to pay the fees of the special auditor. During the audit of the accounts, again by the special auditor, the Assessee has to answer a large number of questions. The Supreme Court held that by virtue of an order under section 142(2A) of the Act, the assessee suffers civil consequences, and the order passed would be prejudicial to him; therefore, the principles of natural justice were held to be implicit. Also, if the assessee was put to notice, it can be shown that the accounts do not require special auditors. In the present case, as stated earlier, it is an admitted position that no hearing was given, and in the light of the law laid down by the Supreme Court as above, the Petitioner is entitled to succeed.
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2022 (6) TMI 903
Estimation of income - Bogus purchases - CIT-A Directed the Assessing Officer to disallow 12.5% bogus purchases and to add 12.5% of the amount of purchases as income of the Appellant - ITAT deleted the addition - HELD THAT:- he argument advanced is that the bogus purchases ought to have been disallowed in totality. The learned counsel for the parties have placed before us the decisions of the Division Bench in the cases of Pr. Commissioner of Income Tax v. M/s.Mohommad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] AND M/S. PARAMSHAKTI DISTRIBUTORS PVT. LTD. [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] wherein as observed that if the factum of sales has been accepted by the Department then even if it is established that there were bogus purchases, it is not necessary that entire amount should be added to the income of the Assessee as there cannot be a sale without purchase. The facts of the present case are identical wherein the sales have been accepted. Therefore, in light of the aforesaid decisions first question of law does not survive for consideration. Addition u/s. 41(1) - cessation of liability - tribunal deleted the penalty - as per revenue the said liabilities were not payable as they stood barred by limitation - HELD THAT:- As decided in JAIN EXPORTS PVT. LTD. [ 2013 (5) TMI 690 - DELHI HIGH COURT] after following the decisions concluded that merely because the liability is barred by limitation, it does not cease to be a debt. This view is also taken by this Court in the case of CIT v. Indian Rayon and Industries Ltd. [ 2010 (3) TMI 299 - BOMBAY HIGH COURT] Therefore, the submission made by the Appellant that because the liability is barred by the period of limitation the same would be treated as income and added under section 41(1) of the Act cannot be accepted as no other decision contrary to the above is shown to us. Thus, the second question of law does not survive for consideration. Revenue appeal dismissed.
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2022 (6) TMI 902
Deduction u/s. 80HHC - retrospective applicability of the amendment of the year 1991 by the Finance Act of 1991 - Whether Appellate Tribunal was justified in reversing the order of the CIT(A) allowing the claim of deduction? - HELD THAT:- In the case of P.R. Prabhakar [ 2006 (7) TMI 121 - SUPREME COURT] considered the question as to whether the amendment of the year 1991 was prospective or retrospective. The Supreme Court observed that the amendment of the year 1991 was prospective in nature. In the light of decision P.R. Prabhakar, the view taken by the Tribunal that the amendment is retrospective in nature and therefore, the commission would not entitle the Appellant Assessee for exemption does not survive This finding of the Tribunal was the foundation of its decision. In the case of P.R. Prabhakar, the Supreme Court also observed that since the amendment to Section 80HHC of the year 1991 was prospective, the commission for export constituted export profits and the assessee would be entitled to deduction under Section 80HHC for the Assessment Year 1991 that is prior to the amendment. The Supreme Court has settled these two questions in its decision. Both grounds on which the Tribunal passes the impugned order therefore do not survive. We have perused the orders of the Assessing Officer, Commissioner of Income Tax (Appeals) and the Tribunal. There was no debate that the commission claimed by the Appellant Assessee was not related to export. In fact, the authorities have observed that, in law the Appellant Assessee was not entitled to claim commission, of any kind, in respect of claim under Section 80HHC and there was no differentiation made as regards the type of commission. Even otherwise, the learned Counsel for the Appellant Revenue has placed on record the audited account by way of praecipe wherein it is shown that the commission was received by the Appellant Assessee in foreign exchange and was relatable to export. This being the position wherein the questions of law framed in this Appeal having been answered in favour of the Appellant Assessee by the decision of the Supreme Court as above, the Appeal will have to be allowed and the question framed will have to be answered accordingly.
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2022 (6) TMI 901
Penalty u/s 271(1)(c) - disallowance of excessive depreciation - cost of acquisition of wind mill - whether or not assessee is entitled to the benefit under proviso to Explanation 10 of Section 43(1)? - HELD THAT:- As the proviso to Explanation 10 of Section 43 (1) of the Act was found not applicable in the case of assessee, an inference has to be drawn that assessee had submitted inaccurate particulars, cannot be accepted. Irrespective of whether or not assessee is entitled to the benefit under proviso to Explanation 10 of Section 43(1) of the Act, in order to entail liability for penalty, there has to be satisfaction based on material as required under Section 271(1)(c) of the Act, that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. From the papers which have been placed before us, we do not find that there is any material to come to the conclusion that in order to claim benefit of deduction under Section 43(1) of the Act, the assessee had submitted inaccurate particulars. No question of law arises for consideration in this appeal and the same is accordingly dismissed.
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2022 (6) TMI 900
Reopening of assessment u/s 147 - validity of notice issued u/s 148A - Non considering reply furnished by appellant - HELD THAT:- As the impugned order under Section 148A(d) of the Act has been passed in great haste and in gross violation of principle of natural justice as the Petitioner was not given reasonable time to file a reply. In any event, as the impugned order under Section 148A(d) of the Act had been passed on 29th March, 2022 i.e. after receipt of the detailed reply by the Petitioner dated 24th March, 2022, the Assessing Officer should have considered the same as it was available on record. By not considering the reply of the Petitioner dated 24th March, 2022, the mandate of Section 148A(c) has been violated as it casts a duty on the Assessing Officer, by using the expression shall , to consider the reply of the Petitioner/assessee in response to notice under Section 148A(b) before making an order under Section 148A(d) of the Act. This Court in Fena Pvt. Ltd. [ 2022 (5) TMI 892 - DELHI HIGH COURT] had quashed the order passed under Section 148A(d) of the Act in similar circumstances i.e. where the Assessing Officer had not taken into consideration the reply along with the documents/evidences filed by the assessee before passing the order under Section 148A(d). - Decided in favour of assessee.
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2022 (6) TMI 899
Interest under Section 240 and 244-A - petitioners seek an order and direction against respondents to pay interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on cash amount and interest at the rate of 12% p.a. from 01.11.2017 till its final realization - revenue placed reliance on Section 132-B (4) (b) and would submit that, liability of payment of interest of the revenue is only upto the date of passing of assessment order under the said provision and not upto the date of payment - whether this Court can award interest or compensation having found delay on the part of the revenue in releasing the cash amount seized by the revenue from the petitioners while carrying out the assessment, though delay was attributed on the part of the respondents and not on the petitioners from the date of assessment order till payment or not? - HELD THAT:- Though in this case the petitioners have prayed for interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on cash amount of Rs.9,35,000/- and compensatory interest at the same rate from 24.12.2019 till 01.12.2020 on the amount of cash released of Rs.14,36,000/-, the petitioners have restricted their prayer for compensatory interest at the rate of 6% p.a. on these two amounts and also on Rs.24,29,000/-. In our view, though Delhi High court in AJAY GUPTA[ 2007 (4) TMI 42 - HIGH COURT, NEW DELHI] had awarded interest at the rate of 9% p.a. towards compensation/damages for the delayed period, since the petitioners in this case have restricted their claim for compensation/damages at the rate of 6% p.a. for the delayed period, we are inclined to allow the claim for the interest by way of compensation/damages at the rate of 6% p.a. for delayed period already quantified in the chart submitted by the petitioners. The respondents are directed to pay interest by way of compensation/damages for the period from 03.03.2018 to 23.12.2019 as prayed under Section 132-B(4) of the Act, 1961 at the rate of 6% p.a. totaling to Rs.5,99,780/- after giving credit of the interest already paid by the revenue for the period from 01.03.2018 to 13.12.2019 in the sum of Rs.2,06,360/- within a period of four weeks from the date of this order.
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2022 (6) TMI 898
Offence u/s 276CC - sanction u/s 279(1) for launching prosecution u/s 276CC - offence alleged is compoundable or not? - Evasion of tax - concealment of taxable income - petitioners submits that since the offence is compoundable, if one more opportunity is given to them they would compound the offence and come out the prosecution - HELD THAT:- The opportunity given was only once by way of show cause notice seeking explanation from the hands of the petitioners. Jurisdictional issue is also raised by the learned counsel but would restrict his submissions seeking one more opportunity to compound. Department would not refute the position that notices are issued while according sanction for prosecution in respect of offences punishable under Section 276CC. The learned counsel would, however, accept that one more opportunity could be given to the petitioners to compound the offence in the light of no further proceedings have happened as interim order is operating in the case at hand throughout the pendency of these proceedings. In the light of what is quoted in the order of sanction we deem it appropriate to accept the submission of the learned counsel appearing for the petitioners more so on two grounds (i) since the offence alleged is compoundable and an opportunity ought to have been granted by the respondents/ department and (ii) though an opportunity is granted, the learned counsel for the petitioner submits, at that point in time the petitioner in Writ Petition No.112881 of 2019 was hospitalised and others were taking care of him - if one more opportunity is granted and compounding is permitted no prejudice would be caused to the Department. The other ground is that the interim order staying all further proceedings pursuant to the private complaint registered is operating in the cases at hand throughout and the prosecution has not proceeded further except cognizance being taken on the registration of private complaint by the respondents. Order - Writ petitions are allowed in part subject to the assessees /petitioners filing applications for compounding within 6 weeks from the date of receipt of a copy of this order.The respondents shall pass appropriate order accepting or declining to accept such compounding within a reasonable time thereafter.
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2022 (6) TMI 897
Undisclosed income u/s. 69A r.w.s 115BBE - deposits made post demonetization period - transaction/bank deposits made by the assessee, one pre-demonetization period deposits, which AO treated as income from profession of the assessee and 50% of such deposits treated as income from profession - HELD THAT:- We are of the view that this dual action of the ld. AO in making said addition on the same issue is not justified and as such we hold that the total cash deposit in bank account i.e. Rs. 27,22,500/- ( which includes the deposits during post demonetization period totalling Rs. 13,00,000/-) to be treated as gross receipts from profession and 50% of such deposits be treated as income from profession during the assessment year in question. Accordingly, ground no. 2 raised by the assessee is partly allowed. We find that since the cash deposit pre-demonetization has been accepted as Business/Profession receipt by Ld. AO, the remaining deposit of Rs. 13,00,000/- post demonetization should also be treated as Business Income as no adverse finding is given by Ld. AO in this regard except the allegation of cash deposit post demonetization and therefore, provisions of section 69A r.w.s 115BBE of the Act will not apply on the said deposits. Thus, ground no. 3 is allowed
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2022 (6) TMI 896
Disallowance of provision on interest on deposits on the basis of working provided by the assessee - CIT (A) has allowed the relief was allowed merely on the ground of production of certificate by bank' - non-verification and non-examination (Assessee s claim) on account of non-observance of the principles of natural justice enshrined in rule 46A - HELD THAT:- A provision outside books, though not disqualified per se , and valid where otherwise in order, the subsequent accounting treatment assumes relevance as the same would require an adjustment (to that extent), in computing taxable income, of the profit/loss disclosed per the operating statement for the period in which the said interest is accounted for in books. As gives rise to the question of as to how the assessee has accounted for the interest short provided i.e., in the subsequent (succeeding) year/s. This is as the depositor would need to be allowed the contracted interest, and which the assessee, being obliged to, would have surely provided for later, even as it, following mercantile system of accounting, cannot claim the same for the relevant previous year in view of an omission to provide for it for the relevant year. This, it needs to be borne in mind, is not a case of a provision being made on the basis of the best information available, adjusted subsequently on crystallization or resolution of a dispute or the relevant facts. Another related aspect is the applicability of s. 40(a)(ia). Inasmuch as and to the extent the interest provided is subject to tax deduction at source, non-deduction thereof would attract disallowance u/s. 40(a)(ia). It needs to be appreciated that the AO disallowed the claim in the absence of any details, while implicit in its allowance is it being toward an ascertained liability, even if on estimated basis, in respect of identified payees. We may though clarify that as the actual provision by the bank (Rs. 300 lacs) is far lower than that exigible (Rs. 540 lacs), the assessee-bank is at liberty to appropriate the provision made against the depositor accounts on which no (or minimal) tax is deductible, i.e., with a view to avoid or minimize the incidence of s. 40(a)(ia), subject to which only deduction u/s. 36(1)(iii) is admissible. This however would not disturb the appropriation already made. We though clarify, be construed as having issued of any final finding/s, but as only highlighting the areas that, among others, arise for consideration and adjudication. Where and to the extent, however, there has already been a specific consideration, followed by a definite finding/s, the same cannot be visited again inasmuch as the AO cannot review his order. The foregoing, if anything, only points to the vital need for deciding cross appeals together, as exhorted by the hon ble higher courts of law time and again, as well as by having regard to the due process of law. Allowance of appropriation of profit by the assessee for Statutory Reserve, Agriculture Credit Fund and Building Fund i.e., toward certain contingencies and/or applications - CIT(A) allowed the same on the basis that the same were in view and in terms of the guidelines and the directions by the regulatory bodies, being RBI and NABARD - HELD THAT:- It is not clarified at any stage, including before us, as to under which provision of law the impugned sums are being claimed as deduction in the computation of income chargeable to tax as income from business, assessable u/s. 28. CIT(A) has not clarified the specific guideline or direction where-under the reserve has been created, as for example building fund , nor has the same been pointed out to us. In fact, the nature of the sum/s under reference as an appropriation (of profit) or as reserve is not in dispute. The same is only an appropriation of profit, set aside for some specific purpose, even if in terms of the guidelines by the regulatory body, and not a provision toward any business liability, much less ascertained, and therefore ineligible for deduction. Even as the law in the matter is well-settled, the Revenue relies on the decision in Associated Power Corporation Ltd. v. CIT [ 1995 (11) TMI 5 - SUPREME COURT] - In fact, no serious objection thereto was raised before us by Sh. Agrawal. We, accordingly, have no hesitation in, reversing the findings by the ld. CIT(A), allowing the Revenues relevant Ground. Disallowance of Gratuity Payable (GP) u/s. 43B - HELD THAT:- As under the circumstances, necessarily require being restored to the file of the AO for determination afresh in accordance with law per a speaking order after hearing the assessee. We direct so, vacating the findings by the CIT(A) - AO shall, to the extent his order is inconsistent with the audit report, also seek clarification therefrom as to the basis of their report/s, making it a part of his order. He shall also ascertain about the disallowance, if any, u/s. 40A(7) or u/s. 43B, in respect of the opening provision. It may here be relevant to state that regard is to be had in the matter of both sec. 40A(7) and sec. 43B inasmuch as s. 43B applies only to sums otherwise allowable . It is thus only the sum allowable u/s. 37(1) r/w s. 40A(7) that shall be allowed subject to the condition of actual payment, as mandated by sec. 43B; the balance getting excluded (disallowed) u/s. 40A(7) itself. The aspect of the provision booked being in accordance with the actuarial valuation (or otherwise scientifically and empirically validated), would also have to be clarified. Disallowance made on the NPA provisions accepting the detailed working of NPA - HELD THAT:- As bank would be provisioning in respect of assets obtaining no longer, i.e., being not on it s books inasmuch as the same stand since recovered. The provision could continue ad infinitum , surpassing, in time, the total value of the outstanding debt. The same is to be therefore restricted to the incremental advances, i.e., where the provision as outstanding at a year-end is, as a matter of accounting procedure/method, not followed by its reversal on the first day of the year following, at the end of which the same would be revisited and provided on the basis of risk assessment at the relevant time/at the per cent prescribed. The provision to the extent it relates to the percentage of income is based only on the income of each year and, thus, is to continue to obtain in the assessee s accounts, increasing each year to the extent of the specified percentage of the income of each following year. The provision account, comprising both components, is only to be adjusted against actual write off of the bad debts. The reversal of provision as at the beginning of the following year is though to be made for the full amount of the corresponding provision made at the close of the immediately preceding year, as outstanding. This is as this only would ensure that the provision is, as at the end of each year, capped at the prescribed percentage of the advances by the rural branches of the bank, other than of course the outstanding part thereof made on the basis of income, which is not liable for reversal. Any excess of the actual write off of bad debts u/s. 36(1)(vii), if any, in excess of the amount available under provision account, is to be debited to the P L A/c for the relevant year.
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2022 (6) TMI 895
Addition u/s 68 - Unexplained cash credit/cash deposited in the bank account - CIT (A) restricted the disallowance to 25% of additions made by AO - HELD THAT:- We note from the above facts that the assessee is working in the unorganized sector where most of trading is carried out in cash. During the year under consideration, we note from the assessment order, that while the assessee has deposited a sum of Rs. 23,93,400/- in cash in his bank accounts held with ICICI Banks (two accounts), but the assessee has also during the year under consideration withdrawn a sum of Rs. 23, 69,098/- from his bank account. It has been held in a number of ITAT decisions that unless the Assessing Officer brings any material on record to show that the cash withdrawn was utilized / used for other purpose, it could not be said that such cash withdrawals might not have been redeposited in the bank account - See M/S. MURLIDHAR ICE-CREAM AND SWEET PARLOUR AND VICA-VERSA [ 2015 (9) TMI 274 - ITAT AHMEDABAD] In the case of Smt. Satya Bhama Bindal [ 2013 (8) TMI 1162 - ITAT CHANDIGARH] ITAT held that that the concept of peak theory needs to be applied both in respect of the opening introduction of cash in hand and various transactions of cash deposits and withdrawals during the year under consideration. Now, in the instant facts, it needs to be appreciated that while making the disallowance, the assessee s set of facts and the nature of business he is engaged has to be given due consideration while making any disallowance. In the case of ACIT v. Armee Infotech [ 2022 (1) TMI 649 - ITAT AHMEDABAD] after taking into consideration the assessee s set of facts, the line of business he was engaged in, the typical gross profit earned in such line of business etc. restricted the disallowance on account of bogus purchase to 7%. As considering the assessee s set of facts, in the interests of justice, we are restricting the disallowance to 10% of the deposits made. - Decided partly in favour of assessee.
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2022 (6) TMI 894
Addition under the head house property - lease rentals are to be paid from the date of handing over the building to lessee - AO held that the rental income of the property commenced on 01.02.2016 itself and has brought the corresponding amount of lease rental receivables from M/s.IBIBO Group Private Limited for the period 01.02.2016 to 31.03.2016 - HELD THAT:- The property was let out on 01.02.2016 the rent commenced from 01.06.2016. It is clearly mentioned in the lease deed that the rent commencement date shall be the date of handing over the physical possession of the fully fitted out and operational possession of the property. Section 23 was substituted with effect from 01.04.2002 by Finance Act, 2001 for and from assessment year 2002- 2003. In the case of S.M.Chandrashekar [ 2017 (1) TMI 52 - ITAT BANGALORE] Tribunal, had held that meaning and interpretation of the words 'property is let cannot be 'property actually let out . As further held by the Tribunal that if a property is held with an intention to let out in the relevant year coupled with efforts made for letting it out, it could be said that such a property is a let out property and the same would fall within the purview of clause (c) of section 23(1). Physical possession was handed over only on 01.06.2016, since works for the period between 01.02.2016 and 01.06.2016 was being undertaken to make the demised property as operational - when the lease was executed on 01.02.2016, the lessee has paid the security deposit equivalent to 10 (Ten) months rent towards an interest free security deposit in respect of leased premise - Therefore, the lease commenced as on date of executing the lease deed and hence, the `property was let as per the provisions of section 23(1)(c) within the relevant financial year. Only an intention to let out a property and coupled with efforts to let out the property is sufficient to come within section 23(1)(c) of the I.T.Act. The case of the assessee in this appeal stands on better footing, inasmuch as, the property was actually been let out during the relevant financial year. Hence, applicable section is 23(1)(c) of the I.T.Act instead of section 23(1)(a) of the I.T.Act invoked by the CIT(A). Since the lease rental received for the relevant assessment year being `Nil , the same has to be adopted instead of ALV as ordered by the CIT(A). Further, the lease rental received by the assessee from 01.06.2016 was disclosed under the head income from house property for the subsequent assessment year, namely, A.Y. 2017-2018 onwards. Addition under the head other sources - HELD THAT:- The assessee has not brought on record any documentary evidence to show that it had incurred interest expenditure as against the income assessed under the head `income from other sources . Therefore, the addition sustained by the CIT(A) to the extent is confirmed.
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2022 (6) TMI 893
Expenses claimed as deduction u/s.10 - Case selected for scrutiny as taxable income shown in revised return is less than the taxable income shown in the original return and large refund has been claimed and Salary income shown in ITR is less than the salary income as per 26AS - HELD THAT:- We noted that the facts are not clearly emerging out of the order of the AO or the CIT(A) whether the assessee is eligible to claim LTA and if any LTA is added to the gross salary of the assessee or not. This issue needs reconsideration and hence, only the issue of LTA is sent back to the file of the AO for reconsideration i.e., for an amount of Rs.2,56,410/-. As regards to food expenses of Rs.36,000/-, telephone expenses of Rs.60,000/-, conveyance expenses of Rs.19,200/- and other exemptions of Rs.1,85,262/-, it is hereby confirmed because these are not related to earning of salary or due to employment urgencies as is envisaged u/s.10(14)(i) (ii) of the Act. Accordingly, this issue is partly set aside to the file of the AO. Income from house property u/s. 24 - CIT(A) noted that the assessee is entitled for claim of deduction to the extent of maximum deduction for self-occupied house property as the assessee claimed the first property as his house property and the second property jointly owned with sister on which the interest on borrowed capital claimed by assessee is Rs.5,37,586/- for which the assessee has earned rental income - HELD THAT:- We noticed that the assessee has claimed house property loss of Rs.5,23,579/- out of which the AO himself has allowed the loss claimed on account of interest paid of Rs.2,00,000/- under the head income from house property and balance amount of Rs.3,23,579/- was added. We find no infirmity in the orders of lower authorities and hence, this issue of assessee s appeal is dismissed.
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2022 (6) TMI 892
Validity of Reopening of assessment u/s 147 - cash deposits under the head income from other sources on the basis of sale agreement copy furnished by the assessee - second round of reopening - HELD THAT:- The facts borne out from the record clearly indicate that the present assessment proceedings have been re-opened second time. The assessee has furnished copies of reasons recorded for first re-opening of assessment and second re-opening of assessment. We have perused reasons recorded by the AO for re-opening of assessment on both occasions and we find that the assessment has been re-opened for the first time to verify cash deposits found in bank account. The assessee had offered an explanation and explained source for cash deposits into bank a/c, as per which, the assessee had received cash consideration for sale of property and said consideration received is source for cash deposits into bank a/c. The assessee had also filed copy of agreement between the parties dated 16.09.2011. AO after considering necessary details has completed re-assessment proceedings and accepted returned income. The assessment had been once again re-opened u/s.147 On perusal of reasons recorded by the AO, we find that the basis for reasonable belief of escapement of income formed by the AO, is copy of sale agreement furnished by the assessee at the time of scrutiny assessment proceedings, which is clear from Para No.3 of reasons recorded by the AO dated 23.03.2017. From the above, it is very clear that the AO has formed reasonable belief of escapement of income on the basis of very same materials which was available at the time of first re-assessment proceedings. Therefore, we are of the considered view that re-opening of assessment in the present case is on the basis of change of opinion, but not on the basis of fresh tangible material come to the possession of the AO subsequent to completion of first re-assessment proceedings As in Kelvinator of India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT ] clearly held that the AO has power to re-open the assessment provided, there is tangible material came to the possession of the AO subsequent to completion of original assessment. In this case, from the reasons recorded by the AO what we could notice is that there is no fresh tangible material come to the knowledge of the AO subsequent to completion of first re-assessment proceedings. Therefore, we are of the considered view that this is a classic case of change of opinion, which is not permissible under the law. Appeal of assessee allowed.
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2022 (6) TMI 891
Condonation of delay in filing the appeal before CIT(A) - Eligible reasons of delay - HELD THAT:- As assessee in its averments has not made out any case that there was reasonable cause which being beyond the control of the assessee, prevented it from filing the appeals in time before the Tribunal. The delay cannot be condoned merely because the assessee's case calls for sympathy or merely out of benevolence. For the exercise of discretion in condoning the delay, it must be established beyond the shadow of doubt that the assessee was diligent and was not guilty of negligence on its part. Sufficient cause as contemplated in the limitation provisions must be a cause which is beyond the control of the assessee. In the case on hand as clearly established that the delay was due to the latches and inaction on the part of the assessee, which could have been avoided by the assessee if it had exercised due care and attention and we agree with the contention of the ld DR that there were no compelling circumstances which prevented the assessee from filing the appeal in time and lack of internal processes cannot be a valid reason for condoning the delay and merely because the assessee is a public institution, it shouldn t expect any advantage over any other private entity. At the same time, respectfully following the decision of the Hon ble Supreme Court in case of Anil Kumar Nehru [ 2019 (1) TMI 1075 - SC ORDER ] and in the interest of substantial Justice, we hereby condone the delay subject to cost of Rs 500/- for each of the sixteen appeals totaling to Rs 8,000/- to which the ld AR has agreed. Validity of orders under sec 201(1)/201(1A) - period of limitation - HELD THAT:- TDS statements in Form 26Q have been filed by the respective branches of the assessee bank for each of the four quarters pertaining to financial year 2009-10 and financial 2010-11 and considering the limitation period of two years from the end of the financial year in which the last of the quarterly statements have been filed, we find that the limitation period for the financial year 2009- 10 relevant to assessment year 2010-11 expires on 31.03.2013 and for the financial year 2010-11 relevant to assessment year 2011-12 expires on 31.03.2014 whereas the assessment orders u/s 201(1)/201(IA) have been passed in last week of March 2017 and March 2018 respectively as noted above. Thus section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable in the instant case as limitation had already expired prior to amended section 201(3) as amended by Finance Act No.2 of 2014 w.e.f 1.10.2014. In light of the same, we are of the considered view that all the orders passed by the Assessing officer under section 201(1)/201(IA) are barred by the limitation and are hereby set-aside. The ground of appeal taken by the assessee in all these sixteen appeals wherein the order of the Assessing officer has been challenged as barred by limitation is thus allowed.
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2022 (6) TMI 890
Late deposit of PF/ESI - deposit of employees contributions qua PF ESI after the due date as prescribed in the relevant Acts, however, before the due date of filing of return of income u/s.139(1) - Addition made following the amendment in 43B regarding Employees Contribution of Provident Fund, ESI or any other welfare fund under Finance Act 2021 - HELD THAT: - Admittedly there is plethora of judgments in favour of the Assessee s contention and of the Revenue. The controversy with regard to divergent views of different High Courts, has been settled by the Hon'ble Apex Court in the case of CIT Vs. M/s. Vegetables Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] by laying down the dictum if two reasonable constructions of a taxing provision are possible that construction which favours the Assessee must be adopted. The issue under controversy travelled upto the Hon ble Apex Court in the cases of Rajasthan State Beverages Ltd [ 2017 (7) TMI 1087 - SC ORDER] , CIT Vs. Alom Extrusion Ltd [ 2009 (11) TMI 27 - SUPREME COURT] , CIT Vs. Vinay Cement Ltd [ 2007 (3) TMI 346 - SC ORDER] clearly held the amount claimed on payment of PF and ESI if deposited on or before due date of filing of returns then the same cannot be disallowed u/s 43B or u/s 36(1)(va) of the Act. Coming to the amendments brought in by the Finance Act 2021 by inserting Explanation 2 in Section 36(1)(va) and 5 in section 43B ITAT including Hyderabad Bench in the case of Value Momentum Software Services Pvt. Ltd. [ 2021 (5) TMI 989 - ITAT HYDERABAD] have taken into consideration the identical issue qua applicability of the amendment to Sections 36(1)(va) and Section 43B of the Act, by inserting Explanations by the Finance Act, 2021 and clearly held that the amendment shall be applicable from 1st April, 2021 onwards . It is also relevant to note that the CBDT has also issued Memorandum of Explanation qua applicability of the amended provisions of Sections 36(1)(va) 43B of the Act w.e.f. 1st April, 2021 and Assessment Year 2021-22 onwards, hence there is no doubt qua applicability of the amended provisions referred above, prospectively. The second aspect as considered by the ld. CIT(A) qua applicability of the amended provisions of Sections 36(1)(va) and 43B of the Act to the cases in hand, is also un-sustainable. - Decided in favour of assessee.
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2022 (6) TMI 889
Disallowance of commission paid to staff and others - Addition made as there has to be written agreement for the commission is not legally sustainable which was not available - HELD THAT:- As entire details including the address of the parties and rate of commission was before the Assessing Officer. There is no adverse inference that TDS has not been deducted. The view of the authorities below that there has to be written agreement for the commission is not legally sustainable. The observations of the ld. CIT (Appeals) that there was no onus upon the Assessing Officer to issue notice to the concerned parties is also de void of any legal backing. When the address of the parties is before the Assessing Officer and it is not the case that the parties are bogus, the Assessing Officer cannot insist that assessee should produce these parties and otherwise Assessing Officer shall take adverse inference. The emphasis of the Revenue authorities in providing e-mail and correspondence is also un-called for. As per the rate of commission noted it is very small amount and by no stretch of imagination can be said to be exorbitant. When the commission paid is of a normal amount, the names and address of the parties have been duly mentioned, the persons who have appeared have also acknowledged the receipt of commission, then the disallowance is solely based upon surmises and conjectures. No law provides that commission expense will be allowed only if there is written agreement. The insistence of the AO for the assessee to produce the party is also un-called for. No case has been made that the percentage of expenditure does not compare well with earlier years which the Revenue has accepted. Hence, in our considered opinion, this disallowance is based on surmise and conjecture and hence not sustainable in law. We have no hesitation in setting aside the order of ld. CIT (Appeals), which holds that acceptance by Revenue of similar commission in previous years has no relevance and that there is no onus of Assessing Officer to issue summons to the parties, if he is not satisfied or that there has to be a written agreement - Decided in favour of assessee.
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2022 (6) TMI 888
Unexplained Cash Credit u/s 68 - share application money pending allotment treated as undisclosed money - creditworthiness of the parties from whom the assessee company received share application money and the genuineness of the transactions proved or not? - CIT (A) has held that AO has not made any further enquiry and he has deleted the addition - HELD THAT:- This order of ld. CIT (A) is devoid of any application of mind whatsoever. Even for argument sake, it is accepted that assessee has given the details with the AO, nothing stopped the ld. CIT (A) in doing the enquiry himself. There is not a whisper in the order of ld. CIT (A) that he examined the financials of these companies who have given share application money and found any cogency in that. It is settled law that ld. CIT (A) has co-terminus power to that of AO. Though we are not in agreement with the ld. CIT (A) s finding that everything was submitted before the AO and AO has falsely passed the assessment order that nothing was submitted before the AO, as it is not the case that ld. CIT (A) has called for the assessment records and found that AO has made false observation. The manner in which ld. CIT (A) passed the appellate order needs much to be desired. It was incumbent upon the ld. CIT(A) to give a finding upon the financial statements of the parties reportedly copies of which have been given to the ld. CIT (A). The mystery of the parties responding through assessee and not coming or appearing before AO also needs to be solved. Ld. CIT (A) s order is palpably wrong. In our considered opinion, in the interest of justice, the issue requires to be remitted to the file of ld. CIT (A). Ld. CIT (A) is directed to give cogent finding as to how the identity, creditworthiness and genuineness of the transactions is established in this case. Appeal of the Revenue stands allowed for statistical purposes
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2022 (6) TMI 887
Revenue recognition - accrual of income - treating the 70% salaries as part of the Project cost instead of 50% as taken by the appellant company - as argued appellant has been following percentage completion method for computing its income and accordingly income was computed accordingly on consistent basis - CIT (A) indicates that the project is being substantially completed on year to the basis and CIT (A) has held that assessee is not permitted to postpone the revenue recognition - HELD THAT:- We find that the above order of ld. CIT (A) does not exhibit proper application of mind. As per ld. CIT (A), the project has been completed more than what the assessee has reflected. In such case, the addition should have been made according to the stage of completion as per the Revenue authorities. CIT (A) has made no examination or remanded the matter to the AO for finding of the actual completion. What is the justification of AO holding that 70% of the salary and wages should be debited to project account and not 50% is not at all spelt out by the AO or the ld. CIT (A). If the authorities below were of the opinion that assessee is falsifying his records than the books should have been rejected. This has not been done. Even if books have been rejected the estimation of income has to be done on a reasonable basis as per past performance or the prevalent industry norms. Devoid of any reasoning, addition of 20% of salaries and incentive to project account is solely based upon surmises and conjectures, hence not sustainable in law. Accordingly we set aside the orders of authorities below and delete the disallowance/addition made by the AO. - Decided in favour of assessee.
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2022 (6) TMI 886
Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- There is no dispute with regard to the fact that the Assessing officer was in possession of information regarding deposit of cash into the bank account of the assessee. It is also undisputed fact that the explanation regarding such cash deposit was not furnished to the Assessing Officer by the assessee prior to reopening of the assessment. Therefore, under these facts we of the considered view that there was reason to form belief regarding escapement of income from assessment. Hence, no reason to quash the assessment as prayed by the assessee. Ground nos. 1 2 of the assessee s appeal are rejected. Addition u/s 69A - Unexplained cash deposits - HELD THAT:- CIT(Appeals) has failed to advert to the explanation offered by the assessee regarding the source of cash deposit. The learned CIT(Appeals) being the first appellate authority ought to have considered the submissions of the assessee regarding source of cash deposit. Before me the assessee has filed bank statement. There from, it is clear that there were cash withdrawals as well as cash deposits. Before the assessing authority the assessee has categorically stated that he had withdrawn cash of Rs. 8,25,900/- and Rs. 2,00,000/- was cash receipt during the year under consideration. Further the assessee has also claimed cash in hand from past savings of Rs. 2,50,000/-. Both the authorities have failed to consider the fact and in a cryptic manner sustained the addition which is not permissible under the law. It cannot be presumed that there was no opening cash balance looking to the fact that the assessee has been earning income for the past many years. Further, the assessee has also demonstrated that there were cash withdrawals from the bank account. Thus addition made by the Assessing Officer is unjustified, hence the same is deleted. Ground of assessee allowed. Addition being unexplained expenditure made u/s 69C - CIT(Appeals) has failed to consider the submissions of the assessee. Assessee has given confirmation as well as bank statement relating to wife of the assessee. Therefore, the authorities below ought to have considered the submissions and evidences filed by the assessee. Non consideration of the same has resulted into miscarriage of justice. Therefore, considering the material available on record, hereby direct the Assessing Officer to delete the addition. Ground of assessee are allowed.
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2022 (6) TMI 885
TDS u/s 194H - Non deduction of tds on Credit card commission under section 40(a)(ia) - as argued by assessee commission is unilaterally retained by the credit card company. It cannot be said that bank acts on behalf of the merchant establishment or that merchant establishment conducts the transaction for the bank - HELD THAT:- .In view of the judgment in the case JDS Apparels Pvt. Ltd. [ 2014 (11) TMI 732 - DELHI HIGH COURT] the artificial distinction between charges attributable to foreign banks (American Express Bank herein) vis- -vis. bank situated in India, in our view, is not justified. Such differentiation made in the press release dated 04.01.2013 is not borne out by judicial pronouncements. In consonance with the judicial precedents, the Ground No. 1 is allowed. Disallowance on account of staff recruitment expenses - AO disallowed the recruitment expenses on the ground that no TDS was deducted for such payments - It is the case of the assessee that the aforesaid payments is an aggregate sum incurred during the year and individual payments to different persons are very small generally ranging between Rs. 1500 to Rs. 7500/- per person - HELD THAT:- On perusal thereof, we find merit in the plea of the assessee for non deduction of TDS on such payments below threshold limit provided under Section 194C of the Act. - Decided in favour of assessee. TDS u/s 194J - Disallowance on account of legal charges - as contended on behalf of the assessee that such payments are made primarily towards stamp duty and registration charges of various lease deeds of stores during the Financial Year 2012-13 - As stated, the assessee has shared 50% of such expenses - HELD THAT:- The expenses incurred not being in the nature of professional services but towards payment of government duty/fee/documentation charges, we see merit in the plea of the assessee for non deduction of TDS under Section 194J. Ground No. 3 is thus allowed.
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2022 (6) TMI 884
Delayed payment of employee's contribution towards EPF and ESI - Payment after due date as prescribed under the relevant Act/Rules in breach of Explanation 5 to Section 43B - case of assessee it has deposited the employee's contribution in EPF and ESI before the due date of filing of return of income stipulated under Section 139(1) - HELD THAT:- . We find that the identical issue has been decided in favour of the assessee by the Hon'ble Delhi High Court in the case of Pr.CIT vs. Pro Interactive Service (India) Pvt. Ltd [ 2018 (9) TMI 2009 - DELHI HIGH COURT] - we direct the Assessing Officer to allow the claim of the assessee and delete the addition. Hence, the grounds of appeal raised by the assessee are allowed. Scope of amendment - We also take note of the plea of the assessee that delayed payment of employee's contribution to PF/ESIC is not disallowable as the amendments to Section 36(1)(va) and Section 43B effected by Finance Act, 2021 were applicable prospectively in relation to Assessment Year 2021-22 and subsequent years. Therefore, the claim of deduction of contribution to Employee's State Insurance Scheme (ESI) and Provident Fund u/s. 36(1)(va) could not be denied to the assessee in Assessment Year 2017-18 in question on the basis of amendments made by Finance Act, 2021. For this proposition, we find support from the decision of the Co-ordinate Bench of Tribunal in the case of The Continental Restaurant and Cafe Company [ 2021 (10) TMI 843 - ITAT BANGALORE] and Adyar Ananda Bhavan Sweets India P. Ltd. [ 2021 (12) TMI 558 - ITAT CHENNAI] . Consequently, the action of revenue on this score is set aside and cancelled. Scope of processing the return of income under Section 143(1) - Co-ordinate Bench of the Tribunal in the case of Kalpesh Synthetics (P.) Ltd. vs. DCIT ( 2022 (5) TMI 461 - ITAT MUMBAI] observed that scope of prima facie disallowance under Section 143 is inherently very limited and only such disallowance can be made under this statutory provision as can be conclusively held to be inadmissible based on material on record. The claim of the assessee for allowability of employee's contribution to PF/ESIC under Section 36(1)(va) r.w.s. 2(24)(x) of the Act is backed by binding judicial precedent of the Hon'ble Jurisdictional High Court and hence such adjustments under Section 143(1), at the minimum, cannot fall in this category. Hence on this score also, the adjustments towards employees contribution to PF/ESIC resulting in disallowance thereof is not permissible in law. Appeal of assessee allowed.
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2022 (6) TMI 883
Penalty u/s 271(1)(c) - Defective notice u/s 274 - assessee argued for non specification of charge - HELD THAT:- Full Bench of Hon ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] has adjudicated the issue and has come to the conclusion that non-ticking of the limb of notice specifying charge under notice 271(1)(c) as to whether it is for concealment of income or for furnishing of inaccurate particulars of income, is fatal. In this case, we note that ld. CIT (A) has brushed aside this issue. Ld. DR for the Revenue has submitted that this aspect needs to be verified at the level of ld. CIT (A) by referring to the assessment record, as to the compliance of requirements of law in this regard. We are of the considered opinion that the matter should be remitted to the file of ld. CIT (A) who will consider this issue in detail after considering the decision of Hon ble Bombay High Court referred above. We are not commenting on other aspects of merit in this case since we are remitting the grounds on the issue of jurisdiction, as otherwise it will lead to multiplication of proceedings - Appeal of assessee allowed for statistical purposes.
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2022 (6) TMI 882
TDS u/s 195 - Receipt of sale of software licenses as Royalty - Addition in accordance with the provisions of section 9(1)(vi) and Article 12 of the DTAA between India and Singapore - HELD THAT:- We are of the considered view that the impugned quarrel is now well settled by the decision in favour of the assessee and against the Revenue in the case of Engineering Analysis Center of Excellence Pvt [ 2021 (3) TMI 138 - SUPREME COURT] - we direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee.
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2022 (6) TMI 881
Income accrued in India - Taxability of revenue from sale of software - whether i n come is not chargeable in appellant's hands under Income Tax Act, 1961 India-USA Double Taxation Avoidance Agreement ('DTAA') as the same was earned outside or India ? - HELD THAT:- Mumbai Tribunal in the case of DDIT v. Sawis Communication Corporation [ 2016 (5) TMI 635 - ITAT MUMBAI] has held that payment received for providing web hosting services though involving use of certain scientific equipment cannot be treated as 'consideration for use of, or right to use of, scientific equipment' which is a sine qua non for taxability u/s 9(1)(vi) read with Explanation 2(iva) thereto as also article 12 of Indo-US DTAA. Chennai Tribunal in the case of ACIT v. Vishwak Solutions Pvt. Ltd. [ 2015 (4) TMI 794 - ITAT CHENNAI] has upheld the findings of CIT(A) that the amount paid to the non-resident is towards hiring of storage space. The aforesaid squarely covers the controversy in regard to the present assessee also. In the light aforesaid, the Bench is of considered view that the Ld. Tax Authorities below had fallen in error in considering the subscription received towards Cloud Services to be royalty income - Decided in favour of assessee.
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2022 (6) TMI 880
Addition on account of employees' contribution to ESI EPF paid belatedly but before the due date of filing of the return of income under section 139(1) - HELD THAT:- As there is a delay in payment of employees' contribution towards PF ESI as per the limitation prescribed under the Specific Acts however, the payment was made before the due date of filing of the return under section 139(1) of the Income Tax Act. I further note that the issue of retrospective applicability of the amendments made by Finance Act, 2021 in section 36(1)(va) and section 43-B has been considered by this Tribunal in a series of decisions and following those decisions, the Tribunal in the case of Lavkush Sharma vs. ACIT [ 2021 (12) TMI 1331 - ITAT ALLAHABAD] prior to the amendment by Finance Act, 2021 in Section 36(1)(va), Section 43B, the issue of allowability of the employee s contribution deposited belatedly as per the due date of the respective Acts however, before the due of filling of return of income under Section 139(1) is covered by the decisions of Hon'ble jurisdictional High Court as well other High Courts. Employee s contribution towards EPF and ESI was deposited by the assessee before the due date of return of income u/s 139(1) which was extended by the CBDT upto 31st October, 2018. Therefore, the claim of assessee is allowed.
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2022 (6) TMI 879
Allowance of interest expenditure - Whether there is direct nexus between the debenture issued and loans advanced? - CIT(A) observed that the interest other than debenture interest to be allowed as these interest expenditures are allowable u/s.57(iii) - CIT(A) confirmed disallowance of interest paid on debenture against this assessee before us - HELD THAT:- Before us, the Ld.AR submitted that the above additional evidence filed by the assessee which are not filed before the AO and he has no occasion to examine the issue resulting to the allowability of interest, the above documents are very crucial and the issue may be remitted back to decide the same in the light of above additional evidence. We exceed to the prayer of the Ld.AR accordingly, this issue in dispute is remitted to the AO to examine the nexus between the debenture issued and loans advanced and decide accordingly. This ground of appeal is treated as allowed for statistical purposes. Disallowance of loss on reasons of non-set up of business - whether the business of the assessee has been set up or not, the assessee has to establish that the company has been already set up for the purpose of carrying on its business operation? - HELD THAT:- The assessee in this case, not established that the assessee is already set up in the business so as to commence its commercial operations and not placed any evidence to suggest that the assessee has set up the business. The financial statement clearly shows that no business has been commenced in the assessment year under consideration and the position of the assessee has been continued till the end of the previous year 2013-14 relevant to AY.2014-15. There was no work in progress in the assessment year under consideration and also in the subsequent assessment year 2015-16, which remain unchanged at NIL as the company has not commenced its business activities. In other words company has not at all completed set up of the business so as to commercially starts its operation. In such circumstances, lower authorities justified disallowing expenditure claimed by the assessee which is only a pre-operative expenditure and cannot be allowed as business expenditure in the assessment year under consideration. The Ld.AR placed reliance on the judgement of the Hon ble jurisdictional High Court in the case of CIT Vs. GMR Energy Ltd.[ 2021 (6) TMI 299 - KARNATAKA HIGH COURT] which is not applicable to the facts of the present case. In view of this, the ground of appeal is dismissed.
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2022 (6) TMI 878
Disallowance u/s 40A - payment of expenditure in cash - plea taken by the assessee in the grounds of appeal is that the Ld. AO has not disputed the genuineness of the impugned expenditure and accepted the sale made by the assessee based on such expenditure - HELD THAT:- We are of the view that this is not enough to bring the case of the assessee out of the ambit of the mandatory provision of section 40A(3). The assessee also claimed that its case is covered under Rule 6DD without specifying under which sub-rule of Rule 6DD as amended by the Income Tax (Seventh Amendment) Rules, 2008 its case falls. In such scenario, in our opinion it would be just and fair if the matter is restored to the file of the Ld. AO for decision afresh. Ld. AO shall give reasonable opportunity to the assessee to present its case and to bring on record all the material in support of its claim that its case falls under Rule 6DD. Thereafter, Ld. AO shall pass reasoned and speaking order in accordance with law. Appeal is partly allowed
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2022 (6) TMI 877
Reopening of assessment / best judgment assessment - addition of receipt of on-money - addition based on the evidence found as result of search and seizure operations in the hands of Shri Madhukar Narayan Patil who is a land aggregator for Jai Corp Group - as no return of income was filed by the appellant in response to said notice u/s 148 appellant also not complied with the other notices issued u/s 143(2) and 142(1) - AO completed the assessment to best judgement by making addition based on the information furnished by the Investigation Wing of the Department, Mumbai that the appellant was paid on-money payment on transfer of the plot HELD THAT:- On mere perusal of the assessment order, it would reveal that the appellant had neither complied with the notice issued u/s 148 nor responded to the notices issued u/s 143(2) and 142(1) of the Act. In these circumstances, based on the information/evidence furnished by the Investigation Wing of the Department, Mumbai found as result of search and seizure operations in the hands of Shri Madhukar Narayan Patil who is land aggregator for Jai Corp Group, the Assessing Officer completed the assessment. No pleadings were made either before the ld. CIT(A) or during the course of hearing before the Tribunal, as to how the appellant was prevented from causing appearance before the Assessing Officer or complying with the statutory notices u/s 148/ 143(2) 142(1). Therefore, the Assessing Officer was justified in making an ex-parte assessment to the best of judgement of the Assessing Officer. The ld. CIT(A) has clearly discussed these facts of the case in great detail vide para 15 of his order. During the course of hearing before us, the appellant had not rebutted the findings of the ld. CIT(A) given in para 15 of his order. Similarly, the evidence and statement given by Shri Madhukar Narayan Patil were supplied to the appellant during the course of proceedings before the ld. CIT(A). The only course of action open to the appellant is to rebut the assessment by cogent reliable evidence, which the appellant failed to do so. In these circumstances, the contentions raised by the appellant before us cannot be accepted - Decided against assessee.
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Customs
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2022 (6) TMI 876
Refund of amount recovered by the respondents by invoking the Bank Guarantee, alongwith the interest - refund rejected on the ground of time limitation - Section 27 of the Customs Act - HELD THAT:- After litigating in a court of law when orders are passed in favour of the petitioner, they are required to be complied with in letter and spirit. Untenable grounds seeking to question the entitlement of the petitioner, does not lie with the respondents. In case the submissions of the respondents were to be accepted, the same would result in overriding the orders passed by the CESTAT. The same is unacceptable - in the facts of the present case, the respondents were not justified in withholding the said payments. In view of the deliberate withholding of the payments, not only the amount is to be returned to the petitioner but they should also be liable to pay interest on the same. Entitlement for Interest - HELD THAT:- Section 27-A of the Customs Act deals with refund of any claim which is liable to attract interest at the minimum of 5% and the maximum of 30%. The Parliament has enacted this law to ensure that the refunds should carry interest. It would imply that any money belonging to the petitioner, which is with the possession of the respondents, requires to be returned along with the rate of interest mentioned therein. Therefore, whether it is a refund of claim of tax or payment in terms of the order of the Tribunal, the petitioner should be entitled for the interest. Keeping in view the peculiar facts and circumstances involved and especially the objections as raised by the respondents, it is deemed just and necessary that the respondents be directed to pay interest at the rate of 10% per annum from the date of the CESTAT order till the date the payments are made to the petitioner. The said amounts shall be paid within a period of four weeks from today. Petition disposed off.
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Corporate Laws
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2022 (6) TMI 875
Cessation of directorship of the 3rd respondent - seeking approval of e-Form DIR-12 filed by the petitioner - Section 167(1)(b) of Companies Act, 2013 - HELD THAT:- As per the provisions of the Companies Act 2013 and the Companies (Appointment and Qualifications of Directors) Rules, 2014, every company, whether new or existing is required to file an e-Form DIR-12 with particulars of its directors and key managerial personnel of the company with the Registrar, within 30 days from the date of appointment/resignation and of any change taking place in their designations. This court is of the opinion that mere pendency of such complaints shall not be a ground to hold the processing/acceptance of Form DIR-12 filed by the petitioner for cessation of directorship of 3rd respondent and the inaction on the part of the R1/Registrar of Companies by withholding processing/accepting the DIR-12 was arbitrary and unreasonable. Due to the inaction on the part of the 1st respondent, the petitioner company was given ACTIVE Non Compliance status for no fault of them leading to imposition of huge penalties and crippling difficulties - The non registration of cessation of directorship of 3rd respondent by way of Form DIR-12 by the Registrar of the Companies was in contravention of the provisions of Section 398 of the Companies Act, 2013. The word shall used in Section 398 (1)(f) of the Companies Act, 2013 denotes that, it is mandatory for the Registrar of Companies to register, process and accept such forms. Filing of Form DIR- 12 was procedural in nature and the same was done pursuant to appointment or cessation or change in designation of a director. The petitioner company, through its Board of Directors and Shareholders was well within its rights to appoint new directors or to confirm the Additional Director as Directors as per the applicable provisions of Companies Act, 2013 - it is considered fit to dispose of the writ petition directing the 1st respondent i.e., Registrar of Companies to consider the Form DIR-12 submitted by the petitioner company, if it is in accordance with law. Petition disposed off.
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Securities / SEBI
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2022 (6) TMI 874
Implementation of the fraudulent CIS - diversion of funds - as submitted principal perpetrators routed the funds raised from the public and their cooperation grave nature of the charges against the applicant - fake invoices having been generated by the companies in which the applicants were involved - Role of present applicants - Disposal of the present bail applications - HELD THAT:- We have decided the present applications independently of those orders, as the said orders concern directors of PGF/PACL [ 2013 (3) TMI 390 - SUPREME COURT] , whose roles are at considerable variance from the roles attributed to the present applicants by the CBI itself. Suffice it to state that while rejecting Mr. Subrata Bhattacharya s application for bail, the Supreme Court specifically noted that the matter involved an alleged criminal conspiracy in furtherance of which the Directors of M/s PGF Limited and M/s PACL Limited are alleged to have illegally obtained a benefit of Rs 45,184 crores at the expense of 5.46 crore investors spread all over the country from sham land transactions. The Court proceeded on the basis of roles attributed to the applicants therein, as elucidated in the affidavit of the CBI. The applicants in the present case, in contrast, are not directors of PGF/PACL and their roles are required to be independently considered in connection with their applications for bail. As applying the relevant principles to the facts of the present cases, further incarceration of the applicants, pending conclusion of the trial, is unnecessary and they are liable to be released on bail, albeit with stringent conditions to ensure their presence at the trial and to minimise the risk of prejudice to the prosecution. As directed that the applicants will be admitted to bail in connection with FIR No. RCBD1/2014/E/ 0004/CBI/BS FC, registered on 19.02.2014, in Police Station CBI, under Sections 120B/409/411/420/467/468/471/474 of the IPC and Sections 4/5 read with Section 6 of the PCMCS Act. The applicants will furnish a personal bond in the sum of ₹30,00,000/- [Rupees Thirty lakhs] each, with two sureties each in the like amount, to the satisfaction of the Trial Court. At least one of the sureties in each case will be from the spouse or a blood relative of the concerned applicant. Each of the applicants will furnish their residential address to the IO, which will be verified by the IO. The applicants will remain resident at the said addresses and will give prior information to the Special Court and the IO in the event of any change of address. The applicants will not leave the country without the permission of the Special Court.
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Insolvency & Bankruptcy
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2022 (6) TMI 873
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The corporate debtor in its reply letter dated 14.05.2016 to the legal notice of the Petitioner dated 22.04.2016, the Respondent has admitted that the claims in furtherance of the debit notice of Rs.15,60,326.94 was revised and reduced to Rs.10,43,923.20, this by itself is also an admission of liability by the Corporate Debtor. However, the Corporate Debtor has contended that the payment thereof is subject to the condition of the Petitioner returning the defective spare parts to the Corporate Debtor. In this regard, Petitioner has already submitted that all the defective goods lying with them were returned to the Corporate Debtor on 21.10.2015 by courier, and the same was communicated to the Corporate Debtor vide email dated 24.10.2015. Moreover, the Petitioner has filed the copy of the said e-mail. Hence the Petitioner has proved the existence of debt and default on the part of the Corporate Debtor. The Petitioner has filed the present Petition before this Tribunal on 22.06.2018 and as such the Notification effected in increasing the threshold limit from Rupees One Lakh to Rupees One Crore as on and from 24.03.2020 does not apply to the present case. Under the said circumstances, since the debt and default on the part of the Corporate Debtor being proved and also by looking at the consent given by an Insolvency Professional, this petition is hereby admitted. Petition admitted - moratorium declared.
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2022 (6) TMI 872
Approval of resolution plan - allegation of non consideration of undervalued transaction - reversal of effects of such avoidance transactions - rejection of Resolution Plan approved by Committee of Creditors - disqualification of Resolution Applicant i.e. Respondent no.1 and 2 u/s 29A of the Code - directions to pass order u/s 47 of the Code requiring Board to initiate disciplinary proceedings against Respondent no. 3 - HELD THAT:- This bench is of the view that the Corporate Debtor is a registered MSME and the provisions of Section 240 A of the Code provide an exemption to the Successful Resolution Applicant from compliance with the provisions of Section 29A(c) and (h) of the Code. So, the resolution plan submitted by the resolution applicant is very much under the provisions of Code. Moreover, a clause of personal guarantee in the resolution plan will not extinguish the right of creditors to proceed against personal guarantors. Creditors are always at liberty to proceed against personal guarantor separately. The application under section 66 is to be filed only by the resolution professional or the liquidator. Moreover, the applicant herein is not a resolution professional and is only a dissenting financial creditor and in this capacity the Applicant has no right to file the present application. In any case, the present application is liable to be dismissed on the ground of maintainability also, since the transactions which were mentioned in the application under section 47 and section 66 does not qualify the criteria of undervalued or fraudulent transaction - Application dismissed.
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2022 (6) TMI 871
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Date of default from the due date of Invoice fell on 22.12.2014 and the Petition was filed on 01.08.2018. But it is seen from the correspondences as exchanged between the parties that the Corporate Debtor had acknowledged in its emails dated 27.03.2015, 10.09.2015, 24.09.2015 and 18.11.2015 wherein the Corporate Debtor stated that the financial condition of the Company is unstable, and they were unable to help immediately. The Corporate Debtor Company were under the process of arranging fund as they were facing huge cash flow problems - Hence, it is evident that the Corporate Debtor Company were not in a position to pay the debt and also any contentions of the Corporate Debtor were not raised/replied to the Demand Notice sent by the Operational Creditor to the Corporate Debtor dated 17.05.2018. The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices. Petition admitted - moratorium declared.
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2022 (6) TMI 870
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Although from the petition, pleadings made and arguments extended by the Counsel of both the sides, it is observed that the defaults in Loan account under Contract No.179643 at Serial No 1 and 2 are dated 05.02.2020 and 05.03.2020 and the remaining defaults were on or after 05.04.2020 which comes under section 10A of the IBC 2016 which cannot be considered as default. Hence, the bench is of considered view that the actual default made by the Corporate Debtor is Rs.1,12,73,387 along with interest.Therefore, it is a fit case for Admission of the Corporate Debtor into Insolvency, because Debt and Default is established and the amount of Debt is more than threshold limit i.e. Rupees One Crore. The application is complete and has been filed under the proper form. Hence, the Application filed by the Financial Creditor is hereby deserves to be admitted. Petition admitted - moratorium declared.
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2022 (6) TMI 869
Requirement of having custody, control and possession of the Unit in order to discharge duties as the Liquidator - HELD THAT:- The respondents in this matter are not represented in spite of notice having been served on the respondents. It is very important to notice here that the Liquidator, is an Officer of the Court appointed under the Code for the purpose of performing his statutory duties under section 35 of the Code. The Liquidator has the power to take into custody and control all the assets, property, effects and actionable claims of the Corporate Debtor and have them evaluated, and to take all such measures to protect and preserve the assets and properties of the Corporate Debtor as he considers necessary. The statutory duties assigned to the Liquidator under the Code cannot be performed if the other law enforcing authorities do not cooperate with the Liquidator and provide him necessary aid and assistance, when it is required to enable him to perform his duties as per law. In this matter the timely assistance has not been provided by Respondent Nos. 2 and 3 to have the custody and possession of the immovable and moveable properties of the Durgapur Unit of the Corporate Debtor from Respondent No. 1. Respondent No. 1 is directed to immediately hand over the Durgapur Unit of the Corporate Debtor situated at Banskopa, L T More, NH-2, Durgapur, under Gopalpur Gram Panchayat, Police Station-Kanksa, District-Paschim Burdwan, Pin-713212, which is being illegally occupied by Respondent No. 1 including all the moveable lying therein that belong to the Corporate Debtor. If there is any disobedience or reluctance or resistance on the part of Respondent No. 1 in handing over the said premises to the applicant as directed herein, Respondent No. 2 and 3 are directed to provide all types of assistance and protection to the applicant to enable him to enter into and take custody, control and possession of the said unit and discharge his duties as the Liquidator and carry out the orders passed by this Adjudicating Authority. Application disposed off.
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2022 (6) TMI 868
Reconstruction of documents - original property documents lost - seeking issuance of certified copies of documents - HELD THAT:- It is a fact borne on record that the 1st Respondent has filed an Application under section 19(5) of the Code and this Tribunal has also issued directions to the Respondents therein to comply with its order. It is also on record that the 1st Respondent could get only a limited information from the erstwhile promoter/Directors. In the present case it could not happen due to the non-cooperation of the erstwhile promoter/directors despite of orders issued by this Tribunal. In the absence of the original title deeds, there is not other option except reconstruct the documents including the property documents. The 2nd to 8th Respondents are directed to issue certified copies of the documents mentioned in the respective Schedules attached with the Application filed by the Applicants immediately once the application for the same is filed with them. The said documents would be treated as 'Original' documents for all future purposes and once the 1st Respondent get all the documents from the 2nd to 8th Respondents, he will hand over the same to the 1st Applicant. Application allowed.
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2022 (6) TMI 867
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - complaint under section 138 of the N.I.Act, 1881 pending between the parties - pre-existing disputes pending between the parties - HELD THAT:- It is clear that in reply to the demand notice, the Corporate Debtor had referred to some disputes pending before the Criminal Court, Chennai and had further stated that the letters and correspondence will be sent to the Operational Creditor shortly. In continuation thereof, the Corporate Debtor has further referred to those disputes between the parties in its reply affidavit also and during the course of arguments also, those very documents have been placed before the Bench. Since the complaint under section 138 of the N.I.Act, 1881 had been pending between the parties and certain pre-existing disputes had been pending between the parties, this petition will have to be rejected. Petition dismissed.
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2022 (6) TMI 866
CIRP - Prosecution proceedings - Failure to provide all the requisite information to the RP - violation of provisions contained in Sections 70, 73 (b) and 19(1) r/w Section 235A of I B Code - HELD THAT:- IBBI has powers to set the criminal law in motion through its authorized officer. In view of Section 236(1) thereof, the offences punishable under the said Code, are triable by the Special Courts so constituted under Chapter XXVIII of the Companies Act, 2013. The complainant has placed on record notification number S.O. 2554(E) dated 27.07.2016, whereby this Court has been conferred with the jurisdiction to try the offences in the capacity of Special Court so constituted in terms of Section 435(1)(a) of the Companies Act, 2013. After considering the documentary evidence placed on record, this Court is satisfied that prima facie the aforesaid offences under the Insolvency Bankruptcy Code, 2016 have been committed by the accused person. Thus, cognizance of said offences is taken - Since the present complaint has been made by a public servant in his official capacity, the pre-summoning evidence is required to be dispensed with in view of proviso to Section 200 CrPC. List on 07.07.2022.
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Service Tax
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2022 (6) TMI 865
Rejection of petitioner s declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner was an eligible person entitled to file a declaration or not - HELD THAT:- When provisions of section 121 (r) read with clause (c) of section 123 read with section 124 of Finance Act, the Circular dated 12th December, 2019 and answer to FAQ 45 are considered, we can safely conclude that requirement under the scheme is admission of tax liability by the declarant during inquiry, investigation or audit. In the show cause notice dated 16th October, 2019, there is an admission from respondents that petitioner s Director in his statement dated 25th June, 2019 has admitted service tax liability amounting to Rs.144,60,835/- as payable on 5th April, 2018. A show cause notice has been issued after 30th June, 2019, i.e, on 16th October, 2019 but that should make no difference to eligibility of petitioner. Eligibility shall be as it was on the relevant date, i.e, on 30th June, 2019 because as on 30th June, 2019, there was an inquiry/investigation pending against petitioner. The amount of duty payable has been quantified on 25th June, 2019 when in the statement of Madhukar Poojari, Director of petitioner it was recorded. In the show cause notice also the total tax liability of the petitioner as on 5th April, 2018 has been quantified as Rs.144,80,183/-. The fact that in the show cause notice which was issued subsequently tax duties quantified by the Departmental Authorities was about Rs.19,348/- in excess would not be material at all to determine eligibility criteria in terms of the scheme. In a similar case which was relied upon by Mr. Shrivastava in the matter of SABAREESH PALLIKERE, PROPRIETOR OF M/S. FINBROS MARKETING VERSUS JURISDICTIONAL DESIGNATED COMMITTEE, THANE COMMISSIONERATE, DIVISION IV, RANGE-II ORS. [ 2021 (2) TMI 515 - BOMBAY HIGH COURT] where it was held that The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30.06.2019. The fact that there could be discrepancy in the figure of tax dues admitted by the person concerned prior to 30.06.2019 and subsequently quantified by the departmental authorities would not be material to determine eligibility in terms of the scheme under the category of inquiry, investigation or audit. What is relevant is admission of tax dues or duty liability by the declarant before the cut off date. Of course the figure or quantum admitted must have some resemblance to the actual dues. In our view, petitioner had fulfilled the said requirement and therefore he was eligible to make the declaration in terms of the scheme under the aforesaid category. Rejection of his declaration therefore on the ground of ineligibility is not justified Facts in that case were also similar to the facts at hand. In that case also petitioner had accepted total service tax liability for the period under consideration and after initiation of inquiry also paid certain amounts but when the show cause cause-cum-demand notice was issued, amount had varied and petitioner's declaration was rejected on the ground of ineligibility since the final amount came to be quantified after 30th October, 2019, i.e, on 11th November, 2019 when the show cause-cum-demand notice was issued - thus it is held that in petitioner's case there was tax dues of petitioner because an inquiry/investigation was pending against petitioner and the amount of duty payable under GST Act was quantified before 30th June, 2019. Since respondent No.4 had issued Form-2 indicating certain amount as payable by petitioner and petitioner had accepted the same by submitting Form-2A on 25th December, 2019, respondent No.4 shall issue Form-3 namely statement in electronic form indicating the amount payable by petitioner in accordance with subsection 4 of Section 127 of the Finance Act, 2019. Petition disposed off.
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2022 (6) TMI 864
Rejection of application under the SVLDR Scheme - delay in filing present application - steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant, were not duly followed - HELD THAT:- There is no pleading or document to show that the remarks/instructions given by Respondent No. 4 as set forth in Annexure P-2 have been adhered to. There are various other steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant. Therefore, although the Petitioner was given an opportunity to participate further in the SVLDR Scheme, it chose not to do so in the manner prescribed Besides this, there is an issue relating to delay which needs to be dealt with as well. The SVLDR Scheme was in force for a limited period, which came into effect from 01.09.2019. Rule 3 of the said Scheme, inter-alia, states that any declaration to be made under the SVLDR Scheme was to be made by an Applicant (Declarant) on or before 31.12.2019. The Petitioner states that his application was rejected on 25.12.2019 - The only other explanation that has been given by the Petitioner is that of the onset of COVID-19. However, the Petitioner chose not to challenge the order of rejection in the pre-Covid period or thereafter, until 2.5 years later. The Petitioner has failed to discharge this burden of delay and laches. No cogent explanation for why the Petitioner waited 2.5 years to approach this Court has been provided. No reasons have been given for not following the procedure as set forth in the SVLDR Scheme. In fact, the Petitioner decided not to disclose these facts to the Court in its pleadings. Clearly these details have been deliberately concealed by the Petitioner in the present Petition. It is a matter of record that the SVLDR Scheme came into force on September 1, 2019 and in terms, inter-alia, of the provisions of the Scheme, the declaration thereunder was to be made electronically on or before 31.12.2019. The Scheme has come to an end more than 2.5 years ago and admittedly, no new Scheme or similar Scheme has been floated by the Respondent No. 2/Ministry of Finance, Government of India. Therefore, the Petitioner has failed to show any cause why the relief sought by him under the SVLDR Scheme should be granted once the Scheme and all its proceedings have been closed. Writ Petition is dismissed.
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2022 (6) TMI 863
Rejection of application under the SVLDR Scheme - delay in filing present application - steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant, were not duly followed - HELD THAT:- There is no pleading or document to show that the remarks/instructions given by Respondent No. 4 as set forth in Annexure P-2 have been adhered to. There are various other steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant. Therefore, although the Petitioner was given an opportunity to participate further in the SVLDR Scheme, it chose not to do so in the manner prescribed Besides this, there is an issue relating to delay which needs to be dealt with as well. The SVLDR Scheme was in force for a limited period, which came into effect from 01.09.2019. Rule 3 of the said Scheme, inter-alia, states that any declaration to be made under the SVLDR Scheme was to be made by an Applicant (Declarant) on or before 31.12.2019. The Petitioner states that his application was rejected on 25.12.2019 - The only other explanation that has been given by the Petitioner is that of the onset of COVID-19. However, the Petitioner chose not to challenge the order of rejection in the pre-Covid period or thereafter, until 2.5 years later. The Petitioner has failed to discharge this burden of delay and laches. No cogent explanation for why the Petitioner waited 2.5 years to approach this Court has been provided. No reasons have been given for not following the procedure as set forth in the SVLDR Scheme. In fact, the Petitioner decided not to disclose these facts to the Court in its pleadings. Clearly these details have been deliberately concealed by the Petitioner in the present Petition. It is a matter of record that the SVLDR Scheme came into force on September 1, 2019 and in terms, inter-alia, of the provisions of the Scheme, the declaration thereunder was to be made electronically on or before 31.12.2019. The Scheme has come to an end more than 2.5 years ago and admittedly, no new Scheme or similar Scheme has been floated by the Respondent No. 2/Ministry of Finance, Government of India. Therefore, the Petitioner has failed to show any cause why the relief sought by him under the SVLDR Scheme should be granted once the Scheme and all its proceedings have been closed. Writ Petition is dismissed.
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2022 (6) TMI 862
Rejection of application under the SVLDR Scheme - delay in filing present application - steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant, were not duly followed - HELD THAT:- There is no pleading or document to show that the remarks/instructions given by Respondent No. 4 as set forth in Annexure P-2 have been adhered to. There are various other steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant. Therefore, although the Petitioner was given an opportunity to participate further in the SVLDR Scheme, it chose not to do so in the manner prescribed. Besides this, there is an issue relating to delay which needs to be dealt with as well. The SVLDR Scheme was in force for a limited period, which came into effect from 01.09.2019. Rule 3 of the said Scheme, inter-alia, states that any declaration to be made under the SVLDR Scheme was to be made by an Applicant (Declarant) on or before 31.12.2019. The Petitioner states that his application was rejected on 25.12.2019 - The only other explanation that has been given by the Petitioner is that of the onset of COVID-19. However, the Petitioner chose not to challenge the order of rejection in the pre-Covid period or thereafter, until 2.5 years later. The Petitioner has failed to discharge this burden of delay and laches. No cogent explanation for why the Petitioner waited 2.5 years to approach this Court has been provided. No reasons have been given for not following the procedure as set forth in the SVLDR Scheme. In fact, the Petitioner decided not to disclose these facts to the Court in its pleadings. Clearly these details have been deliberately concealed by the Petitioner in the present Petition. It is a matter of record that the SVLDR Scheme came into force on September 1, 2019 and in terms, inter-alia, of the provisions of the Scheme, the declaration thereunder was to be made electronically on or before 31.12.2019. The Scheme has come to an end more than 2.5 years ago and admittedly, no new Scheme or similar Scheme has been floated by the Respondent No. 2/Ministry of Finance, Government of India. Therefore, the Petitioner has failed to show any cause why the relief sought by him under the SVLDR Scheme should be granted once the Scheme and all its proceedings have been closed. Writ Petition is dismissed.
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2022 (6) TMI 861
Right to appeal against the order of the Designated Committee constituted under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- A perusal of the impugned order shows that although the petitioner/revenue was given an opportunity to participate in the appeal proceedings, it chose not to do so - Besides this, there is an issue relating to delay which needs to be dealt with. It appears that since the petitioner/revenue has taken the position before the Supreme Court that an appeal against the order of the Designated Committee would not lie before the Commissioner (Appeals), that this writ petition has been filed - The record also shows that the permission for filing the instant writ petition was given, after nearly 9 months of the aforementioned communication dated 18.06.2021 i.e., on 17.03.2022. List the matter on 18.08.2022.
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2022 (6) TMI 860
Invocation of extended period of limitation - Non-payment of service tax on several items of work - business auxiliary service - whether the Department was justified in invoking the extended period of limitation of five years, because admittedly the show cause notice was issued on October 24, 2009 for the period 2004-2005 to 2007-2008? - HELD THAT:- In the present case, the show cause notice merely mentions that the appellant suppressed the value of taxable service. The show cause notice does not mention that suppression was with an intention to evade payment of service tax. The submission of learned authorized representative appearing for the Department that the show cause notice also mentions that suppression was with an intent to evade payment of service tax cannot be accepted because the said allegation is in regard to levy of penalty under sections 76 and 78 of the Finance Act and not section 73(1) of the Finance Act. The Commissioner, however, observed that the appellant had evaded payment of service tax by suppressing the correct value on taxable service. The finding has not only been recorded without giving reasons, but even otherwise the order cannot go beyond the show cause notice. In COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [ 2007 (8) TMI 10 - SUPREME COURT] , the Supreme Court observed that it was well settled that a show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest and if there was no invocation of Rule 7 of the Valuation Rules, 1975 in the show causes notice, it would not be open to the Commissioner to invoke the said Rule - In NESTOR PHARMACEUTICALS LTD. VERSUS COMMISSIONER OF C. EX. DELHI [ 2000 (1) TMI 187 - CEGAT, NEW DELHI] a Division Bench of the Tribunal observed that the Commissioner (Appeals) cannot go beyond the scope of the show cause notice and that no matter can be decided on a ground other than the grounds raised in the show cause notice and for this reason the impugned order was set aside. It, therefore, follows that the Commissioner was not justified in holding that the extended period of limitation under the proviso to section 73(1) of the Finance Act was correctly invoked - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (6) TMI 859
CENVAT Credit - credit denied on the ground of nexus of input services with the manufacturing of the appellant final product - HELD THAT:- The fact is not under dispute that this case is the genesis of the audit objection raised and proceedings were initiated against appellant s own unit and their other units in respect of same inputs services. As regard the other unit, the entire demand raised on the same input services have been dropped by the Learned Adjudicating Authority remaining by Tribunal CESTAT Mumbai. It is also submitted by the Learned Counsel that against the order of the Commissioner (Appeals) in the case of other unit department has accepted order with this status of the case in the present case also being involved same input services all the services are admissible input services and also following on various case laws submitted by the appellant including their own case [ 2014 (2) TMI 495 - CESTAT MUMBAI] in respect of same services issue is no longer res-integra, and it is not only in the appellant s own case in respect of these services there are various other judgments, Wherein the issue of nexus of the said services with the manufacturing final product is decided in favour of the assessee. Appeal allowed.
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2022 (6) TMI 858
CENVAT Credit - denial of Cenvat Credit on the ground that the appellant have taken the Cenvat Credit suo-moto as they have also filed the refund claim - time limitation - HELD THAT:- The Cenvat Credit was denied by both the lower Authorities on the ground that they have taken credit suo-moto. It is difficult to understand what is the meaning of suo-moto where the appellant have taken the credit first time at the time the refund stand rejected. The appellant had two option either to pursue the refund or to take the credit which is permissible as per Cenvat Credit Rules, 2004. Since the appellant s claim stand rejected and on that submission their appeal also disposed of by this tribunal. According they have taken the Cenvat Credit after disposal of the appeal there is nothing survive in the department s case. Time Limitation - HELD THAT:- The allegation of time limitation was not made in the show cause notice. Therefore, the appellant cannot be expected to make any presentation on the issue which was not raised in the show cause notice. Secondly, it is admitted fact that the appellant have taken the Cenvat Credit of ISD invoice and in case of ISD invoice no time limit has been prescribed. It is a settled law that if the invoice is of dated prior to amendment inserting the 1 year time limit, in such case the limitation on 1 year shall not apply, for this reason also the ground of the Lower Authority on limitation does not survive. Hence there is nothing wrong in availment of Cenvat Credit by the appellant. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (6) TMI 857
Validity of assessment order - no opportunity granted, prior to framing of the impugned assessments - violation of principles of natural justice - HELD THAT:- After referring to the verification to be undertaken by the Assessing Authorities in regard to the materials in his possession, at paragraph 3.3.5, the Assessing Authority is required to issue notice along with all details connected to the assessment and seek objections from the assessee concerned. Thereafter, a personal hearing shall be afforded, either physically or virtually, granting adequate opportunity to the dealer to put forth its objections. The Circular bearing No.5/2021 also envisages a request of the assessee for cross examination of the third party dealer. It also provides for such an opportunity of cross examination to be granted suo motu, if the Assessing Authority believes that it would be so appropriate. The assessment will thereafter be concluded within a period of 180 days from date of issue of show cause notice. Let this procedure be followed in the present matters as well. Show cause notices, as indicated in the Circular will be issued to the petitioner within a period of four (4) weeks from today with all necessary enclosures - petition allowed.
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Indian Laws
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2022 (6) TMI 856
Remission of sentence as made by the first appellate court - increase in the compensation amount - Section 357 (3) of the Code of Criminal Procedure - HELD THAT:- On perusal of the sentencing part of the judgement, it appears that practically no reason has been assigned by the Appellate Court for aforesaid remission though the appellate court is of the view that the Trial Court judgment is reasoned and well written. Appellate Court specifically observed that the learned Magistrate has rightly convicted the accused no. 2 for committing offence under Section 138 of the Negotiable Instruments Act and he has also rightly acquitted accused no. 1 as she is not the drawer of the cheque but he observed that the term of sentence imposed upon the accused appears to be excessive. He has not explained why it appears to be excessive to the appellate court because the maximum sentence of imprisonment that a Magistrate can award under Section 138 of the Negotiable Instruments Act is for two years - the finding of the first appellate court needs to be interfered because though the offence under Section 138 of the Negotiable Instruments Act is a basically documentary offence but still such proceeding can never be considered as money recovery proceeding. Once it is proved that the offence has been committed, court is under obligation to impose appropriate sentence to the accused person. The impugned judgment dated 6/9/2018 is set aside only to the extent that the sentence as awarded by the trial court shall remain unaltered. The finding of both the courts below respondent no. 2 as convict and acquitting respondent no.1 on the ground that she is not the drawer of the cheque, remains uninterfered by this court - application disposed off.
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2022 (6) TMI 855
Dishonor of Cheque - Existence of erstwhile company and liability of resultant of company after merger - insufficiency of funds - rebuttal of presumption - argument of the learned counsel for the petitioner was that the complaint has been filed by an unauthorised person since the General Power of Attorney marked at Ex. P-1 was subsequent in its date from the date of filing of the complaint - HELD THAT:- No doubt, the General Power of Attorney executed in favour of PW-1, which is produced at Ex. P-1, is subsequent in its date than that of the lodging of the complaint, however, along with the complaint also, the very same PW-1, who has filed the said complaint, has produced one more copy of the General Power of Attorney, however, shown to have been executed by one Future Capital Holdings Ltd., in his favour. The said Power of Attorney authorises PW-1 to lodge the complaint and to proceed in the criminal prosecution When under a judicial order, merger of the Companies has taken place, the earlier Company cease to be in existence after its merger with another Company and the Company which emerges after merger would be entitled to all the rights and liabilities of the merged Company and subject to the terms of the merger. Thus, when the previous Company which had granted loan to the accused is shown to have been merged, it cannot be said that the present complainant-Company does not have locus standi to file the complaint, so also, its Power of Attorney Sri. V. Jansi Rao. Therefore, the argument of learned counsel for the petitioner on the said point is not acceptable. The last point of argument of learned counsel for the petitioner that the notice issued after dishonour of the cheques since being addressed to the accused in his personal name, but, not to the proprietorship concern, is an invalid notice, is also not acceptable, for the reason that, admittedly the accused is the Proprietor of his concern M/s. Vertical Network Communications - A proprietorship concern since being not an independent legal entity, it can be sued in the name of the Proprietor. Since both the trial Court and the Session Judge's Court after appreciating the materials placed before them, including oral and documentary evidence, have rightly concluded holding the accused guilty of the offence punishable under Section 138 of N.I. Act and sentenced him proportionately to the gravity of the proven guilt, there are no perversity, illegality or error warranting any interference at the hands of this Court. The Criminal Revision Petition is dismissed as devoid of merits.
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2022 (6) TMI 854
Dishonor of Cheque - petitioner was not aware of the said proceedings and was declared a proclaimed person - complaint under Section 138 of the Negotiable Instruments Act, has been withdrawn in view of the compromise - HELD THAT:- In the present case, it is not in dispute that the complaint under Section 138 of the Act of 1881 was filed by Sunaura Technologies Private Limited and it is in the said proceedings that the petitioner was declared as proclaimed person vide order dated 7.5.2018 and a direction was given to the concerned Police Station to initiate proceedings against the petitioner under Section 174-A IPC and in pursuance of the said impugned order, present FIR under Section 174-A of the IPC, was registered. It is the case of the petitioner that he was not aware of the proceedings under Section 138 of the Act of 1881 and was subsequently arrested and released on bail. It has been held in the abovesaid judgments that in similar situation, keeping the proceedings under Section 174-A of the IPC alive would be an abuse of the process of the Court. Moreover, the order declaring the petitioner as proclaimed person would prove to be insignificant inasmuch as the main complaint filed under Section 138 of the Act of 1881 itself has been withdrawn. The present petition is allowed.
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2022 (6) TMI 853
Dishonor of Cheque - rebuttal of presumption - existence of consideration for the Suit Promissory Note or not - Recovery of amount alongwith the interest - HELD THAT:- The Suit Promissory Note indicates that the consideration is a sum of Rs.1,45,12,735/-. Since it is a promissory note, it qualifies as a negotiable instrument in terms of the NI Act. As contended by the Plaintiff, if execution is proved, the Plaintiff is entitled to the presumption under Section 118 of the NI Act. Consequently, the first question is whether the Plaintiff has proved execution of the Suit Promissory Note. By referring to the reply statement filed in O.S.No.36 of 2016, the Defendant contended that the execution of the promissory note was denied by the Defendant. On examining Section 73, it is evident that it specifies one of the methods of proving a document. In order to invoke Section 73, admitted signatures of the person concerned should be available. In this case, the Defendant admits the signatures on Ex.P8, Ex.P9 and Ex.P12. On account of the availability of documents bearing the admitted signature of the Defendant, it is possible to compare such admitted signatures with the disputed signature. Upon undertaking such comparison, the disputed signature on Ex.P13 tallies with the admitted signatures on visual examination with the naked eye. The Defendant denies the signature largely on the basis that the name of the signatory/Defendant is not written in capital letters beneath the disputed signature on Ex.P13. Merely because the name of the executant has not been written beneath the signature, the genuineness of the signature cannot be questioned. Thus, it cannot be concluded that the existence of consideration for the Suit Promissory Note is improbable. In effect, the Defendant has failed to disprove the existence of consideration in the manner required by reading Section 3 of the Evidence Act and Section 118 of the NI Act along with the interpretations thereof by the Hon'ble Supreme Court. Once it is concluded that the existence of consideration is not improbable, it should be concluded that the Defendant has failed to effectively rebut the presumption. For such reason, the Plaintiff is entitled to succeed. Interest - HELD THAT:- The Plaintiff has claimed a sum of Rs.1,71,20,256/- by calculating interest on Rs.1,45,12,735/- at 6% per annum from the date of the Suit Promissory Note until the date of the plaint. Interest has been claimed at 6% per annum although the Suit Promissory Note specifies that interest would be payable at 24% per annum. As indicated earlier, the Plaintiff is entitled to this sum. Although the Plaintiff has claimed interest at 24% per annum on Rs.1,71,20,256/- from the date of plaint until the date of realization, by taking into account the prevailing interest rates, the Plaintiff is entitled to interest at 9% per annum from the date of plaint until the date of realization. The suit is decreed by directing the Defendant to pay the Plaintiff a sum of Rs.1,71,20,256/- with interest thereon at 9% per annum from the date of plaint till the date of realization - Application allowed.
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