Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 24, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Principles of natural justice - Validity of assessment order - The procedure established by law, particularly, the opportunity of personal hearing was unfairly denied to the petitioner-assessee. It is trite law when a thing is prescribed to be done in a particular manner, it must be done in that manner or not at all. - HC
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Grant of Statutory Bail - availment of illegal Input Tax Credit - fake invoices - charge sheet not filed within the statutory period of 90 days - Section 132 (1) (i) of the CGST Act, 2017 - This Court is inclined to give one more opportunity and grant bail to the petitioner subject to conditions imposed - HC
Income Tax
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Entitlement u/s 10B - The petitioner has to get an approval from the competent Board as contemplated for claiming exemption under Section 10-B of the Income Tax Act. Even in case, there is a change of authorities / Board by the Ministry, it is for the petitioner to approach the Ministry or the Department concerned for the purpose of the procedures, which all are in force for claiming exemption under Section 10-B of the Income Tax Act. - HC
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Addition u/s.153A - addition u/s.69A - Assessee was the beneficial owner of the foreign bank account of HSBC Bank at Geneva - Since assessee is a non-resident, at the cost of repetition, there cannot be any addition in respect of a foreign bank account in HSBC Bank, Geneva in India either on substantive or on protective basis. - AT
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Revision u/s 263 - Addition u/s 68 - unexplained share capital and premium - The assessee had not only submitted all the details and evidences to prove the share capital raised but has also produced all the directors of shareholder companies who were examined on oath - AO has verified the bank statements, books of accounts, copy of share application and allotment forms, etc. were checked and placed in the records. - PCIT could not have usurped the revisional jurisdiction u/s 263 of the Act without satisfying the conditions - AT
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Addition of gift u/s 68 - there is no discrepancy in the Gift to the director of the assessee company. The donor is the real brother of recipient of the Gift. - CIT(A) has rightly deleted the additions - AT
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Monetary limit for filing of appeal by revenue in case of penalty - Penalty u/s 271(1)(c) on bogus purchases - Quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the Circular w.r.t penalty also, it could by no means be construed that penalty was to be treated at par with the quantum additions. - AT
Customs
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Validity of notification for restricting the import of certain beans, peas and pulses - different interim orders were passed by the different High Courts and the importers effected various imports on the strength of such interim orders. - The High Court has taken into account a few factors standing in favour of the importers like the orders-in-original holding the field; the importers having made the necessary payments; and the importers incurring expenditure because of warehousing. - The goods in question fall in the category of 'prohibited goods'. - SC
Indian Laws
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Dishonor of Cheque - The petitioner failed to explain as to what were the circumstances under which photocopy was prepared and who was in possession of the original document at the time of photocopy being prepared. In view of these circumstances, this Court comes to conclusion that no foundation has been laid for leading secondary evidence in the shape of photocopy. - HC
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Dishonor of Cheque - The cheque is said to have been given in the year 2013, as such, the year on the cheque is also shown as '2003' by overwriting the digit '1' against '0' at tens' place. Thus, the cheque is shown to have been issued in the year 2013 - No doubt it is an alteration, but had it been a material alteration, the banker while dishonouring the cheque would have, apart from showing the reason of insufficiency of funds in the account of the drawer, would also have mentioned the reason of "alteration require drawer's authentication". It is for the reason that the cheque return memo which is at Exhibit P-2 in its Code No.'1', though mentions the reason for return as "funds insufficient", the Code No.'12' of the very same exhibit for return mentions "alterations require drawer's authentication". - HC
Service Tax
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100% EOU - refund of unutilized CENVAT credit - time limitation - After the introduction of GST in July 2017, there is no option provided to the noticee to avail CENVAT credit, as the returns have been suspended with regard to erstwhile regime. Consequently, the noticee filed the refund of the amount debited in excess in terms of provision 142(3) of CGST Act which was allowed as credit. - The impugned order denying the refund by invoking Section 142(3) of CGST is not sustainable in law - AT
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Demand of service tax - reverse charge - revenue neutral issue - extended period of limitation - The extended period of limitation has wrongly been invoked by the Revenue in the present case because the appellant has not concealed any material fact - AT
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Liability on legal heir of the dues of deceased - It is very much clear that in case of transfer or otherwise disposal of the business, in such circumstances, only the successor is liable to pay the dues. There is no provision in law till yet in case of death of the proprietor of the firm who will be liable to pay the dues thereof - in case of death of the proprietor of the firm, no liability can be fastened on the legal heir for the period till the lifetime of the proprietor - AT
Central Excise
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Once the credit of education cess and secondary education cess is specifically disallowed to be carried forward as transitional credit, they remain and retain their character as education cess and secondary education cess as cenvat credit as per Rule 3 of CCR, 2004. Since there is no finding on the merit by the learned Commissioner(Appeals), it will not be appropriate to decide the appeal on merits. The dismissal of the appeal for non-compliance of mandatory predeposit is not justified in law when the appellant has already paid the entire duty by debiting the cenvat credit account. - AT
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Refund of CENVAT Credit - the credit was reversed under GST Law at the time of filing refund claim. - It is very strange that the learned Commissioner (Appeals) has failed to give any finding on the above relied upon decisions and he has placed reliance on decisions which are not relevant to the facts of the present case. The decisions relied upon by the learned Commissioner in the impugned order does not deal with the subject involved in these cases. - The rejection of the refund under Rule 5 of CCR read with Notification No.27/2012 is not sustainable in law - AT
VAT
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The practice of filing Writ Petitions without exhausting the statutory appellate remedy is in ascending mode and most of such Writ Petitions are filed with an idea to evade payment of pre-deposit for filing an appeal which is contemplated under the procedures. However, the High Court need not encourage such practise. Respecting the institutions created under the legislations is of paramount importance. The High Court cannot undermine the importance of the appellate forum created under the statute, unless there are compelling reasons. - HC
Case Laws:
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GST
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2021 (6) TMI 777
Grant of Anticipatory Bail - applicant is willing to produce all documents required and is also willing to get his statement recorded on the date fixed by the proper authority - Section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The applicant states that he is willing to cooperate with the enquiry and comply with the summons. However, in view of Sections 193 and 228 IPC, he apprehends arrest which, in the present circumstances, is stated to be not required as no custodial investigation would be necessary as the applicant is willing to produce all documents required and is also willing to get his statement recorded on the date fixed by the proper authority - Matter requires consideration. The applicant is entitled to interim anticipatory bail in this case, at this stage - the applicant shall be released on interim anticipatory bail during the investigation, till the next date fixed, on his furnishing a personal bond of ₹ 50,000/- with two sureties of the like amount to the satisfaction of the Station House Officer of the police station concerned on the conditions imposed.
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2021 (6) TMI 775
Seeking release of seized goods - silver biscuits - kacha silver articles - cash - typographical errors were made with regard to the particulars of the order of detention - HELD THAT:- The subsequent development in the form of passing of the final order of confiscation as well as imposition of tax, penalty and fine upon the petitioners has rendered their initial challenge to the show cause notice infructuous. The petitioners are at liberty to assail the final order before the appellate Forum in accordance with law, if they are so advised. The 1st respondent is directed to upload the order in electronic form in its official website forthwith, if not already done so as to enable to the asseessees to seek appropriate appellate remedy in accordance with law - petition disposed off.
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2021 (6) TMI 772
Principles of natural justice - Validity of assessment order - no opportunity of hearing provided upon a revised SCN - Section 75(4) of the CGST Act - HELD THAT:- A plain reading of Section 75(4) of the CGST Act would leave no doubt in one s mind that it is incumbent upon the assessing authority to give an opportunity of personal hearing to the assessee when a request in that regard is received in writing from it or where any adverse decision is contemplated against the assessee. In the present case, a clear and unequivocal prayer for personal hearing had been made by the petitioner-assessee which remained unheeded to and the impugned assessment order came to be passed. The procedure established by law, particularly, the opportunity of personal hearing was unfairly denied to the petitioner-assessee. It is trite law when a thing is prescribed to be done in a particular manner, it must be done in that manner or not at all. When the procedural breach relates to infraction of a facet of natural justice, that is, an opportunity of hearing and denial thereof prejudices the assessee to effectively respond to intricate issues of fact and law as in the present case, the impugned order is liable to be set aside on that score alone - matter remanded to the assessing authority for fresh consideration after giving an opportunity of hearing to the petitioner. Petition allowed by way of remand.
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2021 (6) TMI 768
Grant of Statutory Bail - availment of illegal Input Tax Credit - fake invoices - charge sheet not filed within the statutory period of 90 days - Section 132 (1) (i) of the CGST Act, 2017 - HELD THAT:- It is to be noted that admittedly, the learned Principal District and Sessions Judge, Coimbatore, granted bail to the petitioner on 14.12.2020 itself with certain conditions. Since the petitioner could not comply with the conditions imposed by the learned Principal District and Sessions Judge, filed a modification petition before this Court and this Court, by an order dated 22.02.2021, refused to modify the conditions and however, granted six week times to comply the conditions imposed by the learned Principal District and Sessions Judge, Coimbatore. However, without complying the conditions, the petitioner has taken the next available opportunity of filing a petition under Section 167 (2) of Cr.P.C., seeking mandatory bail, as the charge sheet was not filed within the statutory period of 90 days. The learned Chief Judicial Magistrate, on consideration of facts, held that once a person already granted bail, he cannot file a petition under Section 167 (2) of Cr.P.C. and therefore, the learned Chief Judicial Magistrate, dismissed the petition. Admittedly, in the case on hand, the petitioner was remanded to judicial custody from 29.10.2020 and charge sheet has not been filed so far - Though it is the contention of the learned counsel for the petitioner that the petitioner could not comply with the condition Nos. (i) or (ii) as the petitioner is not financially strong enough to comply with the above conditions, it is to be noted that the petitioner is a registered dealer and he facilitated the recipient of invoices to avail ineligible input tax credit and pay their GST liability through the fraudulently acquired credit, causing loss of revenue to the Government exchequer, that too, to the tune of R.9.7 Crores. This Court is inclined to give one more opportunity and grant bail to the petitioner subject to conditions imposed - application allowed.
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2021 (6) TMI 767
Maintainability of petition - availability of equally alternative efficacious remedy - opportunity of hearing not provided - ex-parte order of assessment passed - principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, it is opined that the order is bad in law. The ground of fair opportunity and ex-parte order does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Petitioner undertakes to appear before the Assessing Officer on 26th of July, 2021 at 10:30 A.M., if possible through digital mode - Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials, if so required and desired - petition disposed off.
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2021 (6) TMI 765
Maintainability of appeal - appeal was dismissed only on the ground that the appellant has not submitted the certified copy of the impugned order in time - validity of Section 16(4) of the Central / Bihar Goods and Service Act, 2017 - HELD THAT:- It is noticed that the impugned order dated 28/01/2021 passed by the respondent no. 4, the Additional Commissioner of State Taxes (Appeal), Saran Division, Chhapra, cryptic in nature, needs to be set aside only on the ground that it does not even contain the reasons necessarily required for making the order self-explainable and/or comprehensible. The Appellate Authority summarily dismissed the appeal without assigning any cogent reason, thus, seriously prejudicing the petitioner s cause and case - It is stated before this Court that the petitioner has already deposited 100 per cent of the amount making the appeal mature to be heard on merits. Impugned order passed by the respondent no. 4, the Additional Commissioner of State Taxes (Appeal), Saran Division, Chhapra stands set aside - Petitioner shall appear before the appropriate authority on 16th of June, 2021 at 10:30 A.M., if possible through digital mode - petition disposed off.
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2021 (6) TMI 763
Availment of illegal input tax credit - invoices issued by both the non-existent and fictitious firm - search and seizure operations under Section 67 of GST Act - HELD THAT:- The power exercised under Section 67 of the Central Goods and Services Tax Act, 2017 is distinct, separate and independent of the power to be exercised by the competent authority under Section 71. The intent, purpose and scope of both the Sections are distinct, separate and independent and not subject to each other - It is true that notice dated 21.01.2021 (Annexure-5) under Section 71 stood issued to the petitioner, but then, upon subjective satisfaction of having reason to believe, the officer authorized to conduct the search and seizure operations under Section 67, did do per law. From the reading of the Panchnama [Page-75], it is evident that two independent witnesses were firstly associated; who volunteered to the authorities to be part of the search and seizure operations; and only thereafter in their presence, petitioner s premises was searched on 21.01.2021, wherefrom the material allegedly kept with an endeavour of evading the tax payable under the Act was recovered. The quantity is huge. Petitioner shall fully cooperate and participate in the passing of the order by the competent authority, so required to do so pursuant to the exercise of power under Section 67 of the Act - Petition disposed off.
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Income Tax
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2021 (6) TMI 774
Levy of penalty u/s 271 (1) (c) - interest payable to the PSUs to assessed as an income of the Respondent depends - HELD THAT:- As decided in [ 2018 (4) TMI 1473 - SUPREME COURT ] the conduct of the parties, as is recorded in the criminal proceedings showing the receipt of amount by the broker, the purpose of receipt and the demand drafts taken by the broker at the instance of the bank are sufficient to prove the fact that the Respondent acted as a broker to the Bank and, hence, the additional interest payable to the PSUs could not be held to be his property or income. The income that has actually accrued to the Respondent is taxable. What income has really occurred to be decided, not by reference to physical receipt of income, but by the receipt of income in reality. Given the fact that the Respondent had acted only as a broker and could not claim any ownership on the sum and that the receipt of money was only for the purpose of taking demand drafts for the payment of the differential interest payable by Indian Bank and that the Respondent had actually handed over the said money to the Bank itself, we have no hesitation in holding that the Respondent held the said amount in trust to be paid to the public sector units on behalf of the Indian Bank based on prior understanding reached with the bank at the time of sale of securities and, hence, the said sum cannot be termed as the income of the Respondent.
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2021 (6) TMI 771
Reopening of assessment u/s 147 - Exemption granted u/s 10B - whether approval granted by the STPI under the delegated powers of the Directors of STPI by IMSC is a valid approval for the purpose of claiming exemption under Section 10B? - HELD THAT:- The dispute arises in view of the fact that the assessee is of an opinion that the approval granted by the STPI under the delegated powers of the Directors of STPI by IMSC is a valid approval for the purpose of claiming exemption under Section 10B of the Act. Therefore, the presumption cannot be construed as suppression on the part of the assessee. It is not a mere presumption in the present case by the assessee. The presumption has got a valid reason because the assessee is holding a valid approval obtained from the STPI and the power to grant approval was delegated to the Directors of STPI by IMSC. It is not as if the assessee claimed exemption under Section 10B without any such approval. It is a case where the order of approval, which was validly granted, was produced before the Assessing Officer at the time of scrutiny and the Assessing Officer also accepted the approval order and granted exemption. Thus, the reason stated in the impugned proceedings that the assessee committed a mistake cannot be accepted. Assessee was possessing a valid approval which was produced before the Assessing Officer and if a ratification is to be obtained, then the AO at the time of scrutiny, ought to have directed the assessee to get any such ratification certificate for the purpose of grant of exemption under Section 10B which the Department had not done. Thus, it was a mistake or omission committed by the AO at the time of passing of the original assessment order. Even in such cases, if the reopening of assessment is made within a period of four years, then there is a ground for the Department to reopen the same. In the present case, the reopening of assessment is made beyond the period of four years and therefore, the statutory requirement contemplated under Section 147 is to be complied with scrupulously. Thus, the ground taken for reopening of assessment that the assessee has not disclosed fully and truly all material facts is not established in the present case and the assessee, in fact, submitted all the particulars regarding the approval granted by the authority and further ratification, if required, must be instructed by the Department which was not done and therefore, there was no suppression or nondisclosure of material facts by the assessee. - Decided in favour of assessee.
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2021 (6) TMI 770
Entitlement u/s 10B - Valid approval from eligible authority granted or not - HELD THAT:- This Court is of the considered opinion that admittedly, the petitioner obtained an approval from the Software Technology Parks of India and it is an autonomous society under Government of India, Ministry of Communications Information Technology, Department of Information Technology. The petitioner has obtained the said approval in proceedings dated 17.04.2008. The approval states that the application submitted by the petitioner for setting up of 100% Export Oriented Unit under the Electronic Hardware Technology Park scheme of Government of India has been approved by this office under the delegated powers to the Directors of STPI by IMSC vide MIT letter No.5(100)/93-Export dated 24.06.1993. The approval granted further clarified that the petitioner has to maintain a separate bank account for EHTP operations. Separate annual balance sheet will have to be made for the unit. A legal agreement by Demand Draft in favour of the Director, Software Technology Parks of India, Chennai, is to be furnished and other terms and conditions are also stated in the order of approval itself. As contended in the approval order that the petitioner has to submit a list of capital goods to be imported for attestation, which is required to obtain the bonded warehouse license from Custom's authorities. It was intimated that separate proforma invoice from the supplier has to be submitted to the office of the Software Technology Parks of India for attestation as and when the petitioner intend to import duty free capital goods. The list of capital goods to be imported for attestation, which is required to obtain the bonded warehouse license from Custom's authorities. Separate proforma invoice from the supplier has to be submitted for attestation as and when the petitioner intend to import duty free capital goods. Perusal of the approval order issued in favour of the writ petitioner in proceedings dated 17.04.2008 reveals that the approval has been granted for setting up of 100% Export Oriented Unit under the Electronic Hardware Technology Park Scheme of Government of India has been approved by the fifth respondent under the delegated powers to the Directors of STPI by IMSC. Thus, such an approval cannot be validated for the purpose of claiming exemption under Section 10-B. Entitlement and to verify the other transactions, such a ratification is contemplated by the Ministry of Finance through the impugned clarification letter and therefore, this Court is of an opinion that there is no infirmity or perversity as such and further, there is no inconsistency as such contended by the petitioner. Thus, the petitioner has to get an approval from the competent Board as contemplated for claiming exemption under Section 10-B of the Income Tax Act. Even in case, there is a change of authorities / Board by the Ministry, it is for the petitioner to approach the Ministry or the Department concerned for the purpose of the procedures, which all are in force for claiming exemption under Section 10-B of the Income Tax Act. This Court is of an opinion that the petitioner has not established any acceptable ground for the purpose of granting the relief as such sought for in the present writ petition and thus, the writ petition stands dismissed.
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2021 (6) TMI 761
Disallowance of Architect fee and brokerage expenses - AO disallowed said expenses only on the ground that Sri Perumbakkam project was not completed for the year under consideration, but never called for any proof of expenses, whereas, CIT(A) has confirmed additions made by the AO on the ground that assessee has not furnished any evidence - HELD THAT:- It is a claim of assessee that had been the AO called for evidence for expenses, the assessee could have furnished said evidence. The assessee was not given opportunity to furnish necessary evidence in support of it expenses, we are of the considered view that issue needs to go back to the file of the AO to give another opportunity to the assessee to file necessary evidence in support of its expenses. Disallowance of sales tax service tax - Claim of the assessee before CIT(A) was that it has opted for composite scheme of payment of sales tax service tax and as per said scheme, taxes on sales cannot be collected from customers - HELD THAT:- The sales tax service tax is an item of expenditure, which is deductible in case same is paid by the assessee without collecting from customers - AO as well as learned CIT(A) were erred in disallowing sales tax service tax debited into profit loss account by holding that sales tax service tax is not an expense. As fact with regard to whether the assessee has collected taxes from customers or not is not coming out from records. Therefore, to ascertain the facts, issue has been set aside to the file of the AO and direct him to cause necessary enquiries and if the AO found that the assessee has opted composite method of payment of taxes without collection of taxes from customers, then AO is directed to allow sales tax service tax paid by the assessee as deductible expenses.
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2021 (6) TMI 758
Denial of deduction u/s 80P(2)(a)(i) - assessee is a Co-operative society registered under the Maharashtra Co- operative Societies Act, 1960 - HELD THAT:- The assessee Co-operative society is admittedly engaged in carrying on the business of banking and providing credit facilities. Section 80P(2)(a)(i) provides that in the case of co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amount of profits and gains of business attributable to such activities shall be deductible in the computation of total income. The claim of assessee for deduction has been negated by the authorities below on the ground that it had admitted certain Members, described as Nominal Members , who were neither entitled to dividend nor voting rights. Taking note of the fact that the Citizen Co-operative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] judgment dealt with the Andhra Act wherein the term Member did not include Nominal Member, the Hon'ble Supreme Court in Mavilayi Service [ 2021 (1) TMI 488 - SUPREME COURT] held that the interest on loans given to Nominal Members under the Kerala Act was eligible u/s 80P(2)(a)(i) as the term Member under the Kerala Act included Nominal Members . As evident that when the loans are given to Nominal Members and the relevant State Act includes, Nominal Member purview of Member , there can be no question of denial of benefit u/s 80P(2)(a)(i). We find that the provisions of the Kerala Act and the Maharashtra Act, in so far as the term `Member including `Nominal member is concerned, are similar. In Jalgaon District Central Co-operative Bank Ltd. [ 2003 (9) TMI 56 - BOMBAY HIGH COURT] has held that the definition of `member given in section 2(19) of the Maharashtra Act takes within its sweep even a nominal member and there is no distinction between a duly registered member and nominal member. We overturn the impugned order and direct to grant deduction u/s 80P(2)(a)(i), as claimed by the assessee. - Decided in favour of assessee.
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2021 (6) TMI 757
Assessment u/s 153A - addition made u/s.69A of the Act in respect of monies lying in foreign bank account as undisclosed income - HELD THAT:- Undisputed fact that there is no incriminating material found during the course of search and in view of the fact that the statement made u/s.132(4) of the Act does not constitute incriminating material, we have no hesitation in quashing the assessment made u/s.153A of the Act r.w.s.143(3) of the Act on 31/03/2015 for the A.Y.2006-07. We also find that on similar facts and circumstances in respect of Base note received from French Government and in respect of assessment completed u/s.153A of the Act, the Co-ordinate Bench of Kolkata Tribunal in the case of Bishwanath Garodia vs. DCIT [ 2016 (9) TMI 1365 - ITAT KOLKATA] had also held that the ld. AO cannot make any assessment u/s.153A of the Act making addition to assessee s income in respect of amount deposited in foreign bank since assessment for relevant assessment year have already been completed u/s.143(3) Penalty u/s. 271 (1)(b) - HELD THAT:- This action of the assessee was found to be of non-cooperative attitude by the ld. AO for which penalty u/s.271(1)(b) of the Act was levied. In our considered opinion, the assessee has given a plausible explanation on the subject mentioned issue and the said explanation was not accepted by the ld. AO. However, we find that ultimately the assessments were framed by the ld. AO for all these assessment years only u/s.143(3) of the Act which goes to prove that assessee had indeed cooperated with the ld. AO for smooth completion of assessment proceedings by making some addition. Hence, we do not deem this as fit case for sustaining the levy of penalty u/s.271(1)(b) of the Act. Accordingly, the penalty levied u/s.271(1)(b) of the Act are hereby directed to deleted for A.Y.2006-07 to 2012-13. Penalty appeals u/s. 271(1)(b) of assessee allowed. Penalty u/s. 271AAA - HELD THAT:- When the only source of income is from diamond business, it could be safely concluded and inferred that assessee could have earned undisclosed income only from such businesses, hence, the second condition prescribed in 271AAA(2) i.e. substantiating the manner in which undisclosed income has been derived has been duly complied with by the assessee in the instant case. Hence, we hold that assessee is duly entitled for immunity from levy of penalty in respect of undisclosed income disclosed during the course of search in terms of Section 271AAA(2) of the Act. Accordingly, the penalty levied in the case of Shri Sunil C Gandhi is hereby directed to be deleted. Addition u/s.153A - addition u/s.69A of the IT Act made on protective basis in the case of the assessee - HELD THAT:- We find that assessee in response to the queries raised by the ld. AO confirmed that he was the beneficial owner of the foreign bank account of HSBC Bank at Geneva and that he has been operating the same since 2000. We find that assessee has also confirmed before the ld. AO that all the funds in the said bank account are in relation to his (i.e. Shri Nirav Gandhi) business activities outside India and do not represent any income from any sources in India. It was also pointed out that the said funds have duly been disclosed by Shri Nirav Gandhi while filing his tax returns in Belgium, which fact was also later confirmed by the Belgium revenue authorities. Hence, there cannot be any addition that could be made in the hands of a non-resident in respect of a foreign bank account either on substantive or on protective basis. On this preliminary ground, we are inclined to grant relief to the assessee (i.e. Shri Nirav Gandhi). We find that assessee has not preferred any appeal against the order passed by the ld. CIT(A). We find that Revenue has challenged the deletion of protective addition made by the ld. CIT(A). Since assessee is a non-resident, at the cost of repetition, there cannot be any addition in respect of a foreign bank account in HSBC Bank, Geneva in India either on substantive or on protective basis. Accordingly, the ground raised by the Revenue is dismissed.
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2021 (6) TMI 756
Addition u/s.35D by treating the amount as pre-operative expenses - HELD THAT:- As decide in own case [ 2019 (11) TMI 1633 - ITAT PUNE] DR was required to submit a report on the granting or otherwise of deduction of such expenses in the earlier years. A copy of the report from the AO has been placed on record by the ld. DR. As per this report, a deduction was claimed for the first time in the return for the A.Y. 2009-10 which was not granted, but the ld. CIT(A) accepted the assessee s claim and the Revenue s appeal has been dismissed, albeit on low tax effect. No assessment was taken up u/s. 143(3) of the Act for the A.Y. 2010-11, meaning thereby that the deduction got allowed. From the above report of the AO, it is ostensible that the assessee has been consistently allowed deduction of ₹ 9.00 lakh in the assessments for the A.Ys 2009-10 and 2010-11. The assessment year 2011-12, under consideration, is a consecutive 3rd year in line. The deduction for similar amounts has been allowed in the immediately two preceding assessment years, following the principle of consistency, hold the assessee to be entitled to deduction in the year under consideration as well. The impugned order is overturned on this score and the deduction is granted. - Decided in favour of assessee.
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2021 (6) TMI 753
Revision u/s 263 - Addition u/s 68 - unexplained share capital and premium - HELD THAT:- AO has enquired about the issue by serving the summons u/s 131 of the Act to the Directors/ Principal officers of share holding companies at their official addresses through the departmental Inspectors. And it is noted that the AO has made field enquiry through the Inspector (on test-check basis) to find out the actual existence of company and to find out whether there are employee/employees working there etc. AO has made specific finding that the share holders are duly registered with the Ministry of Corporate Affairs and they all have filed their respective return of income regularly. The AO notes that the directors of all the share holders company have responded to the summons u/s 131 of the Act and their existence has been verified with the PAN data base and found to be correct. AO has acknowledged to have recorded statement of directors on oath and placed the same on record. The AO has looked into the details of the source of funds submitted by the share holders during the course of statement recorded of the directors and he has recorded his satisfaction on the source of share subscribing money of the share holders. AO has made a finding of fact that the share subscription was made through the banking channel and that all the share subscribers have submitted even their annual return filed for AY 2017-18 (when the Third Assessment order was being framed) even though the assessment was regarding AY 2009-10. Further the AO has noted that the investments made by the share holders are duly reflected in the respective books of accounts and moreover the AO has also noted their creditworthiness and genuineness of the transaction. In order to prove identity, creditworthiness and genuineness of the transaction the assessee had filed the following details of each share subscribers which is evident from PB filed before us. The share holders have filed the following details before AO to prove the identity, creditworthiness and genuineness of the share transaction. The assessee had not only submitted all the details and evidences to prove the share capital raised but has also produced all the directors of shareholder companies who were examined on oath - AO has verified the bank statements, books of accounts, copy of share application and allotment forms, etc. were checked and placed in the records. So the case of assessee is distinguishable and therefore this case law does not apply to the facts of this case. Third PCIT could not have usurped the revisional jurisdiction u/s 263 of the Act without satisfying the condition precedent as prescribed in the section 263 of the Act and consequently the action of the third Ld. PCIT-4, to interfere with the AO s order dated 26.12.2017 by passing impugned orde u/s 263 of the Act is held to be without jurisdiction - Decided in favour of assessee.
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2021 (6) TMI 752
Revision u/s 263 - short term capital loss from the scrips claim - HELD THAT:- No exceptional circumstances in respect of the action of AO while enquiring into the issue of short term capital loss were cited by the Ld. PCIT in his impugned order or the Ld. DR. So, we presume the fact that AO was aware of the contents of the circular of CBDT regarding penny stock and thereafter had issued notice u/s. 142(1) - Thus invoking Explanation 2(c) of section 263 of the Act is not correct in the facts and circumstances of the case. PCIT has not bothered to refer to any cogent material on the basis it can be said that these three scrips in question are penny stock. The assumption of Ld. PCIT is based on surmises and conjectures and it is settled principle of law that suspicion howsoever strong cannot take the place of evidence/proof. Considering the enquiry made by AO on the issue, we presume that the AO has performed his task of an investigator on the issue of short term capital loss on the scrips in question after taking note of CBDT circular No. 287/30/2014-IT(inv.II)- Vol-III dated 16.03.2016 on penny stock and thereafter conducted the enquiry. And after perusal of the reply of the assessee to the specific queries and details called for and after perusal of the supporting materials, the AO being satisfied has accepted the claim of assessee in respect of loss on these scrips. Therefore the AO s action of accepting short term capital loss on the three (3) scrips cannot be termed as a case of no-enquiry on the part of the AO as well as discussed supra the Ld. PCIT s opinion that Explanation 2(c) u/s. 263 is attracted in this case is incorrect in the light of the facts and circumstances as aforestated - condition precedent to invoke revisional jurisdiction u/s 263 of the Act is absent - Decided in favour of assessee.
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2021 (6) TMI 751
Revision u/s 263 - case of assessee was reopened in respect of escapement of income through accommodation entry provided by Akash Agarwal group in the garb of bogus billing - PCIT observed that the AO s action of applying u/s. 44AD of the Act i.e. 8% on the purported accommodation entry from Akash Agarwal group is erroneous and resulted in under assessment of income - HELD THAT:- Since actual contractual work (construction of new road (11 km.), leveling, formation of village road etc. as given in the table supra) has been found to have been executed by some other persons in the remote areas of mines situated at Barajamda, Jharkhand, the AO presumed that the purpose of availing the billing from M/s. Simplex must be for inflation of expenses and thereafter adopted the presumptive tax rate as envisaged u/s. 44AD of the Act. Since the AO s aforesaid finding is based on the evidence in the form of photos/work, completion report and the payment released by reputed companies for the successful completion/execution of works contract, the finding of the AO is a plausible view and cannot be termed perverse. It is trite law that only the net income can be brought to tax. For that expenditure incurred by the assessee has to be allowed to determine the net income of the assessee. In this case, the AO has found that assessee has executed the contract through some one. For execution of the work contract, the assessee received payment from the contractor and the assessee s expenditure incurred need to be allowed. For doing that AO has found that though bogus billing has been made through M/s. simplex, work contract has been executed through some one. So, he was of the opinion that procuring the bills through M/s. Simplex was for inflation of expenses and to plug the revenue loss on account of that he applied the presumptive tax rate u/s. 44AD. Therefore, the action of AO on the facts and circumstances as discussed is a plausible action and cannot at any rate by termed as unsustainable in law . Therefore, the action of Ld. PCIT to invoke the revisional jurisdiction is absent and therefore, the impugned action of Ld. PCIT is held to be bad in law and so quashed. - Decided in favour of assessee.
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2021 (6) TMI 750
Reopening of assessment u/s 147 - reason to believe V/S reason to suspect - suspicious transaction of LTCG in shares - HELD THAT:- AO has simply reproduced the information from DIT(Inv) that since the assessee has transacted in this financial year in the scrip of M/s Essar India, the LTCG claim is bogus; and the AO while recording the reason concluded that by doing the said transaction there was an escapement of income of ₹ 5,55,624/- whereas when the assessment order was framed the AO has found that assessee has made LTCG of ₹ 9,70,583/-. - when the AO got adverse information from the DIT(Inv) as a prudent and responsible officer, the AO should have made preliminary enquiry and collected materials which could have made him form the belief that there is escapement of income. As noted that AO based on the information from DIT(Inv) neither furnished a copy of the same to assessee nor even recorded the gist of the information from DIT in the reasons recorded by him to conclude that LTCG on M/s Essar India is bogus. In the facts and circumstances discussed it is noted that the legal requirement to reopen i.e. reason to believe escapement of income has not been satisfied. Since the requirement of law prescribed u/s 147 of the Act has not been met in the reasons recorded in the case of assessee, the AO did not have jurisdiction to reopen the assessment and therefore the very action of issuing notice u/s 148 is bad in law and consequently all action taken by the AO is null in the eyes of law and therefore quashed. Appeal of the assessee is allowed.
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2021 (6) TMI 748
Validity of assessment - absence of notice under section 143(2) - HELD THAT:- In the case of CIT vs. Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] as, inter alia, been held by the Hon'ble Supreme Court that a complete absence of notice under section 143(2) of the Act does not get cured even by section 292BB of the Act; that for section 292BB of the Act to apply, a notice under section 143(2) must have emanated from the Department and it is only infirmities in manner of service of notice that section 292BB of the Act seeks to cur-e and it is not intended to cure complete absence of notice itself. It was held that the law on the point as regards applicability of the requirement of notice under section 143(2) of the Act is quite clear from the decision in ACIT vs. Hotel Blue Moon [[ 2010 (2) TMI 1 - SUPREME COURT] wherein it was held that notice under section 143(2) of the Act would be mandatory for the purpose of making assessment under section 143(3) of the Act. The above position has duly been taken into consideration by the ld. CIT(A), as noted hereinabove. The Department has not been able to refute the decisions in ACIT vs. Hotel Blue Moon (supra) and CIT vs. Laxman Das Khandelwal (supra), both rendered by the Hon'ble Supreme Court. No merit in the grievance sought to be raised by the Department, the same is hereby rejected
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2021 (6) TMI 737
Addition on account of income from undisclosed sources on protective basis - assessee submits that the substantive addition was made in the hand of M/s Saheli Developers, wherein the assessee is one of the partner - assessee submits that M/s Saheli Developers accepted the addition and filed application for settlement of dispute on tax with the Department under VSVS Scheme, 2020 and have settled the case and paid due tax - HELD THAT:- As assessee has also filed the copy of the assessment order in case of Saheli Developer having PAN ABLFS 4624 G. further, we find that Saheli Developer filed application under VSV-20 for settlement of dispute of tax and the Designated Authority concern has issued Form-3 vide Acknowledgment No. 110537100060121 dated 06.01.2021, copy of which is also placed on record. Considering the facts and circumstances of the case that the substantive addition has been accepted by M/s Saheli Developers and they have paid the due tax by availing the benefit of VSV-20. Therefore, we direct the AO to verify the fact and delete the protective addition at the hand of the assessee. In the result, appeal of assessee is allowed for statistical purpose.
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2021 (6) TMI 734
Reopening of assessment u/s 147 - assessee was one of the beneficiaries of accommodation entries by way of share application provided by third party - Assessee argued that addition confirmed on the basis of statement of third person namely Mukesh Chokshi - HELD THAT:- We find that after reopening u/s 147 notice u/s 148 dated 26.03.2014 was duly served upon the assessee on 29.03.2014. In response to notice under section 148, the assessee filed her reply stating therein that return filed originally on 29310.2007 may be treated as return in response to notice under section 148 - The assessee demanded reasons recorded. The reasons recorded were provided to the assessee on 29.05.2014. The assessee raised certain objections on 30.06.2014. The objection of assessee were disposed of in a speaking order on 23.09.2014. All these facts are not disputed by Assessee. After disposing of objection, AO proceeded to complete the reassessment. AO noted that despite repeated notices, the assessee neither furnished complete details not attended the proceedings before the AO - assessee vehemently argued that the reasons recorded are not valid as there was not sufficient material and specific information against the assessee and strongly relied upon the decision of Tribunal in Pratik Suryakant Shah [ 2017 (2) TMI 463 - ITAT AHMEDABAD] wherein Tribunal has not given finding on validity of reopening rather the assessee was granted relief on merit, so we will consider the said decision at the time of discussion on merit. Revenue relied on the decision in Aaspas Multimedia Ltd [ 2017 (6) TMI 557 - GUJARAT HIGH COURT] wherein held that where the reopening (reassessment) was made on the basis of information received from Pr.DIT (Investigation), and that the assessee was one of the beneficiaries of accommodation entries by way of share application provided by third party, the reopening was justified. Hon ble Supreme Court in Raymond Woollen Mills Ltd., [ 1997 (12) TMI 12 - SUPREME COURT] held that at the time of reopening prima facie material on the basis of which Department could reopen the case is sufficient. Further, sufficiency or correctness of the material is not a thing to be considered at that stage. Considering the decision Hon ble Jurisdictional High Court and of the Apex Court (supra) we are of the view that the ld.AO was having sufficient prima facie material for reopening, thus, the ground no.1 raised by assessee is dismissed. Addition u/s 68 - Bogus LTCG - We find that the facts of the case in hand are similar as of facts in Pratik Suryakant Shah [ 2017 (2) TMI 463 - ITAT AHMEDABAD] - We find that the AO made additions solely on the basis of information received from CCIT (investigation), and even without making any further investigation about the transaction shown by the assessee - in view of the above factual and legal discussions and respectfully following the decisions of coordinate bench of Tribunal as noted above we are of the view that the AO was not justified treating the long term capital gain as bogus solely on the basis of information, when the transaction is supported with sufficient evidence. The case law relied by revenue in Dhakeswari Cotton Mills Ltd.[ 1954 (10) TMI 12 - SUPREME COURT] is not helpful to the revenue qua the facts of the present case. In the said the Hon ble Apex Court held that assessing officer in not fettered by the technical rule of evidence and pleadings and he is not entitled to accept the evidence just like court of law. At the same time the Hon ble Court held that the AO (ITO) is not entitled to make pure guess and make the assessment without reference to any evidence or any or any material at all and that there must be something more than bare suspicious to support the assessment.
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2021 (6) TMI 733
Addition of share application and share premium u/s 68 - assessee explained that assessee company submitted complete details of share application money and shares premium received by the assessee company and clearly submitted that assessee company has not received a single penny as a gift from anyone - Commissioner (Appeal) held that the transactions were made through the NRE account and deleted the addition - HELD THAT:- Commissioner (Appeals) independently examined the evidences filed before him and concluded that the assessee proved the identity and status of Girish Bodra being NRI at Dubai who is having income from Director s remuneration and profit share in Bodra Trading Company LLC and Shyam Trading Co. (LLC). After examining the worth of investor held that the investor has sufficient capacity to invest in the assessee company. The transaction was routed through NRE account. Commissioner (Appeals) also held that the assessee filed details of gift in the name of one director of the company. Further no discrepancy was pointed out by the assessing officer. On the above observation the ld. Commissioner (Appeals) deleted both the additions. In our view the assessee has fully discharged its onus and proved the transaction of share application and share premium money as genuine. We further concur with the findings of the learned Commissioner (Appeals) that there is no discrepancy in the Gift to the director of the assessee company. The donor is the real brother of recipient of the Gift. In our view the learned Commissioner (Appeals) has passed the order after due deliberation on the facts of the case and the documentary evidences furnished by the assessee which we affirm. No contrary fact to take other view is brought over notice. In the result the grounds of appeal raised by revenue are dismissed.
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2021 (6) TMI 730
Reopening of assessment u/s 147 - addition towards payments made to the sub-contractors on the ground that the assessee could not produce any information nor could produce any sub-contractor - HELD THAT:- It is a settled position of law that the assessment can be reopened under section 147/148 on the basis of reason to believe and not reason to suspect . Unless the reasons to believe about the escapement of income exist, no recourse can be taken to the provisions of section 147. It is well settled by a number of judgments of the Hon ble Supreme Court that the twin conditions which are required to be fulfilled before an Assessing Officer can exercise his jurisdiction under clause (a) of section 147 of the Act are (a) that the Assessing Officer must have reason to believe that income, profits or gains chargeable to tax had either been underassessed or had escaped assessment and (b) that the Assessing Officer must have reason to believe that such escapement or underassessment was caused by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. In the impugned case, the Assessing Officer has not satisfied with the second limb of section 147. The reopening of assessment can be quashed on two counts, i) no new material was brought on record by the AO in the reopening of assessment to establish that the income of the assessee has escaped assessment as the assessee has already disclosed all the information necessary for completion of original assessment and ii) the reopening of assessment made beyond four years from the AY under consideration. AO reopened the assessment based on change of opinion, which is not acceptable as per the decisions quoted supra. Therefore, we quash the reopening of assessment made by the AO and the grounds raised by the assessee on this issue are allowed.
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2021 (6) TMI 727
Addition on account of alleged on-money cash receipt - HELD THAT:- From the above details of stamp duty value and actual sale amount, it is evident that no flat has been sold by the assessee on less than the stamp duty value so as to raise any suspicion about receipt of on-money of sale of flats. All the flats are sold at above stamp duty/market value which itself shows that is it not conclusively proved that the assessee has received any on-money. In view of the fact that original statement of director on the basis of which the AO made addition has been retracted and original statement does not hold good and in view of the fact that flats have been sold at the price much above stamp duty value, we hold that the seized material and the statement of Shri Pradeep Gupta do not conclusively prove that on-money has been received by the assessee on sale of flats. In the circumstances, the appeal of the assessee is allowed in terms of our aforesaid observations and the Assessing Officer is directed to delete the addition made on account of alleged on-money cash receipt. Unaccounted income received from sale of flats over and above registered value - HELD THAT:- As observed that the flats have been sold by the assessee at a price much higher than the stamp duty value and thus, the order passed by us while disposing off the appeal of the assessee for A.Y. 2013-14 shall apply mutatis mutandis for disposing the present appeal for A.Y. 2014-15. Accordingly, the addition made in the present appeal is also deleted. Ground No. 3 is allowed. Unexplained portion of cash investment in immovable property u/s. 69B - HELD THAT:- Addition was also made on the basis of original statement of director of company Shri Pradeep Gupta, which does not hold good after the same has been retracted by the director for the reasons given by us in our earlier paragraphs while disposing off the appeal for A.Y. 2013-14. Hence, the addition is deleted. Ground No. 4 is allowed.
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2021 (6) TMI 726
Maintainability of appeal - Monetary limit for filing of appeal by revenue in case of penalty - Penalty u/s 271(1)(c) on bogus purchases - HELD THAT:- Quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the Circular w.r.t penalty also, it could by no means be construed that penalty was to be treated at par with the quantum additions. Quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the Circular w.r.t penalty also, it could by no means be construed that penalty was to be treated at par with the quantum additions. Since the levy of penalty by no means could be construed as an addition within the meaning of Clause 10(e) of the aforesaid circular therefore, we do not find any merit in the contentions advanced by the ld. D.R that the aforesaid exception carved out in the CBDT Circular No. 3/2018 (supra) would also take within its realm a penalty imposed under Sec. 271(1)(c) w.r.t the additions made by the A.O towards bogus purchases on the basis of information received from Sales Tax Department, i.e an external agency. Accordingly, finding favour with the claim of the ld. A.R that the appeal of the revenue is covered by the CBDT Circular No. 17/2019, dated 08.08.2019, the same, thus, in our considered view is not maintainable. Accordingly, we herein dismiss the appeal of the revenue, for the reason, that the tax effect therein involved is lower than that contemplated in the aforesaid CBDT Circular fixing the monetary limit of filing of appeals by the revenue before the Tribunal. Appeal of the revenue is dismissed.
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2021 (6) TMI 725
Addition u/s 68 - unexplained cash credit - HELD THAT:- As assessee has filed all the details required from these loan creditors for proving the identity and creditworthiness of each of the loan creditors and the genuineness of the transactions. The documents filed are copy of loan confirmation letters, copy of the bank pass books evidencing the fact that the transactions are taken place through banking channels, copy of the income tax returns filed by each of the loan creditors which proves that they are all income tax assessee s, annual accounts including balance sheet of each of the loan creditors. CIT(A) has discussed each of the documents filed by these loan creditors - He has given factual findings on each of these cash credits. The ld. D/R could not controvert any of these factual findings. AO has issued notices u/s 133(6) of the Act to each of the loan creditors and all these notices were complied with. We uphold the factual findings of the ld. CIT(A) and dismiss this ground of the Revenue. Addition made u/s 2(22)(e) - HELD THAT:- The loan/advance carried an interest of 12% per annum. On these facts, the ld. CIT(A) relied on the decision of Pradip Kr. Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] as well as CIT vs. Creative Dyeing Printing (P.) Ltd. [ 2009 (9) TMI 43 - DELHI HIGH COURT] and deleted the addition. We find no infirmity in the same.
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2021 (6) TMI 724
Unaccounted income from unaccounted production - HELD THAT:- CIT(A) had deleted the addition noting the report of the Committee specially formed for studying average variation in electricity consumption in similar mills accepting 15 % as acceptable variation. That the Ld. CIT(A) had noted from the facts of the said case that the variation fell within the range so prescribed by the Committee and accordingly deleted the addition made by the AO. In the present appeal also, we have noted that the Ld.CIT(A) , after noting the fact that the data submitted by the assessee regarding consumption of electricity and PMT production of finished goods therefrom was more reliable as opposed to that of the AO, went on to find therefrom that the variation in electricity consumption PMT of goods produced by the assessee fell within the acceptable 15 % range. DR has not controverted the aforestated findings of fact recorded by the Ld. CIT(A). The issue stands squarely covered therefore in favour of the assessee.
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Customs
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2021 (6) TMI 778
Validity of notification for restricting the import of certain beans, peas and pulses - different interim orders were passed by the different High Courts and the importers effected various imports on the strength of such interim orders. - Notifications issued by the Central Government under the Foreign Trade (Development and Regulation) Act, 1992 - Absolute confiscation or redemption to be allowed on payment of redemption fine - HELD THAT:- it is at once clear that when the matter was left for decision by the Commissioner (Appeals), there was neither any occasion nor any justification for the High Court to pass the order for release of the goods for the simple reason that any order for release of goods was to render the material part of the matter a fait accompli. This, simply, could not have been done. Putting it differently, a little pause after paragraph 36 of the impugned order 15.10.2020 and before the directions in the next paragraph would make it clear that for what had been observed in the said paragraph 36 of the impugned order (as regards leaving of the matter for decision by the Appellate Authority), any direction for release of goods pursuant to the order-in-original could not have been issued - It gets, perforce, reiterated that if the orders-in-original dated 28.08.2020 were to be executed under the mandate of the High Court, the appeals were going to be practically redundant after release of the goods and nothing material was to remain for decision by the Appellate Authority on the main subject matter of the appeal. The High Court has taken into account a few factors standing in favour of the importers like the orders-in-original holding the field; the importers having made the necessary payments; and the importers incurring expenditure because of warehousing. An additional factor had been the High Court's dissatisfaction that the orders dated 01.10.2020 were passed in an improper manner and grounds given therein were not justifying the withholding of the goods. While proceeding on these reasons and considerations, it appears that the other overriding factors like the interest of domestic agriculture market economy totally escaped the attention of the High Court. Thus, the impugned order dated 15.10.2020, having been passed while ignoring the relevant considerations, cannot be approved - the impugned orders dated 15.10.2020 (read with the modification order dated 09.12.2020) and 05.01.2021 remain unsustainable and are required to be set aside. Prohibited goods or not - HELD THAT:- The learned ASG has rightly pointed out with reference to the decision in PTR Exports (supra) that an Applicant has no vested right to have export or import licence; and granting of licence depends upon the policy prevalent on the date. The learned ASG has further rightly submitted, with reference to the decision in S.B. International (supra), that granting a licence to import is not a matter of formality; and the authorities have to satisfy themselves that the application satisfies all the requirements of the scheme and the applicable laws. As noticed, only the particular restricted quantity of the commodities covered by the said notifications could have been imported and that too, under a licence. Therefore, any import within the cap (like that of 1.5 lakh MTs) under a licence is the import of restricted goods but, every import of goods in excess of the cap so provided by the notifications, is not that of restricted goods but is clearly an import of prohibited goods. The present case is of an entirely different restriction where import of the referred peas/pulses has been restricted to a particular quantity and could be made only against a licence. The letter and spirit of this restriction, as expounded by this Court earlier, is that, any import beyond the specified quantity is clearly impermissible and is prohibited. This Court has highlighted the adverse impact of excessive quantity of imports of these commodities on the agricultural market economy in the case of Agricas [ 2020 (8) TMI 705 - SUPREME COURT] whereas, it had not been the case in Atul Automations [ 2019 (1) TMI 1324 - SUPREME COURT] that the import was otherwise likely to affect the domestic market economy. In contrast to the case of Atul Automations, where the goods were permitted to be imported (albeit with authorisation) for the reason that they were not manufactured in the country, in the present case, the underlying feature for restricting the imports by quantum has been the availability of excessive stocks and adverse impact on the price obtainable by the farmers of the country. The unnecessary and baseless arguments raised on behalf of the importers that the goods in question are of 'restricted' category, with reference to the expression 'restricted' having been used for the purpose of the notifications in question or with reference to the general answers given by DGFT or other provisions of FTDR Act are, therefore, rejected. The goods in question fall in the category of 'prohibited goods'. Whether the goods in question are liable to absolute confiscation? - HELD THAT:- Once it is clear that the goods in question are improperly imported and fall in the category of 'prohibited goods', the provisions contained in Chapter XIV of the Customs Act, 1962 come into operation and the subject goods are liable to confiscation apart from other consequences - A bare reading of the provision of Section 125(1) of the Customs Act, 1962 makes it evident that a clear distinction is made between 'prohibited goods' and 'other goods'. As has rightly been pointed out, the latter part of Section 125 obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of this provision makes no such compulsion as regards the prohibited goods; and it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation. The sum and substance of the matter is that as regards the imports in question, the personal interests of the importers who made improper imports are pitted against the interests of national economy and more particularly, the interests of farmers. This factor alone is sufficient to find the direction in which discretion ought to be exercised in these matters - The imports in question suffer from the vices of breach of law as also lack of bona fide and the only proper exercise of discretion would be of absolute confiscation and ensuring that these tainted goods do not enter Indian markets. Imposition of penalty on such importers; and rather heavier penalty on those who have been able to get some part of goods released is, obviously, warranted. Thus, the goods in question are to be held liable to absolute confiscation but with a relaxation of allowing re-export, on payment of the necessary redemption fine and subject to the importer discharging other statutory obligations. The Respondent-importers being responsible for the improper imports as also for the present litigation, apart from other consequences, also deserve to be saddled with heavier costs - appeal allowed.
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2021 (6) TMI 747
Refund of the excess payment made - rejection on the ground that the payment towards two bills of entry fall under the jurisdiction of ACC, Bangalore as the imports were made from ACC, Bangalore in respect of two said bills of entry - HELD THAT:- It is not in dispute that the appellant has made payment twice on account of the technical problem in ICEGATE and the fact of double payment was also confirmed from PAO, New Delhi which confirms double payment towards certain bills of entry for which the refund was filed. Further, the refund application was filed with the ICD, Bangalore which has partly allowed the refund but rejected the refund of ₹ 10,49,491/- on the ground that the payment towards two bills of entry fall under the jurisdiction of ACC, Bangalore as the imports were made from ACC, Bangalore. In the additional submissions filed by the appellant, the appellant has also submitted that the bills of entry with reference to which the amounts have been paid twice were provisionally assessed during the relevant point of time due to pendency of SVB proceedings and those bills of entry were finally assessed by closure of provisional duty Bond by ACC, Bangalore in 2019 and communicated to the appellant on 04.01.2019 and has also submitted the documentary proof of final assessment of the said bill of entry and as per Section 27(1B)(c) where any duty is paid provisionally under Section 18, the limitation of one year shall be computed from the date of assessment of duty after the final assessment. If the Department consider the same as duty even then the period of one year will start from 04.01.2019 and the refund filed by the appellant is found to be within time. The impugned order rejecting the refund on time bar is not sustainable in law - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (6) TMI 759
Seeking restoration of name of the company in the ROC - absence of statutory filings for more than two years - Section 252 of Companies Act - HELD THAT:- It is evident that the company is carrying on business and it is in operational. However, the admitted fact that the company is not filed the Annual Returns for two preceding years and the same has been admitted by the Appellant and the Company for their default showing that they are ignorant of the law. The main ground for the removal of the company from the Register of Companies is that if the company is not carrying any business or operation for a period of two immediately preceding years the ROC may issue notice to the Company calling explanation from the Company and thereafter take action in accordance with law. Non-filing of Annual Return is a default. The said default can be cured/rectified by imposing costs as per the provisions of the Companies Act, 2013. Whilst, the Company is carrying the business and if it is in operational however, non-filing the Annual Returns and the financial statement as required under law inadvertently may not be a ground for removing the name of the company - the company is in operational and as per Section 252 of the Companies Act the Learned NCLT ought to have restored the name of the Company to the Register of Companies. The SCN and any consequential order in respect of striking off the company are hereby set aside - ROC is hereby directed to restore the name of the Company i.e. Hiraj Hospitality Pvt. Ltd. on the Register of Companies - application allowed.
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2021 (6) TMI 755
Oppression and Mismanagement - Seeking reasonable exit from the Company firstly to the Appellants and thereafter to the Respondents group by appointing the Chartered Accountant to value the shares of the Company - whether the Learned NCLT has dealt with the Company Petition on its merits or not? HELD THAT:- The counter allegations have not been dealt by the Learned NCLT. It is also a fact that the R-1 Company is closely held family Company. However, the primary duty is to decide the allegations and come to a conclusion and thereafter the Tribunal ought to have considered passing of decisions as it deem fit in accordance with law and the precedents has held by the Hon ble Supreme Court. The Learned Counsel for the Respondent submitted that as per the decisions of the Hon ble Supreme Court even where a case of Oppression has not been made the Jurisdiction of Erstwhile Company Law Board to pass any other or further order in the interest of the Company, if it is of the opinion that the same would protect the interest of the Company, it would not be powerless. It is apt to refer to the provisions of Companies Act, 1956 and Section 397,398 of the Companies Act, 1956 which dealt with the Oppression and Mismanagement in the affairs of the Company and the Jurisdiction Vests with the then the Company Law Board. The Company Law Board had wide powers under Section 402 of 1956 Act to give directions in the interest of the company and its shareholders. The New Companies Act, 2013 Section 241 provides a provision to make an Application to NCLT for relief in the case of Oppression and Mismanagement - the Judgments of the Hon ble Supreme Court with respect to Section 397,398 are squarely applicable to the provisions of Section 241 and 242 of the Companies Act, 2013 with respect to the Oppression and Mismanagement. Reliance placed in the case of upon the Judgment of the Hon ble Supreme Court in Needle Industry (India) Ltd. vs. Needle Industry Newey (India) Holding Ltd. [ 1981 (5) TMI 89 - SUPREME COURT] it was held that Even though the Company petition fails and the appeals succeed out on the finding that the Holding Company has failed to make out a case of Oppression, the court is not powerless to do substantial justice between the parties; and place them, as nearly as it may, in the same position in which they would have been, if the meeting of May 2 were held in accordance with law. Thus, there is no doubt that the then Company Law Board was not powerless to pass orders even though the case of oppression is not made out. We are bound by the above decisions of the Hon ble Supreme Court which are leading Judgments in the matter of Oppression and Mismanagement. However, in the facts of the present case the Learned NCLT has not dealt the case on merits and without arriving at a finding on the basis of merits giving directions more particularly when parties have not come forward for exiting the Company, is in our view Unjustified. There is no doubt that the parties have made some offers but ultimately the parties should have come forward with a concrete proposal with regard to the exit either by the Petitioners or by the Respondents. The Learned NCLT erred in passing the said impugned order, since there is no consensus between the parties with regard to exit from the Company - Learned NCLT is requested to deal with the Company Petition on merits by considering the allegations made by the Appellants/Petitioners along with the documents relied upon by them - stay granted by this Tribunal dated 09.04.2019 shall continue to operate till disposal of the Company Petition No. 138 of 2018 on its merit - Appeal disposed off.
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2021 (6) TMI 743
Sanction of Scheme of Arrangement - Sections 230-232 of the Companies Act, 2013 (for short the 'Act') filed by the Petitioner Companies in terms of Rule 15 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- There are no objections to the Scheme and hence there is no impediment in the sanction of the Scheme. Therefore, the Scheme (Annexure P-1) is hereby approved. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or granting permission in respect of any compliance with any other requirement which may be specifically required under any law. With the sanction of the Scheme, the Demerged Undertaking (as defined in Clause 1.5 of the Scheme) of the Demerged Company shall be transferred to and vested in the Resulting Company. Application disposed off.
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2021 (6) TMI 731
Seeking grant of stay on AGM to be held - subsequent events of acts of oppression and mismanagement occurred in the Respondent Company while conducting the Annual General Meetings - HELD THAT:- In the present case, while discussing the scope of permitting amendments, this Tribunal examined whether the proposed amendment substantiate, elucidate and expand the pre-existing facts already contained in the original pleadings. In the application, the Applicant alleges the subsequent events of acts of oppression and mismanagement occurred in the Respondent Company while conducting the Annual General Meetings. It appears from the records that the original Company Petition was filed on 03.07.2019 before the Chennai Bench. The Applicant alleged procedural irregularities occurred while convening the Annual General Meetings to avail the benefit of the Companies Fresh Start Scheme 2020 for the financial years 2015-2016, 2016-2017, 2017-2018, 2018-2019 according to the Companies Act, 2013. The complaint of the Applicant in the Original Company Petition is that no AGM for the Financial Years 2015-2016 and 2016-2017 was conducted. This Tribunal is of the opinion that only based on the conclusion that whether the petition is maintainable or not, then only subsequent events can be considered to do complete justice between the parties and to make appropriate orders for removing the oppression and mismanagement in the Respondent Company - Application dismissed.
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2021 (6) TMI 728
Approval of Composite Scheme of Arrangement - Section 230 to 232 read with Section 66 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding holding and convening of meetings issued - various directions regarding issuance of SCN also issued. The scheme is approved - Application allowed.
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Insolvency & Bankruptcy
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2021 (6) TMI 760
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - application was dismissed on the ground of pre-existing dispute - HELD THAT:- The Demand Notice has to be responded to within 10 days, as required in Section 8(2) for the purpose of bringing to the notice of the operational creditor the existence of a dispute or evidence of repayment of operational debt. The Corporate Debtor has not done so, prompting the operational creditor to take action as per Section 9 (1). Later during hearing before the Adjudicating Authority, the Corporate Debtor raised the issue of existence of a dispute. It appears to be a spurious dispute, raised to ward off the responsibility of repayment of debt as claimed by the operational debtor - The doubtful nature of dispute can also be inferred from the fact that Ld. Counsel of Respondent (Corporate Debtor) has stated in arguments that he had sent emails regarding the high percentage of wastage of newsprint on 28.9.2016, 5.10.2016, 25.5.2017, 2.7.2018 and 9.8.2018. The first invoice that is included in the demand notice which is due for payment is of 22.2.2018. All the other invoices included in the demand notice are of dates later than 22.2.2018 - It is not clear why the same issue is raised again by the corporate debtor for later invoices. It appears that this issue has been shown as a pre-existing dispute as an afterthought by the Respondent. While there is dispute about the rate of interest claimed by the Appellant it does not significantly alter the quantum of unpaid debt, which will remain to be above Rs. One Lakh. Thus, the application is maintainable on account of the unpaid debt being more than Rs. One Lakh, the threshold amount. Appellant not printing the newspaper for 16 days and the loss incurred by the Respondent on this account - HELD THAT:- The Clause 3 of the agreement stipulates that the responsibility of supplying newsprint lay with the Corporate Debtor. Hence this issue does not provide any help to the Respondent in his case. High percentage of wastage of newsprint in printing - HELD THAT:- The said agreements make it very clear that the minimum number of chargeable copies will be 10,000. In addition, the said agreements also stipulate that the wastage will be less than 4%. This wastage, quite obviously, is in relation to printing of 10,000 copies. It is understood that in printing jobs as the number of copies increase the quantum of wastage decreases and, conversely, as the number of copies decrease the quantum of wastage increases - It is, therefore, logical to expect that the later invoices should also have been settled on the same principle. Hence, we find the insistence of the Respondent that the Appellant should provide clarification for higher wastage to be superfluous and according to us this dispute does not fall in the category of preexisting dispute. Submission of dispute to arbitration - HELD THAT:- The matter was not referred for arbitration by either of the parties. This issue of possibility of arbitration has been raised at the appeal stage. It is not for this tribunal to direct the parties to go for arbitration. The Appellant and the Respondent continued in their relationship of Corporate Debtor and Operational Creditor even after 3.12.2017 and hence effectively the agreements continued to bind the parties. The Corporate Debtor accepted the invoices raised on and after 22.2.2018 and in various emails kept on promising to make payments and buying time for making payments - Appellant s application under Section 9 of IBC satisfies all the ingredients as laid down in law. The same deserved to be admitted. The matter is remitted back to the Adjudicating Authority. The Adjudicating Authority will admit the application (unless parties settle dispute before such Order), and pass further consequential directions as per provisions of IBC - Appeal allowed.
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2021 (6) TMI 754
Claim filed by Operational Creditors belatedly, rejected - CIRP is now at the stage where the Resolution Plan has already been approved by the Committee of Creditors and the same has been filed before the Adjudicating Authority for approval - HELD THAT:- The Nationwide lockdown was imposed on 25th March, 2020. When the period of 90 days expired on 17th March, 2020, if Regulation 12(2) read with Regulation 40C is kept in view, the Appellant cannot take advantage by claiming that because of the COVID-19 situation, the Appellant could not file the claim with the Resolution Professional. Submitting of the claim cannot be equated with filing of the application - It is admitted position that already Resolution Plan has been approved and perusal of the record shows that after much efforts the Resolution Professional could take the CIRP to the stage of approval of Resolution Plan. The reasons recorded by the Adjudicating Authority have substance and if at belated stage when the Resolution Applicants are already before the Committee of Creditors with their Resolution Plan(s) if new claims keep popping up and are entertained, the CIRP would be jeopardized and Resolution Process may become more difficult - keeping in view the object of the I B Code which is Resolution of the Corporate Debtor in time bound manner to maximize value, if such requests of applicants like Appellant are accepted the purpose of I B Code would be defeated. Appeal dismissed.
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2021 (6) TMI 741
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:- Notice of this petition was issued to the corporate debtor on 31.05.2019 to show cause as to why this petition be not admitted. The Financial Creditor has filed affidavit of service vide Diary No. 5595 dated 15.10.2019 wherein it has been stated that notices were sent vide speed post, Email and by hand to the corporate debtor - The Notice of hearing was also published in two newspapers (English) on 16.10.2019. Newspaper clipping of both newspapers are attached as Annexure-P1 of Diary No. 6986 dated 10.12.2019. Accordingly, several opportunities were afforded to the corporate debtor to file its reply but there has been no representation from the respondent so far. In the present case, the occurrence of default is evidenced by the details furnished by petitioner including Loan-cum-Hypothecation agreement, no lien letter along with Demand Promissory Note executed between both parties and same are placed at Annexures A-6 A-7 respectively. Demand Notice dated 06.01.2017 under Section 13(2) of SARFEASI Act (Annexure A-9), possession notice dated 22.03.2017 (Annexure A-10) were issued by financial creditor and copy of order dated 16.02.2019 (Annexure A-11) passed by Debt Recovery Tribunal, Chandigarh wherein recovery certificate was issued shows that the corporate debtor had made default in payment of financial debt. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above ₹ 1,00,000/-, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Application allowed.
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2021 (6) TMI 740
Maintainbaility of application - initiation of CIRP - Corporate Debtor faield to make repayment of its dues - Operational Creditors or not - existence of debt and dispute or not - HELD THAT:- It is the case of the petitioner that in terms of the agreements entered into between the petitioner and the respondent, the respondent guaranteed and warranted that it shall utilize the raw material supplied by the petitioner solely and exclusively for the purpose of manufacture of the products for the petitioner and not for any other purpose. Despite the petitioner having provided with the raw material and technical know-how to the respondent and made repeated requests and reminders, the respondent failed and neglected to supply and deliver the products to the creditor. In July 2017, upon physical verification at the premises of the respondent, the petitioner learnt that the raw materials supplied by it are missing from the site and the respondent has wrongly misused and misappropriated the raw material. The respondent by misusing the raw materials which belonged to the petitioner, is in complete breach and violation of the agreement and has deprived the petitioner of its legitimate rights over the stock of raw material. The respondent with such actions have, therefore, committed willful default of the agreement. The petitioner miserably failed to give a proper calculation/computation of the amount claimed as a debt due from the respondent. The invoices were raised by third party vendors in favour of the petitioner. The petitioner has not raised any invoice against the respondent. In this view of the matter, we are of the considered view that the petitioner failed to establish the relationship of an operational creditor and corporate debtor between the petitioner and respondent and also failed to prove any ascertained and established debt either in respect of any services rendered or goods supplied to the respondent or for any breach of trust or terms of agreements. Hence, the issue is answered in the negative. Petition dismissed.
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2021 (6) TMI 739
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - dispute of contractual nature or not - arbitration proceedings justified or not - HELD THAT:- In the present matter, it is an admitted fact that at the end of each invoice issued by the Operational Creditor there is an Arbitration Clause. Against these invoices Corporate Debtor had issued debit note. When the debit notes were issued, the corporate Debtor also received emails from Operational Creditor seeking clarification and contesting the issuance of Debit Note, hence, a dispute had come into existence by admitting the fact that valid invoice was existing between the parties. Subsequently, after the exchange of emails the parties have met multiple times to settle the dispute between them with respect to the invoice amount and supply involved. At this stage we are not going into the merits of existence of per-existing dispute as defined in I B Code, 2016 but to test whether the dispute if any needs to be sent to arbitration as per section 8 of Arbitration and Conciliation Act (as amended). Since the disputes are purely contractual in nature, the invocation of arbitration is justified. Once the parties are sent to arbitration, nothing survives in the insolvency application as the issues between the parties after arbitration, will decide the rights of the parties. Hence at this stage, the insolvency application in view of the parties being sent to the arbitration, has become infructuous - Application allowed.
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2021 (6) TMI 738
Liquidation of Corporate Debtor - Section 33 (1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Tribunal is of the view that as per the record and submissions made, we endeavors to obtain resolution of corporate debtor has failed and CoC in its commercial wisdom decided to liquidate the corporate debtor which does not require any interference. In present circumstances the CoC decision is appropriate. The corporate debtor Ajit Automotive Service Private Limited stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter - III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - application allowed.
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2021 (6) TMI 736
Deposit with HDFC Bank Account - HELD THAT:- The Applicant-RP intimated the Respondents in all the three applications regarding the initiation of CIRP against the Corporate Debtor through emails. The Respondents advised not to allow any debit transaction in the account of the Corporate Debtor without prior authorisation of the RP. Permission to use the amount as available in the current account of the Corporate Debtor with HDFC Bank - seeking removal of lien on the said account for the purpose of allowing the Resolution Professional to use the said amount - HELD THAT:- It is pertinent to observe here that on an earlier occasion, through an application bearing IA No. 1477/KB/2020 in the underlying company petition, the Applicant/RP had prayed for direction on ICICI Bank to release the attachment and defreeze account of the Corporate Debtor bearing No. 635405000368. This Adjudicating Authority had ordered the Respondent therein to defreeze the bank account in respect of which the prayer was made, i.e., 635405000368 along with another account bearing 635405000356 with the same bank - we direct the release or removal of lien or attachment, as the case may be, of all the bank accounts of the Corporate Debtor mentioned supra by all the banks including the Respondents in IA No. 1475/KB/2020 and IA No. 158/KB/2021. The applicability of the directions contained in this order are extended to all the accounts that may be discovered by the RP in future, in the present company petition, that might have been attached or on which lien might have been created by any of the authorities, to avoid the multiplicity of proceedings. The properties of the corporate debtor, which include the accounts lying at credit in the bank accounts of the corporate debtor, should be available to the resolution professional to keep it as a going concern. Application disposed off.
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2021 (6) TMI 732
Seeking direction to RP to accept the claim filed by the Applicant/Financial Creditor - HELD THAT:- Admittedly, on the application filed by the applicant, the CIRP against the Corporate Debtor was initiated and on perusal of the main application, it is found that while filing the application, the applicant had filed all the documents. As per the averments made in part-IV; column II of the main application, he had enclosed two separate builder-buyer agreements dated 17.04.2013 and 03.10.2013, money receipts, statements issued by the Corporate Debtor admitting the payment made by the financial creditor and bank statement. It is not the case of the applicant that for the first time, he has raised the claim before the RP after approval of the Resolution Plan by COC. Rather, it is the same applicant, on whose application, the CIRP of the Corporate Debtor was initiated and the RP was appointed - the documents enclosed by the applicant along with the application filed under Section 7 of the IBC, 2016 are the same documents which have also been filed along with the claim form. Therefore, the RP is well aware about the claim of the applicant and that is the reason, the applicant is shown as a creditor in the list of creditors prepared by the RP and which is uploaded on his website too. This fact has also not been denied by the RP during the course of his arguments. Here, it is not for the first time that the claim came to the knowledge of the RP or Resolution Applicant, rather all the documents as required to prove the claim by the creditor in class under Regulation 8A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 were already available with the RP - the RP is directed to consider the claim of the applicant - application disposed off.
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2021 (6) TMI 729
Seeking release of attached Bank Accounts - moratorium was already imposed - seeking restraint from transferring or making payments from the bank account of the Corporate Debtor maintained with it to any third party - HELD THAT:- This Bench is of the considered view that in view of the admission of CIRP on 25.09.2019, moratorium is imposed instantaneously, the order of Respondent No. 2 directing Respondent No. 1 to freeze the account of the Corporate Debtor vide an order of attachment dated 21.11.2020 is in contravention of the moratorium imposed under section 14 of the Code, and interferes with the role of the RP in managing the affairs/business and management of the Corporate Debtor under section 17, 18, 20 and 23 of the Code. In view of section 25 the RP is duty bound to take immediate control of all the assets of the Corporate Debtor and hence has rightly sought for the defreezing action from the Respondent No. 1 - The Respondent No. 1 further has appeared in the Court and indicated that they have no objection for defreezing the bank account. The order of attachment passed by the Respondent No. 2, i.e. The Assistant Collector, Division-19, Commercial Tax, Lucknow dated 21.11.2020 is hereby set aside - application allowed.
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Service Tax
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2021 (6) TMI 769
Validity of notice under Section 87 (b) of the Finance Act, 1994 - HELD THAT:- Pursuant to the interim order, the respondents have considered the grounds raised by the writ petitioner and passed an order on 18.08.2017 - the petitioner is at liberty to redress his grievances if any exist with reference to the subsequent order passed by the respondents in the manner known to law. Petition disposed off.
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2021 (6) TMI 749
100% EOU - refund of unutilized CENVAT credit - time limitation - Section 11B and not under Rule 5 of CCR read with N/N. 27/2017 - HELD THAT:- It is not disputed that the appellant debited an amount of ₹ 60,12,607/- which resulted in excess debit of ₹ 12,44,979/-. Further, the appellant has filed the present refund claim under Section 11B and not under Rule 5 of CCR read with Notification No.27/2017. Further, also after the introduction of GST, the appellant could not transitioned the excess debit into TRAN-I. In that case, the only option for the appellant was to file a refund claim under Section 11B read with Section 142(5) - the impugned order has not disputed the eligibility of credit debited in excess. After the introduction of GST in July 2017, there is no option provided to the noticee to avail CENVAT credit, as the returns have been suspended with regard to erstwhile regime. Consequently, the noticee filed the refund of the amount debited in excess in terms of provision 142(3) of CGST Act which was allowed as credit. The impugned order wrongfully invoked the Section 142(3) to reject the refund claim. It is a fact that if CGST Law was not introduced, the appellant would have availed credit in ER-1 Returns and as per Section 174(2)(c) of CGST Act, the appellant cannot be effected of its right, privilege, in availing credit merely in respect of refund rejected on account of limitation being passed after 27.12.2017 - thus, change in taxation regime should not affect the credit availment right of assessee. Hence the appellant is rightly entitled for the credit and also refund. The impugned order denying the refund by invoking Section 142(3) is not sustainable in law - Appeal allowed - decided in favor of appellant.
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2021 (6) TMI 745
Demand of service tax - reverse charge - revenue neutral issue - extended period of limitation - The appellant had received services of Back End Operations such as payrolls and finance input services from its related party AirAsia Global Shared Services (AGSS, for short) which is located outside India - HELD THAT:- In the present case, it is not disputed that the appellant is receiving the services of back-end operation such as payroll and finance from their related party AGSS which is located outside the taxable territory of India. It is also not disputed that the services received by the appellant is an input service and service tax is paid under reverse charge mechanism. Further it is found that the appellant submitted a certificate dt. 01.10.2018 of M/s. MOJ Associates, Chartered Accountants certifying the remittance of taxes under reverse charge mechanism for the receipt of services from AGSS for the financial years 2013-14 to 2017-18. The said certificate mentions that the payment of service tax on business support service received from AGSS made on accrual of invoices. Extended period of limitation - HELD THAT:- Both the authorities have not considered the ratio of the decision in the case of JET AIRWAYS (I) LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI- (VICE-VERSA) [ 2016 (12) TMI 934 - CESTAT MUMBAI] decided by the Tribunal which was upheld by the Hon ble Apex Court in JET AIRWAYS (INDIA) LTD. VERSUS COMMISSIONER [ 2018 (1) TMI 210 - SC ORDER] which is clearly applicable in the facts and circumstances of the present case. It is also found that the Commissioner(Appeals) in the impugned order has wrongly relied upon the ratio laid down by the Apex Court in the case of BALWANT SINGH VERSUS JAGDISH SINGH [ 2010 (7) TMI 556 - SUPREME COURT] wherein the facts of those cases are entirely different from the facts of the present case - The decision of Balwant Singh deals with the condonation of delay while the present case deals with the concept of revenue neutrality with regard to service tax remitted under reverse charge mechanism. The extended period of limitation has wrongly been invoked by the Revenue in the present case because the appellant has not concealed any material fact and has been filing the return regularly and paying the service tax under reverse charge mechanism and has been cooperating with the Department by providing various information and documents - the invocation of extended period of limitation is not sustainable in law. Revenue Neutrality - HELD THAT:- The issue of revenue neutrality has also been clarified by the CBEC vide Circular No.354/148/2009-TRU dt. 16/07/2009 wherein it has been clarified that the service tax paid by a service recipient on reverse charge basis would also qualify as input service for availment of cenvat credit Regarding the demand of the appellant seeking refund of ₹ 20,91,847/- paid post-01.07.2017, both the authorities have not considered the claim of the appellant on merits and therefore it is not desirable for me to give a finding on the request of the appellant to grant refund. The appellant has to file a refund claim as per law and in the present appeal, the refund cannot be granted to the appellant - Appeal disposed off.
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2021 (6) TMI 735
Liability on legal heir of the dues of deceased - whether for the period October 2009 to February 2014, the successor or the son of Shri Kuldeep Singh is liable to pay dues of services provided by Shri Kuldeep Singh or not? - HELD THAT:- It is very much clear that in case of transfer or otherwise disposal of the business, in such circumstances, only the successor is liable to pay the dues. There is no provision in law till yet in case of death of the proprietor of the firm who will be liable to pay the dues thereof - Reliance placed in the case of SHABINA ABRAHAM AND OTHERS VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS [ 2015 (7) TMI 1036 - SUPREME COURT] where it was held that in case of death of the proprietor of the firm, no liability can be fastened on the legal heir for the period till the lifetime of the proprietor. No demand of service tax can be fastened on the son of late Shri Kuldeep Singh for the period October 2009 to February 2014 - the impugned order is modified that the revenue shall determine the liability of the appellant firm w.e.f. 01.03.2014 - Appeal allowed - decided in favor of appellant.
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2021 (6) TMI 723
Classification of services - SGS system installed in the customers premises to enable the customer to procure LPG in bulk quantities - taxable under the head supply of tangible goods service or otherwise? - change of Revenue's View - levy of interest - penalty - extended period of limitation - HELD THAT:- The department cannot take a different stand for the earlier period for the same transactions. As the department has accepted that effective control and possession have been transferred to the customers, no service tax can be levied under the head Supply of Tangible Goods Service . Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (6) TMI 746
100% EOU - Maintainability of appeal - non-compliance of the manadatory predeposit under Section 35F of the Finance Act, 1994 - HELD THAT:- The dismissal of the appeal for non-compliance of mandatory predeposit under Section 35F of the Finance Act, 1994 is not sustainable in law in the present case because the appellant has already paid the entire duty by debiting the cenvat credit account and also paid the interest in cash. Further the Commissioner(Appeals) after hearing the matter on merits should not have dismissed the appeal for non-compliance of Section 35F. Once the credit of education cess and secondary education cess is specifically disallowed to be carried forward as transitional credit, they remain and retain their character as education cess and secondary education cess as cenvat credit as per Rule 3 of CCR, 2004. Since there is no finding on the merit by the learned Commissioner(Appeals), it will not be appropriate to decide the appeal on merits. The dismissal of the appeal for non-compliance of mandatory predeposit is not justified in law when the appellant has already paid the entire duty by debiting the cenvat credit account. The matter remanded back to the learned Commissioner(Appeals) for disposal of the appeal on merits after considering the various provisions contained in Section 140 of CGST Act, 2017 and the Circular dt.02.01.2019 issued by CBIC and after following the principles of natural justice - appeal allowed by way of remand.
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2021 (6) TMI 744
Refund of CENVAT Credit where the balance of the amount as on the appointed day has been carried forward/debited/reversed under this Act - proviso to Section 142(3) of CGST Act - decisions relied not applicable to the facts of the present case - HELD THAT:- When the appellant filed the refund claim for the respective periods, there was no facility to debit the refund claim in ER-2 Returns after the GST Act came into force. It is also found that by the time the refund claim was filed, the appellant had already carried forward the closing balance of credit as on 30.06.2017 through TRAN-1. Further, it is found that since no Return in ER-2 could be filed under GST Law and the appellant in order to satisfy the debit condition under Para 2(h) of the Notification No.27/2012, debited the refund claim amount in GSTR-3B in respective month, in fact, the credit was reversed under GST Law at the time of filing refund claim. An identical issue has been considered by the Tribunal in the case of M/S. GLOBAL ANALYTICS INDIA PVT. LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE [ 2019 (7) TMI 1185 - CESTAT CHENNAI] wherein the Hon ble CESTAT on an identical set of facts has held as denial of refund is not in accordance with law. It is very strange that the learned Commissioner (Appeals) has failed to give any finding on the above relied upon decisions and he has placed reliance on decisions which are not relevant to the facts of the present case. The decisions relied upon by the learned Commissioner in the impugned order does not deal with the subject involved in these cases. The rejection of the refund under Rule 5 of CCR read with Notification No.27/2012 is not sustainable in law - appeal allowed - decided in favor of appellant.
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2021 (6) TMI 742
Interest on delayed refunds - jurisdiction of adjudicating authority to review / reopen the adjudication order already passed - HELD THAT:- Both the authorities have failed to appreciate the reasoning given by the Tribunal while allowing the appeals of the appellant for refund of accumulated cenvat credit under Rule 5 with consequential relief - The Tribunal in GENERAL COMMODITIES PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2016 (7) TMI 653 - CESTAT BANGALORE] allowed the appeal of the appellant and the Revenue s appeal before the High Court was also dismissed; hence the decision of the Tribunal attained finality. In spite of that, the appellant had to file again the refund application though the original authority vide its order dt. 25.09.2017 sanctioned the refund but did not grant interest in view of the consequential relief given by the Tribunal. Thereafter the appellant filed a separate application under Section 11BB of the Central Excise Act, 1944 for claiming the interest for the delay in granting the refund - But the Revenue did not take any action on the application of the appellant and the appellant had to approach the Tribunal for seeking direction to the original authority to dispose of the application and the Tribunal vide its order dt. 23.04.2019 directed the original authority to dispose of the application and thereafter the Revenue again issued a show-cause notice dt. 15.05.2019 to the appellant proposing to reject the demand for interest on the grounds that the original authority does not have the jurisdiction to review or reopen the adjudication order already passed and the appellant had the liberty to file appeal against such adjudication order but he had not filed the same and hence the original authority refused to grant the interest. The Board vide its circular No.670/61/2002-CX dt. 01.10.2002 has also allowed the payment of interest on delayed refund - Further, the entitlement to claim interest on delayed refund is already settled in favour of the assessee by the judgment of the Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] . The appellants are entitled for interest on delayed payment of refund - matter remanded back to the original authority with the direction to compute the interest in accordance with law - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (6) TMI 773
Validity of original assessment order or the First Appellate order - Section 47 of the Puducherry Value Added Tax Act, 2007 - benefit of Input Tax Credit - zero rated transactions - HELD THAT:- The Appellate remedies are vital for the purpose of fact findings regarding the disputed facts. The High Court based on the affidavits filed by the parties cannot make any finding in respect of the disputed facts as the documents and evidences cannot be examined in a writ proceedings and therefore, this Court is of the opinion that the appellate remedy is to be exhausted by the petitioner in all these Writ Petitions. Some Writ Petitions are filed challenging the original assessment order and the other Writ Petitions are filed challenging the orders passed by the First Appellate Authority. In all such cases, the petitioners are entitled to file an appeal under Section 47 and thereafter, under Section 49 and finally, before the High Court under Section 51 of the PVAT Act. This being the scheme of legislation, dispensing with the provisions contemplated under the statute is not preferable. The practice of filing Writ Petitions without exhausting the statutory appellate remedy is in ascending mode and most of such Writ Petitions are filed with an idea to evade payment of pre-deposit for filing an appeal which is contemplated under the procedures. However, the High Court need not encourage such practise. Respecting the institutions created under the legislations is of paramount importance. The High Court cannot undermine the importance of the appellate forum created under the statute, unless there are compelling reasons. The petitioner in all the Writ Petitions are at liberty to file respective appeals before the appellate forum concerned under Sections 47, 49 and 51, as the case may be, by following the procedures contemplated and in a prescribed format - Petition disposed off.
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2021 (6) TMI 764
Levy of penalty u/s Section 20(1) (a) of the Bihar Finance Act, 1981 - bar of limitation stipulated under Section 24 of the said Act - HELD THAT:- Taking note of Section 24 of the Act and applying the principles of interpretation it can be said that the period of limitation applicable would not be four but two years, commencing from the date of communication to the assessing authority of the order passed by the revisional authority - It is clarified that the Statute, i.e. Proviso to Section 24 itself, is very clear. It includes an order passed in a revision, in addition to an order passed in any appeal, reference or review. Reliance on the decision of Hon ble the Apex Court in STATE OF JHARKHAND VERSUS VOLTAS LTD. [ 2007 (5) TMI 18 - SUPREME COURT ] is misconceived, and in any event distinguishable on facts, for the Apex Court was dealing with a case as is evident from paragraph 16 of the report where under the order of remand, the authority did not take any step for completing the proceedings. No proceedings assailing the very same order of remand were pending before any Higher Authority. The order passed under Section 20(1) (a) of the Act imposing a levy of penalty cannot be illegal and invalid given the bar of limitation stipulated under Section 24 of the Act - petition disposed off.
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Indian Laws
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2021 (6) TMI 776
Dishonor of Cheque - photocopy of the cheque can be taken as secondary evidence as provided under Section 65 of the Evidence Act or not - Whether, writ petition (criminal) assailing legality and propriety of the order passed by the Revisional Court is maintainable? - HELD THAT:- Learned counsel while refuting the said contention would submit that the power exercised by this Court under Article 226 of the Constitution of India and under Section 482 Cr.P.C. are one and the same as both the powers have to be exercised rarely and sparingly to prevent abuse of process of any court or to secure the ends of justice, therefore, the writ petition (criminal) assailing the orders passed by the learned Session Judge as well as learned Magistrate First Class is maintainable - the writ petition (criminal) is maintainable assailing the order passed by the learned Sessions Judge in the criminal revision. Therefore, issue number 1 raised by the respondent goes against him and this Court finds that the writ petition (criminal) is maintainable. Whether, the photocopy of the document can be taken as secondary evidence as provided under Section 65 of the Evidence Act? - HELD THAT:- From perusal of Clause 2 and 3 of the Section 63 of the Indian Evidence Act it can be said that by some mechanical process copy of the document may be obtained but the petitioner shall ensure its correctness and accuracy by sufficient placing materials on record. It is pertinent to mention here that there is no whisper in the application filed by petitioner before Trial Court which shall indicate that it has been obtained by mechanical process to ensure its accuracy - In the present application since there is no averment under Section 65 of the Indian Evidence Act that photocopy was compared with the original and it was accurate photocopy of the original and further have not filed with affidavit with regard to person who has obtained the said photocopy. From record it is difficult to hold the hallmark, authenticity and accuracy of the photocopy. The petitioner failed to explain as to what were the circumstances under which photocopy was prepared and who was in possession of the original document at the time of photocopy being prepared. In view of these circumstances, this Court comes to conclusion that no foundation has been laid for leading secondary evidence in the shape of photocopy. Thus, it can be established that photocopy is neither primary evidence nor secondary evidence because the parties are required to prove whether the photocopy taken is the exact copy of the original., therefore, in view of Section 65 of the Indian Evidence Act the Revisional Court as well as the Judicial Magistrate First Class have not committed any error while rejecting the application. The learned Judicial Magistrate First Class and learned Revisional Court have not committed any illegality or irregularities while rejecting the application for permission to lead secondary evidence which warrants interference by this Court exercising power under Article 226 of the Constitution of India - Petition dismissed.
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2021 (6) TMI 766
Dishonor of Cheque - insufficiency of funds - non- performance of his promise under the agreement to sell - HELD THAT:- In the instant case, the accused as DW-1 in his examination-in-chief has taken a contention that, the date column in the cheque at Exhibit P-1 was left blank by him and the same was filled by the complainant. Except this, he has not at all stated as to, whether he did not have his consent for the complainant filling up the date or whether he had precluded the complainant from filling the date in the instrument without his knowledge or consent. Therefore, even assuming that, it is the complainant who has filled the date, still, the drawer of the instrument, by giving such an un-dated cheque to the complainant, has impliedly permitted the complainant to fill the date in the Negotiable Instrument (cheque) by himself. In the instant case, the accused nowhere has stated that he had any objection for the complainant filling up the date in the cheque. It is on a similar point, the Division Bench of the Kerala High Court in Bhaskaran Chandrasekharan's case [ 1998 (4) TMI 569 - KERALA HIGH COURT] was pleased to observe that, when a cheque is issued for a valid consideration with no dispute regarding the signature, amount and name, it cannot be said that, putting a date on the cheque by the payee who is the holder of the cheque in-due-course would amount to material alteration rendering the instrument void. In the instant case, if the pre-printed year of the cheque were to be used without effecting any change in the year, it should have been used on or before the year 2009 but not thereafter. However, the cheque is said to have been given in the year 2013, as such, the year on the cheque is also shown as '2003' by overwriting the digit '1' against '0' at tens' place. Thus, the cheque is shown to have been issued in the year 2013 - No doubt it is an alteration, but had it been a material alteration, the banker while dishonouring the cheque would have, apart from showing the reason of insufficiency of funds in the account of the drawer, would also have mentioned the reason of alteration require drawer's authentication . It is for the reason that the cheque return memo which is at Exhibit P-2 in its Code No.'1', though mentions the reason for return as funds insufficient , the Code No.'12' of the very same exhibit for return mentions alterations require drawer's authentication . Admittedly, the complainant is a real estate businessman and a hotelier. The accused in his deposition has shown his avocation as a coolie. He had agreed to sell his agricultural land to the complainant as per the agreement at Exhibit P-5 as could be made out from the said document. The said agreement does not quantify any damages, except stating that in case of any default the proposed purchaser had a right to take suitable legal action against the vendor and is entitled to recover the loss incurred by him - the quantum of fine imposed which is ₹ 1,05,000/- in addition to the cheque amount appears to be on a higher side. Criminal Revision Petition is allowed-in-part.
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2021 (6) TMI 762
Suspension of operation of the excise licences of the petitioner - allegation is that certain quantum of liquors that were placed in the premises without any lock and key - Compounding of Offences - sale of Indian and Foreign liquors and claims - HELD THAT:- The entirety of the observations of the first appellate authority in regard to the alleged discrepancies are theoretical and do not reveal any independent application of the material that are stated to be available on record or the responses that have been furnished by the petitioner. As regards the reference to the violation of orders to contain the pandemic, those offences have been compounded and as I have indicated in paragraph-4, proceedings cannot be continued any further, qua those offences. The impugned orders of original and appellate authorities are set aside. The respondents are granted liberty to issue a show cause notice afresh indicating the violations and furnishing all materials on the basis of which the allegations are based. After receipt of response from the petitioner, hearing the petitioner and consideration of all materials, the officer will pass an order within a period of eight (8) weeks and the application of the petitioner for renewal of its licence shall be considered thereafter and subject to such order. In the present matter, bearing in mind the nature of the order that has been passed by me, a detailed enunciation of this issue may not be necessary, since there is no identity between the issue raised in show cause notice dated 21.04.2020 and the issue based upon which order of cancellation dated 29.03.2020 has been passed - continuation of the proceedings pursuant to show cause dated 21.04.2020 is, as observed by me earlier, misconceived since it turns on an entirely different set of issues. The authorities have proceeded to compound the offence committed under the Excise Act, which, in my considered view, is contrary to the object and intendment of the Disaster Management Act. The control exercised by the Centre and State under the DM Act is in public interest and to control the situation caused by the prevailing disaster, in this case, the COVID 19 pandemic. Any restrictions placed on the activities and movement of the public is also for the aforesaid reason only - Petition disposed off.
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