TMI Tax Updates - e-Newsletter
June 26, 2024

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Is Tolerance really Tolerance?

   By: Madhusudan Mishra

2. Impugned Order liable to be set aside when reply filed by the Assessee in response to the discrepancies raised in returns has not been taken into consideration

   By: Bimal jain

3. Recommendations of 53rd GST Council Meeting held on 22.06.2024presided by Hon’ble Finance Minister Nirmala Sitharaman

   By: Vivek Jalan

4. INITATION OF PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS

   By: DR.MARIAPPAN GOVINDARAJAN

5. Proper Officer had to at least consider the reply on merits and then form an opinion

   By: Bimal jain

News

1. Clarification on Filling Form-10IEA, If you want to opt for "OLD TAX REGIME"

Highlights / Catch Notes

GST

• High Court ruled that multiple show cause notices can be issued to an individual and their business. Proper jurisdiction must be considered.

  Case-Laws - HC : The High Court addressed the issue of jurisdiction in a case involving the issuance of two show cause notices to an individual for different entities. The petitioner argued that once a notice was issued to them individually, a separate notice could not be issued for their proprietorship concern by a different Commissionerate. The Court held that the jurisdiction of the Commissionerate where the proprietorship was situated was valid. The earlier notice to the individual did not affect the notice to the firm, and the Commissionerate had the authority to examine the actions of the firm. The petitioner was advised to respond to the show cause notice for the firm. The Court found no grounds to interfere, and the appeal was dismissed.
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• The court decided to accept the late appeals in GST case due to valid reasons provided by the petitioner.

  Case-Laws - HC : The High Court addressed a challenge to appellate orders rejecting appeals as time-barred u/s 107 of GST enactments. The petitioner's appeals were filed 21 to 24 days beyond the limitation period but explained the delay due to rectification petitions. The petitioner paid 10% of the disputed tax and had funds appropriated from their bank account. The Court directed the appellate authority to accept and decide the appeals on merits without considering the limitation issue. The impugned orders were quashed, and the bank attachment was lifted. The petition was disposed of accordingly.
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• Penalty proceedings under GST Act initiated after premises search deemed unjustified by High Court. Orders quashed.

  Case-Laws - HC : The High Court addressed penalty u/s 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 following premises search. Relying on precedent, the Court held that penalty proceedings post a search are not warranted. Quashed impugned orders of March 21, 2018 and August 31, 2018, finding them unjustified. Petition allowed based on lack of justification for penalty u/s 129 post-search.
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• Court rules in favor of petitioner in recovery case. Directed to supply demanded documents within 3 days. Petition allowed to reply within 10 days.

  Case-Laws - HC : In a case before the High Court, the petitioner sought recovery of CGST, SGST, and KFC amounts following a search and seizure at their business premises. The petitioner claimed they were not provided with the demanded documents, hindering their ability to respond to the show cause notice. The Court noted the lack of a reply from the petitioner and ordered the respondents to supply the required documents within three days. The petitioner was granted 10 days to file a reply, ultimately leading to the disposal of the writ petition. The Court's decision emphasized upholding principles of natural justice in the proceedings.
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Income Tax

• Profit from sale of agricultural land exempt from tax cannot be added to books profit for MAT calculation. ITAT decision in favor of assessee.

  Case-Laws - AT : The ITAT considered a rectification order u/s 154 regarding MAT computation u/s 115JB on profit from the sale of agricultural land exempt from income tax. The Assessing Officer accepted the income initially but later raised the taxability issue under rectification. The Tribunal held that such profit, not a capital asset under normal provisions, cannot be taxed under MAT. Citing precedents, including HARRISONS MALAYALAM LTD. and others, it ruled that if AO did not treat the gain for book profit, the issue cannot be raised. Exempt income from agricultural land cannot be added to book profit for MAT calculation u/s 115JB. Decision favored the assessee.
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• High Court held no penalty for belated TDS remittance if reasonable cause shown. Failure to pay tax quickly due to govt delay not penalized.

  Case-Laws - HC : The High Court considered a case involving non-payment/belated remittance of TDS u/s 276-B of the Income Tax Act. The issue centered on defining "reasonable cause" for the delay in remittance. The Petitioners demonstrated that they promptly remitted the TDS upon receiving fee reimbursements, mostly for students under a government scheme. The Court noted that penalties u/s 271C do not apply for mere belated remittance. Reference was made to Section 201(1A) and Section 276B consequences. Prosecution u/s 276B is subject to Section 278AA, requiring proof of reasonable cause for delay. The Court found the Petitioners' explanation valid, ruling in their favor and negating the need for criminal prosecution.
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• Court Rules Pre-Paid Sales Tax as Capital Receipt, DEPB License Benefits as Hypothetical, Fire Loss Not Taxable.

  Case-Laws - HC : In the High Court case, the issues addressed included the taxability of pre-payment of sales tax liability, benefits from DEPB License/Focus Market Licenses, and loss of profit due to fire without insurance recovery. The court held that the pre-paid sales tax amount saved by the assessee was a capital receipt, not taxable as revenue. Benefits from licenses were deemed hypothetical income until actual realization, not taxable. Loss of profit due to fire without insurance recovery was not taxable as income until it was enforceable. The court referred to relevant legal precedents to support these decisions. The Revenue appeal was dismissed.
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• High Court ruled in favor of taxpayer on unexplained cash credit issue, allowing telescopic benefit of income surrendered during survey.

  Case-Laws - HC : The High Court dealt with a case involving unexplained cash credit u/s 68 of the Income Tax Act. The assessee had surrendered unaccounted income during a survey, which was offered for tax. The ITAT deleted the addition, allowing telescopic benefit by linking surrendered income to cash deposits in the bank account as maturity proceeds of hundies. ITAT's decision was based on thorough analysis of facts, documents, and evidence. The High Court upheld ITAT's findings, stating no legal error was found. The benefit of telescoping was justified as per precedent. The department failed to prove the source of bank deposits was related to a scam. No substantial question of law arose, and the appeal was decided against the revenue.
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• Trust donations for capital asset not taxable income per ITAT. Donations treated as subsidy = capital receipts.

  Case-Laws - AT : The ITAT, an Appellate Tribunal, assessed whether donations received by a trust for acquiring a capital asset should be taxed as income. The trust treated the donations as corpus funds, not income, in its books. The ITAT agreed with the trust's argument that the donations were to be considered capital receipts, not income u/s 56(1). The ITAT noted that the trust, as a business entity, lawfully treated the donations as subsidies following donor-specific directions. Therefore, Section 2(24)(iia) and Section 56(1) were not applicable, and the addition on donations was directed to be deleted, ruling in favor of the assessee.
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• Addition of bogus LTCG disallowed due to off-market purchase in cash. Exemption denied as payments were non-verifiable. Upheld by ITAT.

  Case-Laws - AT : The Appellate Tribunal upheld the addition u/s 68 for alleged bogus Long Term Capital Gains due to off-market cash purchase of shares. The taxpayer's claim for deduction u/s 10(38) was disallowed as the purchase payments lacked verifiable proof through normal banking channels. Despite holding the shares for over a year and paying STT on sale, the exemption was denied due to unverifiable cash purchases. The Tribunal found the transactions suspicious, considering the lack of credible documentation and the taxpayer's atypical share investment behavior. The decision affirmed the CIT(A)'s ruling against the taxpayer, emphasizing the need for proper sourcing evidence in such cases.
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• Interest income from unutilised government grants not taxable per Tribunal's earlier order. Sponsorship expenditure treated as revenue expense.

  Case-Laws - AT : The ITAT held that interest income received on unutilized grants is not taxable as it is considered part of the grant itself, following earlier Tribunal decisions. The orders for AYs 2014-15, 2015-16, 2017-18, and 2018-19 supported this view, and no new evidence was presented to warrant a different stance. The decision was in line with CIT(A)’s findings, as no higher court rulings were cited to challenge the Tribunal's position. Regarding sponsorship expenditure, the CIT(A) deemed it as revenue expenditure, citing statutory obligations and case law like Lakshmi Ji Sugar Mills Co. Pvt. Ltd. and Raj Spinning and Weaving Mills Ltd. This ruling favored the assessee, allowing for deduction as business expenses.
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• Appeal allowed due to delay explained, order cancellation without DIN void, show cause notices redundant, registration cancellation annulled.

  Case-Laws - AT : The Appellate Tribunal condoned a 97-day delay in filing an appeal due to a prior writ petition. An order lacking a Document Identification Number was deemed non-existent per CBDT circular. However, a stay by the Supreme Court suspended this finding. The Tribunal quashed a cancellation of registration u/s 12AA as prior issues were settled, rendering the cancellation impermissible. The Tribunal annulled the registration cancellation, noting the High Court's reversal of a previous decision. The appeal by the assessee was allowed.
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• Penalty issue: AO didn't specify charges or record proper satisfaction. Vague notice invalidates penalty. Assessee wins!

  Case-Laws - AT : The Appellate Tribunal considered the issue of penalty u/s 271(1)(c) of the Act. It was questioned whether a precise charge was brought against the assessee and if the assessing officer had recorded proper satisfaction. The assessee offered additional income during a search related to inflated marketing expenses. The Tribunal found that the assessing officer did not specify the charge in the penalty proceedings notice, rendering the initiation of penalty proceedings invalid. The vague notice issued was deemed void, leading to the penalty order being quashed in favor of the assessee.
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• Appellate Tribunal Clarifies Charitable Income Exemption, Limits to 15% Without Application, Assessee's Appeal Successful.

  Case-Laws - AT : The Appellate Tribunal addressed the issue of exemption u/s 11 for income from property held for charitable purposes. It held that the provision of section 11(1)(a) applies, limiting the allowance to 15% of the income from trust property if no application of income is made for charitable purposes. The Tribunal clarified that in the absence of the assessee exercising the option to accumulate income, 85% of the income must be applied for charitable purposes. The Tribunal rejected the Revenue's adjustment u/s 143(1)(a) and assessed the income at Rs. 87,430. It also discussed the incorrect application of section 167B for tax rate computation, stating that it should follow normal rates for Associations of Persons. The Tribunal allowed the assessee's appeal.
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• Trust's 80G(5) approval denied due to unclear religious expenses. Case sent back for review.

  Case-Laws - AT : The ITAT decided on the rejection of a Trust's application for approval u/s 80G(5) due to "religious" expenses. The CIT(E) did not seek specific details before rejecting the application. The ITAT directed a fresh assessment by the CIT(E) to determine if less than 5% of total income was spent on religious activities. If so, Trust may qualify for benefits u/s 80G(5) if other conditions are met. The appeal was allowed for statistical purposes.
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• Interest income from FDs with SCDCC Bank allowed as deduction under 80P(2)(a)(i). Revision under sec 263 not valid. Appeal allowed.

  Case-Laws - AT : The Appellate Tribunal reviewed a case involving a revision u/s 263 related to deduction u/s 80P(2)(a)(i). The AO allowed interest income from FD investments as a deduction. The Tribunal noted a previous year's treatment by AO as "income from other sources" and rejection of the deduction claim. The CIT(A) later allowed the deduction for the previous year, stating the interest income was part of operational income u/s 80P(2)(a)(i). The Tribunal found the PCIT's revision u/s 263 invalid, as the interest income was deemed part of operational income due to statutory compulsions. The Assessment Order granting the deduction was upheld, and the PCIT's order u/s 263 was quashed. The appeal by the assessee was allowed.
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Customs

• CESTAT ruled on the classification of imported Zinc. Revenue's claim rejected due to insufficient evidence. Appeal dismissed.

  Case-Laws - AT : The Appellate Tribunal addressed the issue of classifying imported Zinc as unwrought/unrefined under a specific customs tariff heading. The Tribunal rejected the demand for differential duty based on theoretical transaction value, citing lack of evidence supporting the goods being Zinc Dross. The Revenue's attempt to raise a new classification question was deemed inadmissible due to prior concession. The Tribunal upheld the lower authority's decision, stating the Revenue's grounds were not valid. The Tribunal dismissed the Revenue's appeal, finding no errors in the Commissioner's order.
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• CESTAT: After NCLT approves resolution plan, appeal can't continue. Tribunal can't act beyond its powers. Appeal abates.

  Case-Laws - AT : The CESTAT, an Appellate Tribunal, addressed the issue of continuing an appeal post the NCLT's approval of the resolution plan. Referring to Rule 22 of CESTAT (Procedure) Rules, 1982, it was held that the appeal abates once a successor interest with sufficient rights is appointed by NCLT. Citing precedents, including the Supreme Court's ruling, it was established that the Tribunal's powers are limited by statute. Therefore, any order exceeding statutory powers is invalid. In line with Rule 22, the appeal abates upon IRP appointment or plan approval. The decision to abate the appeal aligns with the provisions of CESTAT (Procedure) Rules, 1982.
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Corporate Law

• Court held impugned order lacked prima facie case for info called u/s 206 of Companies Act, 2013. No finding of fraud or unlawful conduct by petitioner.

  Case-Laws - HC : The High Court reviewed a challenge to an order issued u/s 206(4) of the Companies Act 2013, which required the furnishing of details, documents, and information. The Court held that for such an order to be valid, it must establish a prima facie connection between the information sought and the business of the company being conducted fraudulently or unlawfully. The court found that the impugned order lacked this essential linkage and did not demonstrate any fraudulent or unlawful conduct by the petitioner. As the order did not meet the necessary preconditions set out in Sections 206(1) to (3), it was deemed jurisdictionally flawed, leading to the disposal of the petition.
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Benami Property

• Appellate Tribunal Confirms Property Attachment, Citing Benami Transactions and Questionable Fund Sources.

  Case-Laws - AT : The case concerns benami transactions and the attachment of properties. The Adjudicating Authority initially refused to confirm the attachment order, citing funds received as loans or advances through proper banking channels. The Appellate Tribunal found this reasoning flawed, noting the ignorance of the benami nature of the transactions. It highlighted the suspicious nature of fund sources, premium share issuances, and the involvement of non-existing or paper entities. The Tribunal deemed subsequent transactions as benami, despite the non-response of 79 entities to notices. The Tribunal criticized the Authority for basing its decision on conjecture and surmise, disregarding crucial facts. Affidavits filed by a common individual for multiple entities were also scrutinized. The Tribunal upheld the Department's arguments, setting aside the Authority's order and confirming the provisional attachment.
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IBC

• The request to extend the Pre-packaged Insolvency Resolution Process for Kethos Tiles Private Limited was denied. Resolution plan not approved within 120 days

  Case-Laws - Tri : The Tribunal dismissed the application seeking to extend the Pre-packaged Insolvency Resolution Process (PPIRP) for a Corporate Debtor beyond the specified 120-day period as mandated by Section 54D of the Insolvency and Bankruptcy Code, 2016. No Resolution Plan was approved by the Committee of Creditors within the stipulated time frame, leading to the termination of the PPIRP. The Resolution Professional's reliance on Section 12 of the IBC, 2016 was not accepted. The Tribunal found that the Resolution Professional had not fulfilled obligations under the code, leading to the rejection of the application, termination of the PPIRP, and release of the Corporate Debtor from legal proceedings.
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Service Tax

• Tribunal Rules Services as Works Contract Post-2007; Service Tax Demand on Appellant Deemed Unsustainable.

  Case-Laws - AT : The case involved a dispute regarding the classification of services provided by the appellant as Works Contract Service or Construction of Residential Complex/Commercial or Industrial Construction Service for the purpose of service tax. The Appellate Tribunal held that the construction services were composite in nature and fell under works contract service post-1-6-2007. Citing a precedent, it was established that demand for service tax under construction services could only be applicable to purely service contracts pre-1-6-2007, and for composite contracts post-1-6-2007. The Tribunal found that the appellant had disclosed tax payment under works contract service, negating the need for an extended period of limitation. Consequently, the demand for service tax under construction services was deemed unsustainable, and the impugned order was set aside with the appeal being allowed.
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Central Excise

• Waste oils turned into usable lubricating oils not considered manufacturing. Appellant qualifies for SSI exemption.

  Case-Laws - AT : The case involves determining whether a process amounts to manufacture for excise duty purposes and if the appellant is eligible for the Small Scale Industry (SSI) exemption. The Appellate Tribunal referred to legal precedents emphasizing that mere change in goods does not constitute manufacture unless a new product emerges. The tribunal observed that the appellant's reprocessing of waste oils into lubricating oils did not amount to manufacture under Chapter Note 4 of Chapter 27. Consequently, the appellant was not liable to pay excise duty and could avail the SSI exemption under Notification No. 8/2003-CE. The appeal was partially allowed for verification of duty payment on reprocessed oil cleared as lubricants.
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Case Laws:

• GST

• 2024 (6) TMI 1095
  Violation of principles of natural justice - grievance of the petitioner is that the petitioner has not received notice from the 1st respondent before passing an order under Section 73 (9) of the Act - non-intimation of correct address - HELD THAT:- Having not intimated the correct address for communication, the petitioner cannot complain that there is violation of the principles of natural justice inasmuch as the petitioner was not served with notice. Therefore, Ext. P3 cannot be impugned for violation of the principles of natural justice. There are no reason to entertain the writ petition under Article 226 of the Constitution of India. Without prejudice to any other remedy as may be available to the petitioner in law, this writ petition is dismissed.

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• 2024 (6) TMI 1094
  Attachment order in terms of the provisions contained in Section 79 (1) (c) of the WBGST/CGST Act, 2017 - notification dated 2nd November 2023 as well as pre-deposit requirements complied with - HELD THAT:- Admittedly, the petitioner has complied with the conditions set forth in paragraph 3 of the notification and had made a deposit of additional 2.5 per cent of the amount of tax in dispute. It is, however, noticed that notwithstanding the Coordinate Bench of this Court by its order dated 17th November 2023 directing the appellate authority to dispose of the said appeal filed by the petitioner on merits, the same has been kept pending and the order of attachment dated 8th August 2023 has also not been revoked. It may be noted that the petitioner has a statutory right to challenge the determination made under Section 73 of the said Act. Although, the petitioner had preferred an appeal and the said appeal has been kept pending, the respondents are continuing with the proceeding for recovery of tax under Section 79 of the said Act. Despite the aforesaid appeal filed by the petitioner now stands regularized in terms of the notification dated 2nd November 2023 and the petitioner having complied with the conditions indicated, the respondent could not have denied the benefit of Section 107 (7) of the said Act. Since, the said Act does not permit continuance of recovery proceeding for the balance amount and the same is deemed to be stayed, once, the provisions of Section 107 (6) of the said Act are complied with, the order of attachment dated 8th August 2023 passed by the respondents cannot be permitted to continue. Petition disposed off.

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• 2024 (6) TMI 1093
  Challenge to assessment orders pertaining to distinct assessment periods - challenge on the ground that such orders were issued to a dead person - HELD THAT:- The petitioner has placed on record the death certificate. Such certificate indicates the date of death as 08.05.2021. All the relevant communications, including the impugned assessment orders, are subsequent thereto. Consequently, orders impugned herein cannot be sustained. The impugned orders dated 19.09.2023 are set aside by leaving it open to the respondent to initiate proceedings against the legal heirs of the late Mr.Munusamy Nagabushanam. Petition disposed off.

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• 2024 (6) TMI 1092
  Seeking entitlement for Input Tax Credit - challenge to vires of the provisions of Section 16 (2) (c) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Issue Rule returnable on 10.07.2024. By way of ad-interim relief, no coercive steps shall be taken by the respondent authorities during the pednency of these petitions. To be heard with Special Civil Application No. 15188 of 2020 and allied matters.

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• 2024 (6) TMI 1091
  Challenge to original as well as appellate order - appeal was rejected on the ground that it was presented beyond the condonable period under sub-section 4 of Section 107 of applicable GST enactments - HELD THAT:- On perusal of the appellate order dated 01.03.2024, it is evident that the petitioner filed the appeal on 28.12.2023 and the 30 day period expired on 08.12.2023. Since the delay beyond the condonable period is only 20 days, the interest of justice warrants that the petitioner s appeal be considered and disposed of on merits. The appellate order dated 01.03.2024 is set aside and the matter is remanded to the appellate authority. If the petitioner re-presents the appeal within 10 days from the date of receipt of a copy of this order, the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation - petition disposed off by way of remand.

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• 2024 (6) TMI 1090
  Levy of GST - seigniorage fee and mining lease amounts paid to the Government under applicable GST laws - HELD THAT:- The Division Bench Judgment in a batch of cases where the lead case is A.Venkatachalam v. Assistant Commissioner (ST), Palladam [ 2024 (2) TMI 488 - MADRAS HIGH COURT ] where it was held that It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision. This petition is liable to be disposed of on the same terms insofar as it relates to either the issue of seigniorage fee or mining lease. Consequently, the petitioner is permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order.

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• 2024 (6) TMI 1089
  Cancellation of registration - appeals were not received on the ground of limitation - HELD THAT:- The order issued in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , was a conditional order and that the respective petitioner should be directed to comply with all conditions stipulated therein. The respective petitioner herein is directed to file returns for the period prior to the cancellation of registration, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order - the petition is disposed off.

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• 2024 (6) TMI 1088
  Breach of principles of natural justice - petitioner was unaware of proceedings culminating in the impugned order - wrongful availment of Input Tax Credit (ITC) - HELD THAT:- It appears that the GST proposal pertains to the availment of ITC after specifying amounts in the reverse charge column in the GSTR 3B returns. It is also noticeable that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or attend the personal hearing. In these circumstances, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned orders dated 31.10.2023 are set aside, subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (6) TMI 1087
  Violation of principles of natural justice - no reasons stated for not accepting the reply of the petitioner - interest on delayed payment of tax - inadvertent error on the part of the petitioner s accountant - HELD THAT:- In Exts. P10 and P11, no reasons are stated for not accepting the reply of the petitioner. When a show cause notice is issued and a reply is submitted, the authority issuing the show cause notice shall record the reason as to why the reply is not acceptable. Exts. P10 and P11 are set aside being passed in violation of the principles of natural justice. The 1st respondent shall have a revisit of Exts. P10 and P11. The petitioner shall appear before the 1st respondent on 18.06.2024 at 11 a.m and the 1st respondent shall pass fresh orders within a period of one month therefrom. The writ petition is disposed of.

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• 2024 (6) TMI 1086
  Breach of principles of natural justice - mismatches between the GSTR 3B returns of the petitioner and the auto populated GSTR 2A - SCN and impugned order were uploaded on the view additional notices and order tab of the GST portal and not communicated to the petitioner through any other mode - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal pertains to mismatches between the GSTR 3B returns of the petitioner and the auto populated GSTR 2A. Such tax proposals were confirmed because the petitioner failed to reply to the show cause notice or attend the personal hearing. Upon considering the facts and circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 05.01.2024 is set aside, subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (6) TMI 1085
  Violation of principles of natural justice - petitioner asserts that she was unable to respond to the show cause notice on account of personal difficulties - mismatch between the GSTR 1 statement and the GSTR 3B return - HELD THAT:- It is evident that the confirmed tax proposal relates entirely to a mismatch between the GSTR 1 statement and the GSTR 3B return. Such proposal was confirmed because the petitioner did not reply to the show cause notice or attend personal hearing. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary that the petitioner be provided an opportunity to contest the tax demand on merits. The impugned order dated 17.10.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.

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• 2024 (6) TMI 1084
  Violation of principles of natural justice - denial of a personal hearing - order were uploaded on the GST portal and not communicated to the petitioner through any of the other modes prescribed in Section 169 of applicable GST enactments - HELD THAT:- As a registered person under applicable GST enactments, the petitioner was under an obligation to monitor the GST portal on an ongoing basis. Therefore, the explanation provided by the petitioner is wholly not satisfactory. At the same time, on perusal of the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or participate in proceedings. In these circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - petition disposed off by way of remand.

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• 2024 (6) TMI 1083
  Challenge to assessment order and attachment order - mismatch between the petitioner s GSTR 3B returns and the auto-populated GSTR 2A - SCN and impugned order were uploaded on the View Additional Notices and Orders tab on the GST portal, but not communicated to the petitioner through any other mode - Violation of principles of natural justice - HELD THAT:- On perusal of the impugned assessment order, it is evident that the tax proposal pertained to the mismatch between the petitioner s GSTR 3B returns and the auto-populated GSTR 2A. It is also clear that the tax proposal was confirmed because the petitioner failed to reply to the show cause notice. In these circumstances, albeit by putting the petitioner on terms, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits. The impugned assessment order dated 17.11.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within two weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2024 (6) TMI 1082
  Imposition of interest liability on the petitioner - personal hearing was not provided before the impugned orders were issued - violation of principles of natural justice - HELD THAT:- The petitioner has set out details of payment of requisite taxes in respect of the relevant assessment periods. The petitioner has also placed on record proof of payment of about Rs. 2 lakhs towards interest. In sub-section 4 of Section 75 of the applicable GST enactments, a personal hearing is mandatory if requested for or if an order adverse to the tax payer is proposed to be issued. Under Circular No.13/2020-TNGST dated 17.08.2020, tax payers had the benefit of reduced rate of interest during specific months of the COVID-19 pandemic period. By taking into account all the aforesaid factors, albeit by imposing conditions, interference with orders impugned herein is warranted. The orders impugned herein are set aside on condition that the petitioner remits an additional sum of Rs. 2 lakhs, in the aggregate, towards the demand under the orders impugned herein. Such remittance shall be made within three weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2024 (6) TMI 1081
  Violation of principles of natural justice - unreasoned impugned order - discrepancies in the returns filed by the petitioner and replied - HELD THAT:- On perusal of the impugned order, it is evident that no reasons are specified therein. As contended by learned counsel for the petitioner, the tax demand under the impugned order exceeds the amount specified in the show cause notice. In these circumstances, the impugned order cannot be sustained. The impugned order is set aside by leaving it open to the respondent to initiate fresh proceedings in accordance with law - petition allowed.

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• 2024 (6) TMI 1080
  Cancellation of GST registration of the petitioner - the deposit as contended by the petitioner has been duly made - respondent submits that the department would have re-look at the issue of cancellation of the GST Registration - HELD THAT:- The order of cancellation dated 10.01.2024 is set-aside. The matter is remitted to the proper office to re-adjudicate the show cause notice dated 16.12.2023 in accordance with law within four weeks from today - It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party. The petition is disposed off.

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• 2024 (6) TMI 1079
  Validity of attachment order passed under Section 83 of the Central Goods and Service Tax Act, 2017 - expiry of one year from the date the order is made - HELD THAT:- It is conceded by learned counsel for the respondent that provisional attachment order was issued on 27.01.2022 and thereafter no fresh attachment order has been issued - It is held that the provisional attachment of the Bank Account No. 1711210216080640 with AU Small Finance Bank in the name of petitioner has ceased to have effect. The respondent bank is accordingly directed to forthwith permit operation of the said bank account and not impose any embargo on the operation of the same based solely on the provisional attachment order dated 27.01.2022 - Petition allowed.

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• 2024 (6) TMI 1078
  Cancellation of GST registration of the petitioner Company - cancellation on the ground that person issues invoices or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made thereunder - cancellation also on the ground that person does not conduct any business from declared place of business - HELD THAT:- The Appellate Authority has rejected the petitioner s appeal on the ground that the petitioner has not filed any memo of appeal and the grounds on which he is seeking restoration of registration are not clear. The Appellate Authority ought to have adopted the same yardstick while judging the validity of the impugned cancellation order passed by Assistant Commissioner, which also does not disclose any reason for cancellation of petitioner s registration. The mere mention of two sub-rules, without clarifying as to how those rules are being violated and what is the material to substantiate the allegation of violation of rules, would not give rise to a justified ground for cancellation of the petitioner s registration. This Court is of the considered view that the impugned orders dated 18.03.2024 and 03.05.2024 are unsustainable in law. Petition allowed.

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• 2024 (6) TMI 1077
  Jurisdiction - Two SCN to one individual for different entities - SCN issued to petitioner in the capacity of individual as well as for proprietorship concern - Issuance of Multiple show cause notices - HELD THAT:- Appellant submits that once a notice was issued to Shashank Garg by the Commisisonerate at Panchkula, a separate notice could not have been issued in the name of the proprietorship concern by the Superintendent Commissionerate, Rohtak - The argument is misconceived while the petitioner individually may be a resident of the area governed under the jurisdiction of Commissionerate at Panchkula, proprietorship firm was situated at Jind, where the jurisdiction of Rohtak Commsissionerate would lie, it cannot be held that it was not having jurisdiction. As regard the earlier show cause notice issued to the individual, is concerned, the same would have no effect nor can it be said that the notice issued to the firm of the petitioner namely M/s Garg and Company is without jurisdiction or that the Commissionerate at Rohtak is not empowered to examine the actions of the firm. The petitioner who as the proprietor of M/s Garg and company is always free to file appropriate reply, to the show cause notice and contest the same. There are no reason to interfere at this stage with the show cause notice - appeal dismissed.

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• 2024 (6) TMI 1076
  Violation of principles of natural justice - ex-parte order passed on merits without due consideration to the books of account supplied by the petitioner - HELD THAT:- This writ petition is disposed of with a direction that as soon as the president or state president enters office of the Goods and Service Tax Appellate Tribunal constituted under the Act of 2017, the petitioner would file an appeal that may be decided in accordance with law on its own merits. The statutory stay as provided under Section 112 (9) of Act of 2017 would remain in operation till the decision of such appeal. If the appeal is not filed within the prescribed period of limitation, the state would be at liberty to proceed against the petitioner for recovery of remaining taxes, interest and penalty if any. Petition disposed off.

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• 2024 (6) TMI 1075
  Challenge to appellate orders - declining to receive appeals filed by the petitioner as being barred by limitation - appeal rejected as being beyond the period of limitation prescribed in Section 107 of applicable GST enactments - HELD THAT:- The impugned appellate orders indicate that appeals were filed about 21 to 24 days beyond the period for which appeal could be condoned by the appellate authority. The petitioner has explained the reasons for such delay by pointing out that rectification petitions were filed and that appeals were filed shortly after such rectification petitions were rejected. The petitioner has remitted 10% of the disputed tax demand and, in addition, a sum of Rs. 1,26,02,698.80 was appropriated from the bank account of the petitioner towards the tax demand. In these circumstances, these are appropriate cases in which the appellate authority should be directed to receive and dispose of the appeals on merits. The impugned appellate orders are quashed and the appellate authority is directed to receive and dispose of the appeals presented by the petitioner on merits without going into the question of limitation. Since a sum of Rs. 1,26,02,698.80 was appropriated pursuant to the bank attachment, the said bank attachment shall stand raised. Petition disposed off.

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• 2024 (6) TMI 1074
  Cancellation of GST registration of the petitioner - SCN does not mention any date, time or venue where the petitioner had to appear - violation of principles of natural justice - HELD THAT:- As per the respondents, there is material available to establish that the petitioner firm was involved in big scam of evasion of tax. However, it is conceded that the said material has not been provided to the petitioner in support of the show cause notice. The impugned order dated 19.09.2023 is set aside. Proper Officer is directed to furnish all material that the Proper Officer may have in support of the show cause notice to the petitioner within one week from today - petition disposed off.

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• 2024 (6) TMI 1073
  Penalty u/s 129 (3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - proceedings subsequent to search of premises - HELD THAT:- In the present case, the proceedings under Section 129 (3) of the Uttar Pradesh Goods and Services Tax Act, 2017 have been initiated subsequent to search of the business premises of the petitioner. It has been categorically held by the coordinate Bench of this Court in MAHAVIR POLYPLAST PVT. LTD. VERSUS STATE OF U.P. AND 2 OTHERS [ 2022 (8) TMI 410 - ALLAHABAD HIGH COURT] that search and seizure of the godown cannot result in penalty proceedings under Section 129 of the Act. The present proceedings are not justified, and accordingly, the impugned orders dated March 21, 2018 and August 31, 2018 are quashed and set aside - petition allowed.

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• 2024 (6) TMI 1072
  Recovery of CGST, SGST amount and KFC amount - search and seizure of business premises - failure to supply the documents demanded - violation of principles of natural justice - HELD THAT:- The petitioner has not filed any reply to the show cause notice. The petitioner says that the petitioner has not been supplied with the documents demanded by him as mentioned in Ext. P4 and in the absence of those documents, the petitioner is unable to file reply to the show cause notice. The petitioner has approached this Court for a direction/mandamus to the respondents to supply the documents to enable him to file the show cause notice thereafter proceed with the law. Standing Counsel for the respondents submits that the documents, as specified, shall be supplied within three days. Petition allowed to file reply within 10 days thereafter. The present writ petition stands finally disposed of.

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• 2024 (6) TMI 1071
  Short payment of tax - availing excess ITC and utilized the same - initiation of proceedings by issuing intimation under Section 61 of the WBGST Act which is yet to be concluded - pendency of such proceedings can be a bar in issuing the instant show cause notice or not - HELD THAT:- It prima facie appears to this court that such issue has been settled as indicated in para 2 of the Audit Report dated 16-04-2021. This court is not unmindful of the well settled preposition of law that the scope of interference at the stage of show cause notice is very limited. However the grounds of challenge to the show cause notice in the case on hand, touches upon the jurisdictional issue, for which this writ petition is entertained. List this matter under the heading hearing immediately after expiry of the time fixed for exchange of affidavits.

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• 2024 (6) TMI 1036
  Nil returns filed by mistake, but tax in respect of the year 2017 - 2018 has been remitted by the petitioner to the electronic cash ledger - HELD THAT:- Though it is stated that the reply filed by the tax payer is not acceptable, no reason, whatsoever, is forthcoming for not accepting the reply. The learned Government Pleader seeks time to get instructions - Post on 07.06.2024.

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• Income Tax

• 2024 (6) TMI 1070
  Proceedings for an offence u/s 276-B - non-payment/belated remittance of the TDS - Failure to pay tax to the credit of Central Government - interpretation given to term reasonable cause - HELD THAT:- A fair look at the explanation and reply which was given by the Petitioners to the show-cause notice would reveal that the Petitioners have furnished the information as to when they received the fee reimbursement from the Government relating to the students, whose admissions occupied lion s share i.e., 90%. It appears 90% of the students were admitted on fee reimbursement scheme. That being the case, when the Petitioners filed the documents to show that they have not received fee reimbursement within time and immediately after receiving the fee reimbursement amount, they have remitted the amount to the Government Account, which is conveniently ignored by the Respondent Authorities. A cursory look at the proceedings of the learned Commissioner would show that the Petitioners have not furnished any information to buttress their contention that because of the delay in grant of fee reimbursement by the Government of Andhra Pradesh, they could not remit the amount to the Central Government Account within time. As decided in M/s US Technologies International Pvt. Ltd. [ 2023 (4) TMI 418 - SUPREME COURT ] on interpretation of Section 271C which is a penal provision, it is clear that on mere belated remittance, no penalty shall be leviable. In the course of the judgment, the Hon ble Apex Court also referred to various other provisions including Section 276-B and observed that the consequences of consequences on non-payment/belated remittance of the TDS would be under Section 201(1A) and Section 276B of the I.T. Act. Taking a decision to prosecute any person for violation of the provisions under Section 276B, is subject to Section 278AA of I.T. Act, and when the Petitioners are able to establish the reasonable cause for the delay in remittance of the amount to the Central Government Account though deducted the tax at the source. It is a case of appreciation of a point on factual aspect as to the satisfaction of the Authorities on the point of reasonable cause. In the present case, learned Commissioner for Income Tax conveniently ignored the material placed by the Petitioners to establish that there was a reasonable cause for their failure to remit the amount within a stipulated time. This Court is of the considered view that the reason provided by the Petitioner for the delay in remitting the amount to the Central Government is sufficient to constitute reasonable cause in view of Section 278AA of the I.T. Act and hence criminal prosecution against the Petitioners is not warranted. Decided in favour of assessee.

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• 2024 (6) TMI 1069
  TDS u/s 195 - remittance made by the assessee to foreign parties on account of purchase of certain computer software, required for the business of the assessee, would be liable to tax in India as royalty under the provisions of Section 9 (1) (vi) or would it be a business income of the recipient companies - HELD THAT:- It is not in dispute that transactions in the present case are similar to what had fell for consideration of Engineering Analysis Centre of Excellence (P.) Ltd [ 2021 (3) TMI 138 - SUPREME COURT ] Also there is no dispute that there is a DTAA entered with the countries in question, with whose residents the transactions were entered into by the assessee. It is clear that the approach of the AO in the present case was against the correct position in law as held by the Tribunal, and now also endorsed by the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd [ 2021 (3) TMI 138 - SUPREME COURT ]. In this view of the matter, we are in agreement with Mr. Madhur Agarwal that these four Appeals would not give rise to the question of law as noted by us hereinabove. As fairly pointed out for the parties, as the facts are not in dispute as also the DTAA in question applicable we are not discussing the facts involved in each of these Appeals.

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• 2024 (6) TMI 1068
  Validity of appeal filed u/s 260A - Bogus LTCG - whether any substantial question of law has arisen for consideration? - reexamining appellant s additional documents obtained through the Right to Information Act - as argued Tribunal has failed to consider the report of the Securitisation and Exchange Board of India in its proper perspective HELD THAT:- CIT(A) brought out the modus operandi and has recorded finding as to how the claim for long-term capital gain is a bogus claim. The conclusion arrived at by the Tribunal has also been supported by various decisions of the courts including of this Court in the case of Swati Bajaj [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] As the appellant would strenuously contend that certain documents were not available with the assessee at the relevant point of time and subsequently on being advised, applications were made under the Right to Information Act and information was sought for from several people and documents have been obtained which have been enclosed in the stay petition - As submitted by the appellant that these documents should be permitted to be placed before the learned Tribunal or before the CIT(A) so that the factual aspects can be re-examined and a correct conclusion can be arrived at. Unfortunately, such exercise cannot be done by this Court in an appeal filed u/s 260A of the Act. Be that as it may, the reliance placed on the order passed by the adjudicating authority of the Securities and Exchange Board of India (SEBI) is thoroughly misplaced since the said order does not examine the specific transaction done by the assessee with respect to the shares of Sulabh Engineers Services Ltd. Therefore, placing reliance on the said order passed by the SEBI in no manner, improve the case of the assessee. Be it noted that this Court exercising jurisdiction under Section 260A of the Act is required to consider as to whether any substantial question of law has arisen for consideration and this Court cannot be converted into an appellate Tribunal to examine the factual issue which was never placed by the assessee before the Assessing Officer or before the CIT(A) or before the Tribunal. No grounds to interfere with the order passed by the Tribunal and as we find no substantial question of law arises for consideration, the appeal is dismissed.

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• 2024 (6) TMI 1067
  Validity of assessment u/s 153A - assess or reassess the total income of six assessment years - whether search conducted u/s 132 did not yield any incriminating material pertaining to the appellants/assessees for the said assessment years - HELD THAT:- As per the amended provisions of Section 153A of the I.T. Act, while the unearthing of incriminating material would unambiguously clothe an AO with the jurisdiction to initiate proceedings in terms of Section 153A of the I.T. Act for the block period of six years contemplated under that Section, when it comes to passing fresh assessment orders in respect of each of those assessment years comprised in the block of six assessment years, AO must necessarily relate such unearthed incriminating material to the assessment year in question. This is more so in view of the specific provisions u/s 153A (b), which requires the AO to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or the requisition made, and the proviso thereto which mandates that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. In our view, the statutory provision gives a clear indication that, based on the material obtained during the search, the AO who gets the jurisdiction to re-open the assessments, can do so in respect of the individual assessment years comprised in the block period of six years only if the material obtained during the search under Section 132 of the I.T. Act, or any part thereof, relates to the assessment year in question. In the appeals before us, since it is not in dispute that the materials obtained during the search conducted on 21.08.2007 pertain only to the assessment year 2008-09, and there was no incriminating material against the appellants/assessees pertaining to the assessment years 2002-03 to 2007-08, the finding of the Appellate Tribunal reversing the orders of the First Appellate Authority, cannot be legally sustained. we set aside the orders of the Appellate Tribunal, to the extent impugned herein, and answer the substantial questions of law raised by the appellants/assessees in favour of the assessees and against the Revenue.

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• 2024 (6) TMI 1066
  Nature of receipt - Taxability of pre-payment of sales tax liability at discounted value - revenue or capital receipt - HELD THAT:- The assessee in the present case saved an amount of Rs. 15.23 crores on account of pre-paid sales tax. Such amount was sought to be taxed by the assessing officer as revenue receipt. Thus, as held by the Supreme Court in Balkrishna s case ( 2017 (11) TMI 1626 - SUPREME COURT] such amount was required to be treated as a capital receipt. The first question of law as raised by the Revenue thus stands squarely answered. The Revenue s contention on addition of the said amount as the assessee s income needs to be rejected. Taxability of benefits on account of DEPB License/Focus Market Licenses - HELD THAT:- The question is squarely covered by the decision of Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] Our attention is drawn to the contentions of the parties as also the observations as made by the Supreme Court wherein in similar circumstances, the Supreme Court has held that even if it is assumed that the assessee therein was entitled to the benefits under the advance licences, as well as under the duty entitlement passbook, there was no corresponding liability on the Customs authorities to pass on the benefits of duty free imports to the assessee until the goods are actually imported and made available for clearance. It was observed that the benefits represent, at best, a hypothetical income and which may or may not materialise and its money value therefore cannot be the income of the assessee. Considering all, the second question of law as framed would also not arise for consideration. Loss of profit due to fire and repair and other expenditure incurred on account of fire, not received from insurance company - HELD THAT:- The parties are ad idem that this question would also stand covered by the decision of Leisure Wear Exports Ltd. [ 2010 (9) TMI 351 - DELHI HIGH COURT] also confirmed by [ 2011 (10) TMI 782 - SC ORDER] wherein held claim had not been approved as the insurance company had neither accepted the same nor given any assurance for making payment. Therefore, no income had accrued which could be taxed. Tribunal rightly held that ordinarily the income is said to have accrued to a person when he acquires the right to income and this should be enforceable right, though actual quantification or receipt may follow in due course. The mere claim to income without any enforceable right cannot be regarded as an accrued income for the purpose of Income-Tax Act. Revenue appeal dismissed.

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• 2024 (6) TMI 1065
  Petitioner s interest in the subject matter of the assessment or investigation - Petitioner seeks direction for action on representation regarding transfer of files related to S.R.S. Mining from DCIT Non-Corporate Circle 2 to DCIT Central Circle 2 - assessment proceedings were concluded in respect of a partnership firm called M/s.S.R.S.Mining, which was the assessee. He points out that the petitioner is a rank -third party, who is not related to the assessee or the assessment proceedings in any manner. HELD THAT:- The petitioner has approached this Court seeking discretionary relief under Article 226 of the Constitution. From the averments in the affidavit, it is unclear as to how the petitioner has any interest in the subject matter of the assessment or investigation. As correctly contended by learned senior standing counsel, the petitioner appears to be complaining about M/s.S.R.S.Mining and its partners as also against a specific officer of the Income-Tax Department. None of these persons have been made parties to this writ petition. In these facts and circumstances, I decline to exercise discretionary jurisdiction in favour of the petitioner.

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• 2024 (6) TMI 1064
  Condonation of delay in filing an appeal to HC - sufficient reason for delay Or not? - as submitted on receipt of the impugned order the Appellant was making enquires to get details of full-fledged interest statement from the government auditor and clarifications regarding the interest earned from other co-operative banks mentioned in the said order. On receipt of the same, the Appellant contacted the counsel briefed him about the facts and instructed him to file the appeal. This has resulted in a delay 14 days in filing the appeal HELD THAT:- On going through the reason stated in Ext. P4, we find that the petitioner has stated sufficient reason in the application for condonation of delay. 2nd respondent has taken technical view in dismissing the application to condone the delay and in consequently dismissing the appeal. The 2nd respondent went wrong in dismissing the appeal at the threshold on technical grounds. Accordingly, set aside Ext. P5 order and direct the 2nd respondent to consider Ext. P3 appeal on merits, as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a copy of this judgment. Till orders are passed on Ext. P3 appeal, there shall not be any recovery steps against the petitioner pursuant to Ext. P1.

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• 2024 (6) TMI 1063
  Addition u/s 68 - unexplained cash credit - unaccounted income surrendered during the survey and offered to tax - ITAT deleted addition holding that the assessee is entitled for the telescopic benefit of the income surrendered during the year to the cash deposit in Bank account treating the same as maturity proceeds of hundies during the year - HELD THAT:- ITAT has accepted the fact that the respondent is entitled to the telescoping benefit of the surrendered income on which tax has been paid in the income tax return as the source which explains the cash deposited in the bank account, as there was a direct nexus between the cash deposited and the maturity proceeds of the hundis found during the survey proceedings. In coming to this conclusion the ITAT has also extracted the names of the persons to whom hundi loans were given as the hundis were seized during survey and the dates of maturity mentioned therein and the said recovery of loans was accepted as the source of deposits in the bank. Thus, it is apparent that the ITAT s finding of telescoping benefit of surrendered income vis- -vis subsequent bank deposits was reached only after due analysis of all the facts, circumstances, relevant documents and evidence, statements recorded during the survey. ITAT has accepted the contention of the respondent that the cash deposited in the bank accounts originated from the cash balance on hand as per the books of account. This cash balance was, in turn, derived from the loans recovered in cash from the individuals to whom the loans were advanced, against which hundis were seized from the assessee during the survey proceedings. ITAT, being the final authority for fact-finding, has adjudicated the issue comprehensively, taking into account the relevant facts, circumstances, documents/evidence, and judicial rulings. The finding of the ITAT as extracted, stand as matter of fact, with no discernible error of law. Moreover, the department has not highlighted or pointed out any factual inaccuracies or incorrect findings recorded by the ITAT. Consequently, the entitlement of the assessee to the telescopic benefit does not constitute any question of law, as the benefits of telescoping must be judged and allowed based on the facts and circumstances of the case, which has already been thoroughly examined by the ITAT. Benefit of telescoping has been approved in Aliasgar Anvarali Varteji [ 2018 (7) TMI 2340 - GUJARAT HIGH COURT] wherein it was held that, when the entire unaccounted income discovered during the search was included in the overall disclosure, and the negative balance in the books of account was due to payments made from this unaccounted income, the assessee should not be denied the benefit of telescoping of the initial disclosure. The argument of the counsel for the appellant that the assessee has not been able to establish or produce the persons to whom hundi loans were given is answered by the ITAT by extracting the names of the persons to whom loans were given and coupled with the fact that these hundis were seized by the department itself leading to surrender of income in the return shows that the department itself has accepted these hundis as such and the income surrendered there-for and thus now it cannot turnaround and argue that these persons are not genuine. Moreover the argument that source of deposits in bank account is because of Vypam scam has not been proved at any stage by the department as has been observed by the ITAT. Substantial question of law or fact - Tribunal serves as the final authority for fact-finding, and to challenge such findings, there must be substantial evidence indicating a perverse finding of fact by the Tribunal. In the absence of any such substantial question having been raised to point out perversity in the order of the ITAT, it cannot be asserted that any question of law arises for consideration, let alone a substantial question of law, as envisaged under Section 260A of the Income Tax Act. As in the instant case no substantial question of law arises from the order of the Tribunal as the appellant has raised all the question of facts and have disputed the fact findings of the ITAT in the garb of substantial questions of law which is not permitted by the statute itself. No intervention is required in this appeal - Decided against revenue.

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• 2024 (6) TMI 1062
  Intimation order u/s 143 for Denial of exemption u/s 10(38) - claim not made in proper column of return of income - as contended that law is well-settled that AO is required to grant deduction/exemption if law so mandates - basis of dismissal of appeal is stated that the assessee ought to have filed application u/s 119(2)(b) if the return of income had been processed u/s 143(1) HELD THAT:- The inadvertent mistake of the assessee should not fasten it with liability of tax qua gains which is otherwise, not-taxable under law. Therefore, CIT(A) ought not to have dismissed the appeal on hyper technical basis. The impugned order is hereby, set aside and the assessment is restored to the file of AO for verification. If the AO finds that the capital gains is exempt under law, he would allow the claim of the assessee. Grounds raised by the assessee are accordingly, allowed for statistical purposes.

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• 2024 (6) TMI 1061
  Rectification order u/s 154 - MAT computation u/s 115JB on profit earned by the assessee on sale of agricultural land which is exempt from income tax - HELD THAT:- It is also not in dispute that the Assessing Officer has accepted the income earned by the assessee while assessing tax u/s 143(3) of the Act, however, raised the issue of taxable u/s 115JB of the Act under rectification proceedings. As far as the issue under consideration is whether the profit earned by the assessee which is not a capital assets as per the normal provision of the Act and the same was allow to be claimed under normal provisions of the Act, whether the same income can be charged to tax under MAT. Since, the issue under consideration is very much covered in favour of the assessee. We do not see any reason to remit the issue back to the file of the Ld. CIT(A) and can be disposed off by considering the relevant material available on record. We considered the submissions of the assessee and observed various benches of the ITAT had considered the similar issue and decided the issue in favour of the assessee See HARRISONS MALAYALAM LTD. AND ORS. [ 2009 (5) TMI 124 - ITAT COCHIN] , GONTAK EXIMIS LTD. [ 2018 (5) TMI 1870 - ITAT DELHI] and NILGIRI TEA ESTATES LTD. [ 2012 (2) TMI 553 - ITAT COCHIN] wherein held once Assessing Officer has not treated the said gain for the purposes of book profit then by way of such ground the issue cannot be raised by the Department. Otherwise also when the income of agricultural land is exempt from tax, then the said exempt income cannot be added to the books profit while calculating the MAT u/s. 115JB - Decided in favour of assessee.

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• 2024 (6) TMI 1060
  Disallowance u/s 14A - Expenses incurred earning exempt income - manadation to record satisfaction - HELD THAT:- We respectfully following the order of the Tribunal in assessee own s case for the earlier years [ 2018 (7) TMI 209 - ITAT DELHI] this issue is allowed in favour of the assessee we find that in so far as disallowance of interest expenditure is concern, the same has rightly been deleted by CIT (A) after due verification of the records that none of the investments have been made out of borrowed funds and has been made by assessee s own fund. In view of such a clear cut finding, no disallowance of interest can be made. With regard to other disallowance on account of administrative cost, we find that assessee has given a categorical explanation that no expenditure can be said to be attributable especially when all the investments were made in much earlier years and there is only one dividend cheque received during the year. Once assessee has produced all the relevant books of account, explained the nature of expenses debited and has explained that none of the expenditure can be said to be attributable to earning of exempt income, then onus shifts upon the Assessing Officer to examine the books of account and nature of expenditure debited and after recording his satisfaction as per the mandatory requirement given in Section 14A(2) and (3) r.w.s. Rule 8D(1), then only he can proceed to make disallowance under Rule 8D, Accordingly, disallowance made by the AO is hereby directed to be deleted. Thus in the absence of any recording of mandatory satisfaction as per Section 14A (2) r.w.s. Rule 8D (1) Assessing Officer cannot mechanically apply Rule 8D for the purpose of disallowance. Accordingly disallowance made u/s. 14A by Assessing Officer is hereby deleted Computation of book profit under Section 115JB - This matter has also been decided in favour of the assessee by the Tribunal and this issue is also covered by the judgment of Sobha Developers [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT] Accordingly we hold that no disallowance u/s. 14A is made while computing the book profit. The ground no 2 is allowed. Inclusion of self Cenvat Credit availment in the book profit u/s. 115JB - This issue has already been decided by the Tribunal in assessee s own case so the self Cenvat credit cannot be treated as a part of book profit. Deduction u/s 80IB and 80IC - HELD THAT:- Assessee has submitted that same were allowed in favour of the assessee by the Ld CIT(A) by the common order. Failure to explain the source of cash seized from the assessee premise - HELD THAT:- Assessee has explained the nature and source of the impugned cash balance therefore addition made by AO was rightly deleted by the Ld CIT(A). The ground taken by revenue decided accordingly.

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• 2024 (6) TMI 1059
  Interest income earned on Fixed Deposits pertaining to prior period commencement of business - treated as capital receipt OR income from other sources - HELD THAT:- There is no dispute to the fact that the business activities of the assessee-company had not commenced in the Financial Years (FYs) 2015-16 and 2016-17 as well. AO has given a categorical finding, in this regard, in the assessment order itself. Thus, the interest earned on FDs during the year was prior to commencement of business of the assessee-company and was in the nature of capital receipt as held in the assessee s own case in the AYs 2013-14 2014-15. The objection of the Department is that the assessee had not shown any nexus between the funds borrowed and the specific investment made by it, is not found relevant as such nexus has to be examined in the year in which the investments were made for the first time. In the present case, the investments were made in the earlier years that is continuing in the current year and the assessee-company is deriving interest income on the Fixed Deposits made by it in the earlier years. Respectfully following the decision of the Co-ordinate Bench in the AYs 2013-14 2014-15 [ 2020 (3) TMI 1194 - ITAT AHMEDABAD] we hold that the interest income earned on Fixed Deposits pertaining to the prior period commencement of business was in the nature of capital receipt . As held in that year the preoperative expenses of the assessee has to be adjusted with this capital receipt and only the balance expense, if any, need to be amortized as per provisions of Section 35D of the Act. Accordingly, the CIT(A) had rightly allowed the claim of the assessee.

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• 2024 (6) TMI 1058
  Penalty u/s 271(1)(c) - Exemption u/s 11 - additional income was added by the Ld.AO based on the admission made by the Managing Trustee, while recording statement u/s 132(4) - AO observed that in lieu of supply of labour, the assessee has received cash collection charges, which is a clear business activity and is not covered u/s 2(15) of the Act and also not covered under the objective of the Trust - additional income in the statement recorded u/s. 132(4) - CIT(A) considering the submissions made by the assessee concluded that the assessee has not deliberately concealed the income, but has only committed a mistake by claiming exemption, under the bonafide impression that it is exempt from tax and relying on the various judicial pronouncements allowed the appeal of the assessee - HELD THAT:- During the search and seizure, it was found that the actual profit for the impugned assessment year, from it s business operations. However, there is no restriction to the assessee to offer the income u/s. 44AD of the Act on presumptive basis. We also find that the Ld. AO has not disputed the gross collections nor found any incriminating material for concealment of income. Accordingly, the assessee has offered an amount of Rs. 5,35,688/- under the presumptive taxation. AO proposed to tax the balance of Rs. 21,40,708/-, which the Managing Trustee, accepted to offer the same to tax, while recording statement u/s 132(4) of the Act. From the above, discussions, we find that the assessee has disclosed the entire cash receipts and the business receipts, while filing the return of income, but has claimed exemption on the above income based on the provision for expenses. AR s argument that even if the provision is excluded the trust has fulfilled 85% complying with section 11(1) of the Act was also not disputed by the Ld. AO. We have examined the above fact and are of the view that the trust has complied with section 11(1) of the Act. Respectfully following the ratio laid down in CIT Vs. M/s Shakthi Industries [ 2014 (8) TMI 1248 - ANDHRA PRADESH HIGH COURT] we are of the view that mere admission of the additional income in the statement recorded u/s. 132(4) of the Act cannot be considered as concealment in the absence of any incriminating material disclosing such concealment of income. The case laws relied upon by DR is of no help to the revenue and distinguishable on facts. We, therefore, find no infirmity in the order of the Ld.CIT(A) and thereby dismiss the grounds raised by the revenue. Appeal of the revenue is dismissed.

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• 2024 (6) TMI 1057
  Assessment of trust - tax levied on donations received for acquisition of capital asset - Donation amount has been shown as corpus fund - Treatment of donations as capital receipts or income from other sources - DR argued that the amount of contribution received by the assessee is not a capital receipts but is to be considered an income of any kind as defined u/s. 56(1) - HELD THAT:- We are convinced by the argument of Ld. AR in that regard because for attraction of Section 56(1) the amount has to qualify as an income, whereas the assessee has shown the donations as subsidy to be treated as capital assets in the books of accounts. Nothing has been brought on record or submitted by the Ld. DR that a trust registered under the Act cannot claim itself to be a business entity or that it cannot file return as business entity as has been done by the assessee since the A.Y. 2013-14. Since the assessee has rightly and lawfully considered the donations as subsidy which as per legal pronouncements has to be treated due to specific directions of the donor, as capital receipts, therefore, Section 2(24)(iia) is not attracted in the case of the assessee. For these reasons, the Section 56(1) is also not attracted and the arguments of the Ld. DR in that regard does not hold water and is outrightly rejected - we direct the Ld. AO to delete the addition made on account of donations. Decided in favour of assessee.

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• 2024 (6) TMI 1056
  Addition u/s 68 - bogus LTCG - Disallowing deduction claimed u/s 10(38) - off market purchase in physical form by paying cash - exemption claimed on Long Term Capital Gain from transactions on which STT is paid - As argued the case in hand a perusal of the bills of purchase and sale shows that the shares have been held for more than one year, the same has been sold on the recognized stock exchange and necessary STT has been paid to Government treasury and therefore the exemption u/s 10(38) cannot be denied - as per DR that the purchase payments were made in cash and not through the normal banking channel, therefore, the same were non verifiable from the authentic supporting details, such as bank accounts/documents and assessee has failed to furnish the proof of source for the purchase transactions HELD THAT:- Perusal of the order Ld CIT(A) reveals that assessee is an individual and he purchased the share M/s. Kappa Pharma Ltd in physical form and thereafter the same have been converted into electronic mode. The purchase payments were made in cash and not through the normal banking channel, therefore the same were not verifiable the authentic supporting details such as bank account /documents. The assessee is not a regular investor in shares. The assessee has failed to furnish the proof of source for the purchase transactions. The entire transactions are against human probability. See UDIT KALRA C/O DEV RAJ SHARMA [ 2019 (4) TMI 543 - ITAT DELHI] . CIT(A) has rightly confirmed the addition in dispute, which does not need any interference on our part. - Decided against assessee.

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• 2024 (6) TMI 1055
  Accrual of income - Interest income received on the unutilised grants given by the Government of Karnataka - HELD THAT:- We have gone through the above said findings and found that the same is based on the earlier order of this Tribunal in which this Tribunal had held that the interest earned from the unutilised grant-in-aid is also a part of the grant-in-aid and therefore the same is not an income under the provisions of the Act. The said orders are in respect of the assessee s own case for AYs 2014-15, 2015-16, 2017-18 and 2018-19. We also find no materials to take a different view in the present appeal and also the department has not furnished any orders of the Hon ble High Court or Supreme Court overruling the orders of the Coordinated Bench of this Tribunal. We, therefore, fully agreed with the view of the CIT(A) and confirm the order of the learned CIT(A) on the interest income issue. Nature of income - expenditure incurred towards sponsorship by treating - capital expenditure or revenue expenditure - HELD THAT:- We find that the CIT(A) had given a finding that the sponsorship expenditure incurred by the assessee is in the nature of revenue expenditure since the same has been incurred in giving award, price, etc. pursuant to the objectives of the assessee and therefore there is a statutory obligation on the part of the assessee to promote solar energy for which the contribution was made and therefore the same would amounts to business expenses and eligible for deduction as revenue expenditure. In support of its finding the CIT(A) also relied on the judgement of the Hon ble Supreme Court in the case of Lakshmi Ji Sugar Mills Co. Pvt. Ltd. [ 1971 (8) TMI 13 - SUPREME COURT] and the judgement of Raj Spinning and Weaving Mills Ltd [ 2003 (11) TMI 6 - RAJASTHAN HIGH COURT] . Decided in favour of assessee.

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• 2024 (6) TMI 1054
  Reopening of assessment u/s 147 - gain on sale of property - real owner - determination of ownership of the property - land belonged to the firm or partners - AO had apparently proceeded on the premise that it is the assessee firm which had sold the land - notice issued in the address of the property which has already been sold HELD THAT:- It is not in dispute that assessee s case is non-PAN case and the assessee had not filed its return of income for AY 2011-12, even in response to notice issued u/s 148 of the Act. It is not in dispute that the notice u/s 148 has been issued by speed post in the address of the property which has already been sold. Hence the notice u/s 148 of the Act could not be served at all on the assessee. Though the ld AO had stated that the said notice was duly served on the assessee, the same is factually incorrect. In view of the fact that the address mentioned in the notice is the very same property address which had already been sold even according to the ld AO. But the crucial fact remain is that the land never belonged to the firm and it was owned and belonged to the partners. In fact, the notice issued u/s 148 of the Act has been returned unserved. The remark very clearly shows that the assessee firm existed in the said address and was merely using the property owned by the partners as the address of the assessee firm and that since the properties were sold by the partners prior to the issuance of notice u/s 148 of the Act, the assessee firm was not existent in that address and the notice u/s 148 of the Act had to be returned undelivered by the postal authorities. The sale deeds were indeed executed only by few individuals who are partners in the firm. This fact was duly brought on record by the assessee before the ld AO himself in response to show cause notice which have been completely ignored by the ld AO. The details of name of the persons who owned the property, together with the area owned by him, date of purchase of the property by that individual, value of purchase of property by that individual and the details of sale made by those individuals to third-party were duly tabulated by the CIT(A). All these facts very clearly goes to prove that the property was never owned by the firm and that it was owned only by the partners. It is also not the case of the revenue that the subject mentioned property was brought as capital contribution by the partners in the assessee firm in terms of section 45(3) of the Act. It is also pertinent to note that the said property along with stone crusher machines were sold at Rs. 91,74,000/-, and the said sums were credited in the bank accounts of the concerned individuals. None of the credits were made in the bank account of the assessee firm. Hence, the entire facts recorded by the AO and the reasons recorded for reopening the assessment and the assessment order are factually incorrect. Since, the reopening has been made on incorrect assumption of facts by the ld. AO, we have no hesitation in quashing the entire re-assessment proceedings. Decided in favour of assessee.

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• 2024 (6) TMI 1053
  Condonation of delay - appeal filed by the assessee is delayed by 97 days - Cancellation of Registration u/s 12AA - It was the submission that the delay was on account of the period during which the writ petition was pending before the Hon ble High Court - HELD THAT:- Considering the fact that the delay was on account of the assessee seeking alternate remedy before the Hon ble High Court through writ petition, which was subsequently withdrawn and the permission had been granted by the Hon ble High Court to file an appeal before the Tribunal, the delay in filing of the appeal is condoned and the appeal disposed off on merits. Order passed u/s.12AB(4) did not contain the Document Identification Number (DIN No.) - Admittedly, the circular issued by CBDT is binding on the authorities below and the lCIT(Exemptions) is an authority under the CBDT. As the order passed by ld CIT(E) in the case of the assessee, has admittedly been passed without issuing a DIN, in view of the circular issued by CBDT, the order admittedly is non-est and is liable to quashed. However, the issue having been stayed by the Hon ble Supreme Court in the case of Brandix Maritius Holdings Ltd. [ 2024 (1) TMI 276 - SC ORDER ] this finding of the Tribunal quashing the order of CIT(Exemptions) dated 20.6.2023 on account of non-availability of DIN in the said order would stand suspended till the issue is decided by the Hon ble Supreme Court. Cancellation of Registration u/s 12AA - Previous Show Cause Notices and Proceedings - Scope of New Show Cause Notice issued - the activity of the assessee is a business activity or charitable activity? - The provisions of section 12AB(4) provide for the time limit in regard to passing of an order in respect of cancellation of the registration but the said provision refers to the first notice to be issued on or after 1st April, 2022. There is no saving provision in regard to the proceedings initiated prior to 1st April, 2022 and which admittedly being not calumniated into an order being served on the assessee. A perusal of the show cause notice issued by the ld CIT(E) on 6.10.2022 admittedly also does not refer to a show cause notice having been issued on 18.10.2016 and, therefore, it cannot be treated as a continuation of the proceedings either. The main crux of the cancellation of the registration is (i) whether the activity of the assessee is a business activity or charitable activity. Admittedly, this has reached finality for the assessment year 2009-10 to 2011-12, wherein, the Co-ordinate Bench of this Tribunal have held the issue in favour of the assessee. The second issue is in regard to donation to Aids Awareness Trust of Orissa and the questioned the existence of the trust. The assessee has produced the assessment order in the case of said trust and the assessment order passed also refers to its registration by the ld CIT(A). Therefore, the second issue could fall to the ground on account of the act of the department itself in regard to the assessment and in regard to registration by the ld CIT(E). It is also admitted by ld CIT(E) that there are no common trustees nor any related trustee between the assessee trust and Aids Awareness Trust of Orissa. In any case, both the issue had been raised by the ld CIT(E) in its original show cause notice which had been culminated in the orders served on the assessee. A new issue which has been raised by the ld CIT(E) in the show cause notice dated 6.10.2022 is the details of the corpus donation. Admittedly, this was the subject matter of 263 proceedings and that the issue had been considered by the Hon ble Jurisdictional High Court and the Hon ble High Court had found the orders of ld CIT to be un-sustainable and also quashed the same. Thus, all the issues on which the ld CIT(E) has raised the show cause notice for the purpose of cancellation of registration u/s. 12A have already been decided by the Appellate Authority and same has also reached finality. The ld CIT(E) by his order dated 20.6.2023 being the impugned order has tried to unsettle issues which are already settled in the case of the assessee. This is not permissible. This being so, as it is noticed that all the issues on the basis of which, ld CIT(E) has cancelled the registration u/s. 12A granted to the assessee has already been settled by various appellate authorities on earlier occasion and the issue had reached finality, same cannot be used for cancelling the registration of the assessee. This being so, on merits also, the order passed u/s. 12AB(4) by the ld CIT(E) on 20.6.2023 cancelling the registration granted to the assessee stands quashed. As worthwhile to mention here that the ld CIT(E) mentions that the ITAT had sustained the order of the ld CIT(E) in respect of 263 order but this order of the Tribunal sustaining the order u/s. 263 by the ld CIT(E) has already been quashed by the Hon ble Jurisdictional High Court [ 2023 (8) TMI 337 - ORISSA HIGH COURT ], which is also extracted earlier. In these circumstances, the order cancelling the registration stands annulled on merits also. Appeal filed by the assessee stands allowed

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• 2024 (6) TMI 1052
  TP Adjustment - working capital adjustment - HELD THAT:- We note that the assessee has provided the details for working capital adjustment which is extracted supra. The ld. AR also relied on the decision of the coordinate Bench of Tribunal in Huawei Technologies India (P) Ltd. [ 2018 (10) TMI 1796 - ITAT BANGALORE] wherein held CIT(A) was not justified in denying adjustment on account of working capital adjustment. Since, the CIT(A) has not found any error in the TPO s working of working capital adjustment, the working capital adjustment as worked out by the TPO has to be allowed. We may also add that the complete working capital adjustment working has been given by the Assessee and a copy of the same of the Assessee s paper book. No defect whatsoever has been pointed out in these working by the CIT(A). Accordingly, respectfully following the above judgment we restore the issue to the AO/TPO for fresh consideration with a direction to grant working capital adjustment to the assessee in accordance with law to be on par with comparable companies. Credit for Self Assessment tax and Regular Assessment taxes - The Appellant has filed rectification application on 11.01.2024 but the same is not disposed till date. The AO is directed to verify and grant the same

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• 2024 (6) TMI 1051
  Penalty u/s 271(1)(c) - precise charge brought against the assessee or not? - proper satisfaction recorded by the AO or not? - additional income offered during the course of search towards inflated expenditure under the head marketing expenses - as argued absence of proper satisfaction recorded by the AO and also show cause as to why penalty proceedings are initiated, the AO cannot levy penalty u/s.271(1)(c) - assessee has also challenged penalty levied on estimated addition towards additional income offered by the assessee for inflated expenditure under the head marketing expenses on the ground that allocation of additional income for both assessment years was only on ad hoc basis and there was no evidence with the AO as regards concealment of particulars of income or furnishing of inaccurate particulars of income - HELD THAT:- In present case, there is no dispute with regard to the fact that there is no satisfaction from the AO in the assessment order which is clearly evident from the assessment order passed by the AO, where the AO simply initiated penalty proceedings u/s.271(1)(c) of the Act, without specifying a particular charge on the assessee i.e. whether it is concealment of particulars of income or furnishing of inaccurate particulars of income and said lapse even continued in show cause notice issued u/s.274 r.w.s.271(1)(c) of the Act, where the AO has issued a printed form of notice without striking of inapplicable portion of the notice. From the above, it is very clear that the AO has not arrived at satisfaction whether penalty is initiated for concealment of particulars of income or furnishing of inaccurate particulars of income . In absence of proper notice, it cannot be said that the AO has applied his mined to relevant facts and also arrived at satisfaction that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. In absence of specific charge under which limb the penalty proceedings has been initiated, the AO cannot levy penalty u/s.271(1)(c) of the Act. In our considered view, penalty proceedings initiated u/s.271(1)(c) of the Act by issuing a vague notice u/s.274 r.w.s.271(1)(c) of the Act, vitiates the whole proceedings, including consequent penalty order passed by the AO and thus, order passed by the Assessing Officer imposing penalty u/s 271(1)(c) on the basis of invalid notice cannot be sustained under the law. Thus show cause notice issued by the AO notice u/s.274 r.w.s.271(1)(c) of the Act is vague in nature which does not specify under which limb penalty proceedings u/s.271(1)(c) of the Act are initiated. Therefore, we are of the considered view that show cause notice issued by the AO and consequent penalty order passed u/s.271(1)(c) of the Act is void ab initio and liable to be quashed - Decided in favour of assessee.

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• 2024 (6) TMI 1050
  Rejection of application for final registration u/s 12A - application filed by the assessee on Form 10AB merely for selecting the wrong Section code - HELD THAT:- We find that the assessee had intimated ld. CIT (Exemption) about the inadvertent mistake committed at its end and also about the revised Form 10AB filed for the final registration. As seemed that CIT (E) failed to take note of the same and failed to provide opportunity to the assessee. We therefore, under the given facts and circumstances of the case, in the interest of justice and being fair to both the parties, restore this issue of final registration to the file of ld. CIT (E) with a direction that the date of application for final registration should be considered as 26.05.2023. The final registration should be granted as per the revised application filed by the assessee incorporating the correct Section code. Needless to mention that proper opportunity of being heard should be provided to the assessee. Rejection Application filed u/s 80G(5)(iii) solely on the ground that it is belated and is not maintainable - HELD THAT:- We notice that the assessee which is a charitable organization working for the relief of animals and protecting them from cruelty has filed an application for approval of the Trust u/s 80G(5)(iii) of the Act on Form 10AB under Rule 17A of the Rules dated 27.05.2023. As per ld. CIT (E) the last date to file such application relevant to the assessee is 30.09.2022. We however, notice that Section 80G(5)(iii) of the Act refers to the Institution or Trust which are carrying out charitable activities and maintains regular accounts of receipts and expenditure. Certainly, Section 80G(5)(iii) of the Act has a direct connection with Section 12A of the Act which refers to the registration of charitable organizations. From perusal of the above circular which is binding upon the Revenue authorities, we notice that the extended time provided for filing the fresh application on Form 10AB is 30.09.2023. Where the assessee had filed an application on Form 10AB on 27.05.2023 which is prior to the last date for filing such application i.e. 30.09.2023 which means that application of the assessee is not time barred. We therefore, find that CIT (E) grossly erred in rejecting the application as non-maintainable and also erred in cancelling provisional certificate issued to the assessee. We therefore, direct ld. CIT (E) to restore the provisional certificate issued to the assessee and also to admit the application on Form 10AB u/s 80G(5)(iii) of the Act and decide it on merits in accordance with law. Accordingly, all the grounds of appeal raised by the assessee are allowed for statistical purposes.

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• 2024 (6) TMI 1049
  Exemption u/s 11 - assessment of Income from property held for charitable or religious purposes - income of such an Institution is to be computed in the absence of any application of income, i.e., if the allowance for 15% of the income from property held under trust is to be allowed u/s. 11(1)(a) of the Act or not? - HELD THAT:- Applicability of section 11(1)(a) of the Act in the absence of any application of its income for it s objects by the assessee, a charitable trust, during the relevant year. We see no reason for it being not so, and neither has any been stated by the Revenue at any stage. The language of the provision is unambiguously clear, so that an assessee is not entitled to, save where an option is specifically exercised in its respect, and before expiry of the time allowed for furnishing the return of income u/s. 139(1) of the Act, accumulate or set aside for application in excess of 15% of it s income from the property held under trust. That is to say, it is necessarily to, save where an option is specifically exercised in its respect which is not so in the instant case, apply 85% of it s income for charitable purposed during the relevant year. The assessee, as afore-said, having not done so, it s income is accordingly to be limited thereto, i.e., 85% of it s total income. A reading of Explanation 1 to section 11(1), reproduced hereunder, makes it abundantly clear that in the absence of option being exercised, the deeming qua application of income, which extends to the shortfall w.r.t. eighty-five percent of income derived from property held under trust, shall not apply. The application in the instant case being nil, the shortfall extends to the entire 85% We are conscious that the assessee did not file an appeal against the Intimation u/s. 143(1)(a) of the Act raising the impugned demand, preferring instead rectification thereof, scope of which is severely limited. This, to our mind, would not constrain us inasmuch as the Revenue itself has made the impugned adjustment under summary proceedings u/s. 143(1)(a), the scope of which is, again, limited to apparently incorrect claims, which is not the case. The assessee shall accordingly be assessed at the returned income of Rs. 87,430. Even as observed by the Bench during hearing, the principal issue arising in the instant case, inasmuch as it is this that leads to the impugned demand, is the tax rate applied, which has been by the Revenue at the maximum marginal rate, duly raised by the assessee per its grounds of appeal before us. The assessee surely did not raise this issue before the ld. CIT(A), whose adjudication accordingly does not include the same. We, nevertheless, consider the same, being a legal issue, with the relevant facts available on record, adjudicating the same in disposal of the appeal. Application of section 167B - prescribing the maximum marginal rate - Section 167B, as a reading of the provision would show, is only where the shares of the beneficiaries of the trust are not known. The assessee, registered as a charitable trust, is a public body and, accordingly, there is no question of it s beneficiaries being individual members, whose shares have therefore to be defined. The application thereof in the instant case is wholly misconceived. The matter in fact stands clarified by the Board per it s Circular No. 320, dated 11/01/1982, also binding on the Revenue. The tax rate accordingly is to be computed as per the normal rates as applicable to Association of Persons. The same, in our view, is again an apparent mistake and, where contested, outside the ambit of s. 143(1)((a) in the first instance, so that it could not have been effected there-under. Assessee s appeal is allowed.

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• 2024 (6) TMI 1048
  Rejection of application for final approval u/s 80G(5)(iii) - time limit prescribed for making an application for final approval u/s 80G - DR observed that the assessee had already commenced its activities since long even prior to grant of provisional registration, and since the time period for making application mentioned in Clause (iii) to First Proviso to section 80G(5) had already expired, therefore, the assessee could not be granted final registration u/s 80G(5) HELD THAT:- As relying on TOMORROW S FOUNDATION VERSUS CIT (EXEMPTION) , KOLKATA [ 2024 (3) TMI 941 - ITAT KOLKATA] wherein held that after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to grant of provisional registration. Thus the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. As ssessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. The ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2024 (6) TMI 1047
  Rejection of application for approval of Trust u/s 80G(5) - assessee / applicant has mentioned in Form 10AB that it had incurred certain expenses which are religious in nature and such religious expenses incurred by the assessee amounted to Rs. 15.08% of it s total receipts - HELD THAT:- In the instant facts, we observe that the Ld. CIT(E) has not asked for any specific details in the show-cause notice, while rejecting the application made by the assessee / applicant. Further, in the show-cause notice issued by Ld. CIT(E), he has also not asked for any specific details in connection with religious expenses incurred by the assessee. Accordingly, in the interest of justice, the matter is being restored to the file of Ld. CIT(E) for de-novo consideration after analyzing whether less than 5% of the total income has been incurred by the assessee trust towards religious activities. In case it is found that the less than 5% of the total income has been incurred as expenditure by the applicant trust towards religious purposes, then benefit of Section 80G(5) of the Act may be granted to the assessee if other conditions are satisfied, in accordance with law. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (6) TMI 1046
  Revision u/s 263 - deduction u/s 80P(2)(a)(i) - AO held that the interest income earned out of the investments in FDs is to be allowed as a deduction u/s 80P(2)(a)(i) - HELD THAT:- We find that for the immediately preceding Assessment Year viz., 2017-18, assessee had earned interest income out of investments with SCDCC Bank Ltd.- The same was brought to tax by the AO in the Assessment Order for Assessment Year 2017-18 as income from other sources and the claim of deduction under section 80P of the Act was rejected. On further appeal, the CIT(A) allowed the claim of the assessee for the Assessment Year 2017-18 and held that the said interest income received by the assessee is out of statutory compulsions and is part of operational income entitled to deduction under section 80P(2)(a)(i) of the Act Since there was factual finding in the instant case that investments in FDs with SCDCC Bank Ltd., is out of statutory compulsions and interest income received on the same is part of operating income, we are of the view that the order of the PCIT invoking his revisionary powers under section 263 of the Act, is not valid. In other words, there is no error much less an error prejudicial to the interest of the Revenue in the Assessment Order dated 02.12.2022 warranting revision u/s 263 of the Act. Therefore, we hold that the Assessment Order granting the benefit of deduction u/s 80P(2)(a)(i) of the Act with respect to the interest income of Rs.3,53,68,999/- is justified on facts of the instant case. Hence, we quash the order of PCIT passed under section 263 of the Act - Assessee appeal of assessee allowed.

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• Benami Property

• 2024 (6) TMI 1045
  Benami transactions - attachment of the properties of the non appellants - Adjudicating Authority refused to confirm the order of attachment mainly on the grounds that the funds came to the beneficiaries as a loan or advances and were released by M/s Danodia Investments Finance Ltd. through bank or proper banking channel - HELD THAT:- The Bank account of the transaction was supporting the aforesaid and thereby it cannot be said that M/s Danodia Investments Finance Ltd was a non-existing Company and otherwise the loan or advances was not by way of benami transaction. The finding aforesaid is in ignorance of the benami transaction. The Adjudicating Authority conveniently ignored as to how the fund came to M/s Danodia Investments Finance Ltd. The Adjudicating Authority even failed to analyse how the shares were issued at the premium of Rs. 990/- by a Company having no business at all, rather it was existing on papers to provide accommodation entries. The fact aforesaid was conveniently ignored by the Adjudicating Authority and tried to focus only on the period subsequent to the benami transaction by which money was injected in the accounts of M/s Danodia Investments Finance Ltd. We find that the subsequent transaction was out of the benami property defined under section 2 (8) of the Act of 1988, and was otherwise out of the benami transaction of M/s Danodia Investments Finance Ltd. Adjudicating Authority conveniently ignored the fact regarding non-existence of 79 entities or it was on papers and pumped in the money in the accounts of M/s Danodia Investments Finance Ltd. The funds came even subsequently in the year 2014-15 also by way of benami transactions and therefore only despite the notice, 79 entities did not respond to the notice. We find that the impugned order is based on surmises and conjectures. And thereby the Adjudicating Authority had ignored all the relevant facts available on record and even referred in the impugned order. Affidavit filed by the non-appellant which is common for majority of the entities. It is of Mr. Somnath Samanta who submitted the supporting affidavit for majority of the non-appellant Companies which includes M/s Danodia Investments Finance Ltd and even for few Square Four Group Companies and other entities. The exception may be for M/s Mahi Trading Private Limited and Micro Network Private Ltd. etc. For Square Four Assets Management, no separate contest has been made, rather the arguments and the representation is common. The affidavits otherwise reverberates the same and it would be relevant that said Mr. Somnath Samanta had filed the affidavit even for Square Four Housing Infrastructure and at the same time for M/s Danodia Investments Finance Ltd. His affidavit is seen even for Square Four Residency Private Limited. The only argument made now be in reference to section 2 (9) (D) defining the benami transaction as amended by the notification of 2016 with effect from 01.11.2016 - The facts available on record shows that transaction or the arrangement in this case is by non traceable or fictitious entities because 79 entities were found either on paper or not traceable, leaving few. The money was pumped in by layering or cash deposit by those entities which were not found traceable or were having no source to pump the money in the account of M/s Danodia Investments Finance Ltd. It is however to clarify that mere reference of a provision different than applicable would not wash the effect of other provision, if applicable. For all the reasons given above, we find force in the argument of the counsel for the appellant Department and find reason to cause interference in the impugned order, which is set aside. The order of the Adjudicating Authority is set aside and the order of provisional attachment is confirmed.

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• Customs

• 2024 (6) TMI 1044
  Classification of imported goods - Unwrought/Unrefined Zinc - to be classified under CTH No. 79012090 or not - demand of differential duty on the basis of theoretical transaction value, based on NIDB price of primary Zinc ingots - rejection of transaction value by the Assessing Officer - restricted item for import - HELD THAT:- The chemical examination report reproduced and the Revenue s contention that the imported goods were Zinc Dross is without a shred of sustainable evidence. The percentage of zinc found upon test may be higher than that declared but is certainly below the specified limit to merit classification as Zinc Dross, but for that of B/E No. 4663314 dated 18.2.14. In so far as the said question has been raised by the Revenue, it may be pointed out that they are precluded to raise such a question of classification in subsequent appellate proceedings. The Learned Appellate Authority has relied on case law support that have since settled the Question involved in the present appeal. In fact The Learned Appellate Commissioner, discussed at significant length, the facts of the case and applied the legal position thereto as arises in view of settled case laws. However, in view of what has been stated above that the Revenue was barred from raising the impugned question of law having conceded the same in lower proceedings and therefore, could not open it afresh in subsequent proceedings, it is refrained from dwelling on the matter any further, besides pointing out that the test results themselves do not support the case of the revenue. It is found that the department had undertaken the re-assessment exercise, purely on the aspect of valuation of the said goods and therefore the question of determining the nature of this imported product was not taken up in the subsequent proceeding by the Revenue. The Appellate Authority had rightly held that the ground s raised by the Revenue were, in view of the lower authorities Order not maintainable. There are no infirmity in the impugned order of the learned Commissioner (Appeals). The appeal filed by the Revenue is therefore dismissed.

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• 2024 (6) TMI 1043
  Continuation of appeal after Order of NCLT approving the resolution plan has been passed - Rule 22 of CESTAT (Procedure) Rules, 1982 - HELD THAT:- The Mumbai Bench of this Tribunal in the case of M/s. Alok Industries Ltd s case [ 2022 (10) TMI 801 - CESTAT MUMBAI] analysed in detail Rule 22 of CESTAT (Procedure) Rules, 1982 and observed that aforesaid Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. In the appellant s own case, the Hon ble Gujarat High Court in R/Tax Appeal No. 32 of 2019 [ 2022 (8) TMI 1459 - GUJARAT HIGH COURT] taking note of the judgments on the subject including that of Hon ble Supreme Court in Ghansyam Mishra s case [ 2021 (4) TMI 613 - SUPREME COURT] held that in such circumstances, the appeal abates. As observed by the Hon ble Supreme Court and High Courts in a catena of cases that the Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non-est in law. The appeal abates once the IRP is appointed and/or Resolution plan approved. Consequently, this appeal abates as per Rule 22 of CESTAT (Procedure) Rules, 1982 and this is the relief/Order could be passed as prescribed under the said Rule.

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• Corporate Laws

• 2024 (6) TMI 1042
  Calling upon to furnish various details, documents and information - challenge to order passed under Section 206 (4) of the Companies Act 2013 - HELD THAT:- The impugned order under Section 206 (4) of the Act should make out a prima facie case as to the information called for, and how the same relates to the business of a Company being carried on for fraudulent and unlawful purpose. In the impugned order, the said linkage is totally absent. In the impugned order, there is no finding even prima facie of the petitioner s business being conducted fraudulently or unlawful purpose or in defiance of the provisions of the Act, etc. On the contrary in the affidavit in reply it is stated in the impugned notice respondent no. 1 is not alleging or establishing any fraud against petitioner, but is issued for gathering information and it is an opportunity of being heard. In such a case complying with the preconditions under Section 206 (1) to (3) is mandatory. Therefore, even on this count, initiation of Section 206 (4) of the Act being jurisdictional condition, is not satisfied, and therefore, the impugned order is wholly without jurisdiction. Therefore, without satisfying these preconditions an order of the nature issued and impugned in this petition cannot be sustained. Petition disposed off.

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• Insolvency & Bankruptcy

• 2024 (6) TMI 1041
  Seeking to extend the period of Pre-packaged Insolvency Resolution Process(PPIRP) of Kethos Tiles Private Limited for 60 days after the last date of PPIRP - HELD THAT:- It is seen from the application that the Period of 120 days mentioned in the PPIRP came to an end on 03.05.2024. There is no Resolution Plan approved by the CoC till date as per the Application. A plain reading of Section 54D of Insolvency Bankruptcy Code, 2016 reveals that a time period of 120 days from the date of commencement of PPIRP is provided in the Act. As per Section 54D(3), if no Resolution Plan is approved by CoC the RP shall file an Application for Termination of PPIRP. Contrary to the Section Resolution Professional in the present matter has filed an Application seeking extension of time - It is seen that the Counsel for the Applicant relied upon Section 12 of the IBC,2016 to be applied in the PPIRP matters. As no resolution Plan has been approved within the specific time period which is 120 days, it is constrained to order Termination of Pre-Packaged Insolvency Resolution Process of the Corporate Debtor initiated by the order dated 04.01.2024 - It is also seen that the RP appointed by this Tribunal has misled the Tribunal and has not performed the duties as mandated under the code. The present Application is Rejected, PPIRP initiated vide order dated 04.01.2024 is hereby terminated and Corporate Debtor is released from rigor of law - Petition dismissed.

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• Service Tax

• 2024 (6) TMI 1040
  Levy of Service tax - renting of immovable property - Common Area Maintenance Charges - Power Supply Charges - parking charges - Business Exhibition Service and Event Management Service - CENVAT Credit - submission of appellant not taken into account - violation of principles of natural justice - HELD THAT:- Tthe impugned order has been issued without taking into account any submission made by the appellant. During the course of argument, appellant have produced a chart showing the income from renting as detailed in their balance sheet under various categories and the service tax paid by them. There seems to be no liability towards service tax un-discharged, except for the liability which is in respect of the two clients namely M/s Future Value Retail Ltd. and M/s Cinemax India Ltd - these clients were required to deposit 50% of the tax dues with the jurisdictional authority and had to give solvent surety in respect of the remaining amount. If the said requirement has been complied with then matter is covered in favour of the appellant and the demand made by impugned order to the extent of rent received from these clients could not have been confirmed in the impugned order. The case of the appellant was not considered on the basis of the documents and other evidences which were available at the time of investigation and adjudication, even efforts has not been made to reconcile the figures of ST-3 returns with the balance sheet - The exercise which done shows that there may be some variation in the category of services against which service tax has been discharged and demanded in the show cause notice but it is not correct to say that the service tax has not been paid against the said services. Even Board have clarified that change in the classifiable services should not be lead another demand being made but the service tax paid under one category should have been adjusted against the taxable services under which it was due. As this impugned order has been passed without consideration of the documents which exists at the time of investigation and during adjudication just for the reason that appellant had not putting his case properly before the Original Adjudicating Authority, the order is a non-speaking order, requires to be set aside for this reason only and matter is remitted back to the Original Authority for reconsideration and de-novo adjudication. Appeal allowed by way of remand.

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• 2024 (6) TMI 1039
  Classification of services - Works Contract Service or Construction of Residential Complex/Commercial or Industrial Construction Service - appellant were deemed service provider for construction of service brought under Service tax net with effect from 01.07.2010 - N/N. 01/2006-ST dated 01.03.2006 as amended vide N/N. 29/2010-ST dated 22.06.2010 - recovery of service tax with interest and penalties - extended period of limitation. Classification of services - HELD THAT:- The construction services rendered by the appellants are composite in nature involving materials as well as services. The documentary evidence produced by the appellant in form of VAT Audit Report, payment of VAT/Sale Tax, copy of agreements with developer and sub-contractors clearly prove the said fact. The Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] had analysed the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1-6-2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1-6-2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Further, it was held that after 1-6-2007, demand in respect of composite contracts would fall under works contract service only. The decision in Real Value Promoters is squarely applicable to the facts of the case in present appeals. The demand made under construction of residential complex service/construction of Commercial or Industrial Construction cannot therefore sustain. Extended period of limitation - HELD THAT:- The payment of tax under works contract service also disclosed by the appellant along with ST-3 return filed before the Jurisdictional Authority. In this circumstances charge of suppression or willful misstatement do not survive against the Appellant. On the basis of the above fact, extended period of limitation is also not invokable in the present matter. Therefore the demand in the impugned order is not sustainable not only on merit but also on limitation. The impugned order is set aside - Appeal allowed.

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• Central Excise

• 2024 (6) TMI 1038
  Process amounting to manufacture or not - activity undertaken by the appellant to convert the waste oils which is neither fit for use nor marketable as the primary product into lubricating oils which is not only fit for use - time limitation - benefit of SSI exemption under N/N. 8/2003-CE dated 01.03.2003. HELD THAT:- In the case of Servo-Med Industries Pvt. Ltd. Vs. CCE, Mumbai [ 2015 (5) TMI 292 - SUPREME COURT ], the Hon ble Supreme Court has held that manufacture takes place on the application of one or more processes. Each process may lead to a change in the goods, but every change does not amount to manufacture. There must be something more- there must be transformation by which something new and different comes into being, that is there must now emerge an article which has a distinctive name, character or use. In the case of CEE JEE Lubricants Vs. Commissioner of Central Excise Customs, Cochin [ 2019 (8) TMI 1173 - CESTAT BANGALORE ] wherein it is held that We have considered the submissions made at length by both sides and peruse the records, it is undisputed that the appellant procured used oil from different sources. The processing under taken by the appellant is in form of Vacuum distillation, Centrifuging removal of moisture, carbon and other impurities. The entire tenor of the adjudicating authority while confirming the demand is only on the ground that the used oil was unfit for use as lubricating oils were made fit for the use by the appellant by refining or re-processing the same and hence, characteristic and the use has changed. Due to which Chapter Note 4 of Chapter 27 gets attracted and the said activity becomes manufacture. The various decisions and the CBEC Board Circular, it is clear that Note 9 of Chapter 27 is not applicable to the present case. Therefore, the question of whether reprocessing of used waste oils into reprocessed oils that have marketable would amount to manufacture is answered in the negative concluding that it does not amounts to manufacture. Accordingly, the appeals are allowed in favour of the appellant. Whether the appellant is entitled to avail benefit of SSI Exemption under Notification No.8/2003- CE dated 01.03.2003? - HELD THAT:- The Commissioner (A) has held that since the above process amounts to manufacture, the value needs to be included while computing the aggregate value of clearances of all excisable goods for the period 2010 to 2011. Since, it is already held that the above processes undertaken by the appellant do not amount to manufacture and they are not liable to pay excise duty, therefore, the question of including the value of those goods for computation of the aggregate value of the clearances is not sustainable. Accordingly, the appellant is eligible for the benefit of the SSI exemption under N/N. 8/2003-CE dated 01.03.2003. Appeal are partially allowed by way of remand to the original authority only for limited purpose of verification of the fact that whether the appellants have discharged duty on the reprocessed oil cleared as lubricants .

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• Indian Laws

• 2024 (6) TMI 1037
  Dishonour of Cheque - acquittal of accused - locus standi to file the criminal complaints being the Branch Manager of the complainant-federation - HELD THAT:- It transpires that the complaints were filed by Sh. A.N. Pillai in his capacity as the Branch Manager of the complainant government undertaking in the month of January, 1995 whereas the power of attorney was executed in his favour by the complainant federation on 28.06.1995, proved on record as Ex.P5. Vide the said power of attorney, the Managing Director of the complainant federation appointed the Branch Manager as the general attorney. However, there was no clause in the in the power of attorney dated 28.06.1995, executed in favour of the Branch Manager, ratifying the acts of Branch Manager retrospectively. It comes to the fore that on the date the complaints were filed by Sh. A.N. Pillai, Branch Manager, acting on behalf of the complainant federation, there was no such power of attorney duly authorizing the Branch Manager to file the said complaints. The power of the Appellate Court to unsettle the order of acquittal on the basis of re-appreciation of the evidence is subject to the settled law that where two views are possible and out of the two, one points towards the innocence of the accused, the view which favours the accused should prevail over the other pointing towards his guilt. Furthermore, the trial Court has the additional advantage of closely observing the prosecution witnesses and their demeanour, while deciding about the reliability of the version of prosecution witnesses. A two Judge Bench of Hon ble Supreme Court in case of Chandrappa [ 2007 (2) TMI 704 - SUPREME COURT] has laid down the parameters with regard to the power of appellate Court while dealing with an appeal against an order of acquittal and held that If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court. This Court finds that learned counsel for the appellant has been unable to point out any perversity in the impugned judgment of acquittal passed by learned Additional Sessions Judge, Jalandhar - Appeal dismissed.

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