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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter June 28, 2022 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws Articles ANTI-ARBITRATION INJUNCTION TDS u/s 194S on CRYPTO/VDA : ISSUES & CLARIFICATIONS SEBI- NON-SPECIFIC AND OMNIBUS NOTICE FOR PENALTY NEED TO BE CHALLENGED AS VOID. News Auction for Sale (re-issue) of (i) ‘7.38 GS 2027’, (ii) ‘GoI Floating Rate Bond 2028’, (iii) ‘7.54% GS 2036’ (iv) ‘6.99% GS 2051’ NITI Aayog Launches Report on India's Gig and Platform Economy Circulars / Instructions / Orders DGFT Policy Circular No. 40/2015-2020 - dated 27-6-2022 Clarification regarding Chip Import Monitoring System (CHIMS) Highlights / Catch Notes GST Exemption from GST - activity of providing the hostel facility on the rent to various students by applicant is exempt (where hostel fees charged per student per day is much less than Rs.1000/-) - It is found that the services to be supplied in the present case are more than two but in the absence of Brochure of Hostel facilities, Break-up of fees in respect of facilities/services to be provided, License from the Local Authority, Details of rooms occupancy and Rent/ lease Agreement etc; we are not in the position to decide - Application rejected - AAR Visit to Get Source Concessional rate of tax - Manufacture of Fortified Rice Kernels- Premix - the designated Rice Millers have been requisitioned for supply of the fortified rice and the applicant has neither been supplying the said goods for free distribution to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned, nor they are into final supply of said goods - the applicant is not eligible for concessional rate of tax of 5% under the exemption Notification - AAR Visit to Get Source Profiteering - purchase of Flats - it is alleged that Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by way of commensurate reduction in the price of the flats - The Respondent has not disputed the findings of the DGAP regarding method of computation of profiteering and the amount worked out by him. As such, the Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP's Report or the methodology adopted - the Respondent is directed to also pass on interest @18% to the customers/ home/shop buyers on the entire amount profiteered - NAPA Visit to Get Source Profiteering - construction service supplied by the Respondent - It is established that there had been no additional benefit of ITC to the Respondent and hence he is not required to pass on the benefit to the above Applicants by reducing the prices of the flats. The Applicants could have availed the above benefit only if the above project was under execution/implementation before coming into force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after 01.07.2017 on which he was not entitled to do so before the above date. - Application dismissed - NAPA Visit to Get Source Profiteering - service of construction of affordable housing provided by the Respondent - benefit of reduced ITC not passed on by commensurate reduction in the price - the Respondent has denied benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.07.2017 to 29.02.2020 and is therefore, liable to imposition of penalty under the provisions of Section 171 (3A) - NAPA Visit to Get Source Income Tax Format, Procedure and Guidelines for submission of Form No. 1, Form No. 2 and Form No. 2A for Securities Transaction Tax (STT) - Notification Visit to Get Source Exemption u/s 10AA or 10A - As such the assessee during the assessment proceedings has come forward and filed the revised return of income declaring income under the provisions of AMT under section 115JC of the Act. Furthermore, the assessee cannot be deprived from the benefit granted under the statute merely on the reasoning that the assessee failed to claim the same in the income tax return. It is incumbent upon the revenue to allow the alleged claimed of deduction for which the assessee is entitled under the provisions of law. - AT Visit to Get Source Penalty u/s 271C - assessee did not remit the TDS on the due date - Only because of these hardships there was delay in remitting the TDS. Therefore, there is reasonable cause as envisaged u/s 273B for the delayed remittance of TDS. Moreover, the assessee had paid the entire TDS amount along with interest on 30.04.2011, much prior to notice u/s 274 r.w.s. 271C of the I.T.Act was issued to the assessee-deductor - No penalty - AT Visit to Get Source Revision u/s 263 - different treatments cannot be given on the same set of facts in respect of different co-owners of a common piece of land which are subjected to capital gains. If such action on the part of Revision Authority is approved, it would militate against the principle of equality of law as enshrined in the Article 14 of the Constitution. Further, it is seen that the ld.CIT has not taken any steps for reopening the case of other co-owner viz. Shri Vijay Patel and thereby accepted similar long term capital gain and claim of deduction under section 54 and 54F of the Act on the said transaction. - Revision order quashed - AT Visit to Get Source Deduction u/s 80P - Disallowance of deduction under section 80P of the Act in respect of “rental income” - where the assessee-bank derived the income in question from the house property and not from the banking business, the assessee could not be allowed deduction under section 80P of the Act in respect of the income derived by house property. - AT Visit to Get Source Revision u/s 263 - Erroneous allowance of deduction u/s 54B - it is not the case that the AO has not made enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of exemption claimed under section 54B of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. - Revision order quashed - AT Visit to Get Source Revision u/s 263 - Erroneous allowance of deduction u/s 54B - it is not the case that the AO has not made enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of exemption claimed under section 54B of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. - Revision order quashed - AT Visit to Get Source Revision u/s 263 - As per CIT penalty proceedings u/s.270A not initiated by AO - the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue and thus, we are of the considered view that the PCIT is erred in revising the assessment order u/s.263 of the Act. - AT Visit to Get Source Addition u/s 68 - unsecured loan - Merely filing the bank statement by the assessee would not discharge the onus cast upon it to prove the creditworthiness of the loan creditor and genuineness of transaction particularly when the cash was deposited in tranches within a short spam of about ten days before issuing a D.D. in favour of the assessee. - Additions confirmed - AT Visit to Get Source Validity of Reopening of assessment u/s 147 - requirement of recording of “reasons to believe” - validity of jurisdiction assumed by the AO for reopening the case of the assessee - as the Assessing Officer prior to issuance of Notice u/s.148 had failed to record “reasons to believe”, therefore, he had wrongly assumed jurisdiction and framed the impugned assessment u/s.148/143(3) - AT Visit to Get Source Income from house property - deemed rental income of the property, which remained vacant during the year - assessee as confronted that house was very old and partly damaged and was not in a livable condition - AO has not based the estimate on any reasonable working in determining the annual letting value. No description of the property as to the area and the market rates prevalent for rentals has been brought on record. - Additions deleted - AT Visit to Get Source Customs Customs Brokers Licensing (Amendment) Regulations, 2022 - Power of Commissioner of Customs at any Customs Station, may recognise more than one Customs Broker association provided that the minimum number of members of each such association shall not be less than thirty percent of the total licenses issued - Notification Visit to Get Source Mis-declaration of imported goods - Scania 310 Chassis - one complete amphibian bus body mounted on chassis - malafide intention or not - The imported goods herein is Amphibious bus which is also a specialized motor vehicle which runs on road as well as on water. Thus, being a specialized transport vehicle, it is appropriately classifiable under CTH 87 Section XVII of Custom Tariff Act, which covers vehicles, aircraft, vessels and associated transport equipment. - the appellant had mis-classified the goods with an intention to evade payment of appropriate Custom duty. - Penalty was rightly imposed - AT Visit to Get Source Import of bikes - allegation that the goods do not conform to the BIS requirements - it has to be construed that the appellant has complied with requirement of BIS standard (brand name) as well as identity of 157 nos. of bikes. The order of confiscation and re-export in respect of 157 bikes requires to be set aside - the impugned order is set aside and modified to the effect that the 157 nos. of kids bikes have to be released to the appellants for home consumption. Confiscation and order to re-export or for destruction of remaining 26 nos. of kids bikes is upheld. - AT Visit to Get Source DGFT Enlistment of PSIA under para 2.55 of HBP 2015-2020 - an additional agency at is recognized for issuance of Pre-Shipment Inspection Certificates as per provisions of Para 2.55(e) of HBP, 2015-20 - 03 existing Pre-Shipment Inspection Agencies have been allowed to add additional instruments to their existing instruments - Public Notice Visit to Get Source Indian Laws Dishonor of Cheque - Legally enforceable debt or not - preponderance of probablities - failure to discharge the fundamental burden of proving his capacity to advance loan - Taking into consideration his background admittedly a small time farmer holding 6 acres of land and not even a bank savings account claiming he advanced loan of Rs.9 lakhs as against the postdated cheque and no other document obtained for the money transaction, is obviously bound to be suspected - this Court holds that the appellate Court erred in reversing the trial Court judgment.- HC Visit to Get Source Dishonor of Cheque - signing of cheque jointly - vicarious liability u/s 141 of NI Act - True it is that in the case at hand, cheque in question has been signed by petitioners alongwith the main respondent/accused, but once there is no liability if any of these persons towards complainant, they otherwise cannot be held liable for issuance of cheque, which ultimately came to be dishonoured on account of insufficient funds. - HC Visit to Get Source SEBI Guidelines for Large Value Fund for Accredited Investors under SEBI (Alternative Investment Funds) Regulations, 2012 and Requirement of Compliance Officer for Managers of all AIFs - Circular Visit to Get Source Implementation of Circular on ‘Guidelines in pursuance of amendment to SEBI KYC (Know Your client) Registration Agency (KRA) Regulations, 2011’ - Circular Visit to Get Source Reduction of timelines for listing of units of privately placed Infrastructure Investment Trust (InvIT) - to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets. - Circular Visit to Get Source Introduction of Unified Payments Interface (UPI) mechanism for Infrastructure Investment Trusts - Process flow for applying though UPI mechanism - Circular Visit to Get Source Case Laws: GST 2022 (6) TMI 1168 CENVAT Credit - capital goods - CGST transitional credit not received in electronic credit ledger, inspite of filing TRAN-1 - HELD THAT:- Though petition was served and is getting listed since 21 st March 2022, no reply has been filed. Therefore, the averments in paragraph nos.12, 13 and 14 are uncontroverted - to hold petitioner as someone who did not meet the deadline to avail the Cenvat Credit on Capital goods will be too harsh a view to take. Even for a moment if we proceed on the basis that the case did not involve any technical issue as alleged by Respondent No.6 the fact is petitioner filed Form on 26th September 2017. The petitioner is allowed to file required Form by claiming Cenvat Credit and respondent shall within 2 weeks open online portal/provide a link to petitioner for filing the Form - petition disposed off. 2022 (6) TMI 1167 Exemption from GST - activity of providing the hostel facility on the rent to various students by applicant is exempt (where hostel fees charged per student per day is much less than Rs.1000/-) - composite supply or mixed supply - Applicability of entry of Notification No.12/2017-Central Tax (Rate) (as amended time to time) dated 28.06.2017 - lack of requisite documents - HELD THAT:- In order to examine the applicability of exemption/ taxability, there should be documentary evidences which support the contention of the applicant - In the instant case, documentary evidence like rent/lease agreement of the premises and License from the Local authority in respect of Hostel are keenly required. Further, Brochure mentioning thereunder the facilities / services which to be provided to the occupants of the said Hostel and Break up of fees to be charged from the occupants is also required to decide whether it is accommodation lodging service or otherwise. It is found that the services to be supplied in the present case are more than two but in the absence of Brochure of Hostel facilities, Break-up of fees in respect of facilities/services to be provided, License from the Local Authority, Details of rooms occupancy and Rent/ lease Agreement etc; we are not in the position to decide whether the accommodation services alongwith allied services like service of Light, water, food etc. are only to be provided by Hostel or other services will be there. In the absence of above required documents/information, we are not in position to decide whether the said supply is mixed or composite supply. Thus, in absence of supporting documentary evidence in support of services to be provided by the applicant, how it can classify in HSN provided in the CGST Act, 2017 and thus there is no question to discuss the exemption under Sr. No. 14 of the of the Notification No. 12/2017-CT(Rate) dated 28.06.2017 - no ruling advanced for want of requisite documents. 2022 (6) TMI 1166 Concessional rate of tax - Manufacture of Fortified Rice Kernels- Premix - applicability of exemption N/N. 39/2017 CT (R) with effect from 1 Oct 2021 - HELD THAT:- Since under the head Description of Goods at Column (3), the use of words Fortified Rice Kernel (Premix) supply for ICDS or similar scheme duly approved by the Central Government or any State Government signifies that the goods in question must be supplied for ICDS or similar scheme duly approved by the Central Government or any State Government, which clearly means that the supplier must be aware beforehand that the particular quantity/ lot/ batch of said goods are intended for supply for ICDS or similar scheme. In the instant case, as per the applicant's own admission they have to supply the FRK to the Rice Millers, enlisted in the letter dated 03.01.2022 and not to the agency (ies) entrusted by the Government for free distribution to the economically weaker sections of the society. From the above letter, it appears that the Rice Millers referred to in the letter dated 03.01.2022 have to supply, such goods (food preparation) to the agency (ies) entrusted by the Government in this regard and not the applicant - it is also clear that even the sample has to be taken from the rice Mills, where the fortified Rice is being manufactured and not from the premises of the applicant. Thus, the designated Rice Millers have been requisitioned for supply of the fortified rice and the applicant has neither been supplying the said goods for free distribution to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned, nor they are into final supply of said goods in terms of Notification No. 39/2017-C.T. (Rate) dated 18.10.2017 - the applicant is not eligible for concessional rate of tax of 5% under the exemption Notification No. 39/2017-C.T. (Rate) dated 18.10.2017. 2022 (6) TMI 1165 Profiteering - purchase of Flats - it is alleged that Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by way of commensurate reduction in the price of the flats - contravention of Section 171 of CGST Act - Interest - Penalty - HELD THAT:- Section 171 (1) of the CGST Act, 2017 deals with two situations:- One relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 2.34% and during the post-GST period (July-2017 to December-2018), it was 5.65% for the project 'Sports Vile'. This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 3.31% (5.65% - 2.34%) of his turnover for the project 'Sports Ville' and the same was required to be passed on to the customers/ home/shop buyers. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 1,42,45,741/- for the project Sports Ville' which was availed by the Respondent. The Respondent has not disputed the findings of the DGAP regarding method of computation of profiteering and the amount worked out by him. As such, the Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP's Report or the methodology adopted and hence, the Authority determines the profiteered amount for the period from 01.07.2017 to 31.12.2018, in the instant case, as Rs. 1,42,45,741/-, for the project 'Sports Ville'. Interest - HELD THAT:- The Authority directs the concerned jurisdictional CGST/SGST Commissioner to ensure that such amounts are returned/passed on/ refunded along with interest as prescribed under Rule 133 (3) (c) of the CGST Rules, 2017 to each customers/ home/shop buyers by the Respondent, if not already paid. As observed by the Authority, the conclusive proof of passing benefits - Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 1,42,45,741/-, for the project 'Sports Ville . Hence the Respondent is directed to also pass on interest @18% to the customers/ home/shop buyers on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ return/refund, as prescribed under Rule 133 (3) (b) of the CGST Rules 2017 - the profiteering amount of Rs. 1,42,45,741/- for the project 'Sports Ville' along with the interest @ 18% from the date of receiving of advance from the customers/ home/shop buyers till the date of passing the benefit of ITC shall be paid/passed on by the Respondent within a period of 3 months from the date of this order failing which it shall be recovered as per the provisions of the CGST Act, 2017. Penalty - HELD THAT:- Respondent has denied the benefit of ITC to the customers/ home/shop buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the Act and therefore, he is liable for imposition of penalty under the provisions of the Section. However, since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020, whereas, the period during which violation has occurred is w.e.f. 01.07.2017 to 31.12.2018, hence the penalty prescribed under the above Section cannot be imposed on Respondent retrospectively. 2022 (6) TMI 1164 Profiteering - construction service supplied by the Respondent - benefit of input tax credit not passed by way of commensurate reduction in the price in the project - contravention of section 171 of CGST Act - Penalty - HELD THAT:- The Authority finds that the allotment of units, agreements, booking, construction activity and receipt of payments had taken place in the post-GST era. The draw of lots for allotment of houses was conducted on 05.07.2017 in the presence of the committee constituted under the Affordable Housing Policy, 2013. The Authority also finds that first BBA between the flat buyers the Respondent was executed on 20.07.2017 in the post GST period. On the basis of the sequence of the above events, it could be safely concluded that the above project had started after coming in to force of the GST w.e.f. 01.07.2017 and Applicants were allotted flats only after coming in to force of the GST w.e.f. 01.07.2017, as the allotment cum first tax invoice for demand was issued after the implementation of the GST w.e.f. 01.07.2017, hence apparently there was no pre-GST tax rate or input tax credit availability that could be compared with the post-GST tax rate and the input tax credit, to determine whether there was any benefit that was required to be passed on by way of reduced price. It is established that there had been no additional benefit of ITC to the Respondent and hence he is not required to pass on the benefit to the above Applicants by reducing the prices of the flats. The Applicants could have availed the above benefit only if the above project was under execution/implementation before coming into force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after 01.07.2017 on which he was not entitled to do so before the above date. Since there is no basis for comparison of ITC available before and after 01.07.2017, the Respondent is not required to recalibrate the price of the flats due to additional benefit of ITC. Hence, the allegations of the above Applicants made in this behalf are incorrect and therefore, the same cannot be accepted Thus, Respondent had not contravened the provisions of Section 171 (1) of the CGST Act, 2017 and there are no merit in the Applications filed by the above Applicants and the same are accordingly dismissed. 2022 (6) TMI 1163 Profiteering - service of construction of affordable housing provided by the Respondent - benefit of reduced ITC not passed on by commensurate reduction in the price - contravention of section 171 of CGST Act - HELD THAT:- The Authority finds that the Respondent has profiteered an amount of Rs 2,73,04,997/- during the period of investigation. Therefore, in view of the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the buyers of the flats/shops commensurate with the benefit of ITC received by him as has been detailed above. The Authority directs that such amount profiteered as determined shall be passed on/returned by the Respondent to the recipients of supply alongwith the interest @18% from the date such amount was profiteered by the Respondent uptil the date such amount is passed on/returned to the respective recipients of supply. It is also evident from the narration of the facts that the Respondent has denied benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.07.2017 to 29.02.2020 and is therefore, liable to imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and hence accordingly the penalty equivalent to ten per cent of the profiteered amount will be imposed upon him for the ,amount collected after 01.01.2020. However, no penalty shall be leviable if the profiteered amount is deposited/passed on by the Respondent within thirty days of the date of passing of this order by the Authority. Income Tax 2022 (6) TMI 1169 Declaration under the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- We find, accepting assessee s declaration under the Direct Tax Vivad Se Vishwas Act, 2020, the designated has issued Form 5. Thus, with the issuance of Form 5, for all practical purposes, the dispute arising in the appeal stands resolved. That being the case, we permit the assessee to withdraw the present appeal. Accordingly, the appeal is dismissed as withdrawn. 2022 (6) TMI 1162 Exemption u/s 10AA or 10A - Claim denied due to the error of the software used by the tax professional while claiming the deduction deduction u/s 10AA - whether the assessee was eligible for deduction under section 10A or 10AA? - assessee also contended that the claim of the assessee under section 10AA of the Act was disallowed by the AO without issuing any show cause notice which is against the principle of justice - HELD THAT:- Deduction under section 10A of the Act has been discontinued with effect from A.Y. 2012-13 for the newly undertaking/unit. Therefore, it was not possible for claiming the deduction under this said section. Thus, any deduction claimed under section 10A of the Act cannot be said that it was claimed by the assessee with mala-fide intent - assessee has already paid the taxes under the advance tax and self-assessment scheme which is an undisputed fact. The assessee being intending to avoid the alternative minimum tax in pursuance to the provisions of section 115JC of the Act, it would have not paid any self-assessment tax on the date of filing the return of Income. The payment of the self-assessment tax does not raise any doubt on the intention of the assessee merely on the reasoning that the assessee has claimed refund in the income tax return. As such the assessee during the assessment proceedings has come forward and filed the revised return of income declaring income under the provisions of AMT under section 115JC of the Act. Furthermore, the assessee cannot be deprived from the benefit granted under the statute merely on the reasoning that the assessee failed to claim the same in the income tax return. It is incumbent upon the revenue to allow the alleged claimed of deduction for which the assessee is entitled under the provisions of law. As it is an admitted position that the form 56F is applicable for claiming the deduction under section 10A of the Act. However, we find that at that point of time when the assessee was claiming the exemption under section 10AA of the Act, there was no form prescribed by the CBDT. Thus in the absence of any specific form prescribed by the CBDT, the assessee has opted to use form 56F for claiming the exemption. To our understanding, it was an inadvertent mistake and therefore the assessee cannot be deprived from the benefit available under the provisions of law. The assessee has made the claim for the exemption under section 10AA of the Act before the issuance of show cause notice by the Income Tax Department with respect to the deduction claimed under section 10A of the Act. Thus, the revised claim by the assessee was made before detection of the same by the AO. As relying on M/S. RAJASTHAN FASTENERS PVT. LTD. [ 2014 (6) TMI 291 - RAJASTHAN HIGH COURT] we are of the view that the assessee is entitled to benefit u/s 10AA of the Act though it wrongly claim the deduction u/s 10A of the Act at the time of filing the return of Income. Whether the assessee is engaged in the manufacturing activity or not ? - It is undisputed fact that the assessee was established in SEZ located at Sachin. It has granted the letter of permission to begin the manufacturing activity from 25-02-2012 by the SEZ authority. Therefore, we are of the view that the letter of permission was granted by the SEZ authority after satisfying the condition of the term manufacture as discussed above. The agreement entered with the supplier of Gold Ornaments, point no. 9 specified that the assessee is responsible to assemble, studded/mounting of precious and semi-precious stones, Oxidishing, finishing and packaging etc. The assessee has purchased the Gold Ornaments in the form of raw materials with specification and design given by it and make the studded Gold Jewellery for export. The assessee has sufficient labour manpower to manufacture the gold ornaments into studded gold jewellery as seemed from the payment vouchers issued to labourers by it and gate pass issued by the SEZ authorities. Thus in view of the above, we do not find any infirmity in the order of the learned CIT-A. Hence the ground of appeal of the Revenue is hereby dismissed. 2022 (6) TMI 1161 Validity of order u/s 144 - HELD THAT:- In order of learned CIT (A), it was categorically held that all the submissions produced before the learned Assessing Officer was considered. Further, in response to notice under Section 153A of the Act, the assessee did not care to file even the return of income. Therefore, we find that no force in the ground no.1 of the appeal. Hence, dismiss. Addition made without having any incriminating material - HELD THAT:- We find that during the course of search enough evidences were found which are tabulated by the learned Assessing Officer and based on that addition has been made. Therefore, it cannot be said that there is no incriminating material found during the course of search. In the result ground number 3 of the appeal of the assessee is dismissed. Bogus purchases - HELD THAT:- We find that the CIT A has considered all the explanations furnished by the assessee. He has categorically stated that the assessee had booked purchases from six suppliers identified by the sales tax Department as hawala/bogus dealers. The assessee is also not in possession of the bills and other supporting evidences for purchases to the tune of ₹ 5.92 crores. Therefore, there was no doubt that the assessee has indulged in bogus purchases for all these years. The learned and CIT A observed that the average ratio of bogus purchases to the turnover is merely 1.04% and therefore the bogus purchases were estimated for assessment year 2007 08 to 2009 10 at ₹ 60.76 crores. When assessee was confronted with evidences, the key persons, managing director enhanced the admission and offered an additional amount of unaccounted income. On that basis the learned CIT A the addition of ₹ 223,411,367/ . In view of this, we do not find any infirmity in the orders of the lower authorities in confirming the addition of the above amount on account of alleged bogus purchase. Accordingly, ground number 2 of the appeal is dismissed. Disallowance on account of speed money - HELD THAT:- CIT A confirmed the addition however he telescope the same in view of the addition confirmed by him on account of bogus purchases for the reason that in answer to question number 135 the managing director of the company has stated that the source of the above speed money paid is on account of bogus purchases. Therefore we do not find any infirmity in the order of the learned CIT A in allowing the telescoping of the above disallowance with respect to the addition confirmed by him on account of bogus purchases. Accordingly, ground numbers 1 2 of the appeal of the AO are dismissed. Disallowance u/s 14A - assessee has incurred substantial interest expenditure and has also made investment where from exempt dividend on income could have been earned - HELD THAT:- As we find that now with effect from 1 April 2022 the Finance act, 2022 has introduced an explanation, which makes it very clear that the provisions of Section 14A with respect to the disallowance will apply and shall be deemed to have always been applied in case where the assessee has not earned any exempt income. Therefore, in view of the amendment made we set-aside these grounds back to the file of the learned assessing officer to grant an opportunity of the hearing to the assessee and decide the issue afresh. Accordingly, these grounds are allowed with above directions. Disallowance of interest expenditure - CIT- A has deleted the above disallowance holding that assessee has interest free funds available with it in the form of share capital and reserve - HELD THAT:- As relying on the decision of the honourable Bombay High Court in case of Reliance utilities and powers Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] held that the presumption is available in favour of the assessee that no interest-bearing funds have been utilized for the above interest free loans and advances. The learned departmental representative could not show any infirmity in the order of the learned CIT A. Therefore, we confirm the action of the learned CIT A in deleting the above disallowance and accordingly ground of the appeal of the AO is dismissed. Disallowance of deduction u/s 80 IA - AO did not allow the claim of the assessee for the reason that no audit report in form number 10CCB was filed - Before the learned CIT A assessee also failed to show that any such form has been filed before the assessing officer. The assessee also did not produce any evidence before the learned CIT A also. CIT A also asked the assessee to produce certain details, which were not produced. Accordingly, the deduction was disallowed - HELD THAT:- No such details were also produced before us. Disallowance confirmed. Disallowance on account of purchases of development rights of fully developed when the power site acquired from Vish wind infrastructure LLP[ LLP] - HELD THAT:- CIT- A on perusal of the finding of the learned assessing officer, settlement commission as well as in absence of any further information except the further valuation report, confirmed the action of the learned assessing officer. We find that when the payment was not found to be genuine, the party to which payments have been made did not have any capability of performing such work, the report of expert was found to be backdated and without any further evidence, the expert also did not visit the site or carry out any personal inspection, there is no doubt in our mind that the expenditure incurred by the assessee is bogus. Accordingly we confirm the action of the learned CIT A in disallowing the above expenditure. Accordingly, ground of the appeal is dismissed. Disallowance u/s 37 (1) - This offer was made by the assessee before the settlement commission - addition was on account of the provisions of Section 43B of the act since the above sum is not paid before the end of relevant year - HELD THAT:- During the course of assessment proceedings, also assessee did not object to the same. Before the learned CIT A also no evidences were produced. There are no evidences that the above sum has been paid even before the due date of filing of the return of income. Therefore, we do not have any other alternative but to confirm the action of the learned CIT A in confirming the above disallowance - Accordingly, ground of the appeal is dismissed. Disallowance of certain expenditure - HELD THAT:- On careful analysis of the order of the learned CIT A we find that in each of the disallowance, he is faced with the situation where no complete details are available on record but comparative analysis of expenditure is available. He applied his mind and applied reasonable ratio to uphold the disallowance. No infirmity can be imputed in such an order. 2022 (6) TMI 1160 Penalty u/s 271C - assessee did not remit the TDS on the due date - Genuine hardship due to accumulated loss - amount with interest was deposited before issuance of notice - HELD THAT:- As the major part of the TDS relates to remuneration to the Directors credited to the unsecured loan account - TDS was payable on that amount also, but the same could not be remitted due to acute fund shortage for the assessee-company. The assessee-company had incurred huge loss during the relevant financial year and accumulated losses as on 31.03.2010. In addition to the heavy losses, the assessee had huge liability towards bank loan and other borrowings, which is evident from the balance sheet placed on record. In the subsequent years, the bank had taken action under SARFAESI Act and taken possession of the resort and the resort was kept closed for a long time. It was also submitted that after bank had taken possession of the property, one of the NRI Directors had brought in additional funds and settled the dues to the bank and reopened the resort. After reopening due to Covid pandemic, resort was again closed in the month of March 2020. Therefore, the total accumulated losses as per the books of account as on 31.03.2021 is Rs.32,17,77,436. Only because of these hardships there was delay in remitting the TDS. Therefore, there is reasonable cause as envisaged u/s 273B for the delayed remittance of TDS. Moreover, the assessee had paid the entire TDS amount along with interest on 30.04.2011, much prior to notice u/s 274 r.w.s. 271C of the I.T.Act was issued to the assessee-deductor on 05.03.2013. Therefore, for the aforesaid reasoning and the judgment of Lakshadweep Development Corporation Ltd. [ 2019 (3) TMI 333 - KERALA HIGH COURT] we delete the penalty imposed u/s 271C - Assessee appeal allowed. 2022 (6) TMI 1159 Addition u/s 68 - unexplained share application money - HELD THAT:- We note that the assessment for impugned assessment year 2011-12 was re-opened on the basis that during the course of assessment proceedings for assessment in 2012-13 2020 (3) TMI 227 - ITAT AHMEDABAD] , it was found that the assessee company received share application money from M/s Mars Software International Ltd. and Mr. Anil Jain - The reasons to believe for assessment year 2011-12 specifically mentioned that the basis for the opening the case under section 147 of the Act is that during the course of assessment proceedings for assessment year 2012-13, it was found that the assessee accepted the share application money in respect of which additions under section 68 of the Act were made. The first appellate authority in the appeal for assessment year 2012-13 deleted the addition for the reason that the said share application money pertained to the earlier year and hence could not be added in assessment year 2012-13. It was for this reason, reassessment proceedings were initiated for the impugned assessment year 2011-12 to tax the aforesaid share application money in the hands of the assessee, which could not be taxed in assessment year 2012-13 since it did not pertain to that year. However, since Ahmedabad ITAT in the assessee s own case and in respect of the share application money received from the same parties (as in the impugned assessment year 2011-12) has deleted the addition under section 68 which formed the basis for reopening of assessment for the assessment year 2011-12, respectfully following the above ITAT decision the assessee s own case for assessment year 2012-13, we hereby delete addition in respect of share application money under section 68 of the Act. In the result, ground number 1 of the assessee s appeal is allowed. 2022 (6) TMI 1158 Addition of Short term capital gain - AO has made addition of revaluation of the land in the books of the assessee treating the same as short term capital gain - transfer of asset by the partnership firm to partners - Case reopened u/s 147 on the ground that the assessee was one of the beneficiaries of Client Code Modification ( CCM ) and during the financial year 2008-09 profit shifted and loss shifted resulting into net reduction in income due to CCM - CIT(A)held that revalued amount of capital asset which was transferred to capital account of the partners in their respective shares of profit, was not liable to capital gain tax in view of section 45(4) - HELD THAT:- DR could not produce before us any judgments in favour of the Revenue, as against the addition made on account of revaluation of the land in the partnership firm. Similarly, the ld.DR could not place before us any contradictory finding as relied by the ld.CIT(A). In the absence of any further materials or judgments, we do not find it necessity to interfere with the order passed by the ld.CIT(A). Further, the fact in the case of Om Namah Shivay Builders Developers [ 2010 (11) TMI 137 - ITAT, MUMBAI] relied upon by the ld.DR is that one of the partners died and his legal heirs continued in the firm and then retired from the said firm, and this fact is not applicable to the facts of the present case. Thus, the order passed by the ld.CIT(A) does not require any interference on the facts brought out therein are not disputed by the Revenue, therefore, the same is liable to be upheld. - Decided against revenue. 2022 (6) TMI 1157 Revision u/s 263 - Admissibility of deduction u/s 54 and 54F - as submitted claim of deduction u/s 54 and 54F has been accepted in the case of the assessee s brother, who was owning 50% share in the above property - HELD THAT:- It is seen from the paper book that the assessee has made a detailed reply to the show cause notice by producing relevant document viz. sale deed; property tax receipts, copy of Income-Tax Returns for earlier years showing rental income from the above property; copies of bank accounts and copy of the Will executed by the assessee s father. Without appreciating the above documents, the ld.CIT has come to a conclusion that Plot No.34 does not mention anywhere that there was a residential building sold through the sale deed. Further, CIT absolutely erred in stating that the assessee has made 100% claim of deduction whereas she has only 50% as co-owners in the above properties and from going through the Sale Deeds both the lands are vacant lands. Thus, the above finding of the ld.CIT is not correct from the perusal of the above record. The ld.CIT has not given due credence to the reply filed by the assessee and passed this revision order. However, it can be seen from the co-owner, assessee s brother Shri Vijay Patel s case that similar deduction was being allowed by the ITO (International Taxation), Baroda after detailed inquiry, wherein the assessee s brother has also given detailed reply dated 12.12.2011. After considering the above reply, the ITO(International taxation) has accepted the returned income and allowed the deduction by passing order under section 143(3) of the Act dated 29.12.2011 and that assessment order was not subject matter of revision or reopening by the Department, but in the case of the assessee being co-owner of the same properties, a show cause notice under section 263 of the Act dated 23.8.2013 was issued and explanation was called for from the assessee. Here it is to be noted that ld.CIT has not verified, what happened to other co-owner viz. assessee s brother Shri Vijay Patel case which assessment has attained finality. Thus different treatments cannot be given on the same set of facts in respect of different co-owners of a common piece of land which are subjected to capital gains. If such action on the part of Revision Authority is approved, it would militate against the principle of equality of law as enshrined in the Article 14 of the Constitution. Further, it is seen that the ld.CIT has not taken any steps for reopening the case of other co-owner viz. Shri Vijay Patel and thereby accepted similar long term capital gain and claim of deduction under section 54 and 54F of the Act on the said transaction. Therefore, in our considered view, the assessee cannot be treated differently for similar transaction. This ground of appeal of the assessee is allowed on this preliminary aspect, and Revision Order under section 263 of the Act is hereby quashed. - Decided in favour of assessee. 2022 (6) TMI 1156 Benefit of exemption u/s 54F - case of the assessee was selected for computer assisted scrutiny selection (CASS) under the limited scrutiny category - According to the AO, as per the JDA, the assessee was entitled to more than 2 residential houses i.e., flats and therefore the deduction under section 54F of the Act cannot be allowed to the assessee - plea of the assessee is that whatever area it got from the developer under the JDA has to be regarded as one residential unit and exemption under section 54 of the Act should be allowed to the assessee - HELD THAT:- .According to the terms of the agreement, the assessee bargained for only a built-up area and it has to be regarded as one residential area for the purpose of claiming deduction under section 54F of the Act. In this regard, we find that neither before the AO nor before the CIT(A) such a plea was taken. In fact, the plea before the AO was that the assessee should be allowed the benefit of deduction of exemption atleast in respect of one residential unit and it has been submitted that for the convenience, the built-up area was divided into 3 units and that cannot be basis that the assessee got 3 residential houses. In order to decide this issue, it would be necessary to examine the plan and the manner in which the construction of the 3 units has been done and how the property has been assessed and enjoyed by the assessees. We therefore deem it fit and proper to remand this issue to the AO for fresh consideration after affording opportunity of being heard to the assessee. Thus, both the appeals of the assessees are treated as partly allowed for statistical purposes. 2022 (6) TMI 1155 Deduction u/s 80P - assessee has earned interest income from nationalised banks i.e. other than cooperative banks and claimed deduction under section 80P(2)(d) - HELD THAT:- On the issue whether the interest earned on deposits kept with nationalised bank is eligible for deduction under section 80 P of the Act, in our view, the issue is directly covered in favour of the Revenue in view of the Supreme Court decision the case of Totgars, Co-operative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] held that interest earned by assessee would come in category of 'Income from other sources' taxable under section 56 and would not qualify for deduction as business income under section 80P(2)(a)(i). Gujarat High Court in the case of State Bank of India (SBI) [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] held that where assessee, a co-operative society, having accepted deposits from its members, kept idle funds with bank, since there was no nexus between interest earned on said deposits and business of assessee providing credit facilities to its members, it could not claim deduction under section 80P(2) of the Act in respect of interest income in question. In the case of Baroda Citizen Community Co-op. Credit Society Ltd. [ 2022 (1) TMI 987 - ITAT AHMEDABAD] held that in case of a society engaged in providing credit facilities to its members, income from investments made in banks is not deductible under section 80P of the Act. Respectfully following the decisions cited above, we do not find any infirmity in the decision of Ld. CIT(A). Therefore, the appeal of the assessee is dismissed on this issue in respect of Ground Number 1. Disallowance of deduction under section 80P of the Act in respect of rental income and other miscellaneous income - HELD THAT:- Bihar High Court in the case of Bihar Rajya Sahkari Bhoomi Vikas Co-operative Bank Ltd. [ 2008 (9) TMI 310 - PATNA HIGH COURT] held that income earned by assessee, a co-operative bank, by way of interest on provident fund amount of employees and rent from house property could not be treated as income attributable to banking business and would not qualify for deduction under section 80P(2) of the Act. In the case of CIT v. Nainital District Co-Operative Bank[ 2007 (3) TMI 256 - UTTARAKHAND HIGH COURT] held that where the assessee-bank derived the income in question from the house property and not from the banking business, the assessee could not be allowed deduction under section 80P of the Act in respect of the income derived by house property. In view of the consistent view taken by the various High Court/Tribunals, we are of the considered view that the Ld. CIT(Appeals) has not erred in facts and law in confirming the addition made by the Ld. Assessing Officer by denying deduction under section 80P of the Act in respect of rental income/miscellaneous income. In the result, Ground number 2 of the assessee s appeal is dismissed. 2022 (6) TMI 1154 Revision u/s 263 - Erroneous allowance of deduction u/s 54B - distinction between lack of inquiry and inadequate inquiry - AO without making inquiries or verification with respect to the deduction/exemption claimed under section 54 thus assessment is erroneous insofar prejudicial to the interest of the Revenue and thus requiring revision by Pr. CIT u/s 263 - as per CIT the new property purchased by the assessee at Talluka Vejalpur Ahmadabad is a developed land and not an agricultural land as the same falls in Town Planning Scheme-5 (Bodakhedev- Makraba-Vejalpur) within Ahmadabad Municipal Corporation and as per the provision of section 54B of the Act, the exemption is available if there is a transfer of agricultural land and purchase of a new agricultural land - HELD THAT:- An inquiry made by the Assessing Officer, considered inadequate by the Commissioner of Income Tax, cannot make the order of the Assessing Officer erroneous. In our view, the order can be erroneous if the Assessing Officer fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the Assessing Officer. It is Assessing Officer s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various Hon ble High Courts in this regard. Delhi High Court in the case of CIT Vs. Sunbeam Auto [ 2009 (9) TMI 633 - DELHI HIGH COURT] made a distinction between lack of inquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. Thus the principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Assessing Officer adopts one of the course permissible in law and it has resulted in loss of revenue; or where two views are possible and the Assessing Officer has taken one view with which the Commissioner of Income-tax does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Assessing Officer is unsustainable in law, or the AO has completely omitted to make any enquiry altogether or the order demonstrates non-application of mind. Now in the facts before us, in the case of the assessee the AO during the course of assessment proceedings, made enquiries on this issue and after consideration of written submissions filed by the assessee and documents / evidence placed on record, the Ld. AO framed assessment under section 143(3) accepting the return of income - it is not the case that the AO has not made enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of exemption claimed under section 54B of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the Ld. AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. Thus, the revisional order passed by the learned PCIT is not sustainable and therefore we quash the same. Hence the ground of appeal of the assessee is allowed. 2022 (6) TMI 1153 Exemption u/s 11 - disallowing deduction u/s 11(2) for late filing of Form-10 for the Asstt.Year 2015- 16 - Form No.10 was not accompanied along with return of income, thereby 143(1) intimation was passed - assessee uploaded Form No.10 by online on 2.1.2017 and filed its rectification application on 6.10.2017 which was rejected - HELD THAT:- As going by the insertion of new sub-clause (c) of section 11(2) of the Act, the assessee is required to furnish Form No.10 along with Return of Income from the Asst.Year 2016-17 onwards. As per the CBDT Circular No.7 of 2018, representation from the assessee that Form No.9A and 10 could not be filed in specific time for the Asst.Year 2016-17, which were the first year of efiling of these forms, and also to condone such delay by invoking section 11(2)(b) of the Act. All the above provisions circulars make it clear that non-filing or delay in filing the Form No.10, there was no time limit prescribed under the Act for the present Asst.Year 2015-16. Following the Supreme Court judgments, if the Form No.10 is filed before the assessing authority before completion of regular assessment, the assessee is eligible for the deduction. We find that in this case only an intimation under section 143(1) has been made rejecting the claim of deduction to the assessee. There is no regular assessment made for the A.Y. 2015-16. The assessee s rectification petition filed under section 154 of the Act is also rejected without considering insertion of sub-clause (c) in section 11(2) of the Act as well as CBDT Circular No. 7 of 2018. Thus, the ld.CIT(A) has not applied his mind while disposing of the appeal filed by the assessee. The need for disposal of objections by way of a speaking order by the Assessing Officer, who is performing a quasi-judicial function. The soul of a quasi-judicial decision making is in the reasoning for coming to the decision taken by the quasi-judicial officer. While on this aspect of the matter, we may usefully refer to the observations made by the Hon'ble Supreme Court, in the case of Union Public Service Commission v. Bibhu Prasad Sarangi and Ors., [ 2021 (3) TMI 1349 - SUPREME COURT ] - While these observations are in the context of the judicial officers, these observations will be equally applicable to the decisions by the quasi-judicial officers like us, as indeed the Assessing Officer CPC. As in the present case the immediately after the intimation order was passed on 15.9.2016, the assessee realized the mistake of not upholding Form No.10 along with Return of Income, however, uploaded the same on 02.11.2017 and filed rectification application on 6.10.2017 requesting to rectify the mistake in the intimation. But the DCIT(CPC) simply rejected the rectification by his order dated 31.10.2019 by holding that there is no prima facie error in the order sought to be rectified, and simply rejected the rectification application filed by the assessee. CIT(A) even gone one step further by dismissing the appeal without considering Circulars issued by the CBDT, as well as Hon ble Supreme Court s judgment and other High Courts judgments placed by the assessee before the ld.CIT(A), NFAC - as in spite of Circular 14 of 1955, the Departmental Officers are taking advantage of the ignorance of the assessee, instead of assisting the taxpayers more particularly in the matter of claim of relief, issuance of refund, but the officers had not taken any initiative in guiding the taxpayers in accordance with law. This attitude will not give long term benefit to the department and discourage the confidence to the taxpayers. In simple words, when a litigant knocks the doors of the Temple of Justice, Justice to be rendered to his door steps itself and he should not be allowed to run from pillar to post for the Justice Thus we quash the orders passed by the lower authorities, and delete the additions. Thus, the grounds of appeal raised by the assessee are hereby allowed. 2022 (6) TMI 1152 Deduction u/s 80P - deduction on interest earned from Co-Operative Banks u/s 80P(2)(d) - HELD THAT:- CIT(A) has erred in law in holding that the observations of the Hon ble Gujarat High Court in the case of State Bank of India Vs. CIT ( 2016 (7) TMI 516 - GUJARAT HIGH COURT] to the effect that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act haveno binding effect on the jurisdictional Revenue Authorities. In the case of Surendranagar District Co-op. Milk Producers Union Ltd. [ 2019 (9) TMI 978 - ITAT RAJKOT] ITAT held that assessee-co-operative society could not claim benefit of section 80P(2)(d) in respect of interest earned by it from deposits made with nationalised/private banks, however, said benefit was available in respect of interest earned on deposits made with co-operative bank. In the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society ( 2017 (1) TMI 1100 - KARNATAKA HIGH COURT ), the Karnataka High Court has held that the interest income earned by a co- operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. Respectfully, following the decision of Honourable High Court of Gujarat and other cases cited above, in our view, interest earned by the assessee on surplus held with cooperative bank amounting would be eligible for deduction under Sec.80P(2)(d) - Decided in favour of assessee. 2022 (6) TMI 1151 Income from other sources u/s 56(2)(vii) - difference in price as finalized by Ld. DVO and actual purchase-price - HELD THAT:- As the assessee has submitted comparable instances to Ld. DVO as well as Ld. CIT(A) with supportive evidences to demonstrate that the assessee has purchased land at much higher price as compared the prices paid in the those comparable instances. But no finding has been given by the lower authorities on this submission. Secondly, we observe that the land purchased by the assessee is situated in interior area, is rocky and is not suitable for activities. These undisputed features, which are well-accepted by Ld. TPO, have a substantial bearing on the valuation of land and must be taken into account. Thirdly, we observe that the difference in valuation is about 13.14% which is a meagre difference which against is due to estimation involved in the valuation. We observe that these factual aspects are similar to the facts involved in the decision of Hon'ble, ITAT, Mumbai Bench in Suresh C Mehta ( 2014 (1) TMI 192 - ITAT MUMBAI ) relied upon by Ld. AR. On perusal of the decision, we observe that in the similar set of facts, the Hon'ble ITAT has set aside the order passed by the learned Commissioner (Appeals) and remitted the matter back to him to decide afresh after considering the objections of the assessee to V.O's estimate as well as claim for benefit when the difference is less than 15%. At this stage, we would like to make it clear that this decision pertains to Section 50C of the act but that does not make any difference because section 56(2)(vii) is pari materia section 50C. Respectfully following the decision of Hon'ble Co-ordinate Bench, we also think it fit to remit the present matter back to Ld. CIT(A) for a fresh adjudication after considering the objections of assessee. Appeal of assessee is allowed for statistical purposes. 2022 (6) TMI 1150 Revision u/s 263 - As per CIT penalty proceedings u/s.270A not initiated by AO - observation of underreporting or misreporting of incom - HELD THAT:- We find that although the Hon ble Allahabad High Court in the case of CIT v. Surendra Prasad Aggarwal ( 2004 (9) TMI 45 - ALLAHABAD HIGH COURT] has uphold 263 order passed by the PCIT for initiation of penalty proceedings, but the jurisdictional the Hon ble Madras High Court in the case of CIT v. Chennai Metro Rail Ltd. ( 2018 (3) TMI 1586 - MADRAS HIGH COURT] has taken a contrary view after considering the decision of the Hon ble Allahabad High Court in the case of CIT v. Surendra Prasad Aggarwal(supra), and held that in the absence of any findings in the assessment order regarding underreporting or misreporting of income, the PCIT cannot revise the assessment order to initiate penalty proceedings. Therefore, we are of the considered view that the PCIT has erred in invoking revisional powers u/s.263 of the Act, and set aside the assessment order to initiate penalty proceedings u/s.270A of the Act, because, the AO has chosen not to initiate penalty proceedings. The PCIT cannot substitute his views and observed that, the AO has passed erroneous order which resulted in loss of Revenue to the Department. We are of the considered view that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue and thus, we are of the considered view that the PCIT is erred in revising the assessment order u/s.263 of the Act. Hence, we quashed the revision order passed by the PCIT u/s.263 of the Act. - Decided in favour of assessee. 2022 (6) TMI 1149 Delayed payment of employees contribution to ESI PF account within the due date provided under the PF ESI Act - HELD THAT:- We note that the issue is no longer res integra. The decisions of Hon ble High Court Calcutta namely in the case of (i) CIT vs.- Vijayshree Ltd [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] , PHILLIPS CARBON BLACK LIMITED [ 2014 (10) TMI 916 - CALCUTTA HIGH COURT] , M/S COAL INDIA LIMITED. [ 2015 (8) TMI 1451 - CALCUTTA HIGH COURT] and M/S. AKZO NOBEL INDIA LTD. VERSUS COMMISSIONER OF INCOME TAX KOL. -IV [ 2016 (6) TMI 1128 - CALCUTTA HIGH COURT] - This aspect has been considered by the Coordinate Bench of ITAT Kolkata in the case of Lumino Industries Ltd.[ 2021 (11) TMI 926 - ITAT KOLKATA] to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favour of assessee. 2022 (6) TMI 1148 Disallowance u/s 14A r.w.r. 8D - Disallowance under Rule 8D(2)(ii) i.e. with respect to the interest disallowance which has been worked out on the basis of gross interest expenses - HELD THAT:- We find that Hon'ble Gujarat High Court in the case of Nirma Credit and Capital Pvt. Ltd. ( 2017 (9) TMI 485 - GUJARAT HIGH COURT ) has held that for the purpose of working out disallowance under Rule 8D(2)(ii) of the Act, the expenditure by way of interest paid by assessee would be after reducing the taxable income earned during the financial year. Before us, Revenue has not placed any contrary binding decision in this case. We therefore in view of the aforesaid decision of Hon'ble Gujarat High Court direct the AO to working out the disallowance under Section 14A r.w. Rule 8D of the Income Tax Rules on the basis of the net interest under Rule 8D(2)(ii) of the Act. We thus direct accordingly. Thus the ground of assessee is partly allowed. 2022 (6) TMI 1147 Addition u/s 68 - unsecured loan - main thrust of the assessee to explain the cash credit in the shape of unsecured loan is that its account are audited under section 44AB of the Act and Audit Report was filed alongwith the return of income - assessee further explained that the loan from Kumar Nagendra is explained by the assessee by filing a copy of account and bank statement of the party but the same was ignored by the authorities - HELD THAT:- The assessee has failed to discharge its onus as required under section 68 of the Act to prove the identity of the loan creditor, creditworthiness of the loan creditor and the genuineness of the transaction. Accordingly, the Assessing Officer made this addition. As assessee explained the loan from Kumar Nagendra is explained by the assessee by filing a copy of account and bank statement of the party but the same was ignored by the authorities. Except this explanation the assessee has not brought anything on record to prove the identity of the loan creditors, creditworthiness of the loan creditor and genuineness of the transaction Since the assessee has not produced any documentary evidence in respect of the unsecured loan from Munna Kumar, we find that the assessee failed to discharge its primary onus to prove the identity and creditworthiness of the loan creditor as well as genuineness of the transaction. As regards the unsecured loan of Rs. 40 Lac from Kumar Nagendra is concerned, the Assessing Officer as well as the CIT(A) has recorded this fact from the bank statement that a cash was deposited immediately prior to issuing of D.D. in favour of the assessee. Merely filing the bank statement by the assessee would not discharge the onus cast upon it to prove the creditworthiness of the loan creditor and genuineness of transaction particularly when the cash was deposited in tranches within a short spam of about ten days before issuing a D.D. in favour of the assessee. In the absence of any material brought on record before us to counter the finding of the Assessing Officer as well as the CIT(A), we do not find any reason to interfere with the impugned order of the CIT(A) qua this issue. Accordingly, the impugned order of the CIT(A) is upheld. - Decided against assessee. 2022 (6) TMI 1146 Allowable business expenditure u/s 37 - deductibility of freebies etc to medical practitioners - referral commission paid to doctors is in violation of the professional conduct under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002 - Whether authorities below erred in holding that referral commission paid to doctors is in violation of the professional conduct under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002, and, as such, inadmissible as a tax deduction under section 37? - HELD THAT:- The expression allied healthcare industry is required to be interpreted in the context in which appears in the code of conduct for the medical practitioners, and not on the basis of how this expression has been defined in some other context in a journal or on website guidelines. We are unable to see any justification for excluding a medical service provider, like the assessee before us, from the segment of the pharmaceutical and allied healthcare industry in the present context. When an unsuspecting client walks into the consulting chamber of a dentist who advises him to go for stem banking from his dental plump, one cannot be sure whether it is the doctor s genuine advice on its merits of what the doctor actually believes to be beneficial to the client or it is a piece of advice influenced by the financial inducement by way of referral fee that the doctor will get for his client being referred to the service provider in question. Such a situation de facto amounts to receipt of cash or monetary grant by the medical professional from the allied healthcare industry, on the pretext of referral fees- in clear violation of rule 6.8.1(d) of the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. The true consideration for this referral fee is the advice given to the doctor s patient, and a potential customer of the service provider, in favour of stem cell banking. The fiduciary relationship between the doctor and patient is, or has the potential of being, compromised as such by the extraneous considerations. That is clearly contrary to the letter, as also the spirit, of the code of conduct for the medical practitioners. The acceptance of such a referral fee by a medical practitioner is thus forbidden by the legally enforceable code of conduct, which renders it an expense for a purpose that is prohibited by law depriving the assessee company to claim a tax deduction in respect of the said expenditure. We, therefore, approve the conclusions arrived at by the learned Commissioner (Appeals) on this issue, and decline to interfere in the matter. Ground dismissed. Additional receipts having been brought to tax in the hands of the assessee - HELD THAT:- Assessee has now got some material to demonstrate that this receipt was already accounted for, but he fairly admits that this material was not available earlier, and, as such, authorities below had no occasion to deal with the same. Learned Departmental Representative also fairly accepts that this issue can be remitted to the file of the Assessing Officer for fresh examination, and taking an appropriate call in the light of such fresh examination. With the consent of the parties, therefore, the matter stands restored to the file of the Assessing Officer. Ground no. 3 is thus allowed for statistical purposes in the terms indicated above. 2022 (6) TMI 1145 Validity of Reopening of assessment u/s 147 - requirement of recording of reasons to believe - validity of jurisdiction assumed by the AO for reopening the case of the assessee - disallowing claim of deduction u/s.54F - HELD THAT:- Assessing Officer had issued Notice u/s. 148 without recording the reasons to believe on the basis of which the case of the assessee was reopened by him. In our considered view, the failure on the part of the Assessing Officer to record reasons to believe prior to issuance of notice u/s.148, ould go to the very root of the validity of jurisdiction assumed by him u/s. 147 of the Act. Our aforesaid view, i.e., the absence of recording of reasons to believe by the Assessing Officer prior to issuance of Notice u/s. 148 would render the jurisdiction assumed by him for reopening the case of the assessee u/s.147 of the Act and resultantly the consequential assessment so framed as invalid as relying on cases Abdul Majid [ 2005 (5) TMI 24 - ALLAHABAD HIGH COURT ], Baldwin Boys High School [ 2015 (2) TMI 806 - KARNATAKA HIGH COURT ], Shiv Ratan Soni and Baldev Singh Giani [ 2000 (9) TMI 42 - PUNJAB AND HARYANA HIGH COURT ] Requirement of recording of reasons to believe enshrined u/s. 148(1) of the Income Tax Act, 1961 was mandatory on the part of the Assessing Officer. Observing, that the assessment record did not contain reasons recorded by the Assessing Officer, thus the notice of reassessment proceedings had to be treated as nullity. Thus we are of the considered view, that as the Assessing Officer prior to issuance of Notice u/s.148 had failed to record reasons to believe , therefore, he had wrongly assumed jurisdiction and framed the impugned assessment u/s.148/143(3) - Decided in favour of assessee. 2022 (6) TMI 1144 Assessment u/s 153C - Denial of natural justice - no copy of satisfaction note was provided by the Assessing Officer in the course of assessment proceedings - HELD THAT:- It is fact on record that apart from the statements recorded u/s 131 from the assessee and from Shri Navin Nishar, Shri N K Sodhani and Shri Jayesh Zanani and relied upon by the Assessing Officer, there was no incriminating material found in support of the addition towards receipt of the purported alleged commission receipt. We also notice that though the Ld. CIT(A) has also relied on the statements of Shri Navin Nishar, Shri N K Sodhani and Shri Jayesh Zanani, the assessee was never provided with an opportunity to cross examine Shri Jayesh Zanani. It is also a fact that the statements of these parties were later retracted. We also notice that no new material was ever brought on record by the Assessing Officer to corroborate the allegation of commission receipt even despite the fact that the statements u/s 131 of the Acts relied upon by the Assessing Officer stood retracted. From perusal of the records and order of the lower authorities it is abundantly clear that there is no corroborative evidence or incriminating material to support the allegation on the assessee having received commission income. We have observed that the assessee was not provided an opportunity of cross examination of Shri Jayesh Zanani, whose statements were relied upon by the AO for passing the order. Without prejudice, there is no mention in the statement of Shri Jayesh Zanani that the assessee has been paid commission at the rate of 0.15 percent by the companies stated to be entry providers. When no opportunity for cross examination is given, it is not proper to rely on such statements and fatal to the order passed. There has been gross violation of the principles of natural justice and bearing in mind the above judicial precedents, we have no hesitation in holding that there was gross violation of principles of natural justice and fair play as the additions has been made without providing an opportunity to the assessee to cross examine those persons whose statements has been relied upon by the AO. And as regards merits of the case, we find that the issue is covered in favour of the assessee by the decision of the Coordinate bench in assessee s group case of M/s Hemadri Machine Tools Private Limited wherein the alleged bogus donation on which the commission is alleged to have been earned was deleted. Thus in view of above findings and also considering the merits of the case in that there is no incriminating material/corroborative evidence to affirm the receipt of commission income, all the grounds stand allowed. The addition made by AO accordingly stands deleted. 2022 (6) TMI 1143 Income from house property - AO observed that in view of the provisions of section 23 deemed rental income of the property at Delhi, which remained vacant during the year was required to be taxed under the head Income from House Property - assessee as confronted that house was very old and partly damaged and was not in a livable condition - AO got field verification done and rejected the explanation and estimated the ALV of the property at Rs. 12,00,000/- for the AY 2008-09 and added an annual enhancement of 10% on the same for the subsequent years - AO held that since the property was not let out at any time during the period, the vacancy allowance was not available to the appellant - HELD THAT:- AO has not based the estimate on any reasonable working in determining the annual letting value. No description of the property as to the area and the market rates prevalent for rentals has been brought on record. Since, the annual value determined is devoid of any rational endorsement, we hereby delete the addition made by the revenue authorities. Appeal of assessee allowed. Customs 2022 (6) TMI 1142 Time limitation of one year to claim refund of Special Additional Duty - N/N. 93/2008-Customs dated 01.08.2008 - Whether N/N. 102/2007-Customs dated 14.09.2007 and the amending Notification No.93/2008-Customs dated -01.08.2008 issued under sub-section (1) of Section 25 of the Customs Act, 1962, have the standing and statutory backing to prescribe limitation for claiming refund? - HELD THAT:- This Court has taken a view in THE COMMISSIONER OF CUSTOMS, BANGALORE VERSUS M/S. MOLEX INDIA PVT. LTD., [ 2021 (10) TMI 342 - KARNATAKA HIGH COURT ] agreeing with the view taken by the Delhi High Court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT ], where it was held that Indisputably, in N/N.102/2007-Cus dated 14.9.2007, no time period was mentioned for claiming the refund under the said notification. By virtue of the amendment notifications and Circular Nos.6/2008, 10/2012 and 18/2013 issued by Central Board of Excise and Customs, additional restrictions were imposed for availing the exemption. The substantial questions raised are answered against the Revenue and the appeal is dismissed. 2022 (6) TMI 1141 Detention of goods - goods proposed to be exported under duty draw back scheme - levy of penalty - HELD THAT:- There are no merits in the present writ petition as far as the challenge to the impugned order is concerned as the petitioner has an alternate remedy. Therefore, the writ petition is liable to be dismissed. However, liberty given to file a statutory appeal before CESTAT, chennai within a period of sixty days from the date of receipt of copy of this order to the petitioner. The writ petition stands disposed off. 2022 (6) TMI 1140 Mis-declaration of imported goods - Scania 310 Chassis - one complete amphibian bus body mounted on chassis - whether the said mis-classification was with some malafide intention or not? - Confiscation of imported goods - redemption fine - penalty - HELD THAT:- The appellant herein imported one amphibious bus body manufactured and supplied by M/s. Advanced Amphibious Design Inc. Honolulu mounted on Scania 310 chassis supplied by M/s. Scania CV AB Sweden claiming classification of goods under CTH 8901. The appellant had claimed the CTH 89019000 which pertains as per chapter Heading reads as Ships, boats and floating structures and further the explanatory notes to the said chapter heading clearly excludes Amphibious motor vehicles designed to travel over both land and certain tracks of water (swapms etc.) are classifiable as motor vehicles in Chapter 87. There is no dispute that mis-classification was there as the appellant have not challenged the re-classification by the revenue rather they have paid the differential duty alongwith interest before the issuance of the show cause notice and the only issue raised by the appellant is about redemption fine and penalty. The imported goods herein is Amphibious bus which is also a specialized motor vehicle which runs on road as well as on water. Thus, being a specialized transport vehicle, it is appropriately classifiable under CTH 87 Section XVII of Custom Tariff Act, which covers vehicles, aircraft, vessels and associated transport equipment. As per para 4(b) of Section XVII, amphibious motor vehicles are classified under the appropriate heading of Chapter 8703. However in bill of entry they claimed the classification of the goods under CTH 8901. As per the appellant, they merely goes by the advice of their consultant chartered accountant who vide his opinion dated 13.1.2017 advised them that amphibious bus shall be covered either under CTH 89019000 or 89069000. The law laid down by the Hon ble Supreme Court in the matter of NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS CENTRAL EXCISE [ 1998 (7) TMI 91 - SUPREME COURT] which has been relied upon by learned Counsel, will not be of any help for the appellant as the said judgment was passed since there was bonafide belief as therein the appellant s earlier consignment bearing the same description, same classification, identical claim for exemption was cleared by the Delhi Customs House for the previous year, whereas in the instant appeal looking at their earlier import which was under adjudication at the time of the instant import, if the appellant had any doubt regarding classification then instead of taking shield of opinion from their chartered account they could have requested for first check examination and could have taken advice from the customs about the correct classification of the imported goods. The discussion made herein leads to an inevitable conclusion that the appellant had mis-classified the goods with an intention to evade payment of appropriate Custom duty. The appellant resorted to mis-classification / mis-declaration of description of goods showing number of packages as two instead of manifested number of packages as one and since the goods have been deliberately misdeclared/ mis-classified in the Bill of Entry they are liable for confiscation under Section 111(m) of the Customs Act, 1962 and appellants are therefore rightly held liable for penalty under Section 112(a) ibid. Appeal dismissed - decided against appellant. 2022 (6) TMI 1139 Refund claim of Special Additional Duty (SAD) - rejection on the ground of time limitation - refund claim has been rejected without issuing a Show Cause Notice or without granting an opportunity of personal hearing - HELD THAT:- It is clear from the findings recorded by the Adjudicating Authority that the appellant has filed the refund claim within the prescribed time limit of one year from the date of payment of duty, however, before a wrong forum. It is the settled position of law that when a refund claim is filed before a wrong forum, within the statutory time-limit, the date on which the claim was originally filed has to be taken as the date of filing of the refund claim. In the case of SUN PHARMACEUTICAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 2016 (8) TMI 1515 - DELHI HIGH COURT] a similar issue was considered. It was held that when a refund application is made within the prescribed time-limit before a wrong forum and subsequently filed before the correct authority/forum, the original date of filing of the claim has to be taken for computing the time-limit of one year. The rejection of refund on the ground of time-bar cannot be justified. The impugned order rejecting the refund claim is set aside. However, the matter requires to be remanded to the Original Authority who shall process the refund claim on merits - Appeal allowed by way of remand. 2022 (6) TMI 1138 Import of kid bikes - allegation that the goods do not conform to the BIS requirements - Confiscation of the entire goods with an option to redeem the goods for the purpose of re-export only - levy of penalty - HELD THAT:- From the narration of facts stated, it can be seen that out of 183 kids bikes, the department does not deny the identity of 157 kids bikes. So also, there is no dispute as to the brand of these 157 bikes. The dispute is with regard to the 26 nos. of kids bikes only. However, the authorities below have ordered for confiscation and directed to re-export the entire goods or for destruction of the same at the cost of the importer (appellant). The order for confiscation and re-export made in regard to 26 nos. of kids bikes does not require interference. From the records, it is seen that the goods were subjected to quality assurance test by National Accreditation Board for Testing Calibration Laboratory (NABL). This report is dated 30.05.2018. It can be presumed that before the original export to USA, the goods were subjected to test for quality and standards. It is affirmed by the department that the reimported 157 bikes belong to the lot that was originally exported. Therefore, it has to be construed that the appellant has complied with requirement of BIS standard (brand name) as well as identity of 157 nos. of bikes. The order of confiscation and re-export in respect of 157 bikes requires to be set aside - the impugned order is set aside and modified to the effect that the 157 nos. of kids bikes have to be released to the appellants for home consumption. Confiscation and order to re-export or for destruction of remaining 26 nos. of kids bikes is upheld.The redemption fine of Rs.1,00,000/- is imposed for the entire goods. It is directed that 157 nos. of kids bike has to be released on payment of redemption fine Rs.5,000/-. The requirement to pay redemption fine for 26 nos. of bikes for re-export is set aside. The penalty of Rs.50,000/- imposed under Section 112 (a) of the Customs Act, 1962 is reduced to Rs.1,000/-. Appeal allowed in part. Insolvency & Bankruptcy 2022 (6) TMI 1137 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- The Corporate Debtor contended that the Financial Creditor is guilty of forum shopping and has filed proceedings before DRT for the same cause. However, it is to be noted that the purpose of proceedings under Recovery of Debts Due to Banks and Financial Institutions (RDDBFI Act), 1993 is debt recovery and an action under the Insolvency and Bankruptcy Code aims at resolution of the insolvency of the Corporate Debtor. As such, taking action under one legislation cannot curtail the Financial Creditor s right under the Insolvency and Bankruptcy Code 2016. Time Limitation - HELD THAT:- It can be seen that the date of default is mentioned to be 30.09.2012 i.e the date on which the account became NPA. Accordingly, the limitation period for filing the application would ordinarily end on 30.09.2015. However, balance sheets of the Corporate Debtor from the year 2012 to 2019 have been placed on record by the Financial Creditor in the supplementary affidavit dated 6.02.2020. In these Balance sheets, multiple acknowledgments of debt to the Financial Creditor have been made by the Corporate Debtor, specifically, the Corporate Debtor has acknowledged the debt in the balance sheets of Financial Years 2012-13, 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 - due to the specific admissions of debt by the Corporate Debtor, section 18 of the Limitation Act, 1963 will come into effect and result in computation of fresh limitation period of three years from the date of acknowledgment in each balance sheet. Since the last of such acknowledgments was made on 31st March 2019, the limitation period would last up till 31st March 2022. As such, the present petition is well within limitation. Whether admissions are not valid as the debt so acknowledged by the Corporate Debtor in the said balance sheets? - HELD THAT:- This Adjudicating Authority is satisfied that the debt albeit disputed was due from the Corporate Debtor to the Financial Creditor and the Corporate Debtor has made a default in the payment of the same and has also acknowledged the said fact and therefore the plea of Corporate Debtor is untenable and needs to be rejected. Application admitted - moratorium declared. 2022 (6) TMI 1136 Seeking initiation of Liquidation Process of the Corporate Debtor - seeking appointment of Resolution Professional as the Liquidator of the Corporate Debtor - Section 33(1)(a) of the I B Code, 2016 - HELD THAT:- On 18.05.2022, when the matter came up for orders, the learned Resolution Professional submitted that the CoC held on 13.05.2022 noted the failure of the applicants in submitting a joint resolution plan. In the said meeting, the Resolution Applicants appeared and sought time till 16.05.2022 for submitting their joint Resolution Plan as committed before this Tribunal. Considering their request, the 25th meeting of CoC directed them to submit their Plan latest by 16.05.2022 and decided to adjourn the meeting further to 16.05.2022 for considering the progress of submission of Resolution Plan. On 16.05.2022, both the applicants intimated their inability to submit a joint Resolution Plan by email and confirmed this matter by appearing before the adjourned CoC held on 16. 05.2022. It is clear that the only option left with this Tribunal to order the liquidation of the Corporate Debtor. Hence, this Tribunal proceeded to order the liquidation of the Corporate Debtor. M/s. Trivandrum International Health Services Limited is hereby put under liquidation with immediate effect under Section 33 (1) of I B Code, 2016 - Application allowed. PMLA 2022 (6) TMI 1135 Money Laundering - scheduled offences - proceeds of crime - tainted money - requirement of sanction for criminal prosecution in money-laundering cases - Section 50 of PMLA - HELD THAT:- Money-laundering poses a serious threat not only to financial systems of countries but also to their integrity and sovereignty. To obviate such threats international community has taken some initiatives. The Prevention of Money-Laundering Bill having been passed by both the Houses of Parliament received the assent of the President on 17th January, 2003. It came on the Statute Book as THE PREVENTION OF MONEY-LAUNDERING ACT, 2002 (15 of 2003) (Came into force on 1-7-2005). The PMLA seeks to combat money laundering in India and has three main objectives: (I) to prevent and control money laundering, (ii) to confiscate and seize the property obtained from the laundered money; and (iii) to deal with any other issue connected with money laundering in India. It is not in dispute that the tainted money was not obtained by the applicants in discharge of any official duty, the said money has no nexus with the official duty of the applicants and therefore, as per Section 197 of CrPC, there was no requirement for obtaining sanction for criminal prosecution of the applicants. There is no provision under the PMLA Act requiring sanction for criminal prosecution. In this case, in the complaint filed by the ED all the facts as available in case registered by the ACB are mentioned and evidence has also been recorded under Section 50 of PMLA of the applicants by the competent authority. The defence taken by the applicants that they are innocent, under the pressure of Alok Kumar Agrawal they took the money which was seized from them, is a matter of evidence and also depends upon the defence to be taken by Alok Kumar Agrawal during the course of trial. Therefore, the defence taken by the applicants cannot be considered at this stage and it can be considered after recording entire evidence in the case - In the present case, in view of Section 94 of IPC, the defence of the applicants that they kept the tainted money of Alok Kumar Agrawal under threat or compulsion, whether there was any threat of instant death, is to be considered only after taking evidence of the parties during trial. This Court is of the opinion that the tainted money seized from the applicants has no nexus with their official duties and as such, there is requirement of obtaining sanction for criminal prosecution in the money-laundering case and further, no such provision is there in the PMLA. The evidence of the applicants has been recorded in the case registered by the EoW and thereafter, their statements under Section 50 of PMLA was recorded wherein it was found that the tainted money was received by the applicants. Therefore, if the applicants are made accused in the money-laundering case, there is no illegality and also there is no any bar under any law for their impleadment in money-laundering case - this Court finds no illegality or perversity in the impugned orders of the trial Court taking cognizance of the offence against the applicants. Revision petition dismissed. Service Tax 2022 (6) TMI 1134 Refund of the service tax - no services were provided by the German company and that the amount having been refunded to them, they are not liable to pay service tax under reverse charge mechanism - section 142(3) of CGST Act, 2017 - HELD THAT:- It is seen that there is no dispute that the appellant has not paid the service tax on the amount paid by them to the German company. So also there is no dispute that the contract was cancelled and the advance paid by them was returned by the foreign company to the appellant. Section 142(5) of CGST Act, 2017 provides that the refund claim of service tax paid under the existing law in respect of services not provided shall be disposed of under the existing law and has to be paid in cash. It states that such refund is subject to provisions of sub-section (2) of section 11B of Central Excise Act, 1944 only - In the present case, refund has been rejected on the ground of being filed beyond the period of one year as stipulated in sub-section (1) of section 11B. The contract having been annulled on 9.8.2018, it cannot be expected of the appellant to file the refund claim within a period of one year from the date (6.6.2017) of payment of service tax. Further, section 142(5) expressly states that the limitation provided in sub-section (1) of section 11B is not applicable. The Tribunal in the case of PUNJAB NATIONAL BANK VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH [ 2021 (7) TMI 326 - CESTAT BANGALORE] had occasion to consider a similar issue as to whether limitation would apply to the refund filed after the introduction of GST, where it was held that appellant is entitled for cash refund in view of Section 142(9)(b) of the CGST Act but for the purpose of verification of original invoices/documents, I remand the case back to the original authority for the limited purpose of verification of the invoices/ documents. The original authority will grant the refund after verification of the document and after following the principles of natural justice. In the case of M/S. PKF SRIDHAR SANTHANAM LLP VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2021 (10) TMI 1230 - CESTAT CHENNAI ], it was held that the department cannot retain any amount which is not collected under the authority of law. When there is no liability to pay the service tax, the amount paid by the appellant cannot be retained by the department. On perusal of section 142(5), it is stated that any amount accruing to the assessee has to be paid in cash notwithstanding anything contrary contained other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944. The restriction with regard to limitation is contained in section 11B(1) of the Central Excise Act, 1944. This being the case, the rejection of refund on the ground that it is time-barred cannot be justified - appeal allowed - decided in favor of appellant. Central Excise 2022 (6) TMI 1133 Recovery of dues - priority over of the dues - Whether in the absence of any provisions providing for First Charge in relation to Central Excise dues in the Central Excise Act, 1944, the dues of the Excise department would have priority over the dues of the Secured Creditors or not? - HELD THAT:- The petitioner-Bank is having first charge over the property belongs to the respondent No.3 and prays for deciding the matter in the light of the law laid down by Hon'ble Apex Court in the case of PUNJAB NATIONAL BANK VERSUS UNION OF INDIA ORS. [ 2022 (2) TMI 1171 - SUPREME COURT ], where it was held that the provisions contained in the SARFAESI Act, 2002, even after insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08.04.2011, will have an overriding effect on the provisions of the Act of 1944. In view of the aforesaid judgment of Hon'ble Apex Court, nothing remains to be decided by this Court and by following the principle laid down by Hon'ble Apex Court the letter/ communication dated 01.03.2013 (Ann.P.18) appears to be illegal and without jurisdiction and is hereby quashed holding thereby that the petitioner-Canara Bank is having first charge over the property belongs to the respondent No.3. It is further directed that respondent No.1 and 2 shall not create any hurdle in auction and sale of the property in question. Petition allowed. 2022 (6) TMI 1132 Levy of penalty u/r 8 (3A) of Central Excise Rules, 2002 - Freezing of Bank accounts of petitioner - non paid duty - HELD THAT:- Though the rule clearly prescribes the penalty however, the Revenue has not followed the principle of natural justice in as much as they have not issued any SCN and no opportunity was given to the appellant to defend or explain their case. It is a settled law that even though there is no explicit provision for issuance of SCN, as per the Principle of natural justice an assessee should be given sufficient opportunity to explain their case particularly for invocation of penal provision. In the present case admittedly neither SCN was issued to the appellant nor was any opportunity given. The penalty is liable to be set aside only on the ground of principle of natural justice - Penalty set aside - appeal allowed - decided in favor of appellant. Indian Laws 2022 (6) TMI 1131 Dishonor of Cheque - Insufficiency of fund - Legally enforceable debt or not - acquittal of the accused - preponderance of probablities - failure to discharge the fundamental burden of proving his capacity to advance loan - Section 397 and 401 of Cr.P.C. - HELD THAT:- The consistent defence of the petitioner eversince he received the statutory notice from the complainant/respondent is that there was no privity of contract and the cheque was not given to the complainant to discharge any legally enforceable debt and further, the complainant has no source of income to advance Rs.9 lakhs. When a specific defence raised by the accused person at the inception itself even before filing the complaint, the complainant is bound to explain in his complaint regarding the source of income. Failure to explain his source of income is fatal to the complaint. The person capacity to advance loan of Rs.9 lakhs is a very fundamental fact when the capacity is questioned. To add, the complainant admits that he did not receive any other document for advancing loan of Rs.9 lakhs, except the postdated cheque given to him. In any transaction, when cheque is issued, it is presumed to be issued to discharge the existing debt. Offence under Section 138 of Negotiable Instruments Act will get attracted, if the said debt happens to be legally enforceable. Therefore, the existing debt pre-suppose a presumption. If the accused able to prove by preponderance of probabilities that there was no existing debt on the date on which the cheque bears, then the complainant under Section 138 of the Negotiable Instruments Act cannot have the advantage of the statutory presumption under Section 139 of the Negotiable Instruments Act. Hon'ble Supreme Court in BASALINGAPPA VERSUS MUDIBASAPPA [ 2019 (4) TMI 660 - SUPREME COURT] , when the capacity to advance loan or transaction for which the alleged cheque given is denied, the complainant cannot take advantage of Section 139 of the Negotiable Instruments Act without discharging his burden of proving the fundamental fact regarding transaction, which has created an existing debt (or) his capacity to advance loan atleast equivalent to the amount found in the cheque. In this case, for the cheque amount is Rs.9 lakhs, no other previous existing debt (or) transaction claimed in the complaint. No evidence was produced by the complainant to prove his financial capacity to advance a huge sum of Rs.9 lakhs. Taking into consideration his background admittedly a small time farmer holding 6 acres of land and not even a bank savings account claiming he advanced loan of Rs.9 lakhs as against the postdated cheque and no other document obtained for the money transaction, is obviously bound to be suspected - this Court holds that the appellate Court erred in reversing the trial Court judgment. This Criminal Revision Case is allowed. 2022 (6) TMI 1130 Dishonor of Cheque - signing of cheque jointly - vicarious liability u/s 141 of NI Act - insufficiency of funds - acquittal of the accused - existence of legally enforceable debt or not - HELD THAT:- This court finds force in the submission of learned counsel for the petitioners that, at no point of time, allegation, if any, with regard to advancement of loan to the petitioners ever came to be leveled rather, the complainant specifically stated in the complaint that in March, 2016, he on the request of accused Rishi Rana advanced him loan to the tune of Rs. 5.00 Lakh for his domestic use. There is not even a whisper in the complaint that the loan to the tune of Rs. 5.00 Lakh was advanced to some firm or other partners of accused Rishi Rana. It is only after conclusion of evidence, that the complainant filed an application under S. 319 CrPC praying therein to array the petitioners as an accused on the ground that they have also signed cheque alongwith accused Rishi Rana. It has been further averred in the reply that inadvertently before instituting complaint under S.138, no notice could be issued to the petitioners. Once there is no allegation in the complaint that Rs. 5.00 Lakh was advanced to the firm or to other partners of the accused Rishi Rana, complaint against the petitioners is otherwise not maintainable. Mere fact that they have also signed the cheque in question, is not sufficient to conclude complicity of the petitioners in the case, especially when there is no allegation in the complaint that the complainant had advanced loan to the tune of Rs. 5.00 Lakh to the firm or the persons sought to be arrayed as accused - True it is that in the case at hand, cheque in question has been signed by petitioners alongwith respondent/accused Rishi Rana, but once there is no liability if any of these persons towards complainant, they otherwise cannot be held liable for issuance of cheque, which ultimately came to be dishonoured on account of insufficient funds. Interestingly in the case at hand, there is no allegation worth the name in the complaint against the petitioners, that they had taken loan from complainant and they with a view to discharge their liability issued cheque which subsequently came to be dishonoured on account of insufficient funds - Otherwise also it is well settled by now that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action. No doubt under S.319 CrPC, court enjoys vast power to order impleadment of those persons as accused against whom, some evidence appears during trial or enquiry that he has also committed offence alongwith other accused but in the case at hand, there is /was no material available before court below to arrive at a conclusion that persons sought to be arrayed as accused i.e. petitioners herein had committed offence punishable under S.138 of the Act. Petition disposed off. 2022 (6) TMI 1129 Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- It cannot be ignored of the fact that the learned counsel for the petitioner does not dispute the judgment of conviction but his grievance is only about the quantum of sentence, as such also, the impugned judgments of conviction under revision does not warrant any interference at the hands of this court so far as the conviction of the accused for the offence punishable under Section 138 of the N.I. Act, is concerned. Though the accused has attempted to rebut the presumption formed in favour of the complainant and in which process, he has entered witness box and produced certain documents, however, he could not successfully rebut the presumption. In view of the facts and circumstances of the case, the quantum of the fine amount which is very much nearer to the double of the cheque amount, is very much on the higher side, as such, only in reducing the sentence, particularly the quantum of the fine amount, the interference at the hands of this court is warranted. The Criminal Revision Petition stands allowed in part, though does not warrant any interference and as it stands confirmed, however, the order on sentence passed by the Trial Court which was further confirmed by the Sessions Judge's Court, stands modified. The sentencing of imposing a fine of Rs. 1,80,000/- is reduced to a sum of Rs. 1,20,000/-, in which a sum of Rs. 10,000/- is ordered to be paid to the State, and remaining amount to be deposited in the Trial Court which amount shall be released in favour of complainant as compensation under Section 357 of Cr.P.C. and in accordance with law.
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