TMI Tax Updates - e-Newsletter
June 3, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI Short Notes

1. Examining the legality of confiscation of an Imported car.

  Customs:

2. Show cause notice non est in the eyes of law for want of jurisdiction of the authority issuing it.

  Customs:

3. Seeking grant of Bail - wrongful availment of Input Tax Credit and fake invoices.

  GST:

4. Oppression and Mismanagement under the Companies Act, 2013.

  Corporate Laws:

5. Money Laundering - proceeds of crime - scheduled offence - alleged money scam - twin conditions of grant of bail-Section 45(1) of the PMLA satisfied or not.

  Money Laundering:

6. Small Industries Development Bank of India versus M/s. Sibco Investment Pvt. Ltd- Legal Position of NBFC in a civil suit.

  Corporate Laws:

7. Seeking appointment of Arbitrator so as to to constitute an Arbitral Tribunal to adjudicate upon the disputes.

  Corporate Laws:

Notifications

Companies Law

1. G.S.R. 410 (E) - dated 1-6-2022 - Co. Law

Companies (Appointment and Qualification of Directors) Amendment Rules, 2022

IBC

2. IBBI/2022-23/GN/REG083 - dated 1-6-2022 - IBC

Insolvency and Bankruptcy Board of India (Engagement of Research Associates and Consultants) (Amendment) Regulations, 2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD-1/ DOF1/P/CIR/2022/77 - dated 2-6-2022

Procedure for seeking prior approval for change in control of Portfolio Managers

Companies Law

2. 6/2022 - dated 31-5-2022

Relaxation in paying additional fees in case of delay in filing all the event based e-forms by LLPs which are due on and after 25th February, 2022 to 31st May, 2022 up to 30th June, 2022

3. 05/2022 - dated 30-5-2022

Micro Finance/Micro Credit as an object in the Object Clause of Memorandum of Association (MoA) of Section 8 companies registered under the Companies Act, 2013-Clarification

Central Excise

4. Instruction No. 1083/04/2022-CX9 - dated 23-5-2022

Standard Operating Procedure (SOP) for NCLT cases in respect of the Insolvency and Bankruptcy Code (IBC)

Highlights / Catch Notes

GST

• Court Limits Inquiry Period to Four Months Post-Search; ITC Blocking No Longer a Grievance per Bench Order.

  Case-Laws - HC : Provisional attachment - blocking of Input Tax Credit (ITC) - Now, no longer that grievance continuous in wake of order of the Coordinate Bench dated 04/05/2022. Moreover, as fairly admitted, this is a pre SCN stage in post search period and hence, unlimited period also would not be warranted. - The State has volunteered that this inquiry/investigation should be over in three months’ period but to be on safer side, we would grant four months’ period to the State to complete the present exercise, so that it may not have to once again approach for extension. - HC
  Visit to Get Source

  ---

• Court Reviews Anticipatory Bail Request in Forged Input Tax Credit Allegations; Awaits Investigation Outcome on Document Validity.

  Case-Laws - HC : Grant of anticipatory bail - forged ITC - In the present case the petitioner has raised a number of grounds, all of which are a matter of his defence or at best would be placed before the investigating agency when he joins investigation. This Court cannot examine the veracity or the genuineness of the documents attached to this petition and come to the conclusion that no case is made out against the petitioner. - HC
  Visit to Get Source

  ---

Income Tax

• Faceless Penalty Scheme 2021: Digital Framework Introduced to Streamline Income Tax Penalties, Enhance Transparency, and Reduce Biases.

  Notifications : Faceless Penalty Scheme, 2021 - Seeks to amend Notification No. 02/2021 dated 12 January 2021 - Notification
  Visit to Get Source

  ---

• Faceless Penalty Scheme 2022 Update: Streamlining Income Tax Penalties for Greater Transparency and Reduced Personal Interaction.

  Notifications : Faceless Penalty (Amendment) Scheme, 2022 - Notification - Relevant provisions of Scheme updated
  Visit to Get Source

  ---

• Court to Decide on Tax Evasion Allegations u/ss 153A and 276CC of Income Tax Act.

  Case-Laws - HC : Assessment u/s 153A - pendency of re-assessment proceedings - Offence punishable u/s 276CC - As seen from the complaint allegation that despite, giving notice, statutory notice as detailed in the complaint, petitioner has not filed return, paid advance tax and tax demanded, suppressed the real and true income by not filing the return in time. These issues have to be necessarily tried before the Court. The assessment order relating to the assessment year 2009-2010 was not challenged before the ITAT - Section 278 (e) of the Income Tax Act, 1961, empowers the Court to presume culpable mental state of the accused, unless, the accused shows that he had no such mental state with respect to the act charged as an offence in the prosecution. - HC
  Visit to Get Source

  ---

• Penalty u/s 271(1)(c) Waived for Assessee Due to Reasonable Error in Dividend Non-Disclosure and Income Adjustment.

  Case-Laws - HC : Penalty u/s 271(1)(c) - adjustment of the Short Term Capital Loss (STL) with Long Term Capital Gain (LTCG) - Non-disclosure of Dividened income - Assessee voluntarily filed the revised return duly disclosing the disallowance of the dividend in terms of Section 94(7) of the Act and revised its returned income - Tribunal has observed that it was a reasonable human error which could have been committed on the part of the Respondent - No penalty - HC
  Visit to Get Source

  ---

• Assessing Officer Penalized for Hasty Decision; Ordered to Pay Rs. 15,000 in Costs for Ignoring Assessee's Response.

  Case-Laws - HC : Reopening of assessment - undue haste in passing the order - the power to re-assess is available to the authority till the year 2023 - we fail to understand as to what was the great hurry on the part of the assessing officer, Sri Niladri Kumar Ghosh to pass the order dated 23rd March, 2022 by ignoring the reply given by the assessee and uploaded in the department's portal on 21st March, 2022. - respondent/department directed to pay costs of Rs. 15,000/- to the West Bengal State Legal Services Authority - HC
  Visit to Get Source

  ---

• Section 10AA Deduction Upheld: Same Output from Raw Materials Doesn't Deny Tax Benefits if Compliance Met.

  Case-Laws - AT : Deduction claimed u/s 10AA - the relief to the assessee under section 10AA cannot be denied merely on the reasoning that the raw material, processing activities resulted to the final output which is the same. It is for the reason that an assessee can have different eligible units for claiming the deduction under section 10AA of the Act subject to the compliances provided therein. Under the provisions of the Act, there is no necessity to manufacture the different product for claiming the deduction under section 10AA. - AT
  Visit to Get Source

  ---

• No Penalty for Failure to Deduct TDS on Property Transfer Due to Reasonable Cause u/s 273B.

  Case-Laws - AT : Penalty u/s 271C - assessee did not deducted income tax at source u/s. 194IA @ 1% on payments made for transfer of immovable property(other than agricultural land) - There is a latin maxim “ignorantia legis neminem excusat” which means that ignorance of law shall not excuse a person. But at the same time there is no presumption in law that all persons know all the laws, and more so complex fiscal laws concerning taxing statutes. - ssessee has demonstrated a reasonable cause u/s 273B - No penalty - AT
  Visit to Get Source

  ---

• Interest Deduction on Loan for Share Investment Allowed u/s 36(1)(iii); No Basis for Disallowance by Revenue.

  Case-Laws - AT : Deduction of interest u/s. 36(1)(iii) - loan amount for making investment in shares - During the year under consideration, the Assessee utilized the loan amount for making investment in shares in ordinary course and eventually earned dividend or capital gains. It is also not the case of the Revenue department that the Assessee had no commercial expediency for making the investments while using the borrowed funds. Having regards to the nature of activities the Assessee is engaged in, there is no justification for disallowance of interest u/s. 36(1)(iii) of the Act. - AT
  Visit to Get Source

  ---

• Section 153C: Assessee's Claim Dismissed as Frivolous Due to No Pending Assessment to Abate.

  Case-Laws - AT : Assessment u/s 153C - the provisions of these sections provide that pending assessments shall abate. In this case, since the financial year was itself not over there is no question of assessee having filed a return and assessment proceedings being abated. In this view of the matter, the additional ground raised by the assessee is frivolous without any legal basis and hence the same is dismissed. - AT
  Visit to Get Source

  ---

• Assessee's Bogus Purchases Unsubstantiated Despite Notices; AO and CIT(A) Disallow Entire Claimed Amount.

  Case-Laws - AT : Bogus purchases - addition made towards entire bogus purchase - Assessee has literally wasted precious time of the AO by once again issuing notices and summons to the third parties and at the end of the proceedings, the assessee expressed inability to prove before the AO the genuineness of the transactions. Thus, both the AO and the CIT(A) have given clear cut finding that the assessee could not able to prove the purchases as genuine - AT
  Visit to Get Source

  ---

• Assessing Officer Must Conduct Inquiries or Verifications u/ss 263 and 147; Focus on AO's Actions, Not Appeals.

  Case-Laws - AT : Revision u/s 263 - assessment u/s 147 - The language employed by the statute (i.e., w.e.f. 01/6/2015) in this regard, i.e., 'an order passed without making further inquiries or verification which should have been made.' is apposite. It is the inquiry/verification by the AO that is relevant for the purpose, and not the explanation/s, if any, furnished before the appellate authority, much less that de hors the record.- AT
  Visit to Get Source

  ---

• Section 41(2) of Income Tax Act: Provision for Impairment of Loss Not Applicable to Retained Assets, Assessee's Argument Lacks Merit.

  Case-Laws - AT : Addition on account of provision for impairment of loss - Applicability of section 41 - we do not find any substance or merit in the contentions of the Ld. A.R that the assessee’s case is covered by the provision of Section 41(2) of the Act as the provisions of Section 41(2) deals with the charging of income in the year in which is sold, discarded, demolished or destroyed, but not the case where the assessee continue to hold the fixed assets and loss or impairment in the value of asset is calculated on the registered valuer report. - AT
  Visit to Get Source

  ---

Customs

• Section 51A Exemption: Deposits via Electronic Cash and Duty Credit Ledgers Not Subject to Usual Customs Act Rules.

  Notifications : Deposits exempted from the provision of Section 51A of the Customs Act - Exemption from Payments through Electronic Cash Ledger and Electronic Duty Credit Ledger - Notification
  Visit to Get Source

  ---

• New Policy for Exporting Sugar Under Open General License for 2021-22 Season: Compliance and Market Stability Guidelines.

  Circulars : Regulation regarding export of raw, white and refined sugar under OGL in the current sugar seasons 2021-22 (Oct-Sept.) - Order-Instruction
  Visit to Get Source

  ---

• Anti-Dumping Duty on Styrene Butadiene Rubber Imports from EU, Korea, and Thailand Extended Until October 31, 2022.

  Notifications : Levy of Anti-Dumping Duty (ADD) extended on imports of "Styrene Butadiene Rubber" originating in or exported from European Union, Korea RP and Thailand, imposed vide Notification No. 43/2017-Customs (ADD) dated 30th August 2017, till 31st October, 2022. - Notification
  Visit to Get Source

  ---

• Car Importation Not Prohibited; One-Year Usage Rule Violation Doesn't Justify Confiscation.

  Case-Laws - AT : Violation of policy conditions - import of used car - prohibited or restricted goods or not - The car which was imported, the importation of the same was not prohibited. It is not the case of the revenue that there was any prohibition insofar as the importation of the car was concerned at any point of time and admittedly, the only violation, if at all, was the non-usage of the said car for a period of one year abroad, before importation. That ipso facto cannot make the car liable for absolute confiscation - AT
  Visit to Get Source

  ---

DGFT

• Appendix 4R Aligned with Finance Act 2022: Key Changes to RoDTEP Export Rates and Value Caps Effective May 1.

  Notifications : Alignment of Appendix 4R with the Finance Act, 2022 with effect from 01.05.2022 - eligible RoDTEP export items, rates and per unit value caps, wherever applicable is available - Notification
  Visit to Get Source

  ---

Corporate Law

• Companies must file Form CSR-2 for 2020-2021 by June 30, 2022, after submitting relevant AOC-4 forms.

  Notifications : Companies (Accounts) Third Amendment Rules, 2022 - for the preceding financial year (2020-2021), Form CSR-2 shall be filed separately on or before 30th June, 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be - Notification
  Visit to Get Source

  ---

• New Rules for Cross-Border Mergers: Streamlined Procedures for Foreign and Domestic Company Amalgamations Under 2022 Amendments.

  Notifications : Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2022 - Merger or amalgamation of a foreign company with a Company and vice versa - Notification
  Visit to Get Source

  ---

• LLPs Granted Fee Relaxation for Delayed Form 11 Filing Until June 30, 2022.

  Circulars : Relaxation in paying additional fees in case of delay in filing Form 11 (Annual Return) by limited liability Partnerships up to 30th June, 2022 - Circular
  Visit to Get Source

  ---

• NCLT Orders Share Valuation for Fair Exit Amid Allegations of Oppression and Mismanagement u/ss 241-242.

  Case-Laws - Tri : Oppression and mismanagement - issuance of fresh share capital - the shareholding of the Petitioner was reduced rom 84% to 42%. - It is clear that the R1 Company was established by the 2nd Respondent with the help and investment of the petitioner. It is settled law that when a matter is before NCLT under Section 241-242 irrespective of what parties plead, say, or do, the paramount consideration of the Tribunal is to keep in view what is in the interests of the Company - this Tribunal finds it appropriate to get a valuation of the shares which may enable the Petitioner to leave the company with fair value and fair interest. - Tri
  Visit to Get Source

  ---

IBC

• NCLT Can't Review Orders on Substantial Issues, Can Recall if Reply Rights Were Missed Due to Unused Chances.

  Case-Laws - AT : Jurisdiction - Power of NCLT to recall its order - No doubt that the Adjudicating Authority has no jurisdiction to review its order after deciding a substantial issue but it has the jurisdiction to recall the order of the kind in dispute i.e. where the right to Reply was closed by an order on the ground that the opportunities granted were not availed. - AT
  Visit to Get Source

  ---

SEBI

• New SOPs for Stock Exchange Arbitration Enhance Transparency and Efficiency in Resolving Disputes Between Companies and Investors.

  Circulars : Standard Operating Procedures (SOP) for dispute resolution under the Stock Exchange arbitration mechanism for disputes between a Listed Company and/or Registrars to an Issue and Share Transfer Agents (RTAs) and its Shareholder(s)/Investor(s) - Circular
  Visit to Get Source

  ---

• Stock exchanges must use electronic platforms for ASBA in equity and convertible public issues to confirm blocked application funds.

  Circulars : Processing of ASBA applications in Public Issue of Equity Shares and Convertibles - Stock Exchanges shall accept the ASBA applications in their electronic book building platform only with a mandatory confirmation on the application monies blocked. - Circular
  Visit to Get Source

  ---

Service Tax

• Supreme Court Rules Activity as "Transport of Goods by Road Service," Not "Mining Services," Under Finance Act Section 65(105)(zzzy.

  Case-Laws - AT : Levy of penalty u/s 78 of FA - Non-payment of Service Tax - Cargo Handling Services or mining services - the Supreme Court held that the activity would appropriately be classified under the head “transport of goods by road service” and the activity does not involve any service in relation to “mining of mineral” as contemplated under section 65(105) (zzzy) of the Finance Act. The Supreme Court also held that the definition of “mines” has no apparent nexus with the activity undertaken under the service rendered - the Supreme Court categorically held that the activity undertaken by the appellant would fall under the head ‘transportation of goods by road service’. The Commissioner (Appeals) was, therefore, not justified in holding that the appellant had undertaken the activity of mining service w.e.f. 01.06.2007. - AT
  Visit to Get Source

  ---

Central Excise

• Central Excise Department Updates Manual Processing Guidelines for Sabka Vishwas Scheme to Expedite Legacy Tax Dispute Resolutions.

  Circulars : Manual processing of declarations filed by the co-noticees under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Order-Instruction
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (6) TMI 94
  Levy of penalty - Seizure of goods alongwith vehicle - case of petitioner is that the requirement of e-way bill to accompany the goods was not in place in the State of U.P., at the relevant time - HELD THAT:- It is a settled principle in law that no party may be prejudiced by an act of Court. While, the Supreme Court set aside all the orders passed by this Court in different cases as were disclosed by the State in its compliance affidavit, it can never be accepted that it was the intention of the Supreme Court to render the assessees remediless or to take away their right of appeal. In fact the order of the Supreme Court clearly indicates to the contrary. Thus, it was provided by the Supreme Court that in compliance of its order, the revenue authority shall necessarily make compliance within a period of four weeks. It remained for the State authorities to have correctly apprised the Supreme Court, at that stage, itself that the remedy of appeal had been lost by most of the assessees. This Court cannot turn a blind eye to the harsh facts and their consequence, as have been noted above. Accordingly, a query was put to the learned Chief Standing Counsel, today, if the State would waive its objection as to limitation, in these circumstances. Sri K.R. Singh, learned Chief Standing Counsel has fairly stated, since the circumstances are unique and not such as may be blamed on the assessees, the State would not raise any objection to limitation if the appeal/s is/are filed by aggrieved assessees, within reasonable time. The matter is remitted to the appellate authority to decide the appeal afresh, on merits without raising any objection as to limitation - Petition allowed by way of remand.

  ---

• 2022 (6) TMI 93
  Provisional attachment - blocking of Input Tax Credit (ITC) - Revenue sought extension of time period for investigation which this Court has allowed of eight weeks - HELD THAT:- It is noticed that this was in the back drop that the hearing in relation to the provisional attachment had already been completed on 27/08/2021 in wake of pending investigation, the order was not being passed and this Court had needed to issue the directions - As not disputed, the personal presence of opponent was not procured because of his moving to the Apex Court for anticipatory bail and his having been protected for a particular period. Thereafter till his date of arrest, though it was feasible for the officers to get his presence secured, as the State has today not pressed the prayer made in para-11.1, this Court is not desirous to go into this aspect any further. Now, no longer that grievance continuous in wake of order of the Coordinate Bench dated 04/05/2022. Moreover, as fairly admitted, this is a pre SCN stage in post search period and hence, unlimited period also would not be warranted. The State has volunteered that this inquiry/investigation should be over in three months period but to be on safer side, we would grant four months period to the State to complete the present exercise, so that it may not have to once again approach for extension. Application disposed off.

  ---

• 2022 (6) TMI 92
  Grant of anticipatory bail - utilization of input tax credit for himself with dishonest intention to evade payment of taxes - fake and forged documents - HELD THAT:- Hon ble Supreme Court in NEEHARIKA INFRASTRUCTURE PVT. LTD. VERSUS STATE OF MAHARASHTRA AND ORS. [ 2021 (4) TMI 1244 - SUPREME COURT] has categorically held that the courts should not thwart an investigation into the commission of a cognizable offence. The Court cannot and should not embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint and save in exceptional cases where non interference would result in miscarriage of justice, the Court and the judicial process should not interfere at the stage of the investigations of the offences. It has also been held that it would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated. Effectively the Hon ble Supreme Court has reiterated and further expounded the principles enunciated in the judgment of State of STATE OF HARYANA VERSUS BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT] . In NEEHARIKA INFRASTRUCTURE PVT. LTD. VERSUS STATE OF MAHARASHTRA AND ORS. [ 2021 (4) TMI 1244 - SUPREME COURT] it is clear that the interference of the High Court at the stage of investigation has to be in exceptional circumstances and the High Court is not to embark upon an enquiry as to the genuineness or otherwise of the allegations levelled in the FIR. In the present case the petitioner has raised a number of grounds, all of which are a matter of his defence or at best would be placed before the investigating agency when he joins investigation. This Court cannot examine the veracity or the genuineness of the documents attached to this petition and come to the conclusion that no case is made out against the petitioner. There is no merit in the present quashing petition, which is hereby dismissed.

  ---

• Income Tax

• 2022 (6) TMI 91
  Reopening of assessment u/s 147 - Period of limitation - Valid service of notice or not? - HELD THAT:- The petitioner has neither filed his ITR for AY 2016-17 under Section 139(1) of the Act nor filed his ITR under Section 148 of the Act. As per Section 139(1) of the Act, it is mandatory to file the ITR for an individual if his total income during the previous year exceeds maximum amount which is not chargeable to income tax. Therefore, as per Explanation 2(a) of Section 147 of the Act, there is a deemed escapement of Income by the Petitioner. In the present case, the petitioner did not file his ITR under Section 148, thus in view of the principles laid down by the Apex Court in the case of GKN Driveshafts (India) Ltd. v. Income Tax Officer Ors.[ 2002 (11) TMI 7 - SUPREME COURT ] the petitioner is not even entitled to raise objections to the notice issued under the Act. It is pertinent to mention that despite the petitioner not following the mandate enunciated in GKN Driveshafts (Supra), the revenue responded to the objections filed by the petitioner and disposed of the same vide order dated 09.02.2022 supplied to the petitioner vide letter dated 10.02.2022 The impugned notice in the present case is dated 27.03.2021. The notice has also been digitally signed on the same day. Thus, the contention of the petitioner that the notice under Section 148 is beyond limitation does not hold any force and is rejected. The address at which notice was sent by the Revenue is, one of the addresses mentioned by the petitioner on his portal as per Section 282 of the Act read with Rule 127 of the Income Tax Rules. Further, the notice under Section 148 was uploaded on the E-filing portal of the petitioner on 27.03.2021.The petitioner has himself chosen the communication address to be of Faridabad, Haryana which is clearly reflected in the document of PAN jurisdiction details of the petitioner. The petitioner has also raised a plea that notice under Section 148 was never served upon him. The plea of petitioner is that the notice has not been sent at his address, rather the petitioner went to the extent of saying that the notice might have been sent to some other person of his name and may not even belong to him. It is a matter of record that the address at which the notice was sent was mentioned in the PAN details of the petitioner. Section 139 A (5) (d) provides that it is the responsibility of the assessee to intimate the A.O. with respect to any change in his address or in the name and nature of his business on the basis of which the Permanent Account Number was allotted. Though, the petitioner has stated that he had sent a request for change of his address, however, no such communication has been placed on record by the petitioner. If the petitioner is claiming change of his address in his PAN details then, it was obligatory on his part to place the same on record. More so, these are disputed questions of facts, which can be agitated before the authority below. This Court in the writ jurisdiction cannot entertain such pleas. The petitioner has also argued vehemently, regarding the discrepancy in the order disposing of objection filed by him against the reopening of assessment. The issue has been raised as to the fact that the date of order has been mentioned to be 09.02.2022 whereas the communication is dated 10.02.2022. We, consider that there is no force in this contention. It is clear from the record that the order dated 09.02.2022 has been communicated on 10.02.2022. The other discrepancy regarding the date of notice mentioned in the said order as 27.01.2021 instead of 27.03.2021 seems to be a typographical error. The petitioner has also argued that he was not obliged to file any return for the relevant year, as there was no income. The plea of the petitioner is that he got an amount as an advance by virtue of the orders of the Court and the same cannot be assessed as an income in his hand for the assessment year 2016-17. We consider that this issue cannot be determined by this Court in the writ jurisdiction, the petitioner can raise this issue before the authorities below, who is the appropriate forum to decide the same. WP dismissed.

  ---

• 2022 (6) TMI 90
  Validity of Reopening of assessment - notice u/s 148A(b) - no adequate time in accordance with the Act to submit the reply - petitioner states that the impugned order has been passed in violation of the principles of natural justice as it has been passed without providing adequate opportunity to the petitioner in contravention of the provisions of Section 148A of the Act to file a reply to the notice dated 17th March, 2022 issued under Section 148A(b) - Notice sent by speed post at the Delhi Address of petitioner and it is an admitted position that the petitioner is not a resident Indian and is employed in the United States of America and granted eight (8) days time to the petitioner for submitting the reply - HELD THAT:- The submission of the respondent that the petitioner was served with the notice dated 17th March, 2022 on 21st March, 2022 and not on 24th march, 2022 as stated in the petition is of no consequence, since, the period of eight (8) days, if reckoned from the date of 21st March, 2022 would expire on 29th March, 2022. Therefore, even on respondent s showing the e-portal could not have been closed on 26th March, 2022. Also noticed that while in its reply-affidavit, though the respondent places heavy reliance upon the service of notice on 21st March, 2022 through speed post bearing no. ED906740645IN, however, the order passed under Section 148A(d) of the Act refers to the service of notice effected on 24th March, 2022 through speed post bearing no. ED853116135IN. The said order makes no reference to the other speed post receipt. Therefore, the Assessing Officer himself relied upon service of notice issued to the petitioner by speed post vide Consignment No. ED853116135IN, which is admittedly received by the petitioner on 24 th March, 2022 and therefore the Respondent cannot contend to the contrary in the present proceedings. Respondent has not disputed that the petitioner is a non resident and was stationed in the United States of America, when the notice was issued and received at the Delhi address. The status of the petitioner being non-resident is also duly reflected in the profile of the petitioner registered with the respondent. The notice pertains to assessment year 2015-16, and therefore accessing and collating the records for same may require reasonable time for an assessee residing abroad. In these circumstances a request for extension of time to file reply should have been considered by the Assessing Officer for granting a reasonable extension. The submission of the respondent that the Assessing Officer does not review his e-mails and therefore, the request for extension dated 27.03.2022 made through e-mail is not a valid request cannot be accepted. The communication between the Assessee and the Assessing Officer through emails is an established procedure and is evident from the documents annexed by the petitioner with the rejoinder, it is a valid means of communication used by the Assessing officer to communicate with the Petitioner. Respondent itself issues notices under Section 148A (b) to the assessee through emails and therefore a submission that if a reply or request is sent to the assessing officer on his official email address, he is not obliged to consider such email cannot be accepted. See DIVYA CAPITAL ONE PRIVATE LIMITED (EARLIER KNOWN AS DIVYA PORTFOLIO PRIVATE LIMITED) VERSUS ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 7 (1) DELHI ANR. [ 2022 (5) TMI 1016 - DELHI HIGH COURT ] Thus the impugned order dated 31st March, 2022 issued under Section 148A(d) of the Act as well as the Notice dated 31st March, 2022 issued under Section 148 of the Act for the assessment year 2015-16 are hereby quashed and the matter is remanded back to the Assessing Officer for a fresh determination. The petitioner is granted by way of a final opportunity two weeks time to file his response to the Notice under Section 148A(b) of the Act. The Assessing Officer is directed to pass a fresh reasoned order under Section 148A(d) of the Act after considering the petitioner s reply in accordance with law within eight weeks thereafter.

  ---

• 2022 (6) TMI 89
  Reopening of assessment - request for adjournment immediately after receipt of notice u/s 148A(d) - HELD THAT:- In the present case, though the petitioner had filed an application for adjournment immediately after receipt of notice dated 17th March, 2022, the respondent had neither rejected the request for adjournment nor directed the petitioner to file a reply within the original stipulated time. Petitioner had filed its response/submission on 27th March, 2022 by way of an email addressed to the Assessing Officer as the notice under Section 148A(b) had been received from the said email address. As the impugned order under Section 148A(d) of the Act had been passed after receipt of the said email, this Court is of the view that Assessing Officer should have considered the same as the reply was available on record. By not considering the reply of the Petitioner dated 27 th March, 2022, the mandate of Section 148A(c) has been violated as it casts a duty on the Assessing Officer, by using the expression shall , to consider the reply of the Petitioner/assessee in response to notice under Section 148A(b) before making an order under Section 148A(d) of the Act. Consequently, the impugned order dated 30th March, 2022 issued under Section 148A(d) of the Act and the notice dated 31st March, 2022 issued under Section 148 of the Act are set aside. The respondent is directed to take the submission filed on 27th March, 2022 on record and pass a reasoned order in accordance with law within eight weeks.

  ---

• 2022 (6) TMI 88
  Assessment u/s 153A - pendency of re-assessment proceedings - Offence punishable u/s 276 CC - unaccounted receipt of money by the petitioner towards remuneration for directing movies - Whether assessment order was barred by limitation? - HELD THAT:- ITAT after considering the submission of the counsel appearing for the parties concluded that We are of the opinion that assessments made by the AO for all these five assessment years, uniformly on 24.09.2008 are bad in law for the reason that direction of the AO for special audit was served on the assessee on 25.01.2008 which must be considered for the purpose of computing the limitation of time making assessment. In that case, direction of the Assessing Officer was subsequent to the expiry of the due date for making assessment. Further without prejudice, even with the date 25.01.2008, considered by the Assessing Officer as the date of service of direction and not on 28.01.2008 as considered by the CIT (A) is taken into account, still the assessments were not made in the period specified under Section 153 B of the Act. Therefore, it was held that the assessments for the five assessment years on 24.09.2008 are bad in law. Essentially, the Income Tax Appellate Tribunal disposed the appeals only on the ground of limitation and not on merits. It is further observed that other grounds relating to merits become an academic exercise, meaning that other issues raised in the complaint, especially the allegations raised in the complaints with regard to non filing of return of income, non payment of advance tax, non payment of the tax demanded, suppression of true and correct income by not filing return of income had not been considered by the Income Tax Appellate Tribunal. When the matter was not decided on merits, but only on technical ground of limitation, this Court is of the considered view, on the basis of the principles settled in Radheshyam Kejriwal Vs. State of West Bengal and another [ 2011 (2) TMI 154 - SUPREME COURT ] that petitioner cannot seek to quash the proceedings in E.O.C.C.Nos.101, 102, 103, 104, 105 of 2015 on the ground that Income Tax Appellate Tribunal had set aside the assessment orders. As seen from the complaint allegation that despite, giving notice, statutory notice as detailed in the complaint, petitioner has not filed return, paid advance tax and tax demanded, suppressed the real and true income by not filing the return in time. These issues have to be necessarily tried before the Court. The assessment order relating to the assessment year 2009-2010 was not challenged before the Income Tax Appellate Tribunal. In this case also there is allegation of non filing of return of income for the assessment year 2009- 2010, concealment of true and correct income by not filing return of income, non payment of income despite issuance of notice. These violations are liable to be prosecuted for the offences under Section 276 C (1), 276 C (2), 276 CC and 277 of the Income Tax Act, 1961. When it comes to quashing a criminal proceedings, it is very well settled that uncontroverted averments in the complaint without any addition or subtraction should be looked into to examine whether an offence can be made out are not. If that yardstick is applied in this case, this Court is of the considered view that respondent/complainant made out prima-facie case to proceed against the petitioner for the offences alleged in the complaint. Section 278 (e) of the Income Tax Act, 1961, empowers the Court to presume culpable mental state of the accused, unless, the accused shows that he had no such mental state with respect to the act charged as an offence in the prosecution. In this view of the matter, this Court finds that petitioner shall necessarily face the trial. Criminal Original Petitions dismissed.

  ---

• 2022 (6) TMI 87
  Penalty u/s 271(1)(c) - Assessee voluntarily filed the revised return duly disclosing the disallowance of the dividend in terms of Section 94(7) of the Act and revised its returned income - assessee upon receipt of the assessment order issued by the AO deposited the enhanced amount of tax and the Respondent had not challenged the assessment order and at the first instance, admitted its mistake in computation and filed a revised return - HELD THAT:- A perusal of the order of the Tribunal reveals that the Tribunal noted that an error had occurred due to the wrong posting of the entry by the book-keeping staff of the Respondent with respect to the relevant dividend entry income to a wrong date. The Tribunal observed that since the Respondent had voluminous transactions, it committed an error while posting the relevant dividend entry, which was covered by one voucher since it was received on the same security. Tribunal has observed that it was a reasonable human error which could have been committed on the part of the Respondent. The Tribunal noted that on the same security, dividends were received at two distinct dates, however, the error crept in since, the book-keeping staff posted both the entries of the dividend to the same date. The Tribunal has accepted that upon a perusal of the record that such an error was possible and therefore has accepted the submission of the Respondent that this was a bonafide error and there was no intention on its part to evade tax. The view taken by the Tribunal is reasonable. It is a view taken after perusing the records in detail. The Tribunal, after appreciating the evidence has found that the Respondent has proven that it was a bonafide mistake and no substantial question of law would arise. It is not possible to accept the submission of learned counsel for the Appellant that the said finding of the Tribunal is perverse and we, therefore, do not find any merits in this appeal.

  ---

• 2022 (6) TMI 86
  Stay of demand - petitioner suo moto deposited a sum which was equivalent to 20% of demand created, in terms of Office Memorandum - HELD THAT:- As relying upon the Office Memorandum dated 29.02.2016 31.07.2017, considering Section 220(6) considering the fair admission on part of Standing Counsel, and considering the fact that the amount of Rs 2,52,531, equivalent to 20% of the demand, was already refunded by department on 01.06.2020, this court deems it appropriate to direct the respondent to refund the excess amount of Rs 10,10,119, being 80% of the demand that is already recovered from the petitioner. The respondents are entitled to keep 20% of the demand, i.e. Rs 2,52,530 in terms of Office Memorandum dated 29.02.2016 and 31.07.2017, until the appeal of petitioner pending before CIT (Appeal) is decided. The refund of Rs. 10,10,119 be made to the petitioner within a period of 30 days from the pronouncement of this judgment, failing which respondent will be liable to pay interest as applicable. Upon delay of the payment, interest as applicable will be recovered from the erring officer/respondent.

  ---

• 2022 (6) TMI 85
  Disallowance u/s. 40(a)(ia) of the Act for non-deposit of TDS - Tribunal has observed that the Respondent had duly deposited the Tax Deducted at Source (TDS) with the Government by the due date for filing the return of income - HELD THAT:- The said finding of the Tribunal returned after perusing the documents furnished by the Respondent cannot be disputed in the present appeal. Learned counsel for the Appellant has not brought on record any material to dislodge the said finding of fact returned by the Tribunal. Since the deposit of TDS was made within the time permitted, the Tribunal is right in holding that the said expense incurred by the Respondent cannot be disallowed. In this regard, findings of the Tribunal are in conformity with the judgment of the Supreme Court in the case of Commissioner of Income Tax v. Calcutta Export Company [ 2018 (5) TMI 356 - SUPREME COURT] - The finding of the Tribunal is, therefore, correct in law and no substantial question of law with respect to Section 40(a)(ia) of the Act, arises Disallowance u/s 14A read with Rule 8D(2)(iii) - HELD THAT:- Tribunal has considered that the Respondent was holding the shares as a stock-in-trade and has, therefore, disallowed the addition made by the JAO. Learned counsel for the Appellant has not disputed the fact that the shares are held as stock-in-trade by the Respondent. In the aforesaid view of the matter, the questions of law proposed by the Appellant do not arise for consideration either in fact or in law.

  ---

• 2022 (6) TMI 84
  Reopening of assessment - undue haste in passing the order - Notice u/s 148A - petitioner therein was denied effective opportunity to file reply - HELD THAT:- As reply was uploaded online by the assessee on 21st March, 2022 and the time limit for filing the reply in terms of notice expired on 18th March, 2022 which was a public holiday and the following two days namely, 19th March, 2022 and 20th March, 2022 were Saturday and Sunday. Therefore, the next working day was 21st March, 2022. It appears that the assessing officer is not aware of the provisions of the General Clauses Act and, therefore, needs to be appraised of the same. Thus, we have no hesitation to hold that the assessing officer acted in great haste and virtually reduced the procedure under the amended provision to a nullity. We have queried the learned Advocate appearing for the assessee as to whether the assessment was getting time-bared. The prompt reply was that the power to re-assess is available to the authority till the year 2023 if permissible under law. Therefore, we fail to understand as to what was the great hurry on the part of the assessing officer, Sri Niladri Kumar Ghosh to pass the order dated 23rd March, 2022 by ignoring the reply given by the assessee and uploaded in the department s portal on 21st March, 2022. The other officers who are also similarly placed should not reduce the provisions of the Act in an empty formality, we are inclined to impose cost on the authority to serve as a deterrent. For all the above reasons, the appeal is allowed and the order dated 23rd March, 2022 passed under Section 148A(d) and the notice dated 11th March 2022 are quashed and the matter is remanded to the assessing officer to take note of the reply given by the assessee dated 21st March, 2022 and consider the same. According to the learned Advocate for the appellant, the assessee sought for certain information. Hence, this reply should be considered in a meaningful manner and action be initiated in accordance with the law. There will be an order directing the respondent/department to pay costs of Rs. 15,000/- to the West Bengal State Legal Services Authority within three days from the date of which the server copy is made available. Consequently, the order passed in the writ petition is set aside and the writ appeal is allowed and the order dated 23rd March, 2022 as well as the notice issued under Section 148 of the Act dated 11th March, 2022 are quashed.

  ---

• 2022 (6) TMI 83
  Unaccounted brokerage - addition on the basis of the statement made by the assessee as recorded u/s 131 - ITAT deleted the addition - HELD THAT:- On both the aforesaid issues or rather to put in other words, on all the proposed questions of law, there are findings of the fact recorded by the Tribunal in its impugned order. We have looked into in the line of reasoning adopted by the Tribunal so far as the addition of Rs.68 Lakh is concerned and from para 17 onwards, so far as the statement of the assessee recorded under Section 131 of the Act is concerned. We are of the view that none the questions as proposed by the Tribunal to be termed as substantial questions of law.

  ---

• 2022 (6) TMI 82
  Deduction claimed u/s 10AA - allegation of promoters adopted colorable device by transferring the business of the company namely AMPL to assessee firm to claim higher exemption and the assessee firm is formed by splitting up of existing business AMPL - HELD THAT:- CIT-A was pleased to allow the deduction/exemption to the assessee under the provisions of section 10AA of the Act by observing that there was no violation committed by the assessee as envisaged under the provisions of the Act for claiming the deduction under section 10AA of the Act. For claiming the deduction under section 10AA. There was no doubt raised by the AO with respect to the rent paid by the assessee to the company namely AMPL. In view of the above, there remains no ambiguity to the fact that the factory premises used by the assessee in the factory building of AMPL was separate and independent unit though the same was established within the 4 walls of the AMPL. There was no allegation raised by the Revenue that the assessee was using the factory premises of the company namely AMPL for the purpose of its manufacturing/ business activities. Accordingly we are of the view that no adverse inference cannot be drawn to deny the benefit available under section 10AA of the Act to the assessee on the reasoning that it was operating from the premises of sister concern which was also eligible for deduction under section 10AA of the Act. Furthermore, there is no prohibition under the provisions of law suggesting that the assessee cannot be given the benefit of section 10AA of the Act if it is found that it is operating from same building from where another unit which is eligible for deduction under section 10A of the Act is also operating. Thus to our understanding, the assessee cannot be the denied the benefit of exemption which is otherwise available under the provisions of the law. Nature of the business of the company namely AMPL - Assessee before the learned CIT-A has contended that both the assessee firm and company AMPL are manufacturing Bar item but the drawing of final product are different from the drawing of the final product of the company namely AMPL. According to the assessee, it acquires different raw materials, carries out different manufacturing process and the final outcome of the product is also different with that of the company - CIT-A found the explanation submitted by the assessee as genuine and accepted the same. The ld. DR at the time of hearing failed to controvert this fact finding of the ld. CIT-A. Thus it is established that business of the assessee firm and sister concern being company AMPL are different, separate and independent to each other. Therefore, the assessee cannot be denied the benefit of section 10-A of the Act. Without prejudice to the above, assuming final product, raw material and manufacturing process are similar of the assessee and the company, still the relief to the assessee under section 10AA cannot be denied merely on the reasoning that the raw material, processing activities resulted to the final output which is the same. It is for the reason that an assessee can have different eligible units for claiming the deduction under section 10AA of the Act subject to the compliances provided therein. Under the provisions of the Act, there is no necessity to manufacture the different product for claiming the deduction under section 10AA. Let us assume that the partnership firm and the company are one and the same person. As such, the assessee in order to claim higher amount of deduction has created a partnership firm and diverted its business. If that be so, even then the assessee is eligible for deduction under section 10AA of the Act to the tune of 50% in pursuance to the provisions of the Act. However we note that the Revenue has not considered this aspect while framing the assessment under section 143(3) of the Act. What is appealing in the given facts and circumstances is that the Revenue was adamant to deny the benefit provided under section 10AA of the Act on its own presumption of wrong facts. Likewise, the assessee has claimed rent expense in the year under consideration which was paid to M/s AMPL and there was no doubt raised by the revenue with respect to such expenses. In view of the above and after considering the facts in totality, we do not find any reason to deviate from the finding of the learned CIT-A in the given facts and circumstances. Hence, we uphold the same with the direction to allow the benefit of deduction to the assessee under the provisions of section 10AA of the Act in accordance with the provisions of law. Hence the ground of appeal of the revenue is hereby dismissed.

  ---

• 2022 (6) TMI 81
  Delayed of employees contribution towards ESI/PF - assessee s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - Scope of amendment - HELD THAT:- In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant cas. Thus addition by way of adjustment while processing the return of income u/s 143(3) made by the AO towards the deposit of the employee s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. Assessee appeal allowed.

  ---

• 2022 (6) TMI 80
  Rejection of books of accounts - profit estimation of the contract business- HELD THAT:- AO had examined and cross-verified the books of accounts, bills, vouchers and confirmation of accounts etc. pertaining to the year under consideration that were produced by the assessee in the course of the assessment proceedings before him. Although the AO had not brought on record any irregularity or defect in the books of accounts, but had rejected the same, for the reason, that as the assessee in the course of proceedings before the ITSC, Kolkata for the earlier years i.e AYs. 2006-07 to 2012-13 had on a suo-motto basis rejected his books of accounts, therefore, the opening and closing balances of different ledger accounts pertaining to his books of accounts for the year under consideration i.e AY 2014-15 could not be relied upon. AO except for harping on his aforesaid contention, i.e, the opening and closing balances of different ledger accounts pertaining to the books of accounts of the assessee for the year under consideration could not be verified by him, had not brought on record any such specific or material defect in the books of accounts on the basis of which the deducing of the correct profits of the assessee s business for the aforesaid reason was jeopardized. Interestingly, if the observations of the AO are to be accepted, then, it would mean that once an assessee is visited with search proceedings, and he after considering the incriminating documents unearthed during the course of such proceedings comes forth with a disclosure either regards his modus operandi or unaccounted income, then, in all the subsequent years despite there being no iota of evidence that the assessee had continued with his malpractices and modus operandi to generate unaccounted income, it is to be presumed otherwise and has to be made to suffer because of his chequered past. By no means such an incomprehensible and baseless observation of the AO can be accepted. Also, we concur with the view taken by the CIT(Appeals) that even otherwise as the net profit rate disclosed by the assessee during the year under consideration, as demonstrated by him, was better than those of other similarly placed assessee s of his trade line and was commensurate with that prevailing in the industry, therefore, no adverse inferences on the said count itself i.e as regards the profit disclosed by him was liable to be drawn. As regards the reference to the Standard Operating Rate (SoR) by the AO to support his conviction that the income of the assessee from his contract business was justifiably determined by applying a net profit rate @10% to the gross contract receipts for the year under consideration, we are unable to concur to the same. As claimed by the ld. AR, and rightly so, as the SoR for works contracts fixed by the Government departments merely indicates the estimated price of the inputs and expenses and also an estimate of the physical quantity that would be required for execution of the contract, the same, thus, considering manifold factors is too far from the ground realties to have justified earning of a profit margin @10% of the gross contract receipts by the assessee. We, thus, in terms of our aforesaid observations and concurring with the well reasoned view taken by the CIT(Appeals) that there was no justification on the part of the AO in rejecting the books of accounts of the assessee and estimating his income from the contract business @10% of the gross contract receipts, uphold his order - Revenue appeal dismissed.

  ---

• 2022 (6) TMI 79
  Penalty u/s 271C - assessee did not deducted income tax at source u/s. 194IA @ 1% on payments made for transfer of immovable property(other than agricultural land) - HELD THAT:- Revenue is not able to controvert this submission of the assessee. The assessee is the Prop. of New Manish Medical Agencies, and it could not be shown that the assessee is in the business of real estate or is regularly indulging in sale and purchase of properties . This is the solitary property purchased by the assessee, during the year under consideration, which was covered under the ambit of Section 194IA, consideration being not lower than Rs. 50,00,000/- . There is a latin maxim ignorantia legis neminem excusat which means that ignorance of law shall not excuse a person. But at the same time there is no presumption in law that all persons know all the laws, and more so complex fiscal laws concerning taxing statutes. We are of the considered view that the assessee has demonstrated a reasonable cause u/s 273B for not deducting income-tax at source under the provisions of Section 194IA, and hence the penalty levied by AO u/s 271C and confirmed by ld. CIT(A) is not sustainable in the eyes of law, and is hereby ordered to be deleted - Decided in favour of assessee.

  ---

• 2022 (6) TMI 78
  Deduction u/s 80P involving nominal members - HELD THAT:- As the issue is found to be no more res integra in light of Mavilayi Service Cooperative Bank Ltd . [ 2021 (1) TMI 488 - SUPREME COURT] deciding the same against the department. So far as the assessee s very deduction claim pertaining to interest income derived from deposits in cooperative banks is concerned case law State Bank of India Vs. CIT [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] and CIT Vs. Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] holds that such an income also is eligible for the impugned claim. This second issue also goes against the department. Next comes the assessee s reliance on CBDT Circular No.37/2016 that TDS and NPA provisions respectively deserves to be considered as eligible for deduction since enhancing the business profits only. This issue, in my considered opinion, deserves to be restored back to the AO for his fresh adjudication in light of the aforementioned CBDT Circular.

  ---

• 2022 (6) TMI 77
  Deduction u/s 80P denied - this assessee is a milk cooperative who has claimed the impugned deduction regarding income derived from sale of Shenkhat and Palapachola to its members - Profit on selling of Shenkhat and Palapachola is not seen for the benefit of members and not according to objectives mentioned in Bye laws of society. The motive of supplying the shenkhat and palapachola is to earn more profit which is outside from the preview of objectives mentioned in Bye-laws of the society - HELD THAT:- No merit in the learned lower authorities stand first of all since this is not a case involving bogus purchase of the twin foregoing twin fodder products sold to the members. We reiterate that the assessee s sole substantive grievance claim is u/s 80P deduction wherein it has sold organic manure to its milk producers so as to ensure better production of fodder meant for consumption of the milch animals thereby increasing dairy outputting. This crucial direct nexus amongst the assessee, the organic manure sold at its behest for better fodder production milk producers milch animals appears to have escaped the learned lower authorities valuable consideration. Hon ble apex court recent decision in Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] has settled the law that we ought to adopt liberal construction in an instance involving section 80P deduction. We accordingly hold in light of the foregoing factual and legal backdrop that the assessee is very much entitled for section 80P deduction in issue - Decided in favour of assessee.

  ---

• 2022 (6) TMI 76
  Disallowance u/s 37(1) incurred for doctors in alleged violation of India Medical Council Regulation, 2002 - AO found that these expenses have been incurred on various promotional Articles - HELD THAT:- As stated that the assessment year involved is A.Y. 2011-12 and all these details were provided to the learned Assessing Officer during the course of assessment proceedings. On careful consideration of the argument of the parties, we find that this issue is squarely covered in favour of the Revenue by the decision of Hon ble Supreme Court in case of Apex Laboratories Pvt. Ltd. [ 2022 (2) TMI 1114 - SUPREME COURT] as also considered the various decisions which are relied upon by the learned Authorised Representative. However, as the details of such expenses are not available before us, we direct the assessee to submit the details of such expenses within 60 days of this order and then, the learned Assessing Officer after considering the details decide the issue of disallowance as per the order of the Hon ble Supreme Court. In the result, ground no. 1 of the appeal is allowed with above direction. Deprecation on expenditure treated as capital in nature - CIT(A) deleted the same holding that in earlier years the learned Assessing Officer has treated various Revenue expenditure claimed by assessee as capital expenditure and disallowed the same. Details of these expenses are submitted to the learned Assessing Officer - HELD THAT:- Both the parties agreed that this ground is raised as the disallowance made by learned Assessing Officer has not reached finality. In view of this ground no.2 of the appeal of the learned Assessing Officer, is dismissed. Disallowance of deduction under section 80IB - sale of scrap deduction - HELD THAT:- Even before us could not dispute that the scrap was not generated during manufacturing process. Thus, we do not find any infirmity in the order of the learned CIT(A). Thus, ground no. 3 of the appeal is dismissed.

  ---

• 2022 (6) TMI 75
  Revision u/s 263 - deductions claimed u/s. 54 and 54EC - HELD THAT:- As seen from the record that the return filed by the assessee was picked up for scrutiny for verification of the large deduction claimed u/s.54 and also the discrepancy in the tax credit appearing in Form 26AS and ITR. Notice dt.19-09-2016 issued by the AO pursuant thereto, u/s. 143(2) is filed and it shows that the AO simply stated that in view of the reasons for picking up the scrutiny on the aspect of deduction claimed under the head capital gains and tax credit mismatch, the assessee was given an opportunity to produce any evidence she desires. This notice does not specify any questionnaire having a bearing on the determination of the issues involved. AO did not refer to the amount of sale consideration receivable/received by the assessee nor did he obtain any explanation from the assessee as to the excess amount that was kept in deposit in bonds. AO did not make any enquiry into the aspect of transfer of title in the property claimed to have been acquired by the assessee. In all fairness, AO should have called for material to show how the assessee got Rs.70 lakhs whereas the entire sale consideration received was Rs.63.50 lakhs in respect of the property at Sainikpuri wherein, without any dispute the assessee had only half a share. If the assessee got any additional amount towards the furniture and fixtures in the said property and the AO having dealt with this issue by applying his mind, certainly this aspect would not be amenable for revision u/s. 263 - It is pertinent to note that neither the notice u/s. 143(2) of the Act calls for any information on this aspect, nor does the assessment order refer to any enquiries or material giving rise to the subjective satisfaction of AO on this aspect. There is nothing to contradict the opinion of the learned PCIT that there is failure on the part of the AO to make the minimum enquiry, let alone sufficient enquiry on this aspect. Acquisition of residential property by the assessee - As law requires that the transfer of title shall take place on the registration of an instrument duly stamped. Assessee is the partner of the firm, M/s.Matrika Hospital which is the transferor of the property. In fact, the land originally belongs to the assessee which was transferred to the firm wherefrom the assessee acquired it back. When once the document evidencing the transfer is not properly stamped or registered even after sufficient time, and that too when the transferee claims to have paid the entire sale consideration, it should have provoked a doubt in the mind of the AO to look at the genuineness of the transaction. AO have verified whether the payment of sale consideration, as claimed by the assessee, is supported by any evidence. Learned PCIT recorded at paragraph No.2(d) at point 4 that the firm did not disclose any capital gains for the relevant year in respect of the sale of undivided portion of land purported to have been transferred under the agreement of sale. At least the cursory consideration of the circumstances would definitely put the AO on guard prompting him to probe into the matter. Having conducted the necessary enquiries, if the AO reaches a conclusion, it should find its reflection on record either in the notice or questionnaire, if any, or the assessment order. Absolutely there is no support to the contention of the assessee that AO called for the material, applied his mind thereto and reached a plausible conclusion. It is, therefore, clear that for want of conducting enquiries, the assessment order is erroneous. Coming to the aspect of prejudice, contention of the assessee is that insofar as the acquisition of sixth floor of the hospital building is concerned, assessee gains the tax benefit at 20% whereas the hospital suffers the tax burden at 30% and there is no prejudice to the interest of Revenue. On this aspect, learned PCIT commented that the tax laws have to be applied correctly and anything done to the contrary would perpetuate the error. The assessee claiming 20% of tax in respect of the capital gains assumes that there is accrual of capital gains in a legal way. Here in this case, the acquisition of property is itself in doubt and, therefore, it would not be reasonable to jump to the conclusion that in this transaction Revenue is not put to prejudice. It is an admitted fact that the AO did not make any enquiries into the additional amount that was put in bonds out of the sale consideration of the Sainikpuri property and also there is no enquiry into the acquisition of the sixth floor of M/s.Matrika Hospital. All these factors well justify the order of the learned PCIT in exercise of section 263 of the Act and the irresistible conclusion that flows from our discussion is that the assessment order is not only erroneous but also prejudice to the interest of Revenue - Decided against assessee.

  ---

• 2022 (6) TMI 74
  Deduction claimed u/s 80P on the interest received on the deposits made in various bank accounts - HELD THAT:- As decided in own case [ 2018 (5) TMI 246 - ITAT DELHI] authorities below were not justified in refusing to grant deduction under section 80P of the I.T. Act in favour of the assessee. - Decided against revenue.

  ---

• 2022 (6) TMI 73
  Addition u/s 68 - Assessee could not prove the genuineness of the transaction and creditworthiness and identity of the person - Journal entry only in the books of account of the Assessee and in fact, no actual cash credit has been credited/received in the account of the Assessee - HELD THAT:- It is not in controversy here that the credit entry pertains to the journal entry only in the books of account of the Assessee and in fact, no actual cash credit has been credited/received in the account of the Assessee. Hon ble Madras High court in the case of V.R. Global Energy Pvt.[ 2018 (8) TMI 866 - MADRAS HIGH COURT] transactions were only book transactions and there was no cash receipt and therefore, set aside the addition made u/s. 68 of the Act. The Hon ble high Court further held that when there was no cash involved of the transaction of allotment of shares, the provisions of section 68 of the Act treating it as unexplained cash credit are not attracted. Assessee has also relied upon the judgment passed in the case of ITO ward 27(4) New Delhi vs. Zexus Air Services Pvt. Ltd. [ 2021 (4) TMI 1024 - ITAT DELHI] wherein also, the Hon ble Court dealt with the identical issue and affirmed the deletion of similar addition made by the Assessing Officer by invoking the provisions of section 68 of the Act, however, opined that the addition, if any, has to be made in the hands of a person to whom the shares were allotted for his services rendered by debiting the accounts in the books. Therefore, the AO may take necessary steps for bringing this amount to tax in the hands of that person or his legal heirs in accordance with law. Appeal filed by the Assessee stands allowed.

  ---

• 2022 (6) TMI 72
  Deduction of interest u/s. 36(1)(iii) - loan amount for making investment in shares - HELD THAT:- As relying on case of M/S. TATA SONS LTD. AND (VICE-VERSA) [ 2021 (5) TMI 188 - ITAT MUMBAI] interest on borrowed capital utilized for making investments would be eligible for deduction u/s. 36(1)(iii) of the Act because there is no bar for allowability of interest u/s. 36(1)(iii) of the Act for utilizing the borrowed funds for making investments specifically meant for the purposes of business of the Assessee. Coming to the instant case, it is not in dispute here that the Assessee is a NBFC company and engaged into the business of investment in shares, debentures, bonds and financing etc. as ordinary activities. During the year under consideration, the Assessee utilized the loan amount for making investment in shares in ordinary course and eventually earned dividend or capital gains. It is also not the case of the Revenue department that the Assessee had no commercial expediency for making the investments while using the borrowed funds. Having regards to the nature of activities the Assessee is engaged in, there is no justification for disallowance of interest u/s. 36(1)(iii) of the Act. - Appeal of assessee allowed.

  ---

• 2022 (6) TMI 71
  Deduction u/s 80IB - case of the Revenue is that the Assessee had failed to produce the completion certificates during the assessment proceedings as well as during the appellate proceedings - HELD THAT:- Commissioner, while considering the remand report filed by the AO, wherein the completion certificates of the projects of the Assessee have been verified on test-check basis and found to be in order, allowed the deduction u/s. 80IB(10) of the Act for the assessment year under consideration and therefore the main contention of the Revenue Department is that the completion certificates have not been produced during the assessment proceedings as well as appellate proceedings, is devoid of merits. We may clarify that the Assessing Officer has to assess and determine the claim of the assessee as per the directions of the higher authority but by using his own wisdom, which in the instant case has been correctly done by verifying the completion certificates on test check basis and found the same in order. Hence, on the aforesaid consideration and analyzations, we are inclined not to interfere with the order under challenge, as the same does not suffer from any perversity and impropriety and/or illegality. Consequently, the appeal filed by the Revenue is liable to be dismissed.

  ---

• 2022 (6) TMI 70
  Short Term Capital Gain - assessee had introduced the agricultural land in question as stock-in-trade in the books of the partnership firm as per the partnership deed - HELD THAT:- It is pertinent to note that the land in question remained to be an agricultural land till 11.01.2011 when it was converted into non-agricultural land and the same was transferred by the assessee in his individual capacity to M/s Bhogilal Odhavji Industrial Enterprises Pvt. Ltd. by a registered conveyance deed on 12.05.2011. The land in question thus was never transferred by the assessee validly to the partnership firm of M/s. Vallabh Developers much less in the year under consideration when it remained an agricultural land since valid transfer of the same to the firm of M/s. Vallabh Developers was not permissible in the eye of law as the said firm was not agriculturist. The valid transfer of the said land thus was taken place after its conversion into non-agricultural land by a registered conveyance deed dated 12.05.2011 by the assessee in his individual capacity to M/s Bhogilal Odhavji Industrial Enterprises Pvt. Ltd. giving rise to the long term capital gain which was taxable in the hands of the assessee in AY 2012-13. The assessee duly declared such capital gain in his return of income filed for AY 2012-13 and although the learned DR has raised certain questions relating to the computation of such capital gain as well as the admissibility of deduction claimed under Section 54B of the Act at the time of hearing before us, it is observed that the learned CIT(A) in his impugned order has given direction to the Assessing Officer to examine the computation of income from capital gains offered on the sale of land by the assessee for its correctness or otherwise in AY 2012-13 in the light of observations made by him in his impugned order. As such, keeping in view all the facts of the case and having regard to the contentions raised by the learned representatives of both the sides as discussed above, we are of the view that there was no valid transfer of land in question by the assessee to the partnership firm of M/s. Vallabh Dvelopers in the year under consideration giving rise to any capital gain and the transfer of the said land having validly taken place only in the previous year relevant to AY 2012-13 by the assessee to M/s. Vallabh Developers, the capital gain arising from the said transfer was chargeable to tax in the hands of the assessee for AY 2012-13 as duly declared by the assessee in his return of income for AY 2012-13. In that view of the matter, we uphold the impugned order of the learned CIT(A) deleting the addition made by the Assessing Officer on account of short term capital gain and dismiss this appeal of the Revenue.

  ---

• 2022 (6) TMI 69
  Assessment u/s 153C - year of search conducted - Whether jurisdiction under section 153C and the procedure thereof as per the assessee has not been followed? - HELD THAT:- We note that this assessment order passed by the assessing officer is under section 143(3) - The search was conducted on 09.10.2013. The assessment year in this case is 2014-15 and the previous year being 2013-14. Hence the search was conducted during the financial year itself. In this view of the matter, the provisions of section 153C are not at all attracted. The issue raised by the assessee is totally misplaced and not at all applicable in this case. In this regard, we may gainfully refer to the provisions of section 153C which provide that assessment under this section shall be done for 6 assessment years immediately preceding the assessment year relevant to the assessment year in which search is conducted. Hence, the present assessment year is relating to the year of search and hence, assessment procedure for section 153C is not at all applicable. Moreover the provisions of these sections provide that pending assessments shall abate. In this case, since the financial year was itself not over there is no question of assessee having filed a return and assessment proceedings being abated. In this view of the matter, the additional ground raised by the assessee is frivolous without any legal basis and hence the same is dismissed. Unexplained cash found in search - Addition has been made on the basis of seizure of cash at the residence of the assessee and the assessee s submission is that the same belongs to company is totally self-serving statement de hors any cogent evidence. Hence, we do not find any infirmity in the well reasoned order of the Revenue authorities in this regard. Therefore, the ground raised by the assessee stands dismissed.

  ---

• 2022 (6) TMI 68
  Deduction u/s 54F - capital gain was not invested in purchase/construction of new residential house within the specified period of three years - assessee failed to justify the fact that the construction of residential property had taken place within the stipulated time period of 3 years from the date of transfer - HELD THAT:- As in the remand report AO after verifying the additional evidences has categorically observed that assessee s claim of construction of new house property appears to be genuine. The only objection of the Assessing Officer is, since the additional evidences were not produced in course of the assessment proceedings, they should not be accepted. Thus, from the aforesaid fact, emerging on record, it is very much clear that though, at the time of assessment proceedings, Assessing Officer was doubtful regarding assessee s claim of investment in the construction of a new house property within the stipulated period of three years, however, after examining the additional evidences filed by the assessee, such doubts have been removed and assessee s claim of construction of new residential house was accepted as genuine - when the Assessing Officer has accepted assessee s claim of construction of new residential house to be genuine, in such circumstances, deduction claimed under Section 54F of the Act has to be allowed. - Decided in favour of assessee.

  ---

• 2022 (6) TMI 67
  Bogus purchases - addition made towards entire bogus purchase - claim that only GP at the rate of 3.15% only is to be added as income in the hands of the assessee - HELD THAT:- There was categorical direction given to the assessee to produce three parties (brokers) before the AO to prove genuineness of the transaction and also cross-examine the parties. Pursuant to the direction, the AO has given four opportunities to prove the case, and also issued summons calling upon three parties before him; but notices were remained unanswered on the ground that postal authorities returned the same with remark not known or un-sufficient address . When the assessee was requested to produce three parties, the assessee was unable to produce them, but only filed a letter. Assessee has not filed required evidences viz. return of income filed by the broker, bank statements and any other evidences before the Ld. AO. In the absence of the above details, the AO has confirmed the addition and treated the same as bogus purchase. Even during the appellate proceedings, the assessee could not be able to establish the same. From the reading of the assessment order, it is clear that the assessee was given opportunity to prove genuineness of the transaction even in the original assessment proceedings, which were completed on 24.12.2010. Further, the assessee pleaded before this Tribunal in the first round of appeal that he could not produce three parties as well as evidences before the AO. For this reason only, Co-ordinate Bench of this Tribunal had set aside the matter back to the file of the AO for one more opportunity. Now, the assessee simply claims that since the transactions were of more than ten years old, it could not produce three parties before the AO. Assessee has literally wasted precious time of the AO by once again issuing notices and summons to the third parties and at the end of the proceedings, the assessee expressed inability to prove before the AO the genuineness of the transactions. Thus, both the AO and the CIT(A) have given clear cut finding that the assessee could not able to prove the purchases as genuine, and therefore, grounds of appeal raised by the assessee in the written submissions are hereby rejected, and the appeal filed by the assessee are hereby dismissed. The orders passed by the lower authorities do not require any interference. - Appeal of assessee dismissed.

  ---

• 2022 (6) TMI 66
  Disallowance u/s 14A r.w.r. 8D - disallowance made at the ad hoc rate of 20% of the exempt income - HELD THAT:- As no justification has been offered by Revenue for estimation of disallowance @ 20% of exempt income; and further, as the assessee has agreed to disallowance u/s 14A being computed in accordance with method prescribed under Rule 8D; in the specific facts and circumstances of the present appeal before us; we direct the AO to compute the disallowance u/s 14A of Income Tax Act in accordance with the method referred to in the Rule 8D of Income Tax Rules. The assessee has, as per the computation submitted, quantified the disallowance at Rs.1,244/- as mentioned earlier, in foregoing paragraph (B) of this order. The Assessing Officer is directed to verify this computation at the time of giving effect to this order. The Assessing Officer is further directed to provide reasonable opportunity to the assessee to explain the computation, and to make submissions, in case computation presented by the assessee s side in accordance with Rule-8D of Income Tax Rules is not accepted by the Assessing Officer.

  ---

• 2022 (6) TMI 65
  Deduction u/s. 36(1)(viia) - Quantum of the assessee s provision for bad and doubtful debts vis- -vis the statutory limits - HELD THA:- CIT(A) has already indicated corresponding entitlement to be much more than the claim(s) raised as the tax payer s behest. We make it clear that there is no rebuttal in the Revenue s pleadings regarding the assessee s corresponding provision s entitlement amounts. This indeed in addition to the fact that the Revenue has already lost the very substantive grievance in all preceding assessment years. We uphold the CIT(A) s directions deleting the impugned bad debts disallowance in very terms. This first and foremost substantive grievance is decided in assessee s favour. Bonus disallowance with ex-gratia bonus - Revenue s case before us is that once the assessee follows mercantile system of accounting it was very much incumbent on its part to the claim the impugned relief on the very basis than merely making provision followed by its board s resolution passed in the succeeding financial year(s) - HELD THAT:- We note that this particular issue had arisen between the parties in earlier assessment year as well. [ 2012 (3) TMI 492 - ITAT PUNE] - We thus adopt judicial consistency qua this second issue as well as to reject the Revenue s corresponding substantive grounds in both these appeals. Set off of brought forward losses/unabsorbed depreciation in A.Y. 2007-08 wherein no such losses remain to be carried forward - HELD THAT:- The same admitting involves more a reconciliation than any substantive adjudication on our part. We thus restore the Revenue s instant third substantive ground back to the file of Assessing Officer his afresh computation as per law. Ordered accordingly.

  ---

• 2022 (6) TMI 64
  Unexplained cash payments made outside the books - Reliance on seized material found during the course of section 133A - HELD THAT:- We note that the able assistance coming from the revenue side that this disallowance/addition is very much based on the seized material found during the course of section 133A survey exercise dated 7 8.11.2012. There could hardly be only dispute that such seized documents very much carry presumption of correctness regarding contents therein as per section 292C of the Act. We further find that the assessee could not reconcile the impugned addition figures in its regular books before the learned lower authorities. We thus conclude in this factual backdrop that the impugned addition of Rs. 1,75,27,892/- has been rightly made in both the lower proceedings. The same stands upheld. Ad-hoc addition of Rs. 7,00,000/- - HELD THAT:- Revenue could hardly rebut the fact that the CIT(A) has nowhere adjudicated the same in his order under challenged. We thus restore the assessee s instant latter substantive ground back to the CIT(A) for his detailed adjudication as per section 250(6) of the Act as per within three effective opportunities of hearing. Ordered accordingly.

  ---

• 2022 (6) TMI 63
  Revision u/s 263 - assessment u/s 147 - whether no enquiry was made by the AO in the reassessment proceedings in respect of the substantial difference between the fair market value and the stated purchase consideration (as per sale deed), to examine the source of investment in which the reassessment proceedings had been initiated? - HELD THAT:- The first thing that strikes one on a mere browse of the facts of the case is as to why would one, much less a practising lawyer, who is well aware of the intricacies of law, as well as the practical problems one could face on not stating the truth in the registered documents, which have evidentiary value in law, agree to be a name lender of an immovable property (IP)? And to state that he did it for a sum of Rs.10,000 by entering into an agreement in that behalf two years hence? This is as farcical as it could get. No reasonable person could be expected to be agree thereto, and it is in this context that we asked Sh. Agrawal about the education profile of RS. Rather, if the entire consideration was indeed paid-up and, in any case, to be paid by RS, the transaction becomes even more intriguing and inexplicable. There is no explanation at any stage, including before us, for this, and which we regard as incongruent and, rather, anomalous. What purpose, one may ask, does the same, i.e., name lending, serve? Could a transaction, much less the one at hand, being in respect of acquisition of IP, be entered into without any reason or purpose? The assessment order abysmally fails on the ground of lack of enquiry which, inasmuch as it reflects non-application of mind, is one of the infirmities that renders an order as erroneous and prejudicial to the interest of the Revenue and, thus, liable for revision u/s. 263, even as explained in Malabar Industries Co. Ltd. v. CIT [ 2000 (2) TMI 10 - SUPREME COURT] the other three being: wrong assumption of facts; incorrect application of law; and omission to observe the principles of natural justice. The case law in the matter is legion, with a series of decisions by the Apex Court, both before and after Malabar Industries Co. Ltd. (supra). The same has been (by Finance Act, 2015, w.e.f. 01/6/2015) incorporated as one of the ingredients leading to the invocation of sec. 263, in the provision itself. One can understand where an explanation stands rendered, found acceptable by the AO, though not by the revisional authority, but as noted hereinbefore, the assessee s case is sans any explanation and the assessment order without any basis. Couple this with the admitted fact that the promised consideration of Rs. 6 lacs on 12/08/2009, i.e., the basis on which the sale deed was executed, failed, ought to have put the AO on further enquiry. The acceptance of the assessee s version under the circumstances makes the non-application of mind total. There is, to continue further, no enquiry about the creditworthiness; the returned income, etc.RS, the stated and sole owner of the property. Why, he having initiated the assessment proceedings to enquire into the source of investment as well as about the huge difference between the fair market value and the stated consideration, the AO did not even venture on this, extremely relevant, aspect of the matter. Why would a seller, having executed the sale deed on the basis of the entire receipt by 12/8/2009, forego the same, and assume the risk of default of payment? The story of the cheque becoming unable to be presented and, therefore, payment made in cash in instalments - implying he did not have money to pay her upfront, is again too fantastic to be believed, and for the AO to have believed it upfront, facile. All that was necessary for him to verify the assessee s claim was to seek the bank account of RS; the balance wherein on 12/8/2009, i.e., the date of the cheque, would convey if he indeed intended to pay the balance amount through cheque or even had the resources to do so. Why, it may also throw light on how the sum of Rs. 5 lacs, paid through his bank account, came to be deposited therein, as indeed the source of payment of stamp duty at Rs. 3.11 lacs. The investment of the sale proceeds by the seller, if forthcoming, could also help enable establish the truth of the matter. Before parting with this order, we may, if only for the sake of completeness of our order, advert to one of the arguments raised by Sh. Agrawal, stating that there may be no dearth of inquires that could be raised in the matter, so that, going by such a consideration, every order adverse to the Revenue could possibly be regarded as erroneous insofar as it is prejudicial to the interest of the Revenue, liable for revision u/s. 263. True, an explanation could provoke another, and so on. Application of mind contemplates proper enquiry, which, by definition, would be one as warranted in the facts and circumstances of the case, so as to arrive at a reasonable satisfaction with regard thereto. The whole purpose of inquiry, it may be appreciated, is to ascertain the truth of the matter. Any inconsistency or incoherence in the explanation or the evidence adduced should therefore prompt further inquiry, which thus becomes prima facie warranted. The language employed by the statute (i.e., w.e.f. 01/6/2015) in this regard, i.e., an order passed without making further inquiries or verification which should have been made. is apposite. It is the inquiry/verification by the AO that is relevant for the purpose, and not the explanation/s, if any, furnished before the appellate authority, much less that de hors the record. We do not consider it necessary to dilate further in the matter; the case law in the matter, rendered in different fact settings, being legion. The argument advanced is completely inapplicable in the facts of the instant case, which we have found to be of one of lack of inquiry on the most fundamental aspects of the transaction under examination and, thus, observed an absence of any basis to the AO s findings, and inasmuch as they confirm absence of any interest of the assessee in the property, consider the lack of further inquiry as de hors common-sense and logic. Each of the issues raised by the revisionary authority is pertinent, and unaddressed - Assessee appeal dismissed.

  ---

• 2022 (6) TMI 62
  Addition on account of provision for impairment of loss - Applicability of section 41 - deletion of addition by ld CIT(A) on account of loss resulting from impairment of fixed assets based on the valuation done by Government Registered approved Valuer - HELD THAT:- We have perused the provisions of section 41(2) of the Act carefully and in our view the section deals with the loss arising from building, machinery, plant or furniture which are owned by the assessee and in respect of which depreciation is claimed under clause (i) of sub-section (1) of section 32; and which has been used for the purposes of business which is sold, discarded, demolished or destroyed and the moneys payable in respect of such building, machinery, plant or furniture, as the case may be, together with the amount of scrap value, if any, exceeds the written down value, then so much of the excess as does not exceed the difference between the actual cost and the written down value shall be chargeable to income-tax as income of the business of the previous year in which the money is payable for the building, machinery, plant or furniture. Thus we do not find any substance or merit in the contentions of the Ld. A.R that the assessee s case is covered by the provision of Section 41(2) of the Act as the provisions of Section 41(2) deals with the charging of income in the year in which is sold, discarded, demolished or destroyed, but not the case where the assessee continue to hold the fixed assets and loss or impairment in the value of asset is calculated on the registered valuer report. The case cited by the Ld. A.R. before us namely M/s Indowind Energy Ltd. vs. DCIT [ 2016 (10) TMI 1360 - ITAT CHENNAI] is not applicable as the said decisions was rendered in the context of book profit u/s 115JB of the Act. Under these circumstances we are inclined to reverse the order of the Ld. CIT(A) by allowing the ground no. 1 raised by the revenue. Addition on account sundry balance written off - AO noted that the assessee has written off under the head sundry balances and charged the same to the profit and loss account - HELD THAT:- We note that the substantial part of the amount represented the stock written off in respect of garment stock and stock of trims and only a small portion of the total represented sundry debtors written off. The Ld. Counsel of the assessee vehemently argued before us that this is mere claim of genuine nature made by the assessee under the wrong head which represented the business loss and should be allowed to the assessee. We note that the claim has rightly been allowed by ld CIT(A) by appreciating the facts after going through the details filed by the assessee. Having considered these facts we have no iota of doubt in our mind that even the stocks written off which are rendered unserviceable represented a business loss and has to be allowed while computing the income of the assessee though the assessee has made the claim under the head sundry balance written off. In our considered view the mistake of the assessee would not disentitle it from a lawful expenditure. Accordingly, we upheld the order of Ld. CIT(A) by dismissing the grounds raised by the revenue.

  ---

• 2022 (6) TMI 35
  Reopening of assessment u/s 147 - notice u/s 148A (b) - petitioner was asked to give its response with supporting documents electronically in e-proceeding facility through its e-filing account on or before 18th March, 2022 - HELD THAT:- When the petitioner was asked to substantiate its allegation that in compliance of the aforesaid impugned notice dated 11th March, 2022 whether on or before 18th March, 2022 it had filed any objection in compliance of the same, he could not satisfy this Court from any piece of evidence that on or before 18th March, 2022 he had responded to the impugned notice dated 11th March, 2022 or by any piece of evidence petitioner could satisfy this Court that it had made any prayer for adjournment or extension of time to file such reply. Petitioner submits that its Chartered Accountant orally requested the Assessing Officer to grant him more time and this submission of the petitioner is even not supported by any averments in the writ petition. Sitting in exercise of constitutional writ jurisdiction, this Court cannot act as evidence taking authority to verify such oral statement if at all made by Chartered Accountant or by the Assessing Officer to verify such oral statement alleged to have been made by the Chartered Accountant. In the facts and circumstances of the case and what appears from record we are of the view that in passing the impugned order respondent Assessing Officer has committed no procedural irregularity and in view of the fact that doors for the petitioner are not closed from making out any case for dropping the impugned re-assessment proceeding since petitioner will further get further chance to make out his case after the issuance of notice under Section 148.

  ---

• Customs

• 2022 (6) TMI 61
  Seeking provisional release of goods - furnishing a bank guarantee for the differential duty - Section 110A of the Customs Act, 1962 - HELD THAT:- It is put to Mr Chandra, as to whether the respondents/revenue will be agreeable to the release of the subject goods upon the petitioner furnishing a bank guarantee for the differential duty i.e., the amount equivalent to Rs.32,69,000/- and upon a bond being executed for the full value/estimated value of the subject goods. Mr Chandra and Mr Singh say that they would have no objection, if such a direction is issued by the Court. Matter disposed off.

  ---

• 2022 (6) TMI 60
  Smuggling - Racket - reliability upon confessional statement - overwhelming evidence in the form of mobile phone calls made between the appellants and the other implicated persons who were involved in the smuggling racket - HELD THAT:- it is evident that the Central Board of Excise and Customs appointed the respective Commissioner of Central Excise (Adjudication) situated at Mumbai, Chennai, Delhi and Kolkata as Commissioner of Customs (Adjudication) for the purpose of adjudicating cases as assigned to them by the Central Board of Excise and Customs from time to time. It has emerged from the affidavit filed by the respondent, that the Central Board of Excise and Customs vide order dated 10.11.2006 transferred the files relating to the Show Cause Notice dated 24.08.2001 i.e. the one in question, to the Commissioner of Customs (Adjudication) at Room No. 217, New Custom House. As explained in the aforesaid Affidavit filed on behalf of the respondents, Mr. Gurbans Singh the Commissioner of Central Excise (Adjudication) had been duly vested with the power of Commissioner Customs (Adjudication), and was authorized to adjudicate the show cause notice as he was the incumbent of the said room/ office. Thus, it cannot be said that Mr. Gurbans singh did not have the jurisdiction or authority to adjudicate the show cause notice in question. Petition dismissed.

  ---

• 2022 (6) TMI 59
  Violation of policy conditions - import of used car - prohibited or restricted goods or not - rejection of declared value - redetermination of assessable value - whether the imported car is liable for absolute confiscation or should be allowed the option for redemption? - levy of penalty - HELD THAT:- In present case the declared value has been rejected and the value of the car imported has been enhanced based on the findings recorded by the Chartered Engineer without application of mind by the adjudicating authority. The declared value could be rejected only if the importer fails to furnish any documents evidencing the actual transaction value. It is rather surprising that the Revenue has placed reliance on the chartered engineer report when the Revenue is also not disputing the fact that the car was a used car and hence contents of the report of the chartered engineer is highly imaginary and lacks credence which has to be ignored - Chartered Engineer certificate can be a ground for rejection of the declared value and enhancement of the same, but the same needs to be considered along with the submissions made by the appellant by the adjudicating authority. The order of adjudicating authority should be based on proper appreciation of all the facts and submissions. Hence for this purpose the matter needs to be remanded back to the adjudicating authority for redetermination of the value of the imported goods. The car which was imported, the importation of the same was not prohibited. It is not the case of the revenue that there was any prohibition insofar as the importation of the car was concerned at any point of time and admittedly, the only violation, if at all, was the non-usage of the said car for a period of one year abroad, before importation. That ipso facto cannot make the car liable for absolute confiscation - the appellant admits that there are certain violation of the policy restrictions for which the car should have been confiscated but allowed for redemption against a redemption fine in terms of Section 125 of the Customs Act, 1962. This also needs to be examined by the concerned adjudicating authority and as far as possible the importer should be given the option to redeem. Since the matter is remanded back to the original authority, he should re-determine the liability to penalty and quantum of penalty in remand proceedings - appeal allowed by way of remand.

  ---

• Corporate Laws

• 2022 (6) TMI 58
  Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies - section 252 of Companies Act - HELD THAT:- It is established on record that the company was carrying on the business and was operative at the time of the name struck off from the register of companies. Besides that, it is seen that the captioned appeal has been filed within the stipulated period prescribed under Section 252 of the Companies Act, 2013. Needless to say, that RoC, NCT of Delhi and Haryana have raised no specific objection against the restoration of name of the appellant-company subject to filing of statutory returns with the fees as prescribed. Moreover, nobody would be prejudiced by the restoration of the name of the appellant-company and the restoration of the name of the appellant company in the register is clearly in the interest of the Appellant Company. The lapses on the part of the management in non-filing of the annual returns and financial statements time can be countered by imposing cost. In order to achieve the most satisfactory and fairest solution, the restoration of the name of the appellant-company in the register of the RoC is in the interest of the appellant-company and its stakeholders. Although there is a delay in filing the annual returns as well as financial statements before RoC, however, the same can be compensated by way of requisite late filing fees. The filings of the balance sheet before the RoC were only inadvertent in nature and not willful. Accordingly, the impugned order dated 08.08.2018 passed by the RoC, NCT of Delhi and Haryana where by the name of the present appellant-company i.e., M/s. Genesis Industrial Solution Private Limited was struck-off from the register of Registrar of Companies is hereby set aside, subject to the cost of Rs. 1,00,000/- payable to the Prime Minister Care Fund and it is ordered that the appellant-company name stands restored to its original position, as if it had not been struck-off. Appeal allowed.

  ---

• 2022 (6) TMI 57
  Oppression and mismanagement - issuance of fresh share capital - the shareholding of the Petitioner was reduced rom 84% to 42%. - Sections 59, 213 and 241-242 of the Companies Act, 2013 - valuation of shares - HELD THAT:- It is clear that out of the 4,17,086 equity shares allotted, 10,000 equity shares with a face value of Rs. 100 each were allotted to Ms. Laly Joseph on 30.09.2011 at a premium of Rs. 650 per share. The consideration of Rs. 75,00,000/- due to the 1st respondent company was realized by appropriating the credit balance in the account of Ms. Laly Joseph. The account of Ms. Laly Joseph was credited in the books of accounts of the company on 30.09.2011 by debiting the account of Mr. Nikesh Kumar, the 2nd respondent. It appears that this entry was shown in the books of accounts of the company to recognize the value of 75,000 equity shares with a face value of Rs. 100 each transferred by Ms. Laly Joseph in favor of Mr. Nikesh Kumar, the 2nd respondent, on 04.04.2011 for a consideration of Rs. 75,00,000/-. Through the statement showing the particulars of the consideration received by the 1st Respondent Company against the allotment of Equity Shares to its members from the date of incorporation (26.07.2010) to the date of order of this Tribunal on 02.01.2020. It appears from the report that on 07.09.2010 Rs. 1.5 crore received was used equally for allotment of equity and preference shares (i.e. Rs. 75 lakhs each). Thus it is clear that the petitioner had made the investment to the Company even though the shares are allotted as equity and preference. It is clear that the petitioner had invested an amount of Rs. 1,50,00,000/- (One Crore Fifty Lakhs Only) in the R1 Company. The petitioner has not subscribed to the Memorandum of Association or admittedly she has not done anything in relation to the R1 Company. The only concern of the petitioner is that the amount invested by her is not transferred into equity shares as promised by the 2nd Respondent - it is seen that the petitioner wants this Tribunal to direct the 2nd Respondent to obey the initial promise made by him while the deposits were made by her. It is clear that the R1 Company was established by the 2nd Respondent with the help and investment of the petitioner. It is settled law that when a matter is before NCLT under Section 241-242 irrespective of what parties plead, say, or do, the paramount consideration of the Tribunal is to keep in view what is in the interests of the Company - this Tribunal finds it appropriate to get a valuation of the shares which may enable the Petitioner to leave the company with fair value and fair interest. List TCP/20/KOB/2019 on 30.06.2022 for report of the Independent Valuer/hearing.

  ---

• 2022 (6) TMI 56
  Seeking restoration of the name of the struck off company in the register of companies - Section 252(1) of the Companies Act, 2013 - HELD THAT:- Taking into consideration the provisions of section 252 of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just and equitable to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies and company not being a shell company, the company deserves to be restored. The name is restored - Petition allowed.

  ---

• Insolvency & Bankruptcy

• 2022 (6) TMI 55
  Appointment of independent director/Board of Directors - seeking to order injunction to Respondent No.2 to 7 to present management from exercising any powers with respect to Respondent Company - stay on the operation of the bank accounts of Respondent No.1 to prevent misuse/misappropriation of the funds - inspection of books and papers of Respondent No.1 - conduct of forensic audit of books an accounts of Respondent No.1 for last three preceding financial years - conversion of remaining authorised share capital to equity shares in the name of respondents - HELD THAT:- The Learned Tribunal is already hearing the Appeal for its final disposal there is no need to interfere with the impugned order. However, with the consent of the parties the Appeal is being disposed off with indication that subsequent change in the share if any of the either parties will be subject to the result of the proceeding pending before the Tribunal. This Tribunal expects that the Learned Tribunal considering nature of the dispute raised by the Appellant may take steps for disposal of the Company Petition expeditiously - Appeal disposed off.

  ---

• 2022 (6) TMI 54
  Jurisdiction - Power of NCLT to recall its order - right to file the reply - whether the Adjudicating Authority has the power to recall its order of closing of right to file the Reply? - HELD THAT:- There is a difference between recalling of an order and review on merits of the issue decided by the Adjudicating Authority. No doubt that the Adjudicating Authority has no jurisdiction to review its order after deciding a substantial issue but it has the jurisdiction to recall the order of the kind in dispute i.e. where the right to Reply was closed by an order on the ground that the opportunities granted were not availed. The case is remanded back to the Adjudicating Authority to consider the application on merits and decide the same in accordance with law - appeal allowed by way of remand.

  ---

• 2022 (6) TMI 53
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of interest - principal amount is paid - Financial Creditors - existence of debt and dispute or not - Whether the CIRP can be initiated / triggered solely on the basis of the un-paid amount of interest when the entire principal amount of debt has been discharged by the Corporate Debtor? - HELD THAT:- The interest is not included in the term debt per se. Rather, the interest can be claimed as financial debt only if such debt exists. The interest component alone cannot be claimed or pursued, in absence of the debt, to trigger a CIR process against the corporate Debtor. Further, the application pursued for realization of the interest amount alone is against the intent of the IBC, 2016. It is concluded that the CIRP against a Corporate Debtor cannot be initiated/triggered solely on the basis of the un-paid amount of interest where the entire principal amount has already been discharged by the Corporate Debtor. Petition dismissed.

  ---

• 2022 (6) TMI 52
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repyament of its dues - Financial Creditors - existence of debt and dispute or not - Privity of contract - whether the insolvency proceedings under the code can be initiated against the sole proprietorship firm? - HELD THAT:- The Proprietorship firms are not included within the ambit of the code. Therefore, in case the Inter Corporate Loan was issued in the name of the sole proprietorship, and that not being a legal entity cannot sue or be sued and cannot be considered as the corporate person. That the purported Corporate debtor is not a Limited liability partnership firm is also borne out from the pleadings of the purported financial creditor. The petition was maintainable if there was a privity of contract between the Financial Creditor and the individual. However the said debt is not given to an individual but to a concern namely Bulbulitala cold storages, who has incidentally, not been named as a Corporate debtor. The alleged transaction undertaken between the Petitioner and the Principal borrower will not fall under the definition of Section 3(7) of IBC, 2016. Privity of contract - HELD THAT:- It is observed that the Financial Creditor has no privity of contract with the corporate debtor, and therefore no proceedings can be initiated against the corporate debtor and accordingly reject this petition. Petition dismissed.

  ---

• 2022 (6) TMI 51
  Seeking dissolution of the Company - Section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Liquidator has not received any claims and the Corporate Person has neither secured creditor nor unsecured creditors as on date of liquidation. The Liquidator distributed the amounts to the shareholders of the Company and the details of amounts distributed to shareholders - It is noted that the Liquidator has submitted the preliminary report as required under the Regulation 9 of Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 to the Corporate Person. It is noted that the Liquidator having completed the distribution closed the Bank Account with Kotak Mahindra Bank, Hyderabad on 12.01.2022 and the Liquidator has submitted the Final report dated 09.02.2022 of realisation and distribution to Registrar of Companies, Hyderabad and to IBBI - It is noted that the Corporate Person have been completely wound up and its assets completely liquidated. It is directed that this Corporate Person through its Liquidator, voluntarily liquidated itself so as to get dissolved - application allowed.

  ---

• 2022 (6) TMI 50
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The default has occurred in repayment of the financial debt as on 13.10.2018 and no representation has been made by the Corporate Debtor. It is satisfying that in the present petition financial debt is due and payable - The Petition is filed in the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code and is complete. A default has occurred, and debt has remained unpaid. Accordingly, the application is admitted and CIRP is ordered to be initiated against the CD. Petition admitted - moratorium declared.

  ---

• 2022 (6) TMI 49
  Territorial Jurisdiction - Maintainability of petition before NCLT, Jaipur Bench, since as per Section 60(1) of IBC, 2016, the same should be presented before the NCLT Bench having territorial jurisdiction over the place where the registered office of the Corporate Debtor is located - HELD THAT:- This bench has no jurisdiction in the matter due to territorial prescription as per Section 60(1). Under the circumstances no further prosecution of this matter is possible at NCLT, Jaipur. However, in case this bench directs the return of the petition for fresh filing before New Delhi bench where the registered office of the Corporate Debtor is located, it may cause inconvenience to the Petitioner. The other alternative is to transfer the case. It is seen that as per Rule 16 of NCLT Rules, the power to transfer a case lies with the Hon ble President NCLT. Delay and inconvenience may be obviated if the Hon ble President accords approval to transfer the case to NCLT, New Delhi. Application allowed.

  ---

• 2022 (6) TMI 48
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - Whether the documentary evidence furnished with application shows that the aforesaid debt is due and payable and has not yet been paid by the Corporate Debtor? HELD THAT:- This application being under section 9 of the I B Code, 2016 the Operational Creditor shall establish that an operational debt is due and payable by the Corporate Debtor, exceeding Rs. 1 lac besides default, in payment of the same by the Corporate Debtor. A perusal of the invoices, delivery challans and ledger accounts of the Corporate Debtor clearly disclose that the applicant had supplied garments to the Corporate Debtor for the value mentioned therein. The plea of the Corporate Debtor that it had not received supplies from the Operational Creditor cannot be accepted for the reason that the invoices contained TIN number of the Corporate Debtor besides GST has been paid on the goods supplied - there exists an operational debt of a sum of Rs. 24,75,740/- due and payable by the Corporate Debtor to the Operational Creditor and the same was defaulted by the Corporate Debtor. Time limitation - HELD THAT:- The acknowledgement of debt is within the meaning of section 18 of the Limitation Act. The applicant had established operational debt due and payable by the Corporate Debtor and the Corporate Debtor has defaulted in repayment of the same. Therefore, it is a fit case to put the Corporate Debtor under CIRP - petition admitted - moratorium declared.

  ---

• 2022 (6) TMI 47
  Liquidation of Corporate Debtor - section 33(2) of IBC read with sub-section (1) thereof - HELD THAT:- This is a case where no Resolution Plan was received and the 180 days CIRP period will be expiring on 16/05/2022. Therefore, there is no alternative but to order liquidation of the Corporate Debtor. Application allowed.

  ---

• PMLA

• 2022 (6) TMI 46
  Money Laundering - proceeds of crime - scheduled offence - alleged money scam - twin conditions of Section 45(1) of the PMLA satisfied or not - HELD THAT:- The law in regard to grant or refusal of bail is well-settled. The considerations which normally weigh with the court in granting bail in non-bailable offences are:- the nature and seriousness of the offence; the character of the evidence; circumstances which are peculiar to the accused; a reasonable possibility of the presence of the accused not being secured at the trial; reasonable apprehension of witnesses being tampered with; the larger interest of the public or the State and other similar factors which may be relevant in the facts and circumstances of the case. Although bail is the rule and jail is an exception is well established in our criminal jurisprudence, the gravity of the offence is an important aspect which is required to be kept in view by the Court before releasing a person on bail. It is well settled that the socio-economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The jurisdiction of the Court to grant bail to a person accused of an offence under PMLA is circumscribed by the provisions of Section 45 as amended in 2018. The bail can be granted in a case where there are reasonable grounds for believing that the accused is not guilty of such an offence and that he is not likely to commit any offence while on bail. The twin conditions under sub-section (1) of Section 45 of PMLA as it originally stood were made applicable only to the offences punishable for a term of imprisonment of more than three years under Part A of the Schedule II of the Act. There are reasonable grounds for believing that the petitioner is not guilty of the offences alleged. The reasonable ground mentioned in Section 45(1)(ii) of PMLA connotes substantial probable causes for believing that the accused is not guilty of the offence charged. The investigation is going on and the same is at a crucial stage. Undoubtedly, the investigating agency may require further time to collect all the materials, particularly, the alleged nexus of the petitioner with the crime. The accused No. 1 is absconding. It is made clear that it is for the limited purpose of considering this bail application, that too at this stage, these findings have been arrived at. Indeed, different yardsticks might be required at different stages of the investigation. The petitioner cannot be released on bail at this stage - Bail application dismissed.

  ---

• Service Tax

• 2022 (6) TMI 45
  Classification of services - mining services or not - business of exploration and production of crude oil and natural gas - it is alleged by appellant that after an opportunity of personal hearing was granted to the appellant on 23.08.2017, the first respondent waited for two years and thereafter passed the order dated 29.05.2019 - HELD THAT:- In the interregnum period, two circulars came to be issued by the Ministry of Finance, which are very well applicable to the case of the appellant, but they were not even referred to by the first respondent, while passing the order dated 29.05.2019. Therefore, the learned counsel prayed to this court to provide one more opportunity to the appellant to substantiate their case with supportive documentary evidence before the first respondent, instead of filing an appeal to the CESTAT, as directed by the learned Judge. This court finds some bonafide in the contention so raised on the side of the appellant. The learned Judge, in the order impugned herein, categorically stated that before passing of the order-in-original, two circulars were issued by the Ministry of Finance and the same were not considered by the first respondent, however, he directed the appellant to file statutory appeal by raising all these factual aspects before the Appellate Authority, which is also a fact finding authority. Though this court does not find any error in the course adopted by the learned Judge, taking note of the plea raised by the learned counsel for the appellant, it may not be wrong to grant an opportunity to the appellant enabling them to produce the relevant documentary evidence to support their case before the first respondent. The matter is remanded to the first respondent for fresh consideration, after affording an opportunity of personal hearing to the appellant, on sixth day of June, 2022 between 10 a.m. and 5 p.m. - Petition allowed by way of remand.

  ---

• 2022 (6) TMI 44
  Non-payment of service tax - reimbursement of expenses like conveyance, travelling and mobile expenses - chartered accountant services - HELD THAT:- The issue, in respect of reimbursable expenses has been considered and decided by the Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was found that High Court was right in interpreting Section 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider for such service and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. Thus, service tax could not have been levied on the reimbursed expenses - the Commissioner (Appeals), therefore, was not justified in holding that the reimbursable expenses would be subjected to service tax. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (6) TMI 43
  Levy of penalty u/s 78 of FA - Non-payment of Service Tax - Cargo Handling Services or mining services - work of loading, unloading and transportation of a particular quantity of coal from coalface to railway siding within the specified time frame - whether the appellant had provided cargo handling service for the period 01.04.2007 to 30.05.2007 and mining service for the period 01.06.2007? - HELD THAT:- The taxable service of mining defined under section 65 (105) (zzzy) of the Finance Act means any service provided or to be provided to any person by any other person, in relation to mining of mineral, oil or gas. The Commissioner has placed reliance upon the definition of mines under the Mines Act, 1952 and has observed that all processing including handling and movement of coal from one point of mines to dispatch point of mines are activities carried out in relation to mining of minerals. This issue was examined by the Supreme Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR VERSUS SINGH TRANSPORTERS [ 2017 (7) TMI 494 - SUPREME COURT] . The issue involved was whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Finance Act. The Supreme Court held that the activity would appropriately be classified under the head transport of goods by road service and the activity does not involve any service in relation to mining of mineral as contemplated under section 65(105) (zzzy) of the Finance Act. The Supreme Court also held that the definition of mines has no apparent nexus with the activity undertaken under the service rendered - the Supreme Court categorically held that the activity undertaken by the appellant would fall under the head transportation of goods by road service . The Commissioner (Appeals) was, therefore, not justified in holding that the appellant had undertaken the activity of mining service w.e.f. 01.06.2007. It would also not possible to sustain the order passed by the Commissioner holding that these activities undertaken by the appellant prior to 01.06.2007 would fall under the category of cargo handling service . This is for the reason that the Supreme Court categorically held that the activity undertaken by the appellant would fall under the heading transport of goods by road service . The appellant had, therefore, not provided cargo handling service prior to 01.06.2007 under section 65(23) of the Finance Act. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (6) TMI 42
  Refund of accumulated credit of tax - Tax paid on input service deployed in rendering output service - export of output service - period between October 2015 and March 2017 - N/N. 27/2012-CE (NT) dated 30th June 2012 - HELD THAT:- The recovery proceedings under, and in accordance with, rule 14 of CENVAT Credit Rules, 2004 is the sole authority for denial of credit that has been wrongly availed and such proceedings have nothing to do with export of goods or services. This is demonstrably clear from the general provisions of rule 3 and rule 14 of CENVAT Credit Rules, 2004 and the self-contained re-determination envisaged in rule 6 of the said Rules that can be enforced, once again and by specific provisioning, through rule 14 of CENVAT Credit Rules, 2004. Rule 5 of CENVAT Credit Rules, 2004 does not provide for such recovery of non-monetized credit; on the contrary, denial of refund concurrently retains credit to that extent. Admittedly, this issue had not been raised in the proceedings before the first appellant authority. The outcome of the proceedings before the first appellate authority may well have been impacted by this proposition, along with the binding decisions, now put forth before the Tribunal. Furthermore, appellant also now claims to be in possession of documentation that could negate the denial of refund claim. Revenue has no dispute over any portion of the refund sanctioned by the lower authorities - the Tribunal has been deprived of the wisdom and domain expertise of the first appellate authority insofar as the impugned order is concerned. A fresh determination of the grounds of appeal, including the ones in the appeals now being disposed off, pertaining to the denial of refund, and bar on re-credit, of Rs. 19,73,306, is the appropriate course of action. To enable this, the matter is remanded back to the first appellant authority to ascertain applicability of the decisions of Tribunal to the consequences determined by the original authority of such portion of the claim for which documentary evidence prescribed in notification no. 27/2012-CE (NT) dated 30th June 2012 is presented - appeal allowed by way of remand.

  ---

• Central Excise

• 2022 (6) TMI 41
  Input Tax Credit - non-production of original documents by the appellant - Department observed that they have passed on wrong credit to the customers on various counts including the unspecified documents, without having proper documents and the excess credit/ double incidence of duty has been passed on - HELD THAT:- In view of the perusal of the documents as are already on record including Departments own verification report is also on record. It is held that there are sufficient documents/evidence on record. Thus the findings in the impugned order, that no documents are produced by appellants are hereby held wrong. However, it is still to be appreciated and re considered as to whether those documents and even the verification report pertains to the same invoices which are the subject matter of the Show Cause Notice, as has been mentioned by ld. D.R. It is also to be reconsidered as to whether the documents on record including the invoices are with respect to the amounts mentioned in the Show Cause Notice and whether those documents are sufficient. to falsify the allegations in the Show Cause Notice. This re assessment and re-consideration is only possible at the end of the adjudicating authority below itself. Matter accordingly is remanded to Commissioner (Appeals) to reconsider the entire matter in the light of the documents produced by the appellant - appeal stands allowed by way of remand.

  ---

• 2022 (6) TMI 40
  Levy of penalty u/r 26 of Central Excise Rules, 2002 - clandestine clearance - cigarettes - HELD THAT:- In view of the decision in M/S LUCKY TOBACCO COMPANY PVT. LIMITED, R.B. SHUKLA, RIZWAN KHAN, MURLI DHAR OJHA, T.K. GHOSH, MOHAMMAD HASSAN HASHMI, BHARAT KUMAR PATEL VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS, CENTRAL GOODS SERVICE TAX [ 2019 (5) TMI 369 - CESTAT NEW DELHI] where it was held that there is no evidence to establish manufacture and clandestine removal of alleged quantities by LTCPL on the basis of which demand of Rs. 657,50,888/- could sustain, it is found that the cause of action against these appellants also does not survive. The appeals are allowed.

  ---

• 2022 (6) TMI 39
  Validity of order of remand - appellant /assessee is in appeal before this Tribunal, inter alia, on the ground that the order of remand is bad as the Commissioner (Appeals) is required to pass a reasoned order on merits, as required under Section 35 A (3) of the Act - HELD THAT:- The issue herein is squarely covered in favour of the appellant in view of the precedent order of the Division Bench in the appellant s own case RATHI SPECIAL STEELS LIMITED VERSUS COMMISSIONER CUSTOMS CENTRAL EXCISE, ALWAR. [ 2019 (4) TMI 2057 - CESTAT NEW DELHI] where it was held that No evidence was led by the Department regarding use of raw material, electricity, sale of material or mode or transport nor any evidence was led to substantiate that the Appellant was using the same advanced technology as SAIL. The impugned demand is, therefore, not sustainable. This appeal is allowed.

  ---

• CST, VAT & Sales Tax

• 2022 (6) TMI 38
  Non-deposit of disputed tax as court fee due to the Kerala Legal Benefit Fund - HELD THAT:- It is true that the statute now mandates the amount to be paid to the Kerala Legal Benefit Fund as 1% of the disputed tax amount, by virtue of the amendment dated 07.04.2016. This Court has held, through series of judgments, that the amendment is prospective. It will suffice if the petitioner remits 0.5% of the disputed tax to the Kerala Legal Benefit Fund and also furnishes a personal bond without sureties before the Assessing Authority undertaking to pay the balance amount due under the Kerala Legal Benefit Fund, if the issue is ultimately found against the petitioner. On furnishing the bond as directed above and on payment of 0.5% of the disputed tax to the Kerala Legal Benefit Fund (if not already paid) within four weeks from today, the appellate authority shall number the appeal and consider the same on merits, in accordance with law - Petition disposed off.

  ---

• Indian Laws

• 2022 (6) TMI 37
  Dishonor of Cheque - acquittal of the accused - sufficient cause for making the complaint within such prescribed period or not - clause (b) of sub-section (1) of Section 142 of the NI Act - HELD THAT:- It is clear that if a complaint is filed beyond the statutory period, as prescribed under Section 138 of the NI Act, then, the complainant must satisfy the court that he had sufficient cause for not making the complaint within such prescribed period, i.e. within one month of the date the cause of action arises under the proviso (c) of Section 138 of the NI Act. In the instant case, the cause of action arose to make the complaint to the court when the drawer of the cheque i.e. the respondent no. 1 failed to make the payment of the amount mentioned in the cheque to the complainant within 15 (fifteen) days of the receipt of the demand notice served upon the respondent no.1 by the complainant. The cause of action of making the complaint to the court arose after expiry of 15 (fifteen) days and the complaint ought to have filed within next 30 (thirty) days as embodied under clause (b) of sub-section (1) of Section 142 of the NI Act, but, the complainant made the complaint to the court after 10 days of the expiry of such one month. In the instant case, learned trial Court acquitted the accused person, namely, Joy Deb on the ground that the complainant did not comply with the essential requirements of the provision as contemplated under Section 142(b) of the NI Act since the complaint was filed by the complainant after expiry of statutory period of limitation (thirty days) in terms of proviso appended to Section 138 of the NI Act - in the instant case, the Court took the cognizance wrongly, and further proceeding with the trial caused serious prejudice to both the complainant and the accused from rendering equitable justice to them. In this situation, in the opinion of this Court, it would be appropriate to remit the matter to the learned trial Court. The matter is remitted to the court of the learned Chief Judicial Magistrate, Agartala, West Tripura to proceed afresh keeping in mind the legal positions - Appeal allowed by way of remand.

  ---

• 2022 (6) TMI 36
  Dishonor of Cheque - time limitation to decide a complaint filed under the provisions of Negotiable Instruments Act - case of applicant is that as per the provision of Section 143(3) of the Negotiable Instruments Act a complaint filed under the provisions of Negotiable Instruments Act should be decided within a period of six months from the date of its filing. HELD THAT:- The complaint filed by the applicant under Section 138 of the Negotiable Instruments Act is pending since September, 2019, no doubt after that Covid 19 pandemic emerged but inspite of that by virtue of the provision of Section 143(3) Negotiable Instrument Act trial under the provisions of Negotiable Instrument Act shall be conducted as expeditiously as possible and trial court shall make all the endeavour to conclude the trial within six months from the date of filing of the complaint and further Constitution Bench of the Apex Court in IN RE : EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881 [ 2022 (5) TMI 978 - SUPREME COURT ], also directed to expedite the proceedings pending under Section 138 of the Negotiable Instrument Act therefore, in view of the matter trial court is directed to expedite the proceedings of the aforesaid complaint case filed under the Negotiable Instrument Act and shall make all endeavour to decide the same within a period of six months from the date of production of certified copy of this order. Application disposed off.

  ---