TMI Tax Updates - e-Newsletter
June 30, 2021

Case Laws in this Newsletter:

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

Articles

1. Income Tax Due Date Further Extended beyond June, 2021

   By: CSLalit Rajput

2. Shocking reality - NATIONAL FACELESS ASSESSMENT CENTRE (NFAC ) SEEMS NOT PREPARED AND EQUIPPED TO HANDLE PENALTY MATTERS or NFAC is also adopting easy going approach and harassing assessee.

   By: DEVKUMAR KOTHARI

3. TAXABILITY OF COMMISSION FROM AUCTION OF FLOWERS

   By: Dr. Sanjiv Agarwal

4. PUBLIC ANNOUNCEMENT IN THE PROCESS OF DELISTING OF EQUITY SHARES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Functionality to register complaint on misuse of PAN in GST Registration

2. Electoral Bearer Bond Scheme 2018 - Sale by Authorised Branches of State Bank of India (SBI) during July 01-10, 2021

3. Finance Minister Smt. Nirmala Sitharaman holds 6th review meeting on CAPEX & infrastructure roadmap

4. NITI Aayog Releases Report on Not-for-Profit Hospital Model in India

Notifications

Customs

1. 34/2021 - dated 28-6-2021 - ADD

Seeks to further amend notification No. 29/2017-Customs (ADD), dated the 14th June, 2017 to extend the levy of Anti-Dumping duty on 'Glazed/Unglazed Porcelain/Vitrified tiles' originating in or exported from China PR, up to and inclusive of 31st December, 2021.

DGFT

2. 9/2015-2020 - dated 28-6-2021 - FTP

Amendment of import policy conditions for items under Exim code 07019000 of Chapter 07 of ITC (HS), 2017, Schedule –I (Import Policy)

GST - States

3. G.O. Ms. No. 22 - dated 18-6-2021 - Puducherry SGST

Puducherry Goods and Services Tax (Fifth Amendment) Rules, 2021.

4. G.O. Ms. No. 21 - dated 18-6-2021 - Puducherry SGST

Amendment in Notification G.O. Ms. No. 34, dated the 5th August, 2019

5. G.O. Ms. No. 20 - dated 18-6-2021 - Puducherry SGST

Amendment in Notification G.O. Ms. No. 12, dated the 10th May, 2021

6. G.O. Ms. No. 15 - dated 18-6-2021 - Puducherry SGST

Amendment in Notification No. G.O. Ms. No. 6, dated 14th January, 2019

7. G.O. Ms. No. 93 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/269(c-4)/2019, dated 29th March, 2019

8. G.O. Ms. No. 92 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-14)/2017, dated 29th June, 2017

9. G.O. Ms. No. 91 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-4)/2017, dated 29th June, 2017

10. G.O. Ms. No. 89 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/301(f-2)/2019, dated 23rd April, 2019

11. G.O. Ms. No. 88 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/289(c-4)/2021, dated 11th May, 2021

12. G.O. Ms. No. 87 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/232(h-5)/2020 dated 13th April, 2020

13. G.O. Ms. No. 86 - dated 2-6-2021 - Tamil Nadu SGST

Seeks to rationalize late fee for delay in filing of return in FORM GSTR-7

14. G.O. Ms. No. 85 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/1041(d-2)/2017, dated 29th December, 2017

15. G.O. Ms. No. 84 - dated 2-6-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/79(h-1)/2018, dated 23rd January, 2018

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD/CDMRD_DRM/P/CIR/2021/586 - dated 29-6-2021

Cross Margin in Commodity Index Futures and its underlying constituent futures or its variants

Highlights / Catch Notes

GST

• Training for JEE/NEET by Haryana's Welfare Directorate is GST/IGST exempt if government-funded.

  Case-Laws - AAR : Levy of GST / IGST - training to students at behest of Directorate of Welfare of Scheduled Caste and Backward Classes Department, Haryana - the training imparted by M/S Sachdeva Colleges Ltd. to the students selected through Directorate of Haryana for JEE (Non-Med.) and NEE T (Medical) are exempt, subject to that the whole expenditure is borne by the Center/State Government. - AAR
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Income Tax

• High Court Affirms Timely Appeals Under Direct Tax Vivad Se Vishwas Act, 2020, for Dispute Resolution Eligibility.

  Case-Laws - HC : Direct Tax Vivad Se Vishwas Act, 2020 - It is a matter of first principles that the order of condonation of delay relates to the appeal and once delay has been condoned in the filing of appeal that means in this particular case appeal has been filed in time i.e. before the specified date i.e. 31st January 2020 as required under the DTVSV Act thereby making Petitioner an eligible appellant to avail the benefit of the DTVSV Scheme - HC
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• Petitioner's Ownership Claim Over Land Unproven; Alleged Transfer Violates Section 281 Amid Recovery Proceedings.

  Case-Laws - HC : Recovery proceedings - Attachment of property - ownership over the property in respect of which the petitioner is now seeking to exercise an exclusive right as an owner - In the facts of the case what is evident is that, the so-called transfer of undivided share in the land by the two brothers namely the paternal uncles of the petitioner in favour of the petitioner’s father has not been proved. Such transfer would been contrary to Section 281 inasmuch as notice under Section 158BD had been initiated - HC
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• Delhi Police Welfare Fund Gains Tax Exemption Status u/s 11, Eligible for Registration u/s 12A.

  Case-Laws - AT : Exemption u/s 11 - eligible for registration under section 12A - the appellant, the Delhi Police Welfare And Recreational Club Fund is charitable in its objects and is a body that constitutes a section of the public, and so, the fund founded for the benefit of such section should be treated as charitable in its objects, attracting thereby the exemption from the exigibility to tax. - AT
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• Generic Show Cause Notice Issued u/s 274/271(1)(c) Lacks Specificity, Potentially Affecting Penalty Validity.

  Case-Laws - AT : Penalty u/s 271(1)(c) - defect in the SCN - AO has issued a generic show cause notice in a printed form without mentioning the specific charge by striking off the inapplicable words. Thus, the show cause notice issued under section 274 r.w.s section 271(1)(c) is a vague and omnibus notice revealing complete non-application of mind by the assessing officer. - AT
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• Income Tax Act Section 263: Assessment Order Halted Pending Appeal Resolution, Limitation Period in Focus.

  Case-Laws - AT : Revision u/s 263 - period of limitation - We adopting a cautious but not a pedantic approach, though, refrain from restraining the A.O from proceeding with the assessment proceedings, however, at the same time, in all fairness herein direct him not to pass the assessment order giving effect to the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021 for a period of three months from the date of this order or till the disposal of the appeal filed by the assessee before us i.e against the order passed by the Pr. CIT u/s 263, dated 31.03.2021, whichever is earlier. - AT
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• No Addition u/s 68 for Alleged Bogus LTCG; Assessee Qualifies for Exemption u/s 10(38.

  Case-Laws - AT : Addition u/s 68 - Bogus LTCG on sale of shares - all the documentary evidences have not been found to be non genuine and the source of sale consideration is well supported by contract note issued by the registered broker and shares have been transferred from Demat account which were held for more than 12 months, the assessee is eligible for the exemption u/s 10(38) of the Act for Long Term Capital Gain and thus no addition was called for u/s 68 as well as the addition for estimated brokerage expenses - AT
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• Court Rules Against Reopening Assessment: No Evidence of Tax Evasion, Notice Based Only on VAT Info Invalid.

  Case-Laws - AT : Reopening of assessment u/s 147 - All the documentary evidences shows no iota of evidence that there was any intention of the assessee to evade tax by over stating the purchase - In the instant case, no efforts were made and just based on the information received from VAT Department notice was issued -mere change of opinion cannot be a basis to issue a notice u/s 148 - AT
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Customs

• Court Grants Petitioner MEIS Scheme Benefits, Rules Denial Due to Delay Unjust in Specific Case Circumstances.

  Case-Laws - HC : Amendment of shipping bills - It would be too harsh to state in such circumstances, specifically in the light of the facts as noticed by me above in paragraph Nos.2 to 5 that the petitioner should be denied the benefit merely on the ground of delay. This argument is rejected - The petitioner is entitled to the benefit under the MEIS Scheme - HC
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• Court Rules Black Pepper Imports Ban Below Rs. 500 Valid; Finds Writ Petition Premature Due to Invoice Inflation Allegations.

  Case-Laws - HC : Release of seized goods - Black Pepper - freely importable goods or not - The prayer sought for in the writ petition is not maintainable or rather has to be taken to be premature, considering the facts of the case, since the Revenue states that the import of black pepper into India, which is valued below ₹ 500/- is prohibited taking into consideration the welfare of the agriculturists and it is alleged by the DRI that the imports had been effected by the appellant by inflating the invoice value. - HC
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• Customs Broker's License Revocation Overturned; Not Liable for Undervaluation Without Importer Contact; Penalty Too Harsh.

  Case-Laws - AT : Revocation of Customs Broker License - alleged undervaluation - It is not within the remit of the customs broker to be conversant with the negotiations on price or the manner of transference of agreed recompense and, therefore, compliance with the said obligations would not have altered the allegations leveled against the importer, whether on the beneficial owner or of that on record. - For not having insisted upon contact with the importer on record, revocation of licence and, that too, for first breach is, indeed, drastic - AT
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• Customs broker's license suspension upheld over export overvaluation claims; appellant failed to counter Commissioner's findings.

  Case-Laws - AT : Continuation of Suspension of Customs Broker Licence - overvaluing the export goods - The appellant could not bring any evidence to negate the prima facie findings of the Commissioner, therefore, there are no reason to interfere with the order of suspension - AT
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Indian Laws

• Court Acquittal in Cheque Dishonor Case Overlooks Presumptions in Negotiable Instruments Act, Needs Appellate Review.

  Case-Laws - HC : Dishonor of Cheque - acquittal of the accused - After having admitted that the Ext. P1 cheque was issued by him, in the absence of a plausible and satisfactory explanation, the trial court ought to have drawn the presumptions under Sections 118 and 139 of the Act. The court went wrong in taking the statement given by first respondent under Section 313 of the Cr.P.C. as gospel truth and acquitting him from liability. That finding requires interference in appeal. - HC
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• Court Directs Accused to Deposit 20% of Compensation, Not Fine, in Cheque Dishonor Appeal u/s 138.

  Case-Laws - HC : Dishonor of Cheque - Requirement to deposit of the amount - the word used in Section 138 is "fine" and therefore, discretion is available to the Court under Section 148 to impose condition for preferring an Appeal to deposit minimum of 20% of the "fine" or "compensation" Awarded by the trial Court. - considering the financial crunch that the accused will have to face in this trying time, the Court deems it fit to directed the accused to deposit 20% of compensation instead directing to deposit 20% of the fine imposed - HC
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Central Excise

• Appellant's Refund for Excess Excise Duty Approved; Unjust Rejection Overturned with Chartered Accountant's Certification.

  Case-Laws - AT : Refund of excess paid excise duty - It is clear from these documents that the appellant has not claimed rebate on these invoices. They have also furnished the Certificate from their Chartered Accountant to show that the rebate has not been claimed on these invoices. - The rejection of refund is unjustified - AT
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VAT

• Authorities Urged to Address Delay Tactics in VAT and Sales Tax Cases to Safeguard State Revenue and Public Interest.

  Case-Laws - HC : Unnecessary delay - In the present case, undoubtedly, the assessees are adopting the delay tactics. Unfortunately, the system also supports such litigants in disposal of the matters as such matters are kept pending for years together. Ultimately, such delay causes injury to the revenue for the State and sufferers would be the public at large in the society. Thus, the authorities are bound to be careful while dealing with such matters. - HC
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• High Court dismisses petition; Tribunal grants stay on tax recovery, reduces pre-deposit from 25% to 15.

  Case-Laws - HC : Maintainability - requirement with the pre-deposit or security - The Tribunal has considered the relevant aspects namely the financial position of the petitioner and has exercised its discretion to the extent of granting the stay against the recovery of the dues by directing the petitioner to deposit 15% of the tax dues instead of 25% as directed by the first Appellate Authority. - Petition dismissed - HC
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• Court Ruling: Lack of Personal Hearing Violates Principles of Natural Justice, Denying Effective Opportunity to Present Case.

  Case-Laws - HC : Effective opportunity - Courts have consistently interpreted the phrase 'effective opportunity' to mean and include an opportunity of personal hearing as well. In this case, since admittedly the petitioner has not been heard in person, the impugned order has been passed in violation of principles of natural justice and without affording adequate opportunity of personal hearing to put forth its case - HC
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Case Laws:

• GST

• 2021 (6) TMI 1011
  Levy of GST / IGST - training to students at behest of Directorate of Welfare of Scheduled Caste and Backward Classes Department, Haryana by applicant under a training programme for which total expenditure is borne by state Govt. of Haryana - Entry No. 72 of the Haryana Govt. Excise Taxation Department Notification No. 47/ST-2 Dated 30.06.2017 - requirement of registration under the State of Haryana under HGST/CGST. HELD THAT:- The applicant is providing training for JEE (Non Med.) and NEET (Med.) to the selected candidates at the behest of Directorate of Welfare of Schedule Caste and Backward Class, Department of Haryana, Chandigarh, Class 12 ff Non-Medical and Medical aspirants. The applicant has placed reliance on the entry No. 72 of the notification No. 47 dated 30-06-2017 - This authority also agrees with the operative part of the above stated letter issued to the Director, Welfare of Schedule Caste and Backward Classes Department, Haryana. Therefore, the training imparted by M/S Sachdeva Colleges Ltd. to the students selected through Directorate of Haryana for JEE (Non-Med.) and NEE T (Medical) are exempt under entry 72 of Notification No. 47 of the HGST Act subject to that the whole expenditure is borne by the Center/State Government. Requirement of registration - HELD THAT:- Section 23 of the Act provides that any person engaged exclusively in the business of supplying goods and services or both that are not liable to tax or fully exempt from tax under this Act or under the Integrated Goods and Service Tax Act. So the applicant is not liable for registration till he supplies goods and services or both that are not liable to tax or fully exempt from lax under the GST Acts. Application disposed off.

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• 2021 (6) TMI 1001
  Grant of Anticipatory Bail - defalcation in accounting of input tax credit - false and fabricated invoices so to take advantage of input credit, without supply of goods - HELD THAT:- This court has no reason to doubt the undertaking given by Sri Mathur that unless and until after receiving evidence and documents produced by the applicant, if satisfaction is arrived in terms of their being any suppression of fact or mis-statement or improper availment of input tax credit, no action is warranted to be taken to arrest the applicant. Application dismissed.

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• 2021 (6) TMI 960
  Refund of unutilized Input Tax Credit accumulated due to Export of Goods and Service - reversal of supply of exempted supply - zero rated supply - personal hearing was not granted to the Appellant - principles of natural justice - sub Section 3(a) of Section 16 of IGST Act, 2017 read with Rule 89 of CGST Rules, 2017 - HELD THAT:- The appellant has argued that during the month of August 2018, the Appellant had transferred MEIS Scrips/Licence on receipt of consideration charges amounting to Rs. 8,69,740/- which is reflected in Para 3.1(c) of the Form GSTR-B for August 2018 as with effect from 13-10-2017, Duty Credit Scrips [MEIS etc.] falling under Heading 4907 have been exempted from levy of Goods and Service Tax by Notification No. 35/2017-C.T. (Rate), dated 13-10-2017.I find that the appellant has further submitted that for the supply of MEIS Licence, the Appellant had availed Input Tax Credit of Rs. 14,362/- on Consultancy Services used exclusively for exempted supply of MEIS Licence and also availed Input Tax Credit of Rs. 50,438/- in respect of Telephone services, Courier Service, Computer Repairing Services, Internet Services, Rental Services and purchase of Stationary items used for taxable supplies including Zero-rated supplies as well as exempted supply of MEIS Licence. Rule 42(1) provides the manner of determination of the amount of input tax credit to be reversed in terms of Section 17 (2) of CGST Act, 2017.I observe that the appellant has produced a chart showing details of availment of Input Tax Credit of Rs. 14,362/- in respect of Input Service used exclusively for exempted supply of MEIS Licence and Rs. 50,438/- in respect of Input and Input Services used for taxable supplies including Zero-rated supplies as well as exempted supply of MEIS Licence - he amount of input tax credit attributable to supply of exempted supply in terms of Rule 42 of the CGST Rules, 2017 during the month of August 2018 comes to Rs. 16,313/-(Rs. 14362/- in respect of consultancy service used exclusively for supply of exempted service and Rs. 1951/- being common input tax credit) - It is observed that the appellant has paid the excess credit amounting to Rs. 16,313/- vide entry numbers DC0806200082724 dated 20-06-2020 in electronic ledger account /Form GSTR-3Band has furnished Form GST DRC-03. The appeal filed by the appellant is allowed upto the extent of excluding the value of exempt supplies other than zerorated supplies in the Adjusted Total Turnover - appeal disposed off.

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• Income Tax

• 2021 (6) TMI 1010
  Disallowance of deduction u/s 10B - AO disallowed the claim of the assessee for deduction under section 10B for want of rectification accorded by the Board of Approval appointed for this purpose by the Government of India - assessee has presented before the AO that if at all the claim under section 10B is not allowed, the same may be considered under section 10A - HELD THAT:- The issue involved in the present appeals is covered by the decision of M/S MPHASIS LTD. (FORMERLY KNOWN AS MPHASIS BFL LTD.) [ 2019 (11) TMI 1383 - SUPREME COURT] AND Mphasis Ltd.[ 2014 (8) TMI 690 - KARNATAKA HIGH COURT] wherein held that if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term total turnover in Section 10-A, there is nothing in the said Section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. Though when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to the same, the said ordinary meaning to be attributed to such word is to be in conformity with the context in which it is used. - Also see M/S. ZYLOG SYSTEMS LIMITED [ 2020 (3) TMI 181 - MADRAS HIGH COURT] - Decided in favour of assessee.

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• 2021 (6) TMI 1008
  Direct Tax Vivad Se Vishwas Act, 2020 - whether Petitioner is an eligible appellant under the provisions of the DTVSV Act? - Whether if the appeal before the appellate forum, CIT(A) in this case, is pending before the specified date i.e. 31st January 2020, then the applicant would be an eligible appellant? - HELD THAT:- The undisputed facts that emerge are that Assessment Order being passed on 26 th December 2019, the demand was raised before the specified date i.e., 31st January 2020. Petitioner had filed appeal before Commissioner of Income Tax (A) on 6th February 2020 and the condonation of delay application was filed on 20th February 2020. The condonation delay as per the affidavit of the department came on 25th December 2020. In view of the department s own stand that the delay in filing the appeal before the CIT(A) has been condoned, there is nothing left for us to say further. It is a matter of first principles that the order of condonation of delay relates to the appeal and once delay has been condoned in the filing of appeal that means in this particular case appeal has been filed in time i.e. before the specified date i.e. 31 st January 2020 as required under the DTVSV Act thereby making Petitioner an eligible appellant to avail the benefit of the DTVSV Scheme. Moreover, the department has in its affidavit in reply clearly stated that the Petitioner is an eligible appellant under the DTVSV Act and that Petitioner also does not fall within the disqualification in Section 9 of the DTVSV Act. Petition allowed.

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• 2021 (6) TMI 1003
  Assessment of trust - depreciation allowable as application of income on charitable objects - Double deduction - HELD THAT:-Substantial questions of law that are raised in the above appeal were already decided in M/s.National College Council, Teppakulam, Tiruchirapalli [ 2021 (4) TMI 469 - MADRAS HIGH COURT ] Substantial questions of law, which have been framed in these appeals, have been answered against the Revenue as relying on RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [ 2017 (12) TMI 1067 - SUPREME COURT] . - Decided against revenue.

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• 2021 (6) TMI 997
  Recovery proceedings - Attachment of property - ownership over the property in respect of which the petitioner is now seeking to exercise an exclusive right as an owner - case of the petitioner is that the property in question which has been attached by the impugned notice dated 22.03.2007 was transferred in his favour under a Family Settlement Deed - as submitted that the petitioner is not only in possession of the property but is also receiving rents from the tenants and therefore the question of attaching the property under the provisions of Section 226(3) of the Income Tax Act, 1961 does not arise - HELD THAT:- As per section 281 of the Income Tax Act, 1961 where, during the pendency of any proceeding under the Act, or after completion thereof, before service of notice under Rule 2 of the Second Schedule, any assessee creates any charge of his assets in favour of any other person or part of the possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever, such charge or transfer is void as against any claim in respect of any tax or any other sum payable by an assessee as a result of completion of the said proceedings or otherwise. Since Section 158 BD of the Income Tax Act, 1961, proceedings were pending for the Block Assessment Period from 01.04.1988 to 15.12.1998, all transfers are void under Section 281 of the Income Tax Act, 1961. In the facts of the case what is evident is that, the so-called transfer of undivided share in the land by the two brothers namely the paternal uncles of the petitioner in favour of the petitioner s father has not been proved. Such transfer would been contrary to Section 281 inasmuch as notice under Section 158BD had been initiated against Late Milapchand Dadha and Sons (HUF) as early as 09.07.2001. The so-called family arrangement pursuant to which transfers were allegedly affected are to be declared as void. As far as, the arrears of tax from M/s.Dadha Estates (P) Ltd is concerned, it is not clear on what basis the Income Tax Department had issued the impugned notice inasmuch as the said company is not the owner of the property. Encumbrance Certificate dated 20.02.2009 filed along with the typed set of papers seems to indicate that the same property is under a charge in favour of Andhra Bank. M/s.Dadha Brothers Ltd and the petitioner s father are shown to be party to the transactions and defaulted and proceedings were initiated before the Debt Recovery Tribunal, Hyderabad in O.A.No.146 of 1996 by the lending bank and they were default of Rs. 82,58,660/- and that a Recovery Certificate dated 10.04.2002 had been issued. These factors raises serious doubt as to the ownership over the property in respect of which the petitioner is now seeking to exercise an exclusive right as an owner. There are several disputed questions of facts which remain unanswered and there it cannot be unravelled in the course of a summary proceedings under Article 226 of the Constitution of India. The petitioner has to therefore necessarily approach a civil court in accordance with law to establish his rights, if any, over the property. Petitioner is fighting a proxy battle for and on behalf of the Coparcenors Milapchand Dadha and Sons (HUF) of which his father and his paternal uncles were Coparcenors and by virtue of his birth in the family, the petitioner alone became a Coparcenor. No reasons to interfere with the proceedings initiated by the respondent/Income Tax Department inasmuch as not only the late Milapchand Dadha and Sons (HUF) is in arrears of tax to the Income Tax Department but also the said company which had put the construction of the Dadha Complex, at New No.365, Mint Street, Sowcarpet, Chennai-600 079 was in arrears of tax. That apart, there is Recovery Certificate issued for the same property in favour of Andhra Bank in O.A.No.146 of 1996.

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• 2021 (6) TMI 993
  Disallowance u/s 14A read with Rule 8D - HELD THAT:- It is not in dispute that the question of law framed by this appeal has already been considered by Division Bench of this Court in Commissioner of Income-Tax and another vs. Sabari Enterprises [ 2007 (7) TMI 169 - KARNATAKA HIGH COURT] As perused the judgment rendered in the aforesaid case and we find that the reasons set out therein to disallow the contention of the revenue are just and proper and do not call for any reconsideration. - Decided in favour of assessee.

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• 2021 (6) TMI 988
  Exemption u/s 11 - eligible for registration under section 12A - nature of activity of promotion of welfare and recreational activities of the police personnel - Charitable activity u/s 2(15) - Only objection is that the aims objects of standing order No. 270 of Commissioner of police, Delhi clearly establish that the primary objective of the appellant club is to provide benefit to its members of Delhi police personnel only and not to public at large or general public and, therefore, it violates the provisions of section 2 (15) - HELD THAT:- In AP Police Welfare Case [ 1983 (3) TMI 19 - ANDHRA PRADESH HIGH COURT ] held that insofar as public employment is concerned and in particular the government formed by, for and of the people is the employer, even it is to be taken in a restrictive sense, and the employer is the representative of the public or the people - in the ultimate analysis, it is the public that is the employer; qui facit per alium facit per se, and so, to the service rendered by the employees in the public employment, the beneficiaries are the public. On this test the court reached a conclusion that AP Police Welfare Association which is a charitable in its objects, as is quite apparent from the very objectives laid down under the rules framed thereunder, is a body that would constitute a section of the public and so, the fund founded for the benefit of such section should be treated as charitable in its object, attracting thereby the exemption from the exigibility to tax. It is clear that the issue involved in this matter is no longer res Integra and is squarely covered by the judicial decisions for a long time. In the absence of any change in the facts or law holding the field, we find it difficult to take a different view or not to follow the binding precedent of the higher judicial fora. We accordingly, following the same, hold that the appellant, the Delhi Police Welfare And Recreational Club Fund is charitable in its objects and is a body that constitutes a section of the public, and so, the fund founded for the benefit of such section should be treated as charitable in its objects, attracting thereby the exemption from the exigibility to tax. With this view of the matter, we set aside the impugned order passed by the ld. CIT(E) and hold that the appellant is eligible for registration under section 12 A of the Act and direct its registration thereunder accordingly. - Appeal of the assessee is allowed.

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• 2021 (6) TMI 987
  Deduction u/s 10A - whether the expenditure incurred in foreign currency is required to be excluded from the export turnover or not when the assessee is exporting only software? - HELD THAT:- As decided in own case [ 2014 (1) TMI 1751 - ITAT BANGALORE] assessee is in the business of exporting computer software and therefore the expenses incurred in foreign exchange cannot be said to be one incurred by the assessee in connection with providing technical services outside India. The assessee does not claim exclusion of telecommunication charges or insurance attributable to the delivery of software outside India. The claim for exclusion from the export turnover is made by the assessee only in respect of expenses incurred in foreign currency in providing technical services outside India. We however do not have the break-up of the item of expenditure incurred in foreign currency outside India. A copy of the agreement between the Assessee and Robert Bosch, Germany titled software project agreement (SPA) has been filed before us. We do not know as to whether the entire export turnover is in relation to this client alone or there were other clients for whom the Assessee rendered computer software development services. A perusal of the SPA filed before us shows that the Assessee agreed to carry out software development work for Robert Bosch Germany at Germany also. The terms of the agreement for rendering services on-site at clauses-5.2 to 5.2.6 of the agreement does not involve rendering of any technical services. The question as to whether the entire expenditure incurred in foreign exchange outside India relates to providing technical services outside India cannot be decided in the absence of the required information as stated above. If the claim of the Assessee that the entire expenditure incurred in foreign exchange outside India does not relate to providing technical services outside India, then the same cannot be excluded from the export turnover. Whether the amount deducted from export turnover is also required to be deducted from total turnover or not? - Since this issue is related to computation of deduction u/s 10A, this issue also restored to the file of the Ld. CIT(A) with the direction to follow the decision rendered in the case of Tata Elixi Ltd. [ 2016 (3) TMI 460 - KARNATAKA HIGH COURT] and also decision rendered in the case of HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] . Deduction of unrealized from the export proceeds, while computing deduction u/s 10A on the ground that the same has not been realised within a period of 6 months - Ld. A.R. invited our attention to Master Circular No.9/2008-09 dated 1st July, 2008 issued by RBI. The Ld. A.R. submitted that the RBI has granted general permission to realize the export proceeds within a period of 12 months from the date of export on or after 1st September, 2004. We notice that the Ld. CIT(A) has not adjudicated this aspect. Accordingly, we restore this issue also to his file for examining the same afresh by considering the circular issued by RBI. Claim of foreign tax credit - Since this is a legal ground and all facts are available on record, we admit the same. Since this issue requires examination at the end of AO, we restore this issue to the file of the A.O. for examining the claim of the assessee in accordance with law.

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• 2021 (6) TMI 986
  Revision u/s 263 - period of limitation - Whether assessee is an agent of the state government of Maharashtra? - HELD THAT:- Only exception for extending the stipulated time period for giving effect to the order passed by the Pr. CIT u/s 263 can be found in the first proviso to sub-section (5) of Sec. 153 of the Act, which contemplates, that in a case effect is to be inter alia given by the A.O to an order passed under Sec. 263, wholly or partly, otherwise than by making a fresh assessment or reassessment, the period therein specified can be extended in a case where a request is made by the A.O to the Pr. CIT or CIT, that for reasons beyond his control, it is not possible for him to give effect to such order within the stipulated time period, pursuant whereto, on satisfaction of the Pr. CIT or CIT an additional period of six months to give effect to the order may be allowed. However, as in the case before us the Pr. CIT had directed the A.O to frame a de novo assessment, therefore, the first proviso to sub-section (5) of Sec. 153 and the extension therein contemplated would not be applicable. As such, in the case before us the de novo assessment as had been directed by the Pr. CIT vide his order passed u/s 263, dated 31.03.2021, without any choice, has to be framed by the A.O within a period of twelve months from the end of the financial year in which order u/s 263 was passed by the Pr. CIT. We find, that the legislature in all its wisdom had expressly vide Explanation 1 to Sec. 153 of the Act carved out certain circumstances wherein the period involved is to be excluded for computing the period of limitation. Although, we find, that as per clause (ii) of Explanation 1 to Sec. 153 of the Act, the period during which the assessment proceedings are stayed by an order or injunction of any court , the period therein involved is to be excluded for the purpose of computing the limitation for framing the assessment, reassessment and re-computation as envisaged in the said statutory provision, however, no such exclusion has been carved out by the legislature in all its wisdom in a case where the assessment proceedings are stayed by an order passed by the Tribunal. Accordingly, it is in the backdrop of the aforesaid mandate of law that we shall herein deal with the request of the assessee for restraining the A.O from framing the de novo assessment in pursuance to the order passed by the Pr. CIT u/s 263, dated 31.03.2021. Adverting to the claim of the assessee that it has a good case on merits, without expressing any opinion, we prima facie find substantial force in the same, for the reason, that the issue involved in the present appeal, viz. as to whether or not the assessee is an agent of the state government of Maharashtra, as claimed by the ld. A.R is squarely covered by the respective orders passed by the Tribunal in the assessee s own case, wherein the respective orders passed by the Pr. CIT-15, Mumbai u/s 263 of the Act, involving identical facts are stated to have been set-aside by the Tribunal. Though, we remain conscious of the fact that circumscribed by the prescribed time limitation for framing of an assessment pursuant to an order passed by the Pr. CIT u/s 263 of the Act, there is an innate limitation on staying of the assessment proceedings, but then, at the same time we cannot also remain oblivious of the fact that in case the aforesaid request of the assessee is rejected at the threshold, the same may result to multiplicity of litigation which could otherwise have been avoided. We, thus, adopting a cautious but not a pedantic approach, though, refrain from restraining the A.O from proceeding with the assessment proceedings, however, at the same time, in all fairness herein direct him not to pass the assessment order giving effect to the order passed by the Pr. CIT u/s 263 for a period of three months from the date of this order or till the disposal of the appeal filed by the assessee before us i.e against the order passed by the Pr. CIT u/s 263, dated 12.03.2021, whichever is earlier.

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• 2021 (6) TMI 985
  Penalty u/s 271(1)(c) - defect in the show causer notice issued under section 274 - non specification of charge - excess claim of deduction u/s 36(1)(viia) in respect of provision for bad and doubtful debt relating to rural branches as AO observed that certain branches in respect of which the assessee had claimed the deduction, do not qualify as rural branches - HELD THAT:- AO has issued a generic show cause notice in a printed form without mentioning the specific charge by striking off the inapplicable words. Thus, the show cause notice issued under section 274 r.w.s section 271(1)(c) is a vague and omnibus notice revealing complete non-application of mind by the assessing officer. Thus, as relying on SMT. KAUSHALYA AND OTHERS [ 1995 (1) TMI 25 - BOMBAY HIGH COURT] penalty order passed under section 271(1)(c) of the Act, has to be declared as invalid. Thus respectfully following the Full Bench decision of Mohammed Farhan A Shaikh vs DCIT [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] we hold the impugned order passed under section 271(1)(c) of the Act as invalid and without jurisdiction due to defect in the show cause notice issued under section 274 r.w.s. 271(1)(c) of the Act. Thus, the penalty order passed in pursuance thereto, being vitiated, has to be quashed. Accordingly, we uphold the decision of learned Commissioner (Appeals) in deleting the penalty imposed under section 271(1)(c) - Decided in favour of assessee.

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• 2021 (6) TMI 984
  Revision u/s 263 - period of limitation - case of the assessee was selected for limited scrutiny under CASS for specific issues viz. (i) contract receipts/fees mismatch; (ii) sundry creditors; and (iii) sales turnover mismatch - as submitted by assesee Pr. CIT had blatantly traversed beyond the limited scope of jurisdiction vested with him u/s 263 - HELD THAT:- As in the case before us the Pr. CIT had directed the A.O to frame a de novo assessment, therefore, the first proviso to sub-section (5) of Sec. 153 and the extension therein contemplated would not be applicable. As such, in the case before us the de novo assessment as directed by the Pr. CIT vide his order passed u/s 263, dated 31.03.2021, without any choice, has to be framed by the A.O within a period of twelve months from the end of the financial year in which the order u/s 263 was passed by the Pr. CIT. We find, that the legislature in all its wisdom had expressly vide Explanation 1 to Sec. 153 of the Act carved out certain circumstances wherein the period involved is to be excluded for computing the period of limitation. Although, we find, that as per clause (ii) of Explanation 1 to Sec. 153 of the Act, the period during which the assessment proceedings are stayed by an order or injunction of any court, the period therein involved is to be excluded for the purpose of computing the limitation for framing the assessment, reassessment and re-computation as envisaged in the said statutory provision, however, no such exclusion has been carved out by the legislature in all its wisdom in a case where the assessment proceedings are stayed by an order passed by the Tribunal. Accordingly, it is in the backdrop of the aforesaid mandate of law that we shall herein deal with the request of the assessee for restraining the A.O from framing the de novo assessment in pursuance to the order passed by the Pr. CIT u/s 263, dated 31.03.2021. Adverting to the claim of the assessee that it has a good case on merits, without expressing any opinion, we prima facie find substantial force in the same, for the reason, that the contention of the assesee is supported by the judgment of India Advantage Fund VII [ 2017 (2) TMI 722 - KARNATAKA HIGH COURT ] wherein it was observed that once the trust deed provided that benefits amongst the beneficiaries were to be shared proportionate to their investments, then, the shares of the beneficiaries were to be held as determinate. We remain conscious of the fact that circumscribed by the prescribed time limitation for framing of an assessment pursuant to an order passed by the Pr. CIT u/s 263 of the Act, there is an innate limitation on staying of the assessment proceedings, but then, at the same time we cannot also remain oblivious of the fact that in case the aforesaid request of the assessee is rejected at the threshold, then, the same may result to multiplicity of litigation which could have been otherwise avoided. We, thus, adopting a cautious but not a pedantic approach, though, refrain from restraining the A.O from proceeding with the assessment proceedings, however, at the same time, in all fairness herein direct him not to pass the assessment order giving effect to the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021 for a period of three months from the date of this order or till the disposal of the appeal filed by the assessee before us i.e against the order passed by the Pr. CIT u/s 263, dated 31.03.2021, whichever is earlier. Application filed by the assessee is allowed

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• 2021 (6) TMI 983
  Disallowance u/s 54 - Whether property was purchased by the Assessee and advance was paid, is a genuine transaction and not an arranged transaction and colourable device to avoid payment of capital gains tax as alleged by the AO in the assessment order and the remand report? - HELD THAT:- From the said documents it is clear that the Assessee had issued a legal notice through her lawyer on dated 28-01-2019 to the Seller wherein alleged to have been paid Rs. 90 Lakhs to the seller and called upon the seller to execute and register the sale deed. The Seller vide reply dated 12-02-2019 through his lawyer did not refute the acceptance of Rs. 90 lakhs and offered no objection to perform his part of agreement subject to payment of remaining sale consideration of Rs. 60 Lakhs with interest @ 24% after the grace time i.e. after 110 days of time but noting said about refund of Rs. 27 Lakhs. It is the case of the Assessee that total sale consideration was fixed @ 1.5 Crores and out of which Rs. 90 Lakhs was paid as advance amount and remaining balance to be payable was Rs. 60 Lakhs only. From the reply of the seller to the notice sent by the Assessee, it is clear that the seller was asking remaining amount of Rs. 60 Lakhs only and has not disputed the receiving of Rs. 90 Lakhs, which goes to show that question for refund of Rs. 27 Lakhs to the Assessee by the seller as observed by the Ld. Commissioner, at all does not arise and if that would have been there that certainly the seller would have raised objection qua payment of Rs. 90 Lakhs. On the basis of aforesaid considerations and analyzations, we are inclined to allow deduction of Rs. 27 Lakhs as well u/s 54. - Appeal filed by the Assessee stands allowed.

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• 2021 (6) TMI 982
  Capital gain computation - LTCG or STCG - sale consideration received in respect of transfer of land and transfer of super structure - HELD THAT:- There is no doubt that the assessee has entered into development agreement for construction of the flats and sold 4 flats as per the details given in this order and received the sale consideration. There is no dispute with regard to sale of flats and rates adopted by the AO. AR did not bring any evidence to controvert the findings of the AO during the appeal hearing - we uphold the action of the AO as well as the CIT(A) in treating the sale consideration received in respect of transfer of land as long term capital gain and transfer of super structure as short term capital gain. Thus, computing the income under long term capital gains and short term capital gains is confirmed. Deduction u/s 54F - As seen from the assessment proceedings as well as the CIT(A) proceedings that the assessee has made the investment for purchase of new flat or new house within two years from the end of the relevant financial year as specified u/s 54F of the act. Though the assessee has not made the deposit in specified account, it is observed form the order of the AO that the assessee has made the deposit in the bank account and used the said amount only for the purpose of acquiring the new asset. Hon ble courts in similar circumstances held that, the assessee would be given the benefit of deduction u/s 54F of the Act, since, the deduction u/s 54F is beneficial provision and introduced with an intention to encourage the housing / accommodation across the country. assessee is eligible for deduction u/s 54F from the long term capital gains. Though assesses did not make the claim, appellate authorities are not barred from entertaining the fresh claim. This view is supported by in the case of Goetze (India) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] . Hence, we set aside the order of the lower authorities and direct the AO to verify the facts regarding acquiring the new asset and allow deduction u/s 54F in respect of long term capital gains. Accordingly, the order of Ld.CIT(A) in respect of long term capital gains is set aside and the order of the Ld.CIT(A) in respect of short term capital gains is confirmed.

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• 2021 (6) TMI 981
  Unexplained cash credits u/s 68 - HELD THAT:- As assessee has filed the documentary evidence pertaining to investor(s) along with confirmation letters claiming to have discharged its onus to satisfy genuineness, credit worthiness of the impugned share capital money It fails to dispute that the legislation has introduced 1st proviso to sec.68 of the Act vide Finance Act, 2012 w.e.f. 1.4.2013 that such a taxpayer must also prove source of source as well (clause a ) which has remained totally uncomplied with. We make it clear that we are in AY. 2013-14 whereas case law cited before us pertains to AY 1962-63 and upto 2009-10 only. Hon ble apex court s judgement in NRA Iron and Steel Corporation Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] has made it clear that mere filing of documents does not absolve an assessee to prove genuineness and creditworthiness of its investor(s) parties. We thus express our complete agreement with the learned CIT(A) s detailed findings affirming impugned unexplained cash credits addition - The assessee fails in its sole substantive ground.

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• 2021 (6) TMI 980
  Disallowance of claim of shortage of inventory - assessee explained before the A.O. that the shortage of inventory has been found when the physical inventory of apparels accessories was verified by the auditors with the book stock in various show rooms/warehouses located all over India - HELD THAT:- As noticed there are shortages as well as excess stocks and the net amount of difference resulted in shortage of stock - We notice from the report that the physical inventory has been taken in all stores and warehouses and the difference between physical stock and book stock has been noticed meticulously in respect of each item of apparel and the accessory. Thus, it is not a single case of theft, as presumed by the AO, which may warrant filing of FIR. The shortage noticed is as low as Rs. 68/-. CIT(A) has also appreciated that the retail trade is prone to such pilferages, shoplifting etc., resulting in such kind of shortages of stock - we are of the view that there is no reason to suspect the claim of the assessee. Accordingly, we are of the view that there is no reason to restrict the disallowance to 50% as done by Ld. CIT(A). In our view, in the facts and circumstances of the case and also considering the detailed report of shortages of stock, the entire claim of the assessee should have been allowed as deduction. Accordingly, we set aside the order passed by Ld. CIT(A) and direct the A.O. to delete the disallowance relating to shortage of inventory. Disallowance of expenditure relating to exceptional items - HELD THAT:- As we notice that the assessee has not furnished explanation/details before the A.O. and the ld. CIT(A) has also not admitted the explanations furnished by the assessee, meaning thereby, no tax authority has examined the details relating to the claim. Hence, in the interest of natural justice, we are of the view that the assessee should be provided with one more opportunity to properly explain its case. Accordingly, we set aside the order passed by ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh by duly considering the information and explanations that may be furnished by the assessee. After affording adequate opportunity of being heard, the A.O. may take appropriate decision in accordance with law. Disallowance of franchisee fees - CIT-A deleted the addition - HELD THAT:- As decided in own case [ 2020 (9) TMI 1190 - TMI BANGALORE] that when the payment made by the assessee to a company was in the nature of license fees which constitute an item of allowable expenditure in the computation of profit and gains and it cannot be a capital expenditure. In our opinion, the findings and reasons given by the CIT(Appeals) to allow the claim of the expenses in regard to franchisee on the Agreement entered by the assessee is a revenue expenditure and it cannot be construed as a capital expenditure. Hence the appeal of revenue is dismissed.

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• 2021 (6) TMI 978
  Assessment u/s 153A - assessee has failed to prove the genuineness of the expenditure incurred - HELD THAT:- There are incriminating material found during the course of search coupled with the statement of the entry operators which clearly proved that the assessing officer has rightly assumed the jurisdiction and asked the assessee to prove the identity creditworthiness and genuineness of the subcontractors who perform the work and whose expenditure has been booked by the assessee in the profit and loss account. As the addition has been made u/s 37 (1) of the act as the assessee has failed to prove the genuineness of the expenditure incurred, therefore they have been rightly disallowed by the learned assessing officer and confirmed by the learned and CIT appeal respectfully following the decision of the honourable Delhi High Court in case of Modi stone Ltd [ 2011 (5) TMI 26 - DELHI HIGH COURT] . As the addition/disallowance has not only been made only on the basis of the statement of Mr Praveen Agarwal but on the part of the failure of the assessee to prove the genuineness of the work carried out - there is no requirement of giving any opportunity of cross-examination of Mr Praveen Agarwal to the assessee s as the addition is not solely been made on that basis. AO has made the addition in the hence of the assessee on protective basis and the learned CIT A has confirmed the addition in the hence of the assessee on substantive basis by disallowing the expenditure, we set-aside the whole issue back to the file of AO to verify that if the addition has been made on substantive basis in the hands of PACL Ltd and assessee has already been charged tax on the income, then the addition of disallowance of the expenditure in the hence of the assessee requires to be deleted as it will amount to double addition of the same income. Even otherwise the real beneficiary of this accommodation entry is PACL Ltd. If the substantive addition has not been sustained or made in the hence of the PACL Ltd then the order of the learned CIT A deserves to be confirmed and addition is required to be made in the hence of the assessee - Appeal filed by the assessee is set-aside to the file of the learned assessing officer with above direction.

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• 2021 (6) TMI 975
  Capital gain computation - assessee sold a piece of non-agricultural land along with its three co-owners - addition on LTCG on the basis of report of DVO, received in assessee s co-owners case and apply the cost as on 01.04.1981 @ Rs. 550 per sq. mtr. - whether CIT(A) ought to have directed the Ld. A.O. to adopt the value as on 01st April 1981 as adopted by the appellant as per the valuation report submitted by him and hence Your Petitioner prays that the ld. A.O. be directed to adopt the rate @ 700 per sq. Mt. instead of the rate as per report of DVO.? - HELD THAT:- We find that the assessee sold piece of land on 04.06.2012. There is no dispute about the date of transaction - amendment to section 55A(a) i.e. substitution of the word is at variance with the Fair Market Value were inserted in the Income Tax Act w.e.f 01.07.2012 and the same is not applicable retrospectively - amended provisions of section 55A is not applicable to the facts of the present case. Since the amendment made in the statute is not applicable on the transaction dated 04.06.2012, therefore, the reference made by the AO was invalid. We further find that the ground of appeal raised by the assessee is squarely covered by the decision of Tribunal in Ranchodbhai C. Patel [ 2020 (12) TMI 171 - ITAT AHMEDABAD] wherein on transaction of sale of land prior to 01.07.2012, the assessee in that case was allowed similar relief by the Tribunal, by following the decision of Jurisdictional High Court in CIT Vs Gauranginiben S Sodhan [ 2014 (2) TMI 78 - GUJARAT HIGH COURT] and Hon ble Bombay High Court in CIT Vs. Pooja Prints [ 2014 (1) TMI 764 - BOMBAY HIGH COURT] Without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department s valuation officer, in absence of a valid reference to the valuation officer, the addition so made under the head long term capital gains so far as it relates to cost of acquisition as substituted by fair market value as on 1.4.1981 is directed to be deleted. In the result, the appeal of the assessee is allowed

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• 2021 (6) TMI 974
  Reopening of assessment u/s 147 - eligibility of reasons to believe - CIT(A) quashing the impugned reopening as not sustainable as this is an instance of Anti Corruption Bureau (ACB) s proceedings which could see light of the day only after the specified period of four years from the end of the relevant assessment year thereby prompting the Assessing officer to take recourse to sec. 147/148 proceedings by recording the necessary reasons - HELD THAT:- We see no merit in Revenue s instant arguments. It is evident from a perusal of the Assessing officer s reopening reasons recorded in assessee s case that he has nowhere recorded any reasons to believe that the assessee had not truly and fully disclosed details of her taxable income. The CIT(A) has already considered various judicial precedents whilst deciding the instant legal issue in assessee s favour. As decided in Hindustan Lever Ltd. Vs. R.B. Wadkar [ 2004 (2) TMI 41 - BOMBAY HIGH COURT ] it is needless to mention that the reopening reasons are required to be read as they were recorded by the Assessing officer. No substitution or deletion is permissible. No addition or deletion can be made on those reasons. No inference can be allowed to be drawn on the basis of the reasons not recorded. It is for the Assessing officer to disclose and open his mind through the reasons recorded by him, he has to speak through his reasons . And also that the reasons should be self-explanatory and should not keep the assessee guessing for reasons. Assessing officer s reopening reasons have failed in not only recording any such failure in light of sec. 147(1) 1st proviso on assessee s part but also he made it clear that the same were in order to verify the above facts . We thus uphold CIT(A) s findings deciding the instant legal issue in assessee s favour. Loan(s) taken from Mr. T Nanda K and treated as unexplained u/s. 68 - necessary condition of filing Overseas remittance certificate for the corresponding money transfer from USA had not been complied with at the assessee s behest - HELD THAT:- The same is found to be against the clinching facts recorded in CIT(A) s order that the impugned sum had nowhere came from any foreign bank account but from a domestic account of the credit party only. The Revenue s sole substantive argument in favour of impugned addition is outrightly rejected. Coupled with this, the assessee has also filed relevant details of bank account in issue that the impugned sum stood duly repaid vide cheque dated 18.2.2008 cleared on 27.2.2008. Revenue s instant former substantive ground fails therefore. Unexplained bank deposits addition - HELD THAT:- As evident from the case records that the impugned sum had been wrongly taken as Rs. 1,44,00,000/- towards unexplained deposits in the bank account wherein the actual figure was Rs. 54 lakhs only and the assessee s cash flow statement had duly explained the source to the tune of Rs. 67,08,674/- - Decided against revenue.

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• 2021 (6) TMI 971
  Bogus purchases - Estimation of income - CIT-A restricted the disallowance to 25% - HELD THAT:- Assessee may not have been able to prove the genuineness of purchases from the declared source, however, it is a fact on record that the Assessing Officer has not disputed the sales effected by the assessee - assessee must have purchased goods from some other undisclosed source or from grey market - it is the settled legal position that the entire purchases cannot be disallowed, but only the profit element embedded in such purchases can be considered for addition. Therefore, we restrict the disallowance to 25% of the non-genuine purchase is fair and reasonable - Decided against revenue.

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• 2021 (6) TMI 970
  Penalty u/s 271(1)(c) - bogus purchases - addition on account of hawala purchases - HELD THAT:- AO imposed penalty under section 271(1)(c) on estimation basis without adducing any evidence on record for concealment of income. Penalty under section 271(1)(c) is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad-hoc basis does not result into imposition of penalty u/s. 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. Thus when addition is made on estimate basis, penalty is not sustainable in the eyes of law -Even the learned Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that Commissioner (Appeals) was indeed justified in directing the Assessing Officer to delete the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty. - Decided against revenue.

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• 2021 (6) TMI 969
  TP Adjustment - Interest on receivables - forms an international transaction U/s. 92B or not? - HELD THAT:- This tribunal s coordinate bench decision Bechtel India Pvt. Ltd. [ 2017 (5) TMI 965 - ITAT DELHI] holds that interest on receivables indeed comes within the purview of section 92B Explanation (c) inserted vide Finance Act 2012 as applicable with retrospective effect from 1/4/2002. Hon ble Madras high court s recent judgment in PCIT Vs Reddington India [ 2020 (12) TMI 516 - MADRAS HIGH COURT] also holds the same view. We thus, accept the Revenue s arguments in principle that interest on receivables is indeed an international transaction U/s. 92B of the Act. Interest adjustments on receivables - We notice with the able assistance of both the parties that neither of the TPO in these three assessment years has given any comparable instance in the very segment whilst charging the impugned interest on the assessee s receivables since he had adopted the SBI s term deposit rates only in benchmarking the same. The Revenue s endeavor before us supports the lower authorities action on the pretext that such receivables are very much akin to a financial transaction to be benchmarked as per the SBI s short term lending or deposit rates. We find no merit in the Revenue s instant argument since Chapter -X of the Act is a special provision wherein each and every adjustment could only be made going by the uncontrolled market price of the transactions in the very segment; followed by benchmarking thereof as per the international currency LIBOR rates only. We, therefore, reverse the TPO s identical action in all these Assessment Years in view of the foregoing twin reasons regarding non-quantification of the impugned adjustment(s) segment wise and as per the LIBOR rates - We, thus, follow judicial consistency as whilst confirming the DRP s directions in A.Y: 2011-2012 to the Assessing Officer to delete the impugned interest adjustments on receivables. Exclude communication charges from assessee s total turnover - HELD THAT:- AO s draft assessment order had excluded the impugned communication charges from export turnover only which stands modified in the DRP s directions that the assessee s total turnover of Rs. 4,26,963/- must also follow the suit to this limited extent. Suffice to say, the instant issue has also stands settled as per the hon ble apex court s landmark decision in Addl. CIT vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] followed by the CBDT s circular No. 4/2018 dated 14/8/2018 hold that communication charges deserve to be excluded both export as well as total turnover. We thus, decline the Revenue s instant later substantive ground as well. Disallowing business promotion expenses - HELD THAT:- It transpires from a perusal of the case records the DRP had directed the Assessing Officer to examine the Assessee s vouchers which in turn were submitted only to the extent of Rs. 75,49,208/-. AO s final assessment order holds that the vouchers are not wholly and exclusively related to the assessee s business. DR fails to substantiate that such day-to-day expenses very much form part of the regular heads of expenditure per se which cannot be altogether ruled out. We also make clear that the Assessee has further failed to prove the live nexus between its impugned claim to have been incurred wholly and exclusively for the purpose of the business only. Facing with this situation, we deem it appropriate to restrict the impugned disallowance to the extent of 20% only with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.

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• 2021 (6) TMI 968
  Unexplained investment in Jewellery - search party found invoices of jewellery - Central Board of Direct Taxes Circular No. 1916, dated May 11, 1994, lays down guidelines for seizure of jewellery and ornaments in the course of search - HELD THAT:- Having regard to the circular and size of the family, the ornaments to the extent specified in the circular should be accepted as reasonable. The Tribunal, accordingly, found that the jewellery held by the assessee and his family members was well within the limit laid down under the Central Board of Direct Taxes circular and, accordingly, deleted the whole addition on the ground that the jewellery held by each of the family members was below the limits specified in the said circular. Bills of purchase of jewellery were found instead of jewellery itself and assessee has explained that the jewellery is purchased for the friends and relatives of the assessee when the bills are found but the jewellery is not available with the assesseeduring the course of search the addition is also required to be made u/s 69 of the act. Therefore we do not find any difference in the above those situations so far as the overall jewellery found during the course of search as well as the bills of such jewellery do not exceed the limits specified in the above instructions. Respectfully following the decision of the Coordinate bench for AY 2010-11 and 2013-14 [ 2019 (2) TMI 1798 - ITAT DELHI ] we are of the considered view that addition on account of unexplained investment in jewellery is in teeth of CBDT Circular no. 1914 and deserves to be deleted. - Decided in favour of assessee.

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• 2021 (6) TMI 967
  Bogus LTCG - Addition u/s 68 - exemption u/s 10(38) on sale of shares - HELD THAT:- There is no restriction under the law to purchase equity shares on off line mode. Vide order dated 22.3.2013 of the Hon ble Mumbai High Court M/s Conart Traders Limited was merged with M/s SAL and in lieu there of 10000 shares of M/s SAL were received by the assessee in its demat account. After holding the equity shares for more than 12 months assessee sold the shares of M/s SAL during the period April 2014 to June 2014 through Indira Securities which is a registered broker and all the transactions of sale of shares took place on the recognised stock exchange. Sale consideration was received in the bank account attached with the Demat account. The detail of the persons purchasing the shares is not available on the portal of SEBI and all the transactions of purchase and sale took place on the portal through registered brokers under the control of SEBI. M/s SAL has not been striked off as a shell company. Trading of shares of M/s SAL was permitted by SEBI. All the conditions provided u/s 10(38) of the Act prima facie seems to have been fulfilled by the assessee. Assessee was not provided opportunity of cross examination - A.O has referred to some investigation reports carried out in the case of some brokers and other assessee(s) and there is a reference of the company M/s SAL, however it is not disputed that name of the assessee is not appearing in such report nor any evidence was found by the Ld. A.O which could indicate that assessee was also a part of the alleged racket of providing accommodation entry of bogus LTCG nor any proof of any agreement between the assessee and other persons mentioned in the report has been found. So the basis of addition is primarily on the statement of third party as well as the information gathered from other sources. Perusal of the records shows that the assessee has not been provided any access to such report nor any opportunity was provided to cross examine those persons who accepted to have provided accommodation entries for the bogus LTCG to the assessee. See DIPESH RAMESH VARDHAN, RAMESH BABULAL VARDHAN, MANJU RAMESH VARDHAN, VISHAL RAMESH VARDHAN, RAJESH BABULAL VARDHAN [ 2020 (8) TMI 405 - ITAT MUMBAI] As relying on SMT. KRISHNA DEVI, HARDEV SAHAI GUPTA (GARG) , SMT. BINDU GARG [ 2021 (1) TMI 1008 - DELHI HIGH COURT] we are of the considered view that the case of the assessee is squarely covered by the above stated judgments and we being bound to follow the judicial precedence are inclined to hold that the claim of LTCG made by the assessee is genuine and is eligible for exemption u/s 10(38) of the Act. - Decided in favour of assessee.

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• 2021 (6) TMI 966
  Bogus LTCG - sudden rise and fall in the share prices of a listed company - genuineness of claim of Long Term Capital Gain as exempt income u/s 10(38) of the Act arising out of the transactions of sale of equity shares of Kappac Pharma Limited - HELD THAT:- There are various factors for the sudden rise and fall in the share prices of a listed company which are majorly linked to the market sentiments, performance of the sector, availability of shares i.e demand and supply, holding of the promoters, future prospects etc. In the instant case, nothing on record is available to show that any enquiry was conducted by department at the business premises of Kappac Pharma Ltd. and its involvement in this alleged racket of managing bogus LTCG. Kappac Pharma Ltd. is registered with Registrar of Companies and is still live at the portal of Registrar of companies. All transfers of shares of particular listed company is well recorded in the Registrar of shareholders. Even the purchase of shares by assessee is directly from a shareholder company, being original allottee of equity shares of Kappac Pharma Ltd. which were subsequently transferred in the name of respective assessee(s). Assets are in the nature of equity shares which are not part of a business stock and have been held for more than 12 months so will comes under the category of Long Term Capital Asset. The equity shares are sold through recognized stock exchange (Bombay Stock Exchange) and security transactions tax have been paid on this transaction. Part of purchase and sale - Purchase is off line and made in cash. AO has raised doubt on the purchases being made in cash but there is no bar under the law to make purchase in cash. In all these cases equity shares were purchase from Shah Sons Propon Private Limited. PAN No. of the seller was provided before both the lower authorities. The seller namely Shah Sons Propon Private Limited purchased equity shares in November 2010 and was originally allotted the shares by Kappac Pharma Ltd. which is a company registered at Mumbai. Genuineness of the documents namely share certificate placed is not doubted. For sure the details of shareholder would be available on the portal of the Registrar of Company where annual returns are filed by the Companies. Further has this certificate being bogus then how could the shares are dematerialized. Because once a share are lodged for dematerialization the original share certificate is to be deposited and the correctness of the certificate is verified through the company which has issued the share certificate. Once the details are found to be correct the shares are dematerialized. Sale part - The assessee has opened DMAT account with Kotak Securities Ltd. which is known to be a reputed company engaged in the providing services as share broker. Kotal Security is registered with Bombay Stock Exchange. Sale is effected on the portal operated and controlled by Bombay Stock Exchange. The seller has no idea as to who is the buyer on the other side. On the portal the payment for the sale is received by broker which in this case is Kotak Security Limited who after deducting the brokerage and other applicable tax including Security Transactions Tax remits the balance amount in the bank account of the assessee which is registered in the DMAT Account. In the instant case, no flaw or any inconsistency has been found by the Revenue authorities with all these transaction of purchase and sale. Whether Kappac Pharma Ltd is a penny stock company or not has been dealt in detail in CANARA BANK VERSUS JOINT COMMISSIONER OF INCOME-TAX, LTU AND VICE VERSA [ 2017 (11) TMI 1425 - ITAT BANGALORE ] held the transaction from sale of equity shares of Kappac Pharma Limited as genuine and also allowed the claim of assessee of LTCG from the sale of equity shares of Kappac Pharma Ltd. and also deleted the alleged commission expenditure added by Ld. AO for arranging the bogus LTCG. Records placed before us also shows that report of the investigation wing or any enquiry conducted from 3rd persons were not made available to the assessee which thus grossly violates the principles of natural justice. As the assessee never got opportunity to go through these reports this action of the lower authorities was not justified. Thus alleged transaction of purchase and sale of equity shares of Kappac Pharma Ltd. are not bogus as the respective assessee(s) have duly charged there onus to prove the genuineness of purchase and sale of equity shares of listed company KPL (listed in Bombay Stock Exchange) by placing necessary documents to prove that the purchase are directly from the shareholder and sold through a registered broker and nothing adverse has been found by the revenue authorities and KPL is not held to be a penny stock company. Addition is purely based on the report of the investigation wing carried out in the case of other persons finding no mention or the involvements of assessee(s) in any of such report and thus, the claim of the LTCG has been rightly made as exempt income u/s 10(38) - Decided in favour of assessee.

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• 2021 (6) TMI 965
  Addition u/s 68 - Bogus LTCG on sale of shares - denial of assessee claim to the benefit u/s 10(38) - HELD THAT:- Since the Ld. A.O has not indicated or brought on record any evidence which could prove that the assessee(s) are having any link with the alleged brokers/sub brokers/companies or are associated to earn bogus Long Term Capital Gain. We therefore in the given facts and circumstances of the case and respectfully following the judgment of Hon ble Delhi High Court in the case of PCIT v/s Smt. Krishna Devi Others [ 2021 (1) TMI 1008 - DELHI HIGH COURT] and SWATI LUTHRA, SHRUTI LUTHRA, NAMRATA SEHGAL LUTHRA, MS. ASHA LUTHRA [ 2019 (7) TMI 526 - ITAT DELHI] since the facts and issues raised are similar and assessee has filed necessary documents to prove the genuineness of purchase and sales of equity shares of listed company and also fulfilled the conditions provided u/s 10(38) of the Act and all these documentary evidences have not been found to be non genuine and the source of sale consideration is well supported by contract note issued by the registered broker and shares have been transferred from Demat account which were held for more than 12 months, the assessee is eligible for the exemption u/s 10(38) of the Act for Long Term Capital Gain and thus no addition was called for u/s 68 as well as the addition for estimated brokerage expenses. - Decided in favour of assessee.

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• 2021 (6) TMI 964
  Reopening of assessment u/s 147 - Bogus purchases - notice issued on the basis of information received by the Ld. AO about a purchase from M/s. Motion Traders Pvt. Ltd. and as per the Value Added Tax (VAT) Department, Mumbai, this party issued bogus bills - HELD THAT:- As records shows that after receiving the information Ld. iAO has not made an independent application of mind on the information. Before initiating the reassessment proceedings in motion he was bound to examine the facts related to the purchase from M/s. Motion Traders Pvt. Ltd. which is available on record. The purchase was made from a Pvt. Limited company assessed to tax. Material was received by the AKOLA unit of the assessee and on 18.12.2009 payments made through account payee cheque. Copy of bank account in support already stood filed during the assessment proceedings. All the documentary evidences shows no iota of evidence that there was any intention of the assessee to evade tax by over stating the purchase. The above stated facts were required to be examined by the Ld. AO to form an opinion before issuing notice u/s 148 - In the instant case, no such efforts were made and just based on the information received from VAT Department notice was issued -mere change of opinion cannot be a basis to issue a notice u/s 148 of the Act. We find support from in the judgment of Hon ble Apex Court in the case of CIT vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] We find no reason to interfere in the finding of Ld. CIT(A) quashing reassessment proceedings. Ground No.1 raised by the Revenue is dismissed. Claim of deduction u/s 80IB - proof of commencing the commercial production - date from which appellant company was ready for manufacturing - HELD THAT:- From perusal of the above finding as well as the documentary evidences placed before us in the paper book including water connection, electricity connection, Maharashtra Pollution Control Board Registration, Sales Tax registration, professional Tax registration and the date of installation of machinery and found that all these events occurred before 31.03.2002 which was the deadline for commencing the commercial production. Ld. DR failed to rebut this fact by placing any contrary material. Assessee is eligible for deduction u/s 80IB and thus, find no reason to interfere in the finding of Ld. CIT(A) allowing the assessee s claim of deduction u/s 80IB. - Decided in favour of assessee.

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• Customs

• 2021 (6) TMI 1007
  Amendment of shipping bills - amendment sought on the ground of erroneous assumption that the shipping bills contain an inadvertant error that disentitled it from claiming benefit under the Merchandise Exports from India Scheme (MEIS Scheme) - HELD THAT:- Reliance on Section 149 of the Customs Act, 1962 (in short Act ) dealing with Amendment of documents is unnecessary in this case, since the shipping bills require no amendment and clearly reflect the intention of the petitioner to claim the benefit. In the petitioner s representation dated 04.10.2019 too, the petitioner reiterates its intention to claim reward under the MEIS Scheme, but goes on thereafter to refer to provisions of Section 149 of the Act - In view of the fact that the petitioner s intention to claim MEIS benefit is clear from the shipping bills and the mistake has only happened while uploading the bills in the EDI, the error is hyper-technical, inadvertent and a human error and should not stand in the way of the petitioner being granted the substantial benefit which it has opted for, from inception. It appears that the petitioner has been inspired by an order passed by this Court in a Writ Petition granting benefit in similar situations. It would be too harsh to state in such circumstances, specifically in the light of the facts as noticed by me above in paragraph Nos.2 to 5 that the petitioner should be denied the benefit merely on the ground of delay. This argument is rejected - The petitioner is entitled to the benefit under the MEIS Scheme and the respondents are directed to grant consequential benefits to the petitioner within a period of eight (8) weeks from today. The petitioner is entitled to the benefit under the MEIS Scheme and the respondents are directed to grant consequential benefits to the petitioner within a period of eight (8) weeks from today - Petition allowed.

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• 2021 (6) TMI 1006
  Seeking G Card Licence to the petitioner under Regulation 17(3) of Customs Brokers Licensing Regulations, 2013 - upgradation of license from H to G - HELD THAT:- It is clear that the respondent authorities have conducted the examination not with a view to upgrade the licence holder, but with a view to reject the upgradation from H to G . The object of any examination is to ensure that the qualified candidate is promoted to the next post. If an examination is conducted with the object to reject candidates, then the examination itself has to be struck down. In this case, the respondent had no right to conduct any oral examination. It is not provided in the Rules. The Rules stipulate that written examination alone must be conducted. Other State authorities have conducted only written examination and they have not called upon the qualified candidates to again appear for an oral examination. The reasons are obvious. In the present case, for the written examination, the maximum mark was 100 and the qualifying mark was 50 and separately, for oral examination 100 marks were allotted as a maximum and the qualifying mark was given as 50. It is not known what is the nature of oral examination, which was conducted and how the candidates were assessed. Those details are absent in the counter affidavit. A direction is issued to the respondent to consider the petitioner s representation, dated 02.07.2020, seeking G Card Licence to the petitioner, under Regulation 17(3) of Customs Brokers Licensing Regulations, 2013 and to pass necessary orders, within a period of eight weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2021 (6) TMI 1004
  Release of seized goods - Black Pepper - freely importable goods or not - value declared is more than Rs. 500/- - prohibition as per the amended DGFT notification No. 21/2015-2020, dated 25.07.2018 - HELD THAT:- There is no necessity for this Court to go into the aspect with regard to the investigation, which is being carried on by DRI, Tuticorin, because the issue involved in the writ petition is whether the goods imported by the appellant can be released by the Customs Authority, either by way of a release in total or by way of a provisional release. Since the DRI has taken up the matter for investigation, the appellant seeks for provisional release of the cargo, which has been imported by them, seized by the DRI and presently lying in the Tuticorin Port. If such is the prayer sought for by the appellant, then reasonable time should be granted to the Competent Authority to take a decision on such an application or representation being filed for provisional release of the cargo. There is no formal request made to the Competent Authority, who is stated to be the Commissioner of Customs, Tuticorin, praying for provisional release of the cargo. Therefore, in our considered view, the prayer as couched in the writ petition is premature and no Writ of Mandamus could have been issued at the present stage, more particularly, when the Authority is yet to take a decision on the matter and more importantly, when there is no specific request made by the appellant for grant of provisional release before the Commissioner of Customs, Tuticorin. The prayer sought for in the writ petition is not maintainable or rather has to be taken to be premature, considering the facts of the case, since the Revenue states that the import of black pepper into India, which is valued below Rs. 500/- is prohibited taking into consideration the welfare of the agriculturists and it is alleged by the DRI that the imports had been effected by the appellant by inflating the invoice value. The writ petition stands disposed of by directing the appellant to file a proper application for grant of provisional release of the cargo along with their submissions as well as the documents which they propose to rely upon and the Commissioner of Customs, Tuticorin, shall fix the date for personal hearing, preferably, through video conferencing.

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• 2021 (6) TMI 962
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - alleged undervaluation - allegation is that the holder of import export code (IEC) had neither been contacted by the appellant nor prescribed authorization obtained from him was held to have been established - breach of regulation no. 11(a), 11(d), 11(e), 11(m) and 11(n) of Customs Broker Licensing Regulations, 2013 - HELD THAT:- Though the inquiry, prescribed under Customs Broker Licensing Regulations, 2013, held that, while the breach of several of the obligations in regulation no. 11 had been substantiated, that failure to discharge duties with speed, as stipulated in regulation no. 11(m), was not, the licensing authority did, nonetheless, consider it fit to disregard that finding to conclude that the acceptance of documents from an unrelated person was indication of inefficiency but for which loss of revenue could have been avoided. It is also noted that it is the admitted lack of contact with the importer on record, Shri Balam Singh Rawat, and the obtaining of the authorization and documentation from Shri Anil Kumar Vachhar, the beneficiary importer, which is the foundation for every finding of breach sustained against the appellant - The obligation to advice the client to comply with the provisions of Customs Act, 1962, the obligation to exercise due diligence by ascertaining the veracity of all information pertaining to client, the obligation to discharge duties as customs broker with utmost speed and efficiency and without any delay and the obligation to verify antecedents, correctness of importer exporter code, to identify his client and functioning of his client at the declared address were, according to the licencing authority, breached. Breach of Regulation no. 11(m) - HELD THAT:- The regulation does not mandate physical verification but adjures ascertainment from reliable, independent, authentic documents, data or information. It is found that the records do not allege that the importer-export code (IEC) had been obtained fraudulently or that the importer on record did not exist. These were claimed to have been verified from the data made available in the public domain by the Director General of Foreign Trade. The inquiry authority had held that the allegation of failure to discharge duties with utmost speed and efficiency would not sustain and, in departing therefrom to render a separate finding of the breach, the licensing authority failed to evince any acceptable reasons for such. Thus, this breach does not sustain. Breach of Regulation no. 11(e) - HELD THAT:- There is no doubt that the appellant did not have any contact with the importer on record and, consequently, there can be no scope for imparting any information to the importer which may conceivably be held as having led to breach of regulation no. 11(e) of Customs Broker Licensing Regulations, 2013. Breach of regulation 11(d) - HELD THAT:- Rendering advice to the client is just as inconceivable indicating the lack of scope for any breach of the obligation prescribed in regulation 11(d). It is seen from the visual evaluation of the signatures that forgery is also not in evidence. Nevertheless, the licensing authority did proceed to record a contradictory finding which, in the absence of expert opinion, is not tenable. Breach of regulation no. 11(a) - Failure to obtain authorization from the company/firm or individual by whom they, for the time, had been employed as customs broker - HELD THAT:- The appellant has not denied the lack of any communication with M/s Forus Enterprises except through Shri Anil Kumar Vachhar. We find that proceedings, under section 28 of Customs Act, 1962, for recovery of differential duty has been initiated against the beneficiary importer, Shri Anil Kumar Vachhar. It would, thus, appear that the appellant had dealt with the beneficiary importer of the imported goods but against authorization furnished by the importer on record. It is also equally clear that the appellant, while dealing with Shri Anil Kumar Vachhar, did not appear to have evinced any interest in ascertaining the identity, or connection with the goods, of the importer on record. The allegation against the imports is limited to undervaluation and it is difficult to appreciate that the breach of regulation no. 11(a) had, in any way, contributed to suppression of the value of the goods imported against the bill of entry. It is not within the remit of the customs broker to be conversant with the negotiations on price or the manner of transference of agreed recompense and, therefore, compliance with the said obligations would not have altered the allegations leveled against the importer, whether on the beneficial owner or of that on record. The licencing authority, after considering the nature and extent of contributory negligence on the part of M/s Mahavir Logistics, did find it appropriate to revoke the suspension ordered on 19th February 2018 by order dated 26th April 2018 - For not having insisted upon contact with the importer on record, revocation of licence and, that too, for first breach is, indeed, drastic - the ends of justice would be served by confirming the forfeiture of security deposit and the imposition of penalty of Rs.50,000/- while setting aside the revocation of the customs broker licence. Appeal allowed in part.

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• 2021 (6) TMI 961
  Continuation of Suspension of Customs Broker Licence - overvaluing the export goods - Wall Paper - fraudulent claiming of input tax credit refund - inquiry pending against broker - HELD THAT:- On the basis of offences reported from the Commissioner of Customs (P), Jamnagar, initially Customs Broker License of the appellant was suspended on 31.7.2020, thereafter the post decisional hearing was extended to the appellant on 13.8.2020. On prima facie scrutiny of the evidences about allegation of improper discharge of the duty by the appellant and thereby violation of regulations 10(a), 10(d), 10(e) and 10(n) of CBLR, 2018, the Commissioner has observed that further continuation of the appellant Customs Broker in discharging services under the CBLR, 2018 will cause impediment to the interest of the Revenue pending full-fledged inquiry against him. Hence, he directed suspension of the license issued to the appellant pending further proceedings in the matter. The appellant could not bring any evidence to negate the prima facie findings of the Commissioner, therefore, there are no reason to interfere with the order of suspension dated 31.7.2020 and confirmation by the Commissioner in the present impugned order. Also, there is no arbitrary exercise of power in placing the license under suspension by the adjudicating authority not the timeline prescribed under the regulations has been violated The impugned order need not be interfered - appeal disposed off.

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• 2021 (6) TMI 959
  Seeking provisional release of goods imported - prohibition on import of pepper or not - HELD THAT:- The consignment is pepper, which is an agricultural product. Keeping the products unloaded and making the petitioner to pay demurrage charges is of no use to both the parties. Keeping the consignment in Government warehouse may lead to spoilage of the agricultural products. This Court is inclined to grant an Ad Interim Direction, directing the respondents to provisionally release the goods imported to the petitioner on the conditions imposed - petition allowed.

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• Corporate Laws

• 2021 (6) TMI 976
  Oppression, mismanagement or misappropriation - seeking parity in the shareholding of the 1st Respondent Company to the extent that the petitioner and the Respondent No.2 hold 50% of the shareholding each - valuation of shares of the 1st Respondent Company so as to give a quietus to the disputes in the running of the company - removal of the Respondent No.2 as the Managing Director - seeking re-constitution of the Board of Directors on the basis of proportional representation to the shareholding of the parties - seeking removal of the 3rd Respondent as the Director of the Company - seeking investigation into the affairs of the Respondent No.1Company - seeking to bring back siphoned funds - HELD THAT:- Prior to incorporation of the Respondent No.1 Company, Respondent No.2 and Petitioner and other two persons agreed to hold 25% shares each in the Respondent Company - if the majority acts are against the provisions of the Articles of Association or the statute covering it, or makes any arbitrary use of the majority powers, resulting or likely to result in financial loss or where action could be characterized as unfair and improper could be arise only when Company starts its operations. In the present case the 1st Respondent Company began its operation on 14.08.2006 after its incorporation and the e-mail referred to by the petitioner was sent on 06.06.2006. It is true that prior to the constitution of the Respondent Company there was an understanding between the parties. Unfortunately, it was not made a record after the establishment of the Company. Therefore, this Tribunal considers it as a preliminary discussion between the parties before the incorporation of the 1st Respondent Company. Hence, claiming oppression based on a previous understanding cannot be considered as an act amounts to oppression and mismanagement of the Company. Petitioner contends that Respondent intends to increase the capital of the Company to dilute the shareholding of the Petitioner. Petitioner also contends that he is a 40% shareholder in the Respondent No.1 Company and entered into a Memorandum of Understanding (MoU) with Respondent No.2 which is a private agreement to buy back the 15% shares of the Petitioner - it is clear that Petitioner by entering into an MoU with Respondent No.2 agreed that he holds 40% of shares in the Respondent No.1 Company. This, MoU can be considered as a document to conclude that the Petitioner holds 40% of share in the Respondent Company, as he does not provide any other evidence to prove that he is a 40% shareholder in the Company. Moreover, nothing on record to prove that the Company increased the Share Capital to dilute the Shares of the Petitioner. To prove oppression against the minority shareholder in the Respondent No.1 Company, Petitioner must prove that the other Companies are engaged in the same class of business, conduct the affairs of other companies in an unfair manner that prejudice the interests of the minority shareholder in the Respondent No.1 Company. In this Petition except the allegations stated in the Petition, Petitioner has not produced any record to show that the website is owned by the Respondent No.2. Mere change of employees from the Respondent No.1 Company to the Respondent No.4 Company does not constitute oppression and mismanagement. This Tribunal is of the view that the Company Petition is nothing but a dressed up petition using different expressions in various paras of the Petition prefacing it with allegations of Oppression and Mismanagement with no actual records placed it along with the Petition would not assume the character of a petition under Section 397 and 398 of the Companies Act,1956 - this Bench is of the view that this is not a fit case for approving the allegations of oppression and mismanagement in the Respondent Company as alleged by the Petitioner - Petition dismissed.

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• 2021 (6) TMI 972
  Sanction of Scheme of Amalgamation - Section 230(1)(b) of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding and convening of meetings were issued - Various directions regarding issuance of various notices for the meetings were issued - application allowed - the scheme is approved.

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• Insolvency & Bankruptcy

• 2021 (6) TMI 989
  Jurisdiction - power of Adjudicating Authority to interfere before the quasi-judicial determination - locus standi to challenge the inclusion of DSKL in the CIRP - necessary party to application - due date to file EOI is a commercial decision or not. Whether the Adjudicating Authority does not invest with the Jurisdiction to interfere before the quasi-judicial determination is made, under Section 31 of IBC? - HELD THAT:- In the present case, Adjudicating Authority, while deciding the Application I.A No. 1029 of 2020, has exercised the jurisdiction under Section 60 (5) (c), which empowers to decide any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor or Corporate Person under this Code . Thus, before approval of the Resolution Plan the Adjudicating Authority can entertain or dispose of the question of priorities or any question of law or facts, arising out of or in relation to CIRP or Liquidation proceedings - the argument of Ld. Counsel for Pankaj Joshi that the Adjudicating Authority has no jurisdiction to entertain and decide the Application cannot be agreed upon. Whether GIACL did not have locus standi to challenge the inclusion of DSKL in the CIRP? - HELD THAT:- Admittedly, DSKL requested to submit EOI after one month of due date and the same was rejected in the 7thCoC meeting held on 03.04.2020 and the decision was communicated to the DSKL on 09.04.2020. After lapse of two months DSKL again made attempt to become a part of CIRP before that four eligible Applicants including GIACL were short listed as Prospective Resolution Applicants. Therefore, there was a competition between these four Prospective Resolution Applicants but the RP has tried to induct DSKL in the CIRP in violation of the provisions of Regulation 36-A (6) of the Regulations 2016 - We are unable to convince with the Ld. Counsel for DSKL and Pankaj Joshi that GIACL did not have the locus standi to challenge the inclusion of DSKL in the CIRP. Ld. Adjudicating Authority has rightly entertained the Application I.A No. 1029 of 2020 and decided the same. Whether DSKL was a necessary party to the Application I.A. No. 1029 of 2020? - HELD THAT:- DSKL has no vested right because, the right has already been extinguished when DSKL has failed to submit EOI till last date and subsequently, the request for submitting EOI after due date was also rejected by the CoC in view of Regulation 36-A of Regulations 2016. Therefore, DSKL has no right to contest the Application as in the Application the actions of RP CoC are questioned - The question for the consideration before Adjudicating Authority was that, whether the actions of RP and CoC are justifiable in the present facts of this case - we are not convinced with the argument of Ld. Counsel for DSKL that the Ld. Adjudicating Authority has not given reasonable opportunity of hearing and thereby violated the principle of natural justice. Whether to allow DSKL after due date to file EOI is a commercial decision? - HELD THAT:- In view of Regulation 30A, withdrawal was not permitted. In that context, Hon ble Supreme Court held that this Regulation has to be read along with the main provision of Section 12A which contains no such stipulation. Therefore, it held that this stipulation can only be construed as directory depending on the facts of each case. It is not ruled, that Regulation 36 A is not in consonance with any of the provision of the IBC or Regulation 36-A is not mandatory in nature. Thus, this Judgment also does not support the case of DSKL. The second limb of argument, that the word shall has to be read as may since no consequence of noncompliance are provided, is not acceptable as Regulation 36-A (6) itself provides that EOI received after the time specified shall be rejected - to allow DSKL after due date at the instance of Pankaj Joshi to file EOI is not a commercial decision. Pankaj Joshi has suppressed the fact that he himself has overturned the decision of 7thCoC meeting and permitted DSKL to submit its EOI. Pankaj Joshi also misguided the CoC that he is not required to take express permission from the CoC to issue a request for Resolution Plan to an eligible Prospective Resolution Applicant . This is not the position in this case the request for submission of EOI after due date was rejected by the CoC then there is no question to issue a request for resolution plan to DSKL - Pankaj Joshi in 09th CoC meeting canvassed the case of DSKL and when one of the CoC Members proposed to publish fresh Form G then he suggested that this is impracticable and delayed the CIRP - the decision taken in 09th Meeting of the CoC was not transparent, fair and was under the influence of Pankaj Joshi. Whether the adverse remarks in Para 54 of the impugned order are baseless and uncalled for? - HELD THAT:- Mr. Pankaj Joshi has failed to explain that his actions are bonafide. It is expected from a Resolution Professional that he must act in a fair and balanced manner without getting influenced by the conflicting interest of the parties. In the present case, Mr. Pankaj Joshi suppressed material facts and misguided the members of CoC to achieve the desired decision in favour of DSKL - the adverse remarks and observations made in the Para 54 of the impugned order are not baseless and uncalled for and on the other hand, for appreciating the materials on record and to decide the matter, such observations are necessary. Appeal dismissed.

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• PMLA

• 2021 (6) TMI 990
  Money Laundering - illegal diversion of funds - schedule offence - supply of Gold Bullion or there was only paper transaction - Section 33 of the Sale of Goods Act - HELD THAT:- In the case at hand, the picture is totally different. The criminal Court can independently come to a conclusion that the 22 fixed deposits were proceeds of crime and they were projected as untainted money from MJPL (A3) and Suresh Khatri (A4). The other distinguishing feature in this case is that, the total proceeds of crime is Rs. 318.75crores, out of which, the 22 fixed deposits represent only Rs. 143crores and for the balance amount which has gone into the kitty of MJPL (A3), they can be prosecuted as abettors of the offence of money laundering committed by KGPL (A1). Lastly, the order of the Adjudicating Authority in this case, has not attained finality and the same is pending before the Tribunal and therefore, on this ground too, the criminal prosecution cannot be quashed. In a simple private complaint case, the Magistrate may not have any materials dehors the sworn statement of the complainant to take cognizance of the offences alleged in the complaint. In such cases, it will be desirable, if the Magistrate passes an order giving reasons for taking cognizance of the offence and issuing process. In this case, along with the complaint, the Enforcement Directorate has filed 56 documents and also the statements recorded under the PML Act, in support of the allegations in the complaint - The prosecution has to prove the offence, by adducing evidence and this opportunity has to be given to the prosecution in this case too. The prosecution of MJPL (A3) and Suresh Khatri (A4) cannot be said to be unfounded - Petition dismissed.

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• Central Excise

• 2021 (6) TMI 979
  Refund of excess paid excise duty - non-production of evidence to prove double payment of duty - procedure prescribed for cancelling the invoices not followed - section 11B of Central Excise Act, 1944 - HELD THAT:- The original authority has called for a verification report from the Range officer. It is mentioned in the report that the appellant has not followed the procedure for cancellation of invoice and that there is no evidence for double payment. From the ARE-1 itself, it is easy for the department to verify whether the goods as per the cancelled invoices have been exported or not. The department does not have a case that the quantities of goods mentioned in the cancelled invoices have been exported. Merely because, the procedure under Para 12 of Chapter 4 of CBEC Excise Manual of Supplementary Instructions, 2005 has not been followed cannot be a ground to deny the refund of excess duty paid. Needless to say that no duty can be retained by department, which is not required to be paid under the provisions of law. When the matter came up for hearing, the department has not produced any such details on their side. However, the appellant has furnished the entire details with regard to rebate claim and the summary of total exports made on payment of duty during the relevant period. It is clear from these documents that the appellant has not claimed rebate on these invoices. They have also furnished the Certificate from their Chartered Accountant to show that the rebate has not been claimed on these invoices. The certificate also establishes that there is excess payment of duty - These documents would sufficiently prove and establish that the appellant has paid excess duty and also the fact that they have not claimed rebate on these invoices. The decision relied on by the appellant in the case of APEX ECOTECH PVT. LTD. VERSUS COMMISSIONER OF C. EX. S.T., PUNE-I [ 2018 (11) TMI 566 - CESTAT MUMBAI] is also on similar set of facts in which the Tribunal has allowed refund, where it was held that There is no specific provision mandate as to how an invoice (duty paying document) has to be cancelled and refund was allowed. The rejection of refund is unjustified - Appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 977
  CENVAT Credit - input services - banking and finance service - Pelletizing Plant - allowable or not in terms of Rule 3 read with Rule 2 (l) read with Rule 9(6) of CCR - HELD THAT:- The setting-up of Pelletizing machine/plant is undisputedly for modernisation of the existing manufacturing facility for better efficiency and better quality of finished products, which amounts to modernisation. Further, hold modernisation is allowable, and any service used by appellant/manufacturer for modernisation of their manufacturing facility, is allowable input service. The input credit of Rs. 25,14,532/- is allowable credit under Rule 2(l) read with Rule 3 read with Rule 9 of CCR, 2004 - Appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 973
  Levy of penalty - Clandestine removal - case solely made on the strength of statements - cross- examination done or not - HELD THAT:- An identical issue was decided in the case of ATUL BANSAL, BANSAL CASTINGS PVT. LTD., HIMANSHUBHAI NANDLAL JAGANI VERSUS C.C.E. S.T. -RAJKOT, BHAVNAGAR [ 2019 (8) TMI 959 - CESTAT AHMEDABAD ] where it was held that Since the statements cannot be relied upon, these records in isolation has no evidentiary valued particularly when the same was not corroborated with the statutory records of the appellant. The differentiation asserted by the Learned Authorized Representative is misplaced as the order dated 21.08.2019 of tribunal does not actually go into the statements. Therefore, any extra admission made in the statement is of no relevance to create any distinction from the aforesaid decision. It disregards the statements on the ground that no cross- examination has been granted. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (6) TMI 1005
  Violation of principles of natural justice - Revision of assessment - opportunity as contemplated under the provisions of the Act is not provided before passing the final orders of revision of assessment - HELD THAT:- Petitioner s request to grant two months time to file certificate of payment in letter dated 17.09.2013 was not disposed of. In other words, no order of rejection or acceptance was passed. Thus, the petitioner was deprived of his opportunity to file the documents. This Court is of the considered opinion that the assessees may work out their remedy in a calculated manner, some times to prolong and protract the issues. However, the authorities competent are expected to be cautious in the matter of following of the procedures contemplated. Evasion of Tax is a common phenomenon in our nation. Thus, the competent authorities while dealing with any issues are bound to be careful, more specifically in the matter of following the procedures as contemplated in the statute and the rules - The officials competent are expected to follow the procedures contemplated under the statute and rules scrupulously. The procedural violations, if any, committed would cause unnecessary delay and further, provide cause for further disputes on such technical grounds. In the present case, undoubtedly, the assessees are adopting the delay tactics. Unfortunately, the system also supports such litigants in disposal of the matters as such matters are kept pending for years together. Ultimately, such delay causes injury to the revenue for the State and sufferers would be the public at large in the society. Thus, the authorities are bound to be careful while dealing with such matters. The respondent is also expected to pursue the matters before the Courts vigilantly so as to get disposal as early as possible in such matters where fresh considerations are required on account of certain technical and procedural irregularities. In view of the fact that the respondent has not disposed of the request made by the petitioner to grant two months time to file certificate of payment, the matter is to be remanded back for fresh adjudication by following the procedures - petition allowed by way of remand.

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• 2021 (6) TMI 999
  Maintainability - requirement with the pre-deposit or security - restraint on Respondent from making coercive recovery in relation to the subject matter of the petition - bone of contention raised by petitioner is that the Tribunal could not have taken into consideration the turnover of the petitioner for both the accounting years for the purpose of determining the amount of pre-deposit - Section 67 of the Gujarat Value Added Tax Act, 2003 - HELD THAT:- From the bare reading of the subsection (4) of Section 73, it clearly transpires that an Appeal before the Appellate Authority against the order of assessment would not be ordinarily entertained unless such an appeal is accompanied by satisfactory proof of payment of the tax in respect of which an appeal has been preferred. Of course, the Appellate authority may if it deems fit for the reasons to be recorded in writing entertain the Appeal by granting relaxation in payment of tax in respect of which the Appeal is preferred as mentioned therein. The petitioner has challenged the order passed by the Tribunal directing it to pay 15% of the tax dues instead of 25% as directed by the First Appellate Authority. Apart from the fact that the First Appellate Authority had exercised the discretion in favour of the petitioner as contemplated under Section 73(4) of the GVAT Act by directing the petitioner to make payment of 25% of the tax dues instead of entire tax dues, for entertaining the Appeal, however the first appellate authority dismissed the Appeals on account of non-payment of the said pre-deposit amount, the Tribunal also passed the impugned order exercising its discretion by granting stay against the recovery of tax dues by directing the petitioner to pay 15% instead of 25% of the tax dues, while admitting the Second Appeals. Such an order of the Tribunal being interim and discretionary in nature, no statutory or legal right of the petitioner could be said to have been infringed, which would warrant interference of this Court under Article 226 of the Constitution of India. It is well settled position of law that the High Court will ordinarily not entertain the petition under Article 226 of the Constitution of India, involving recovery of taxes, cess, fees or other types of public money. It cannot be gainsaid that any stay of an action initiated by the State or its authorities for the recovery of taxes etc. would have serious implication on the authorities in discharging their constitutional and legal obligations - The Tribunal has not committed an error in taking into consideration the turnover of sales and purchase of the petitioner, while passing the impugned order. It transpires that the details of sales and purchase of the petitioner were taken into consideration by the Tribunal with a view to ascertain the financial position of the petitioner. The Tribunal has considered the relevant aspects namely the financial position of the petitioner and has exercised its discretion to the extent of granting the stay against the recovery of the dues by directing the petitioner to deposit 15% of the tax dues instead of 25% as directed by the first Appellate Authority. Petition dismissed.

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• 2021 (6) TMI 998
  Violation of principles of natural justice - validity of assessment order - effective opportunity of personal hearing of the assessee - HELD THAT:- No time was granted by the authority and it is understood by the learned counsel appearing for the petitioner that the petitioner and the respondent officer were in touch telephonically with the further requirements that were sought for by the Assessing Officer to complete the assessment - The consultant of the petitioner was affected by COVID-19, as a result that the petitioner was unable to procure and produce the details sought for by the officer. In support of this submission, medical records have been filed at page Nos.58 59 of the typed-set. This documents are not in dispute. The impugned order has come to be passed on 30.03.2021 without affording an opportunity of personal hearing. This is an assessment which, in terms of Section 27 of the Act, which requires an effective opportunity of personal hearing of the assessee. Courts have consistently interpreted the phrase effective opportunity to mean and include an opportunity of personal hearing as well. In this case, since admittedly the petitioner has not been heard in person, the impugned order has been passed in violation of principles of natural justice and without affording adequate opportunity of personal hearing to put forth its case - petition allowed.

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• Indian Laws

• 2021 (6) TMI 1009
  Grant of regular bail - Smuggling - Phensedyl - recovered bottles were found containing Codeine Phosphate which is a manufactured drug - recovery of commercial quantity of Codeine or not - whether the rigour of Section 37 of the NDPS Act which regulates the grant of bail for offence involving commercial quantity of drugs is attracted or not? - HELD THAT:- Matter is referred to Larger Bench to decide following issues:- a) whether in cases specifically related to manufactured drug with a miniscule percentage of a narcotic substance, the weight of the neutral substance ought to be ignored while determining the nature of the quantity seized i.e. small, commercial or in between? b) whether Note 4 of the S.O. 1055 (E) dated 19th October, 2001 published in the Gazette of India, Extra., Pt.II, Sec3 (ii) dated 19th October 2001, as amended on 18.11.2009, should be held inapplicable to manufactured drug which contain a miniscule percentage of a narcotic drug? c) whether Note 4 of the S.O. 1055 (E) dated 19th October, 2001 published in the Gazette of India, Extra., Pt.II, Sec3 (ii) dated 19th October 2001, as amended on 18.11.2009, should be made applicable to cough syrups containing miniscule percentage of Codeine since it has medicinal value and is also easily available? Since the question is referred to a larger Bench, this Court is inclined to grant the petitioner interim bail for 90 days on the petitioner furnishing a personal bond in the sum of Rs. 35,000/- with surety in the like amount to the satisfaction of the Trial Court subject to the conditions imposed - application allowed.

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• 2021 (6) TMI 1002
  Dishonor of Cheque - proceeding under Section 482 of the Code of Criminal Procedure - adjudication of this Court is that if the applicant is not a signatory to the subject cheque then would a proceeding under Section 138 lie against him? - Section 141 of the NI Act - HELD THAT:- Two private individuals cannot be said to be other association of individuals . Therefore, there is no question of invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act. The criminal complaint filed against 8 the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act, therefore, can be said to be abuse of process of law and therefore the same is required to be quashed and set aside. The impugned judgment and order dated 21.08.2019 passed by the High Court refusing to quash the criminal complaint against the appellant for the offence punishable under Section 138 read with Section 141 of the NI Act is hereby quashed and set aside - this Court is of the considered opinion that the proceedings under Section 138 of the Negotiable Instruments Act cannot be permitted to continue against the present applicant. Appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 1000
  Dishonor of Cheque - reliability or genuineness or otherwise of the allegations made in the F.I.R. - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The power of quashing of the criminal proceeding should be exercised very sparingly and with circumspection and that too in a rarest of rare case. The Court is not justified in embarking upon the inquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim and caprice - In the instant case, the applicants have placed their reliance on some extraneous/defence material. In the instant case, respondent no. 2 has not disputed about filing of the complaints against deceased Selvakumar s/o Govindaraj for having committed the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. We have carefully gone through those five complaints which are part of the record. We are surprised to note that the allegations have been made against deceased Selvakumar alone with the specific contention that he is the proprietor of M/s. Shreejith Traders and in that capacity, he has issued the cheques for the balance amount as referred in the present F.I.R. - In the case of State of Haryana and Others v. Bhajan Lal and Others, [ 1990 (11) TMI 386 - SUPREME COURT ], in para 102, the Supreme Court has given the categories of cases by way of illustrations wherein such quashing power under Section 482 of Cr.P.C. could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice. The Supreme Court has considered the intention of cheating right from the inception and further held that the offence of cheating prima facie made out and no ground to quash the F.I.R. Thus, we find that the facts and circumstances of the said case cannot be made applicable to the facts and circumstances of the present case - the F.I.R. lodged by respondent no. 2 is nothing but an abuse of the process of the court and the same is necessary to be quashed and set aside in the interest of justice. The criminal application is allowed.

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• 2021 (6) TMI 996
  Dishonor of Cheque - acquittal of the accused - insufficiency of funds - cross-examination of appellant - wrong interpretation adopted by the learned Magistrate - rebuttal of presumptions - Section 142 of the Negotiable Instruments Act - HELD THAT:- The answers given by the accused in reply to questions under Section 313 of the Cr.P.C., are not per se evidence; they are not on oath; the prosecution does not get opportunity to verify the correctness of such statements, unless the accused takes oath and enters the box under Section 315 of the Cr.P.C., they do not get opportunity to cross examine. Here the counsel for the first respondent did not cross examine the appellant, when he took oath and gave evidence as PW1. Secondly, no evidence is tendered by the first respondent in support of his version that the cheque was given only in consideration of Rs. 50,000/-. The learned Magistrate has gone estray in acquitting the first respondent. Having regard to the circumstances he should not have been acquitted. After having admitted that the Ext. P1 cheque was issued by him, in the absence of a plausible and satisfactory explanation, the trial court ought to have drawn the presumptions under Sections 118 and 139 of the Act. The court went wrong in taking the statement given by first respondent under Section 313 of the Cr.P.C. as gospel truth and acquitting him from liability. That finding requires interference in appeal. The first respondent is found guilty and convicted under Section 138 of the N.I. Act and sentenced to pay a fine of Rs. 2,50,000/- in default to undergo simple imprisonment for six months. When realised, the amount shall be paid as compensation to the appellant - Appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 995
  Dishonor of Cheque - acquittal of the accused - legally enforceable liability or not - rebuttal of presumption - Sections 118 and 139 of the Act - HELD THAT:- It is trite that merely for the reason that the accused had admitted his signature on a negotiable instrument, its execution cannot be assumed. In order to draw the presumptions under Sections 118 and 139 of the Act, either the execution of the cheque should be admitted or it has to be proved that it was executed and issued in discharge of a legally enforceable liability. Here the first respondent does not admit the execution of the cheque. A perusal of Ext. P9 shows that the actual consideration of the vehicle was Rs. 33,900/-. It is evident from Ext. P10 also. The margin money was Rs. 6,800/-. The loan amount, that is the amount actually lent by the appellant, was Rs. 27,100/-. So the total amount found payable by the first respondent was Rs. 39,295/- which includes FC amount, may be financial credit amount, of Rs. 12,195/-. The first respondent was liable to pay a total amount of Rs. 39,295/- in 36 instalments at the rate of Rs. 1092/-. The documents produced by the parties indicate that the first respondent was never regular in repayment of the amount. However, at least in alternate months he has paid amounts. Till 17.07.2007, though intermittently, he paid an amount of Rs. 16,433/-, which includes the defaulted instalment interest. But the last remittance has not been reckoned by the appellant. Secondly, Rs. 12,195/- shown payable by the first respondent includes interest for the entire period of 36 months, during the period of the entire hire purchase agreement. There is substance in the finding of the trial court that it was not supported by consideration and therefore the appellant is not entitled to draw the presumptions under Sections 118 and 139 of the Act - it is obvious that sufficient reasons are not made out by the appellant to interfere with the judgment under attack - Appeal dismissed.

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• 2021 (6) TMI 994
  Dishonor of Cheque - insufficiency of funds - acquittal of the accused - rebuttal of presumptions - Sections 118 and 139 of Negotiable Act - HELD THAT:- Exts. D5 and D6 were highlighted by the respondent to indicate the prevaricating stands taken by the appellant before the trial court and the civil court. When examined as PW1 before the trial court, the appellant stated that the Ext. P1 was brought prepared and signed before him. But before the civil court he said that the entire entries in Ext. P1 cheque were inserted before him. So, on this aspect also the appellant has taken different stands. In the circumstances, the trial court cannot be found fault with for disbelieving such a version The 1st respondent has no case that he had any monetary transaction with the appellant, but has stated specifically in Ext. D1, that the Ext. P1 was handed over to Surendran without incorporating the name of the payee and putting the date and that, Surendran had facilitated it to misuse the same. The presumptions under Sections 118 and 139 of the Act can be drawn in favour of the complainant only if the execution of the cheque is admitted or proved. Here, the 1st respondent has denied its execution and has given his own version as to how the document had come into existence. Exts. D2 and D3 documents have to be appreciated in this context. Admittedly the 1st respondent and DW1 had some vehicle deal, they jointly owned a Tempo Traveller and an agreement like Ext. D2 was executed while they had parted company. DW1 also admitted that an amount of Rs. 1,92,500/- was due to him, while executing such an agreement two cheques drawn on Punjab National Bank were handed over to him, for Rs. 1,92,000/-. It is the common case that the transaction between DW1 and the 1st respondent has come to an end. The appellant has failed to make out an offence under Section 138 of the Act. Thus the impugned judgment does not warrant interference in appeal - Appeal dismissed.

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• 2021 (6) TMI 992
  Principles of natural justice - ex-parte judgement - suit for recovery - pronote and receipt was stated to have been returned to the respondent at the time of compromise - Order 9 Rule 13 read with Section 151 CPC - notice of the application under Order 21 Rule 66 CPC - HELD THAT:- Respondent had duly proved another pronote and receipt dated 06.06.2014 in favour of Amardeep Kaur, the original of which was produced before the said Court. The said pronote and receipt was stated to have been returned to the respondent at the time of compromise by Amardeep Kaur. Respondent has indeed successfully proved that he had sufficient reason for not appearing before the trial Court as has been averred. Apprehension raised by learned counsel for the petitioner that such a finding would prejudicially affect the petitioner at the time of trial of the suit is unfounded, as it is abundantly clear that learned trial Court shall proceed to decide the matter on the basis of evidence to be led before it by the respective parties. Whether or not the present transaction was a part of compromise arrived at between the petitioner and the respondent, is clearly the subject matter of trial and shall be decided accordingly by the learned trial Court on the basis of evidence, which would be produced before it. Petition dismissed.

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• 2021 (6) TMI 991
  Dishonor of Cheque - Requirement to deposit of the amount as provided under Section 148 of Negotiable Instruments Act - HELD THAT:- In the instant case, the trial Court has Awarded fine of Rs. 1,80,00,000/- along with simple imprisonment for two years and at the same time, has Awarded compensation of Rs. 1,50,00,000/- by invoking Section 357 of the Criminal Procedure Code - The language of Section 138 of the Act provides for the punishment with imprisonment for a term which may be extended to two years or with fine, which may extend to twice the amount of the Cheque or with both. Therefore, the word used in Section 138 is fine and therefore, discretion is available to the Court under Section 148 to impose condition for preferring an Appeal to deposit minimum of 20% of the fine or compensation Awarded by the trial Court. The Court is of the opinion that in a given facts of the case, where accused person is facing convictions in 9 complaints and in each of these complaints, accused has faced conviction, wherein fine is separately imposed and compensation is also separately imposed, therefore, considering the financial crunch that the accused will have to face in this trying time, the Court deems it fit to directed the accused to deposit 20% of compensation instead directing to deposit 20% of the fine imposed. The Court has also taken into consideration the submission made on behalf of the accused regarding financial inability to arrange for such huge deposits in these Appeals. Considering the overall fact situation, where the accused person is ordered to pay fine of Rs. 1,80,00,000/- in one of the 9 complaints and similar amount ordered to be paid as fine over and above this, an amount of Rs. 1,50,00,000/- Awarded as compensation under Section 357 of the Criminal Procedure Code and what has been brought on the record of this case regarding decree issued by the Commercial Court in Commercial Civil Suit No. 43 of 2919 dated 09.12.2020 holding the plaintiff Company to entitle to recover Rs. 4,50,25,000/- with accrued rate of interest at the rate of 6% from 26.10.2012 till realization of the full amount, in the facts of this case, the Court does not deem it fit to enhance the amount of deposit to more than 20% of the compensation Awarded and hence, no interference on that count. Application dismissed.

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• 2021 (6) TMI 963
  Dishonor of Cheque - publication of proclamation against person absconding - proclaimed person/offender or not - Section 82 of the Cr.P.C. - HELD THAT:- In the present case vide order dated 06.10.2017 proclamation under Section 82 of the Cr.P.C. was ordered to be published against the petitioner requiring the petitioner to appear before the Court on 14.11.2017. The proclamation was published on 06.11.2017. The petitioner was not given statutory minimum period of thirty days from 06.11.2017 (the date on which the proclamation issued in terms of order dated 06.10.2017 was published) till 14.11.2017 (the date fixed for his appearance before the Court). Learned Judicial Magistrate First Class, Gurugram vide order dated 14.11.2017 adjourned the case firstly to 19.12.2017 and then to 10.01.2018 for awaiting the appearance of the petitioner on the ground that statutory period of thirty days had not elapsed and vide order dated 10.01.2018 declared the petitioner to be proclaimed person. Learned Judicial Magistrate First Class, Gurugram could not extend the time to complete the period of thirty days by simply adjourning the case on 14.11.2017 to 19.12.2017 and then to 10.01.2018 for awaiting appearance of the petitioner and was mandatorily required to issue the proclamation again for publication thereof in accordance with the provisions of Section 82(2) of the Cr.P.C. by giving thirty days time to the petitioner from the date of publication of the proclamation till the date fixed for his appearance before the Court. The petition is allowed.

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