Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 7, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Applicable GST SAC and GST rate - - providing boarding and lodging to the students - There are two distinct supplies in this contract one for accommodation and the other for food - The SAC for supply of accommodation is ‘99631’ - this is exempt in the present case as per day rent is below Rs.1000/- - The SAC for supply of food is ‘99633’ and taxable at the rate is: i. 6% CGST & SGST each with ITC upto 14.11.2017. ii. 2.5% CGST & SGST each without ITC thereafter from 15.11.2017 onwards - AAR
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Levy of GST - Valuation - Resident Welfare Association (RWA) collecting monthly maintenance charges - Any amounts collected periodically along with the monthly maintenance charges are covered under Entry 77 of Notification No. 12/2017. Therefore they are taxable if the total amount collected by the RWA, by whatever name i.e., monthly maintenance or sinking fund etc., exceeds Rs.7500/-. - AAR
Income Tax
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Clarification regarding Form No 10AC issued till the date of this Circular - In view of the amendments made vide Finance Act, 2022, the conditions subject to which the registration/approval or provisional registration/ provisional approval was granted to trusts and institutions need to be revised to align the same with the amendments made by Finance Act, 2022. - Clarification issued
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Reopening of assessment - notice under Section 148A(b) - it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. - HC
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Survey proceedings - documents impounded under Section 131(3) - there is no provision under the Act to retain the documents of title as security for any tax liability that may arise in the future. In the absence of any such statutory provision, the respondents cannot retain documents of title impounded/seized by them under Section 131(3) of the Act - HC
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Assessment u/s 144A - Power of JCIT to issue directions in certain cases - Directions to be exercised by the Joint Commissioner under Section 144(A) is merely intended to guide the Assessing Officer to complete the assessment and only such directions are binding on an Assessing Officer. Since directions contained in the impugned order passed by the Joint Commissioner was prejudicial to the petitioner and to complete the assessment in a particular manner, petitioner should have been called for hearing by the second respondent Joint Commissioner. - The assessment order quashed - HC
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Admissibility of additional evidences under Rule 46A - Power of CIT(A) - Penalty u/s 271D - taking cash loan - Default under provisions of section 269SS - proof of bona fides and genuiness of the transaction - “reasonable cause” - the ld. CIT(A) has to pass a speaking order in writing as to his decision as to admission or refusal to admit additional evidences. - ld. CIT(A) did not comply with Rule 46A of the 1962 Rules. - Matter restored back - AT
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Penalty u/s 271(1)(c) - non-compliance of notice issues - if the quantum proceedings itself are declared to be bad in law and quashed , then any non compliance on the part of the assessee to respond to notice issued u/s 142(1) during such proceedings which are held to be void ab inito and proceedings without jurisdiction , will not give rise to any cause of action for validly initiating penalty proceedings u/s 271(1)(b) for non compliance of notice issued u/s 142(1) during such proceedings - AT
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TDS Credit u/s 199 - grievances of the assessee is that the entire TDS amount was not duly given credit by the CPC Centre - cash basis of system of accounting followed by assessee - there are provisions of under the IT Act; namely, section 199 of the IT Act, 1961 and Rule 37BA of the IT Rules, 1962 and proper mechanism is also provided under the Act and Rules. Thus, respectfully following the ratio of the Jurisdictional High Court judgement, the assessee is entitled to get credit on TDS. - AT
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Addition u/s 69B - Amount of investments, etc., not fully disclosed in books of account. - the silence of the assessee on the statement recorded proves that he has accepted the averments made in the statement of the witness whose statement has been recorded after the due process of law. - AT
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Addition u/s 69C - Unexplained expenses/premium - assessee did not furnish the source of payment of such expenses/premium - The case of assessee throughout the proceedings was that she is not having sufficient income. The expenses incurred by the other co-owners on her behalf and that no such similar addition was made in case of other co-owners, on whose behalf similar expenses were incurred by other co-owners. - It is settled law that the assessee cannot be treated as indifferently in respect of expenses or treatment of capital gain. - Additions deleted - AT
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Disallowance of claim of communication expenses - Non-deduction of TDS - Royalty as per Article 12 of India-US treaty - the AO/CIT(A) relied upon the Explanations 5 & 6 inserted in sec. 9(1)(vi) of the Act by Finance Act, 2012. Since it is a prospective amendment, the disallowance u/s 40(a)(i) cannot be invoked for the year under consideration relying upon the above said amendment. - AT
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Validity of assessment - no notice u/s 143(2) - the assessment order passed by the Assessing Officer (DCIT) was bad in law for want of issuance of notice u/s 143(2) of the Act. - since the legal issue relating to the jurisdiction to frame the assessment not only for want of issue of notice u/s 143(2) of the Act but also for want of competent territorial jurisdiction to frame the assessment is decided in favour of the assessee, therefore, the assessment order passed without jurisdiction is bad in law and is hereby quashed. - AT
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Under valuation of closing stock of rice - improper maintenance of stock register by the assessee-firm - the method of valuation was adopted by the Ld. AO in closing stock that should be considered to opening stock also. So, both the valuation of opening and closing stock will be in the order. The asses see-firm should get proper opportunity to explain its method of valuation before the Ld. AO. - AT
Customs
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Exemption from CVD - Classification of imported goods - Iron Ore (fines) or Iron Ore (concentrate) - The process of crushing and screening undertaken on the Iron Ore after they have been mined at Carajas, Brazil and subsequent blending at Oman with 5-10% iron ore concentrate would result in classification of the goods imported under CTI 2601 11 31 as Iron Ore fines and would consequently be entitled to the benefit of exemption from payment of CVD under the notification dated 17.03.2012. - AT
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Seeking provisional release of seized goods - This is a classification dispute and, being a classification dispute, denial of provisional release would be disproportionate detriment. The appellant is a regular importer and differential duty, if any, arising upon conclusion of proceedings should be recoverable without difficulty. Breach of policy prohibition, should that be determined, is also rectifiable for such is the authority to relax vested in the Director General of Foreign Trade and, hence, not warranting denial of provisional release. - AT
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Power of Commissioner (appeals) - appeal was considered on merit and directions were issued to the lower authority for re-assessing the Bills of Entry with consequential relief - Certain amendments were carried out to Section 128 of Customs Act,1962 w.e.f.29.03.2018 by the Finance Act, 2018. The effect of amendment was that the Commissioner (Appeals) was empowered under the statute to refer the matter back to the adjudicating authority with direction for fresh adjudication or decision, concerning the situation, where no order or decision has been passed after reassessment under Section 17ibid. - AT
State GST
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Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices - the service recipient is located outside India and place of supply of the service is in India as per IGST Act 2017 - Clarification issued
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Time limitation for filing of Refund of excess payment / balance in electronic cash ledger - Application of unjust enrichment on such refund - Refund of excess TDS / TCS deposited - Relevant date for refund in case of export - Clarification on certain refund related issues
Indian Laws
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Dishonor of Cheque - insufficiency of funds - vicarious liability - petitioners are Non-executive Independent Directors of the Company - The phrase "non-executive independent director" is not even shown to exist in any of the documents appended by the petitioners. The respondent has demonstrated varied nomenclature of the petitioners in several documents. Therefore, it becomes a matter of trial. - HC
IBC
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Validity of directions issued by the NCLT after permitting the withdrawal of application - Direction to deposit the unpaid TDS amount, deducted from the employees - While permitting withdrawal of Section 9 Application, the Adjudicating Authority could have passed an order taking into consideration the Settlement entered between the parties. Hence, direction to Appellant to deposit the deducted amount of TDS cannot be faulted. - AT
VAT
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Adverse remarks against the officer of VAT department acting as AO - There was no necessity of stretching the matter too far and passing further orders for imposition of costs and for departmental actions with other comments regarding competence of the appellant to discharge quasi-judicial functions. - Having said that, we deem it appropriate to close this matter with annulment of strictures and observations against the appellant in both the impugned orders - SC
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Recovery of dues towards tax - Right of secured creditors - creation of first charge - the State cannot claim any first charge over the subject property by virtue of Section-48 of the GVAT Act, 2003. - HC
Case Laws:
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GST
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2022 (6) TMI 254
Constitutional Validity of Section 103(1)(b) of the GST Acts - violative of Section 103(1)(b) of the GST Acts or not - Levy of GST on fryums/papad - HELD THAT:- Prima facie, it appears that the Appellate Authority took the view that the Papad are known in the market as fryums and not Papad . There is a further challenge to the constitutional validity of Section 103(1)(b) of the GST Act on the ground that the same is manifestly arbitrary and violative of Articles 14 and 19(1)(g) respectively of the Constitution. The constitutional validity of Section 103(1) (b) of the Act is already made a subject matter of challenge in the case of J.K. PAPAD INDUSTRIES VERSUS UNION OF INDIA [ 2021 (11) TMI 155 - GUJARAT HIGH COURT ]. In the said writ application, a Co-ordinate Bench of this Court has issued Notice and the matter is to come up on 08.06.2022 for hearing. Let Notice be issued to the respondents, returnable on 15.06.2022.
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2022 (6) TMI 253
Exemption form GST - Medical insurance premium taken to provide health Insurance to the employees, pensioners and their family members - Vehicle insurance Policy taken to provide Insurance to the vehicles owned by the Board - Eligibility of exemption as mentioned in Entry No. 3 of the Notification Number 12/2017 - Central Tax (Rate), dt 28th June, 2017 - HELD THAT:- The applicant is procuring medical insurance services to their employees and their family members. Thus there is no direct relation between the insurance services procured by the applicant and the functions discharged by them under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017. Vehicle insurance policies procured by the applicant for the vehicles owned by the board qualify for exemption if they are directly used to provide services under Schedule XII of the Constitution. However if they are used for transportation of employees/board members/other persons they will not have direct relationship to functions discharged under Article 243W and therefore will not qualify for exemption under Notification No. 12/2017.
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2022 (6) TMI 252
Applicable GST SAC and GST rate - Supply of service - Composite Supply or Mixed Supply - providing boarding and lodging to the students undergoing training under healthcare related vocational program - applicability of serial no. 14 of Notification No. 12/2017 dt:28.06.2017 - HELD THAT:- The applicant states that he is providing lodging and boarding to students undergoing training under healthcare related vocational program under Deendayal Upadyay Grameen Kaushalya Yojana (DDU-GKY) by charging Rs.9000/- per candidate per month; of which Rs.3500/- is towards rent for accommodation at fixed cost and Rs.5500/- towards food on head count/actual number of candidates - According to the applicant, the chapter heading 9963 at serial no. 14 of Notification No. 12/2017 dt: 28.06.2017 describes such services for residential or lodging purposes and exempts the same if the value of supply of a unit of accommodation is below Rs.1000/- per day. The applicant states that he is charging only Rs.9000/- per month which amounts to Rs.300/- per day for both accommodation and food as a composite supply. Further that the supply of food is ancillary to accommodation and accommodation being the principle supply, hence he claims that their service is exempt from tax in view of this entry. As seen from the information serviced by the applicant, the rent is fixed at the rate of Rs.3500/- whereas the food is charged at Rs.5500/- as per the head count or actual number of candidates. This means that the price is variable to the extent of food supplied and this is not a single price the customer pays, no matter how much of the package is actually received. For the above reason, the two supplies are not integral to one another. There are two distinct supplies in this contract one for accommodation and the other for food - The SAC for supply of accommodation is 99631 and as enumerated at serial no. 14 of Notification No. 12/2017 dt: 28.06.2017 this is exempt in the present case as per day rent is below Rs.1000/- - The SAC for supply of food is 99633 and taxable at the rate is: i. 6% CGST SGST each with ITC upto 14.11.2017. ii. 2.5% CGST SGST each without ITC thereafter from 15.11.2017 onwards - There are two distinct supplies in this contract one for accommodation and the other for food - the service is not exempted vide Notification No. 12/2017 CT(Rate) dated: 28.06.2017.
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2022 (6) TMI 251
Levy of GST - Valuation - Resident Welfare Association (RWA) collecting monthly maintenance charges, certain annual fee by name sinking fund and charges for electricity used in common area - GST on monthly collection not exceeding Rs.7500 per member as total collection of the society is more than Rs.20 lakhs a year - GST on total monthly maintenance of Rs.7500 per member plus annual sinking fund collected in July or august month in which annual sinking fund will be collected due to monthly collection including annual sinking fund exceeding Rs.7500 per member for that month or only on sinking fund which is over and above Rs.7500 per member - GST on monthly collection of common area electricity charge paid by the members in addition to the Rs.7500 monthly maintenance charged on the basis of actual bill divided by carpet area of 9,01,913 sq. ft pro rata charged to respective member s flat carpet area. HELD THAT:- The Serial No. 77 of Notification No. 12/2017 as amended vide Notification No. 02/2018 dt: 25.01.2018 states that service by an unincorporated body or a non-profit entity to its own members is exempt upto an amount of Rs. 7500 per member for sourcing goods or services from a 3rd person for the common use of its members in a housing society or a residential complex. Therefore where the aggregate turnover of a Residents Welfare Association (RWA) exceeds Rs.20 lakhs in a financial year and the amount collected for maintenance per member exceeds Rs.7500/- then the entire amount is chargeable to GST at the rate of 18% - Further even if the annual turnover of the RWA is greater than Rs.20 lakhs but the monthly maintenance charged per person is Rs. 7500/- or less, then such RWA need not pay tax on the amounts so collected. Any amounts collected periodically along with the monthly maintenance charges are covered under Entry 77 of Notification No. 12/2017. Therefore they are taxable if the total amount collected by the RWA, by whatever name i.e., monthly maintenance or sinking fund etc., exceeds Rs.7500/-. Therefore the total amount collected in July or august month by RWA from the members i.e., the monthly maintenance charge plus sinking fund amount is liable to tax if it exceeds Rs.7500/-. Nevertheless, GST is not leviable on electricity and water charges collected from residents.
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2022 (6) TMI 250
Seeking clarification on determination of transaction value in case of supplies made free of cost by recipient by suppliers as per terms of contract - contracts with a host of vendors/suppliers for extraction of coal - HELD THAT:- The commodity Diesel is covered under Entry 54 to the List II of the Schedule VII to the Constitution of India and therefore it is excluded from levy of GST and hence beyond the scope of Chapter XVII of the CGST Act, 2017. Application dismissed.
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2022 (6) TMI 249
Maintainability of application when inquiry proceedings are pending - Government Entity as per Notification No.11/2017 31/2017 or not - works contract executing civil works for Central Government Employees Welfare Housing Organization (CGEWHO) - applicability of tax rate of 12% is applicable to the contract entered into by the applicant with CGEWHO, in pursuance of N/N.11/2017 Central tax rate F.No.354/117/2017 TRU dated 28th June, 2017 and amended N/N. 24/2017 Central Tax (Rate) dated 21st September 2017 read with N/N. 31/2017 Central Tax (Rate)) dated 13th October 2017 - HELD THAT:- It is well settled law of interpretation that where the legislature uses the same expression in the same statute at two or more places, then the same interpretation should be given to that expression. Thus, generally the same words are used with the same meaning throughout the same statute; otherwise it would cause injustice. This principle of interpretation was upheld by the Hon ble Supreme Court of India in a catena of case law starting from AGHUBANS NARAIN SINGH VERSUS U.P. GOVT. THROUGH COLLECTOR OF BIJNOR [ 1966 (9) TMI 145 - SUPREME COURT] and the latest being S SHER SINGH VERSUS STATE OF HARYANA [ 2015 (1) TMI 1467 - SUPREME COURT] . Therefore in view of the amendment to Section 83(1) the expression proceedings will have the same meaning for Chapter XIV as the other chapters mentioned in the CGST Act, 2017. In the present case as the DGGI, Hyderabad has even issued a notice for payment of tax before the above hearing was held for disposal of the question raised before AAR. Merely because the application before the AAR was filed earlier to the investigation initiated by DGGI they will not be immune from any inquiry. Thus as the proceedings are pending under Chapter-XIV of the CGST Act, 2017 regarding the question raised by the applicant, their application stands rejected.
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Income Tax
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2022 (6) TMI 248
Reopening of assessment u/s 147 - validity of order passed under Section 148A(d) - assessee contented on Non considering the objections raised by the petitioner - HELD THAT:- The consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence the writ petition stands dismissed.
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2022 (6) TMI 247
Reopening of assessment u/s 147 - notice u/s 148A against non-existent entity - As argued violation of principles of natural justice without taking into consideration the reply filed by the Petitioner - HELD THAT:- Revenue on instructions of the Assessing Officer admits that the Petitioner s reply was not taken into consideration while passing the impugned order under Section 148A(d) Keeping in view the fact that the impugned order and notice have been issued without considering the reply filed by the Petitioner, this Court sets aside the impugned order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act by the Respondent No.1both dated 4th April, 2022 for the Assessment Year 2018-19. The Assessing Officer is directed to pass a fresh reasoned order in accordance with law after considering the reply filed by the Petitioner within eight weeks.
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2022 (6) TMI 246
Reopening of assessment - notice under Section 148A(b) - contention raised by petitioner is that there is no escapement of income which can form basis for proceeding against the petitioner also non considering objections submitted by the petitioner in response to notice under Section 148A(b) - HELD THAT:- As the consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence, the instant writ petition stands dismissed.
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2022 (6) TMI 245
Reopening of assessment u/s 147 - notice u/s 148A(d) - application for adjournment was filed by the petitioner seeking extension of time to file a reply to the said notice - HELD THAT:- Having heard learned counsel for the parties, this Court is of the view that the petitioner/assessee has the right to get adequate time in accordance with the Act to submit its reply. It is pertinent to mention that Section 148A(b) permits the Assessing Officer to suo moto provide up to thirty day s period to an assessee to respond to the show cause notice issued under Section 148A(b), which period may in fact be further extended upon an application made by the Assessee in this behalf, and such period given to the petitioner-assessee is excluded in computing the period of limitation for issuance of notice under Section 148A(d) of the Act in terms of the third proviso to Section 149 of the Act. In the present case, though the petitioner had filed an application for adjournment immediately after receipt of notice dated 17th March, 2022, the respondent had neither rejected the request for adjournment nor directed the petitioner to file a reply within the original stipulated time. By denying an opportunity of adequate time to the petitioner, the mandate of Section 148A(b) has been violated.Consequently, the impugned order dated 31st March, 2022 issued under Section 148A(d) of the Act and the notice dated 31st March, 2022 issued under Section 148 of the Act are set aside.
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2022 (6) TMI 244
Validity of reopening of assessment u/s 147 - rejecting the objections submitted by the petitioner to notice issued under Section 148-A(b) by ignoring the reply submitted by the petitioner - HELD THAT:- As abundantly clear that the mandate of Section 148- A(b) of the Income Tax Act that the assessee shall be provided a minimum of seven days and maximum of thirty days, which may be extended by the I.T.O. for filing reply to the show cause notice, was not complied with. Furthermore, annexure to the notice indicates that the assessment was sought to be reopened in respect of a suspicious transaction which took place in a bank account maintained at the Oriental Bank of Commerce, Connaught Place, New Delhi, Delhi India Branch in the year 2017- 18. In the reply petitioner, pertinently asserted that he had no connection whatsoever with the said bank account and sought details thereof so that proper response could be filed. However, the I.T.O. expressly ignored the reply of the petitioner and passed the impugned order (Annexure- 6) dated 30.3.2022, wrongly mentioning therein that the petitioner did not file reply to the notice under Section 148-A(b) - The said finding in the impugned order is factually incorrect in view of the admitted material available on record. The response to the notice was unquestionably submitted by the petitioner within the timeline as provided under Section 148-A(b) and thus, there was no reason whatsoever for the I.T.O. not to have provided the requisite details to the petitioner. Had the account details be provided and if the petitioner was able to establish that he had no connection with the suspected bank account, manifestly, the subsequent proceedings would not have been required. It is clear that the Income Tax Authorities were trying to cover up the default on their part in not having the notice served properly upon the petitioner. Since the impugned order came to be passed on 30.03.2022, there was no ostensible reason for the Tax authorities to ignore the reply dated 29.3.2022 filed by the petitioner. As a consequence, the impugned order (Annexure-6) dated 30.03.2022, does not stand to scrutiny, as the same is absolutely arbitrary and perverse and also suffers from the gross violation of the fair play and principles of natural justice. Consequently, the impugned order (Annexure-6) dated 30.03.2022 is quashed and set aside.
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2022 (6) TMI 243
Survey proceedings - documents impounded under Section 131(3) - Power to retain documents of title impounded/seized by them under Section 131(3) - HELD THAT:- The document in question was seized on 17.02.2010. The respondent has no case that petitioner has any liability in respect of the assessment years prior to 2009-10. The learned Standing Counsel for the Income Tax Department fairly conceded that there is no provision under the Act to retain the documents of title as security for any tax liability that may arise in the future. In the absence of any such statutory provision, the respondents cannot retain documents of title impounded/seized by them under Section 131(3) of the Act. Apart from the above, under Section 131(3) of the Act, the documents impounded can be retained in the custody of the respondents beyond 15 days only after obtaining approval of the Principal Chief Commissioner or other officers named in the said subsection. There is no case for the respondents that any such approval had been obtained by the department from any of the officers mentioned in Section 131(3) of the Act. Therefore the respondents cannot under any circumstances retain the documents of title of the petitioner. Respondents have acted illegally and with material irregularity in retaining the documents of title belonging to the petitioner. Accordingly, the respondents are directed to return the original Sale Deed bearing No.3561/2008 executed before the Sub Registrar's office, Ernakulam to the petitioner within an outer period of 30 days from the date of receipt of a copy of this judgment.
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2022 (6) TMI 242
Assessment u/s 144A - Power of Joint Commissioner to issue directions in certain cases - Expenditure incurred towards procurement of raw materials - Addition under either section 40A(2) or Section 37 of the Income Tax Act - HELD THAT:- Section 144-A does not empower to the Joint Commissioner to give a direction to an Assessing Officer to complete the assessment in a particular manner. Directions to be exercised by the Joint Commissioner under Section 144(A) is merely intended to guide the Assessing Officer to complete the assessment and only such directions are binding on an Assessing Officer. Since directions contained in the impugned order passed by the Joint Commissioner was prejudicial to the petitioner and to complete the assessment in a particular manner, petitioner should have been called for hearing by the second respondent Joint Commissioner. As there is a violation of Section 144(A) of the Income Tax Act, 1961, the consequential the Assessment Order dated 27.12.2018 passed by the first respondent also has to go. It would have different, if the 1st respondent independently had decided to proceed with the proposal in the Show Cause Notice. Therefore, the impugned direction of the second respondent impugned in W.P is hereby quashed. However, there is no necessity to remit the cases back to the second respondent to re-do exercise under Section 144 A of the Income tax Act, 1961.
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2022 (6) TMI 241
Computation of the turnover by AO as the total deposits in the bank accounts as against the turnover declared by the assessee - transaction relating to personal agricultural proceeds of Tomato and Onion not concerned to trading transactions - confirmation of trading transactions instead of declared trading receipt - THAT:- Assessee has not produced any documentary evidence to show that certain deposits relate to the agriculture sale proceeds of neighbouring agriculturist and therefore, in the absence of any confirmation or documentary evidence, it is against the preponderance of probability that the sale proceeds of the agriculturists would be deposited in the bank account of the assessee The sale proceeds of the family members of the assessee is also unlikely to be deposited in the bank account of the assessee. Thus the assessee s own sale proceeds of Tomato and Onion as well as the withdrawal of cash which can be utilized for the subsequent deposits in the bank account, the interest on the saving bank account and LIC receipts as claimed by the assessee cannot be treated as part of the turnover of the assessee. The assessee though produce land holding record as well as the affidavit in support of the claim however, neither the Assessing Officer nor the CIT(A) has taken any step to verify these facts or to determine the quantity of the Tomato and Onion production in the land holding of the assessee and sale proceeds of the same. Hence, taking the entire deposits in the bank account without considering the sale proceeds of the assessee s own agriculture produce and the source of deposit representing the interest and LIC receipt is not justified. The impugned order is set aside and the matter is remanded to the record of the Assessing Officer to re-adjudicate the same after considering the quantity and sale proceeds of the Tomato and Onion produced by the assessee from his own land holding as well as the interest income and LIC receipt which cannot be part of the turnover. The record of the land holding and the agriculture produce on the land belonging to the assessee is required to be verified and examined by the Assessing Officer and then to decide the issue afresh. Needless to say an appropriate opportunity of hearing be given to the assessee before passing the fresh order.
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2022 (6) TMI 240
Admissibility of additional evidences under Rule 46A - Power of CIT(A) - Penalty u/s 271D - taking cash loan - Default under provisions of section 269SS - proof of bona fides and genuiness of the transaction - reasonable cause - whether transactions were between family members/spouse for acquiring a house for their living and all had pooled their resources which were genuine transactions for acquiring the property for mutual benefit of the family and the intention was not to evade taxes? - admission of additional evidences - HELD THAT: - From the perusal of the orders of the authorities below, it transpires that the assessee has submitted additional evidences before ld. CIT(A) for the first time, but, however, ld. CIT(A) did not complied with Sub-Rule (1), (2) and (3) of Rule 46A of the 1962 Rules, and proceeded to adjudicate the appeal of the assessee, although same stood dismissed by ld. CIT(A). The purpose and purport of Rule 46A of the 1962 Rules, is that the assessee is required to explain and justify as to why the evidences could not be produced in the proceedings before the AO, and reasons and justification for producing the evidences for the first time before ld. CIT(A). Secondly, the ld. CIT(A) has to pass a speaking order in writing as to his decision as to admission or refusal to admit additional evidences. Thirdly, ld. CIT(A) is obligated to forward these additional evidences to the AO for his examination / cross examination, as well for filing by AO of evidences in rebuttal thereof. No remand report from AO on the additional evidences submitted by assessee for the first time before ld. CIT(A), was called for by ld. CIT(A). These additional evidences/explanations filed by the assessee before ld. CIT(A) for the first time, remained unverified. Thus in nut-shell, what emerges from records before us, is that ld. CIT(A) did not comply with Rule 46A of the 1962 Rules. Under these circumstances, we are of the considered view that matter may be restored to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law, after complying with Rule 46A. Assessee appeal is allowed for statistical purposes.
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2022 (6) TMI 239
Enhancement of assessment u/s 251 - Reopening of assessment u/s 147 - addition u/s 68 on unexplained cash deposited in bank account - unexplained contract receipt - HELD THAT:- CIT(A) issued notice under section 251(2) of the Act to the assessee show causing as to why assessment for Asst.Year 2009-10 be not enhanced by this amount, as identities of the persons from whom such receipts were claimed to have been made and evidence thereof, could not be produced by the assessee. It was explained by the assessee that since the assessee filed the return of income under the scheme of section 44AD, he was exempted from maintaining books of accounts. Except this submission, there was nothing on record to prove the case of the assessee that the amount of Rs.5,75,250/- claimed to have been received as contract receipts. In the absence of the material evidence to prove his case, the ld.CIT(A) increased an amount of Rs.5,75,250/- to the income of the assessee and enhanced the assessment according by invoking provisions of section 251(1) of the Act. It was also noticed by the ld.CIT(A) that the assessee has not filed any return of income voluntarily, and only after issuance of notice under section 148 the assessee came forward and filed the return for the Asst.Year 2009-10. Had there been no proceedings under section 148 of the Act, the assessee would not have filed any return of income. Even before us also, there is no fresh material evidence to support claim of the assessee except submissions and materials as were placed before the lower authorities. In this view of the matter, we do not find any infirmity in the order of the ld.CIT(A), which we uphold, and the grounds of appeal of the assessee are rejected.
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2022 (6) TMI 238
Penalty u/s 271(1)(c) - non-compliance of notice issued by AO under Section 142(1) during the course of reassessment proceedings - CIT-A held reopening of the assessment u/s 147/148 was based on wrong and incorrect reasons recorded, and secondly that the reassessment order dated 27.12.2017 passed by the AO was without jurisdiction and void ab-initio - HELD THAT:- Once the quantum re-assessment itself is held to be void ab-inito and without jurisdiction , nothing survives so far as non compliances of notices u/s 142(1) of the 1961 Act, as the proceedings itself was vitiated , held to be bad in law and quashed , as it is also held by ld. CIT(A), NFAC, New Delhi , that reopening of the assessment was done based on wrong and incorrect reasons recorded. Thus, if the quantum proceedings itself are declared to be bad in law and quashed , then any non compliance on the part of the assessee to respond to notice issued u/s 142(1) during such proceedings which are held to be void ab inito and proceedings without jurisdiction , will not give rise to any cause of action for validly initiating penalty proceedings u/s 271(1)(b) for non compliance of notice issued u/s 142(1) during such proceedings , and hence consequently penalty proceedings itself are to be held to be bad in law, liable to be quashed. Thus, we order deletion of penalty levied by the AO u/s 271(1)(b) - Appeal of assessee allowed.
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2022 (6) TMI 237
Disallowance u/s 14A r.w.r. 8D - AO held that the assessee has not considered any proportionate interest expenses and financial charges, administrative expenses, common facility, utilization of assets of business for the investment activities - HELD THAT:- When mixed funds were used for investment yielding exempt income and if own reserve surplus fund is more than such investment then presumption would arise that investment was made from own surplus reserve fund. Thus, Rule 8D(i) and 8D(ii) are not applicable. So far as administrative expenses it is held that no disallowance u/s 14A of the Act in respect of interest and administrative expenses ought to be made where there are sufficient own funds - Since, the reserve surplus fund are more than the investment made yielding exempt income, hence further disallowance u/s. 14A of the Act i.e. more than that of the appellant was not required. In other words, the AO is directed to restrict disallowance u/s 14A to the extent of disallowance-suo motu made by the appellant. Deduction u/s 80IA(4) - Whether CIT(A) is right in law in allowing deduction at the rate on which the GEB supplied power to its customers ignoring the rate on which GSECL (a power generating company) supplied its power to GEB and not considering rate other than the selling price charged by the assessee? - HELD THAT:- Respectfully following judgment of jurisdictional High Court in the assessee s own case [ 2017 (1) TMI 513 - GUJARAT HIGH COURT] decided the issue in favour of assessee.
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2022 (6) TMI 236
TDS Credit u/s 199 - grievances of the assessee is that the entire TDS amount was not duly given credit by the CPC Centre - cash basis of system of accounting followed by assessee - As submitted the assessee is following the cash basis system of accounting though the TDS is being made in the earlier years the assessee claimed TDS credit in the current year where the professional fees paid to receive - HELD THAT:- As relying on case of Naresh Bhavani Shah (HUF) [ 2017 (7) TMI 819 - GUJARAT HIGH COURT ] it is crystal clear that there are provisions of under the IT Act; namely, section 199 of the IT Act, 1961 and Rule 37BA of the IT Rules, 1962 and proper mechanism is also provided under the Act and Rules. Thus, respectfully following the ratio of the Jurisdictional High Court judgement, the assessee is entitled to get credit on TDS. Hence, this ground of appeal raised by the assessee is allowed by setting-aside the orders passed by lower authorities and direct the DCIT, CPC to pass fresh orders giving proper opportunities to the assessee and in accordance with law within a period of 12 weeks from the date of receipt of this order.
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2022 (6) TMI 235
Addition u/s 68 - cash deposited in the bank is unexplained - HELD THAT:- Perusal of the gift deed shows that the donor viz. Shri Narendra Maganbhai Pancholi has sold piece of agriculture land from 28.3.2008 to 30.3.2008 and one agriculture land on 26.7.1999. The donor claimed that this amount has been invested in private bank, shroff and money lenders etc. and this amount till August 2011 accumulated around Rs.18.00 lakhs; out of this Rs.18.00 lakhs, the donor gifted to the assessee during August, 2011 to March 2012 a sum of Rs.17,27,000/-. The assessee has not proved or explained before the lower authorities the instalments of amount of gift given by the donor and mode of payment. When the AO has requested to produce the donor as well as witnesses, the assessee failed to do so. However, it is noticed that the gift deed executed in the non-judicial stamp paper is dated as 17.11.2011, however, the same was executed on 31.3.2012, i.e. almost after 100 days CIT(A) has held that sale of agriculture land by the donor pertained to the financial year 1999- 2000 and 2008-09, but the assessee claimed that the copies were given during the financial year 2011-12, and there is a clear cut time gap of more than thousand days from the date of sale and the date of alleged donation made to the assessee. The same has not been explained by the assessee before the lower authorities. Further, it is seen from the gift deed that the donor stated to have deposited the sale proceeds in private banks, but no bank passbook or income from agriculture activity has been produced before the lower authorities. The assessee has also failed to produce the donor or the witnesses before the authorities. Even before us, except gift deed, the other three documents viz. 7/12 extracts, registered sale deed and latest 7/12 of the land record, which are in Gujarat language are only produced and English translation was not furnished. Hence, based on these unexplained documents we are not in a position to adjudicate the issue on hand. The ld.DR also repeated the same arguments as were made before the lower authorities, and no new documents could be furnished to establish genuineness of the gift received from Shri Narendra Maganbhai Pancholi. In the absence of the same, ground raised by the assessee for deletion of impugned addition is hereby rejected. Similar is the issue relating to addition of rental income as in support of the claim of the addition made by the AO, the assessee has not produced any details before us, hence, this ground is also rejected. Initiation of penalty proceedings under section 271(1)(c) of the Act, which is consequential in nature - Decided against assessee.
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2022 (6) TMI 234
Addition u/s 69B - Amount of investments, etc., not fully disclosed in books of account. - HELD THAT:- On a perusal of the statutory provision, it can safely be gathered that the assessee has made investment in the property and the investment recorded by him based on the statement recorded by the witness stated that the consideration of the said property was Rs. 50,00,000 and they have received the said money from the assessee. Whereas the assessee has not officered any plausible explanation. He remained to be silent right from the assessment proceedings and before the CIT(A) and has not objected to the findings recorded by the witness and he also remained silent on the cross examination of the witness whose statement is relied upon. Thus, the silence of the assessee on the statement recorded proves that he has accepted the averments made in the statement of the witness whose statement has been recorded after the due process of law. We, thus, in terms of our aforesaid observations and concurring with the well-reasoned view taken by the CIT(A) that mere filling of an appeal and filling of an affidavit which are self-serving documents and learned AR at the time of hearing before CIT(A) could not bring any material which could have change the factual position of the case. Thus, based on this observation we uphold of the view of the CIT(A) and the appeal of the assessee is dismissed.
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2022 (6) TMI 233
Penalty u/s 271(1)(c) - Defective notice u/s 274 - difference between concealment of income OR furnishing of inaccurate particulars of income - argument of non specifying the nature of default i.e. whether there is concealment of income or furnishing of inaccurate particulars of income - failure to strike off the irrelevant default - HELD THAT:- Admittedly, it is a matter of fact borne from record that the A.O in the SCN dated 29.06.2016 that was issued a/w the assessment order had while initiating the penalty proceedings u/s. 271(1)(c) of the Act, failed to strike off the irrelevant default i.e. concealment of income OR furnishing of inaccurate particulars of income for which the impugned penalty proceedings had been initiated by him. But then, we find that A.O had vide another SCN dated 23.11.2016 called upon the assessee to show cause as to why penalty u/s.271(1)(c) may not be imposed on him. However, as the contents of the aforesaid SCN dated 23.11.2016 are neither discernible from the records nor brought to our notice us by the Ld. Authorized Representative (for short AR ) for the assessee, therefore, in absence of complete facts/records before us, we are unable to concur with the Ld. AR that as the A.O had while initiating penalty proceedings failed to strike off the relevant default in the body of the SCN , therefore, he had invalidly assumed jurisdiction and imposed penalty on the assessee. as both the defaults i.e. concealment of income and furnishing of inaccurate particulars of income are separate and distinct default which operates in their exclusive fields, therefore, imposition of penalty by the A.O qua the aforesaid solitary addition for both of the aforesaid defaults contemplated in Section 271(1)(c) of the Act cannot not be sustained and is liable to be struck down on the said count itself. We find that the fine distinction between the said two defaults contemplated in Sec. 271(1)(c), viz. concealment of income and furnishing of inaccurate particulars of income had been appreciated at length by the Hon ble Supreme Court in its judgments passed in the case of Dilip Shroff Vs. Jt. CIT[ 2007 (5) TMI 198 - SUPREME COURT] and T ASHOK PAI [ 2007 (5) TMI 199 - SUPREME COURT] - Decided in favour of assessee.
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2022 (6) TMI 232
Addition u/s 69C - Unexplained expenses/premium - assessee did not furnish the source of payment of such expenses/premium - HELD THAT:- There is no dispute that that the assessee was co-owner of agricultural land having 6.67% share in the said agricultural land. The assessee before transferring the land, paid conversion charges along with other co-owners. The case of assessee throughout the proceedings was that she is not having sufficient income. The expenses incurred by the other co-owners on her behalf and that no such similar addition was made in case of other co-owners, on whose behalf similar expenses were incurred by other co-owners. We find that the assessee has placed on record the copy of two assessment orders passed u/s 143(3) of the Act, in the name of Kantaben Patel and Vipul Champakbhai Patel, though by different Assessing Officers of different wards. However, the facts remained the same that no such addition was made in case of other co-owners thought similar expenses were spent on their behalf by their relative and co-owners. It is settled law that the assessee cannot be treated as indifferently in respect of expenses or treatment of capital gain. The Hon'ble Madras High Court in CIT vs. Kumararani Meenakshi Achi [ 2006 (10) TMI 123 - MADRAS HIGH COURT ] held that during the same assessment year same quantity of wealth in possession of co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. If such an action on the part of the assessing authorities is sanctioned it would militate against the principle of equality of laws enshrined in Article 14 of the Constitution. Revenue cannot treat the assessee in different way, therefore, the addition on account of unexplained source under section 69C is deleted. In the result the grounds of appeal raised by the assessee are allowed.
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2022 (6) TMI 231
Disallowance of exemption u/s 10(1) - Admission of additional evidence - HELD THAT:- Having admitted the said documents, the matter is restored to the file of the AO with the following directions:- AO shall examine the case of the assessee de-novo in the light of these documents/ statements and any other documents , record etc and thereafter record a categorical finding whether the nature of the activities of the assessee are agricultural in nature and whether the assessee is entitled to claim deduction u/s 10(1A) of the Act or not . AO may exercise his power as conferred under the IT Act for examining and enforcing attendance of any person whether farmers, organizers or the officials of the company for the purpose of recording statements, etc. AO while deciding the issue shall follow principles of natural justice and afford opportunity of hearing to the assessee in accordance with law and permit the assessee to file any document or evidence to prove its case In the light of the above, the grounds raised by the revenue against the action of the CIT(A) in deleting the disallowance of exemption claimed by the assessee u/s 10(1) of the Act are treated as allowed for statistical purposes. Disallowance u/s 14A - HELD THAT:- As submitted by the ld. DR that whether the nature of the business of the assessee is agricultural or not to be decided by the AO and, therefore, the outcome of the result will have bearing on the application of section 14A. Therefore, we remit the issue to the file of the AO with a direction to compute the disallowance u/s 14A based on the outcome of the nature of the business of the assessee. Thus, the ground raised by the assessee is treated as allowed for statistical purposes.
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2022 (6) TMI 230
Addition u/s 69A - Unexplained cash deposits - HELD THAT:- We find that unless the Revenue authorities have any evidence that the above cash withdrawn from bank account has been used by the assessee for any other purpose, the credit for available cash withdrawn from her own bank account and subsequent redeposit in cash cannot be denied. In the present case, the learned CIT(A) has confirmed the disallowance for the reason that the assessee could not explain the reasons for earlier withdrawal of the cash from her bank account and subsequent redeposit. We find that because of this reason, the availability of cash in the hands of the assessee does not vanish. When assessee is submitting that she has not used that cash but redeposit, it is for revenue to prove that such cash has already been used by assessee. In view of this, the addition deserves to be deleted. Credit claimed to have been received from friends and relatives added in the hands of the assessee as assessee could not file the Permanent Account Number and confirmation of those relatives, admittedly, assessee did not furnish the confirmation and Permanent Account Numbers of the relatives - we find that assessee did not explain, who are those relatives and on what occasions those sums have been received. In any way, under the Provisions of Section 56(1)(v) of the Act, sum of money exceeding is only taxable. Though above provisions are applicable from 1/4/2005, but it can be used as a guide. Therefore looking at the facts and circumstances of the case, we find that out of addition, assessee deserves relief is considered as reasonable and hence, addition to that extent is deleted. Further, assessee is also entitled to the excess - Therefore, even otherwise, the addition is covered as expenditure. In view of this, the learned Assessing Officer is directed to delete the addition on account of deposited in the bank account. Thus, ground no. 1 of the appeal is allowed. Disallowing adhoc allowance under section 37(1) - HELD THAT:- The assessee also did not deny that the complete third party evidences are not available with her. Accordingly, we do not find any infirmity in the order of the learned CIT(A) in confirming this disallowance. Accordingly, ground no. 2 of the appeal is dismissed. Addition under section 69C - During the course of search a loose paper pertaining to Orion Enterprises was found wherein the extra work was mentioned - HELD THAT:- As submitted the copy of account of advance received from Mr. Manish Marwah for the above work by Orion Enterprises and also the copy of the invoice and agreement for work done. There is no evidence that the above work was done at the flat of the assessee. Admittedly, the seized document is on the letterhead of Orion Enterprises and not the assessee. Though assessee is one of the partners of Orion Enterprises, the overwhelming evidences submitted before the CIT(A) where the document is explained, this addition of ₹3,20,000/- on account of alleged repair work in the flat owned by the assessee cannot be made in her hands, when the income has already been offered in AY 2006-07 by Orion Enterprises undisputedly. In case of Orion enterprises, for this year it is merely advance received which culminated in to income in Ay 2006- 07. Ld Lower authorities neither examined the books of Orion enterprise nor examined Mr. Marwah and rejected evidences placed on record purely on guesswork . Further during search it was also not found that assessee has got any work done on renovation at her flat. Thus the addition was on rejection of evidences produced without examination and making additions on presumptions without evidences. Accordingly, we direct the learned Assessing Officer to delete the addition of ₹3,20,000/- under section 69C of the Act. Accordingly, ground of the appeal is allowed. Addition u/s 69B - Unexplained jewellery - HELD THAT:- We find that jewellery has been found during the course of search from the possession of the assessee. The jewellery was inventorised. The claim of the assessee that this has been received as a gift from relatives and friends is not at all substantiated but merely remained a claim. In view of this we do not find any infirmity in the orders of the learned lower authorities in confirming the addition u/s 69B of the act after granting benefit of 500 g of gold jewellery to the assessee in terms of CBDT instruction number 1916. Accordingly, ground number 6 of the appeal is dismissed. Addition so made on the basis of the inventory of paintings made at the time of search - The inventory of the paintings are also produced before us. It is apparent that in most of the paintings the name of artist/painter Rouble Nagi is mentioned. It is stated before us that this is the name used by the assessee for her paintings. Most of the other paintings, the name of the artist is unknown. The valuation has been made by the revenue for each of the painting and there is no basis available that how the above paintings have been valued. Naturally if the paintings are made by the assessee herself, it cannot be added in the hence of the assessee u/s 69B of the act. In view of this we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to segregate each of the painting if made by her. The AO is directed to verify and reduce the addition to that extent. Further, the amount of printing already recorded in the books of accounts of the assessee should also be reduced from un accounted income u/s 69B of the act. The assessee is directed to produce such details before the learned assessing officer, which may be examined and issue may be decided afresh. Addition based on slips having noting of sale/purchase of jewelry which were seized at the time of search - The claim of the assessee is that all these slips belong to Anmol Jwellers and he would confirm their real nature of the transaction. Despite this statement, the learned AO did not summon Anmol Jwellers. In view of this, we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to produce Anmol Jwellers before the learned assessing officer and explain the purposes and content of the above slips. Merely stating that these are estimates will not serve the purpose unless, assessee proves the intent and purpose of preparing those estimates as well as the contents of receipt of money. Further assessee is also directed to show how the bill of sanjaykumar which is paid credit card of HDFC bank is found in possession of asseseee where bill is issued by Anmol Jwellers. On furnishing the above details, the learned AO may decide the above issue on its own merits.
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2022 (6) TMI 229
Unexplained deposits/investment - addition based on dairy found in search - HELD THAT:- The entries in the diary of the alleged one Shri Gouri Shankar Choudhary were in the name of Shri Ramavtar Agarwal and not in the name of the assessee. It has been alleged that the disputed amount of Rs.10,00,000/- was given by the assessee through cheque. However, there is no mention either of any bank account of the assessee or any other details to show that the said amount was paid by the assessee through cheque. Assessee has relied upon paper-book page 20 onwards which is the copy of the bank account statement of the assessee to submit that the assessee did not issue any alleged cheque to any such person. However, otherwise if the payment was made through cheque then how the same may be alleged to be out of unexplained sources especially when there is no allegation that the deposit in the bank account of the assessee was from any unknown source of income. We do not find any justification on the part of the CIT(A) in confirming the addition and the same is ordered to be deleted - Appeal of assessee allowed.
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2022 (6) TMI 228
Deduction u/s 80JJAA - AO disallowed the claim holding that the business of software development will not fall under the category of industrial undertaking, assessee is not engaged in the business of manufacturing or production of articles or things and the employees, being software engineers, would not fall under the definition of workmen as defined u/s 80JJAA - HELD THAT:- We notice that the various contentious issues with regard to the deduction allowable u/s 80JJAA of the Act has been resolved in the case of CIT vs. Texas Instruments India P Ltd [ 2021 (4) TMI 1049 - KARNATAKA HIGH COURT] . Both the parties agreed that this issue may be restored to the file of the assessing officer for examining it afresh in the light of decision rendered by Hon ble jurisdictional High Court, referred above. Nature of expenses - disallowance of annual maintenance contract and software expenses claimed as revenue expenses - HELD THAT:- We hold that there is no requirement of disallowance made u/s 40(a)(i)/40(a)(ia) as the payments have been made prior to the decision rendered in the case of Samsung Electronics Co [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT] - Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete the disallowance made u/s 40(a)(i)/40(a)(ia). For capitalisation of software expenses - We are of the view that this issue also requires fresh examination at the end of the AO. Accordingly, we set aside the order passed by CIT(A) on this issue and restore the same to the file of AO with the direction to examine this issue, follow the above cited binding decisions of the jurisdictional High Court and take appropriate decision. The assessee is also directed to furnish all the relevant information to the AO. Disallowance of claim of communication expenses - As submitted that the said payment does not quality to be royalty as per Article 12 of India-US treaty and hence it is not liable for tax deduction at source - AO, however, held that the assessee would be liable to deduct tax at source on the above said payment in terms of sec. 9(1)(vi) of the Act and accordingly disallowed the above said expenditure - HELD THAT:- In the instant case, the assessee has reimbursed the data link charges to its AE, which in turn has entered into agreement with third party vendors for providing data link facility. It can be noticed that the assessee has made the payment for using the facility provided by a third party vendor. Accordingly, following the decisions rendered in the above cited cases, we hold that this payment shall not fall under the category of royalty within the meaning of Article 12 of DTAA. Since it is not shown that the provider of the link facility had permanent establishment in India, the payment cannot be taxed in India and hence the provisions of sec.195 are not applicable. We noticed that the AO/CIT(A) relied upon the Explanations 5 6 inserted in sec. 9(1)(vi) of the Act by Finance Act, 2012. Since it is a prospective amendment, the disallowance u/s 40(a)(i) cannot be invoked for the year under consideration relying upon the above said amendment. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance. Disallowance of Legal and Professional fees u/s 40(a)(i) - HELD THAT:- In the instant case, the assessee has availed legal and professional services in USA. In the above said case, it has been held that the professional services would not fall under the category of Fee for technical services within the meaning of sec. 9(1)(vii) - Following the same, we hold that the view taken by Ld CIT(A) cannot be sustained. Under Sec. 90(2) of the Act, the provisions of the Income tax Act are required to be applied only if they are more beneficial to the assessee. We noticed that under the Income tax Act, this receipt is not taxable in India in the hands of non-residents. Hence, the provisions of Income tax Act are more beneficial to the non-residents. There is no necessity to refer to the provisions of India-USA DTAA. In any case, we notice that, in order to bring the impugned payments within the Article 12 of India-USA DTAA, the services should have been made available technical knowledge etc to the assessee herein. In the instant case, the assessee has only availed professional services of non-residents in connection with tax compliances and the technical knowledge has not been made available . Since the make available clause fails, the impugned payments cannot be taxed as Fee for Included services under Article 12 of the India-USA DTAA. In this view of the matter, there is no necessity to refer to Article 15 also. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance of legal and professional fees made u/s 40(a)(i). - Decided in favour of assessee.
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2022 (6) TMI 227
Validity of assessment - no notice u/s 143(2) - Jurisdiction of AO u/s 124 - competent officer to proceed with the assessment by way of issue of notice u/s 143(2) - unexplained cash credit u/s 68 - HELD THAT:- As in this case, the competent officer to proceed with the assessment by way of issue of notice u/s 143(2) of the Act was DCIT/ACIT, whereas, the notice u/s 143(2) has been issued by the ITO, Ward-1(1), Kolkata who did not have any jurisdiction to issue the aforesaid notice. As has been held by the various courts of the country including the Apex Court, the issuance of notice u/s 143(2) by the concerned Assessing Officer of a competent jurisdiction is mandatory to assume jurisdiction to proceed to frame assessment u/s 143(3) - when the notice u/s 143(2) was issued by an officer who did not have jurisdiction to proceed with the assessment and the assessment was framed by the other officer who did not issue the notice u/s 143(2) before proceeding to frame the assessment, then such an assessment order was bad in law. See BHAGYALAXMI CONCLAVE PVT. LTD., DHANLAXMI CONCLAVE PVT. LTD., BINDHYAWASINI DEVELOPERS PVT. LTD. VERSUS DCIT, CIRCLE-13 (1) , KOLKATA [ 2021 (2) TMI 181 - ITAT KOLKATA] . Thus the assessment order passed by the Assessing Officer (DCIT) was bad in law for want of issuance of notice u/s 143(2) of the Act. Jurisdiction of Assessing Officers - assessment order passed by the DCIT, Kolkata - Since, in this case, the assessee not only mentioned in the return of income his address as Gandhidham, Gujarat but also brought the said fact into the notice of concerned authorities well in advance in response to the notice u/s 142(1) itself, stating therein that the principal place of business of the assessee was at Gandhidham and the entire operation of the assessee was carried out in the State of Gujarat only, however, neither the Commissioner acted on the aforesaid objection/application of the assessee nor did the DCIT/Assessing Officer referred the matter to the competent authority for transfer of the case to the officer of competent territorial jurisdiction. In view of the provisions of section 124 of the Act, the DCIT, Kolkata did not have any territorial jurisdiction to frame the impugned assessment order, therefore, the assessment order passed by the DCIT, Kolkata is bad in law. In view of the above discussion, since the legal issue relating to the jurisdiction to frame the assessment not only for want of issue of notice u/s 143(2) of the Act but also for want of competent territorial jurisdiction to frame the assessment is decided in favour of the assessee, therefore, the assessment order passed without jurisdiction is bad in law and is hereby quashed. Appeal of the assessee stands allowed.
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2022 (6) TMI 226
Unaccounted money - Unexplained cash deposits in bank account u/s 68 - HELD THAT:- From the beginning, the assessee-appellant explanation given was that withdrawal was to pay for procurement of land but due to some reason, the deal was not finalize which cannot be denied by the AO merely on suspicion. Keeping in view all the facts and circumstances of the case and material available on record, we are of the considered view that disallowance made by the AO is not sustainable and, therefore, we set aside the impugned order passed by the Ld. CIT(A) and allow the ground raised by the assessee.
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2022 (6) TMI 225
Revision u/s 263 - Validity of limited scrutiny - As per CIT Order passed u/s.143(3) as erroneous and prejudicial to the interest of revenue - difference between the jantri value and the apparent sale consideration - verification of purchase sale of immovable property - HELD THAT:- As the present case was selected for limited scrutiny, in our considered opinion, learned PCIT has exceeded his power for requiring the details of sales and purchase of the immovable property. Thus, we allow the assessee's appeal.
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2022 (6) TMI 224
Delayed employees contribution to Provident Fund and ESI - sum not remitted before due date prescribed u/s. 36(1)(va) but before the due date of filing of income tax returns u/s. 139(1) - HELD THAT:- It is not in dispute that assessee had remitted the employees' contribution to PF ESI much before the due date of filing of return u/s. 139(1) of the Act, though the same has been remitted belatedly beyond the due date specified under the respective PF ESI Acts. We find that this issue is no longer res integra in view of the recent decision of the Co-ordinate Bench of this Tribunal in the case of Kalpesh Synthetics Pvt. Ltd [ 2022 (5) TMI 461 - ITAT MUMBAI] We find that the amendment has been brought in the statute only from A.Y. 2021-22 and onwards which is very clear from Explanatory Memorandum of Finance Act, 2021 issued by the CBDT. Hence, we hold that the amendment brought in Section 36(1)(va) of the Act is to be construed only as prospective in operation and cannot be applicable for the year under consideration. Reliance in this regard is also placed on the decision of Adyar Ananda Bhavan Sweets India Pvt. Ltd. [ 2021 (12) TMI 558 - ITAT CHENNAI] . We find that the law prevailing prior to A.Y. 2021-22 would rule the field and the case laws rendered by various High Courts would rule the field. Prior to the amendment, the Hon'ble Jurisdictional High Court in the case of CIT vs. Ghatge Patil Transport Ltd.[ 2014 (10) TMI 402 - BOMBAY HIGH COURT] had held that employees contribution to PF ESI if remitted within the due date prescribed u/s. 139(1) of the Act for filing the income tax returns, would be allowed as deduction u/s. 43B of the Act. We also find that this issue has been decided in favour of the assessee after considering various decisions of Hon'ble Supreme Court, High Court and this Tribunal in the case of Forcepoint Software Consulting India P. Ltd. [ 2022 (6) TMI 95 - ITAT MUMBAI] for A.Y. 2019-20 dated 27/04/222. In view of the aforesaid judicial precedents in favour of the assessee, the grounds raised by the assessee are allowed.
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2022 (6) TMI 223
Under valuation of closing stock of rice - improper maintenance of stock register by the assessee-firm - unable to produce quality-wise closing stock before the Ld. AO - as per AO Quality of rice is not mentioned in stock register maintained by the assessee, purchase bills, most of sale bills, stock statement furnished to the bank and audit report filed by the assessee - CIT-A deleted the addition - HELD THAT:- The assessee-firm was unable to explain the valuation of quality wise closing stock of rice. The valuation of assessee-firm was submitted in Bank which was on basis of average rate of rice paddy. This valuation submitted in bank is not supported in books of accounts. Respectful observation in the case of CIT(Central) Gurgaon v. Sheena Exports [ 2012 (4) TMI 465 - PUNJAB AND HARYANA HIGH COURT ] that stock statement submitted in is unverified. The assessee later on through its regular books day to day stock register had substantiated its claim related valuation of stock. Here is the lack of explanation before the Assessing Authority. CIT(A) also failed plug of the lacuna in factual matrix. The Ld. CIT-DR pointed out the documents are accepted by the Ld. CIT(A) without allowing opportunity to the Ld. AO. The additional evidence was accepted without considering legal provision. He prayed for sending back the matter to the Ld. Assessing Authority for proper verification of stock. On other hand, the method of valuation was adopted by the Ld. AO in closing stock that should be considered to opening stock also. So, both the valuation of opening and closing stock will be in the order. The asses see-firm should get proper opportunity to explain its method of valuation before the Ld. AO. The impugned order is set aside and the matter is restored back to Ld. AO for denovo adjudication after considering the assessee's evidences. The assessee, in turn, is directed to substantiate its case - Appeal of revenue allowed for statistical purposes.
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2022 (6) TMI 222
Penalty u/s 271(1)(c) - defective notice u/s 274 - main grievance of the assessee that the notice initiated by the Ld. AO was not determined the allegation of the assessee whether it is concealed income or furnished inaccurate particular of income - HELD THAT:- This particular notice it is a self defective and the Ld. AO did not mention the nature of concealment in the notice issued u/s. 274/271(1)(c). The counsel laid down that in the absence of such specific notice, the notice would be invalid as held in various judicial pronouncements including the decision of Hon'ble Karnataka High Court in CIT V/s. SAS's Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] against which Special Leave Petition (SLP) filed by the department stood dismissed by Hon'ble Supreme Court which is reported [ 2016 (8) TMI 1145 - SC ORDER] . The notice u/s. 274/271(1)(c) of the Act is not carrying the specific limb. Therefore, this is a case where both the parts of the offences i.e., concealment of income as well as furnishing of inaccurate particulars of income were involved. Appeal of assessee allowed.
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2022 (6) TMI 221
Condonation of delay after the notice was served to the assessee seeking argument on the grounds of appeal - denial of principles of natural justice - As argued NFAC has passed the order without giving the assessee an opportunity of being heard and the order has been passed contending that no evidence placed on record in respect of the delay in filling an appeal by 125 days by the assessee - HELD THAT:- The assessee was out of India is transpired from the copy of the passport placed on record. We feel that when the circumstances were beyond the control of the assessee and we considered this compliance of the assessee as valid compliance raised in the appeal memo and was not given specific opportunity to place on record the evidence. Thus, the order of the lower authority is against the principles of natural justice. Looking to this aspect on facts the delay declared on sworn statement and considering the dates given in the pass port that the assessee was out of India the appeal dismissal is not correct and that too without giving an opportunity on this aspect. DR has not objected of submitting this evidence as assessee under the faceless appeal was prevented to submit this detail. Ongoing through this evidence we found force in the contention of the assessee. In the result the delay in filling an appeal by the assessee is condoned. As it is evident that the addition made by the assessing officer in his assessment order are on account of non-submission of the details by the assessee. Therefore, assessee is directed to file all the details connected with the assessment before the assessing officer and make compliance in accordance with law and the assessing officer may frame the assessment after giving proper opportunity to the assessee. Thus, the case is remanded to the file of the Assessing Officer. Appeal of assessee allowed.
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Customs
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2022 (6) TMI 220
Seeking grant of Bail - Smuggling - Gold Bars (Global Currency) - medium for exchange in criminal transactions or not - alleged commission of criminal conspiracy - terrorist activities - threatening the economic security and damaging the monetary stability of India as provided under Section 15(1) (a) (iiia) of UAP Act being a terrorist act punishable under Section 16 of the UAP Act - Scheduled offences or not - HELD THAT:- The amendment was made to the definition of terrorist act by bringing in facets of terrorist acts by disturbing the economic stability of the country. The said amendment has been made pursuant to the recommendations of the Financial Action Task Force (FATF). The said report claims that gold is a universally accepted currency, gold can be transferred anonymously and transactions are difficult to trace and verify. It was noted that gold is a form of global currency and also acts as a medium for exchange in criminal transactions. However, it may be noted that despite the fact that the report specifically deals with gold, the word gold have not been added while amending Section 15(1)(a)(iiia) UAP Act. Further possession, use, production, transfer of counterfeit currency or coin is per-se illegal and an offence, however, production, possession, use etc. of gold is not per-se illegal or an offence. Even import of gold is not prohibited but restricted subject to prescribed quantity on payment of duty. Thus mere smuggling of gold without any connection whatsoever to threatening economic security or monetary stability of India cannot be a terrorist act. It is evident that all the appellants except Dileep Laxman Patil and Vaibhav Sampat More are in custody since 21st September, 2020 and have spent more than 20 months in custody. The trial is likely to take some time, also for the reason that some of the appellants have filed petitions challenging the order granting sanction claiming that an alleged offence under the Customs Act cannot be brought in the realm of provisions of the UAP Act. This Court deems it fit to grant bail to the appellants. Consequently, appellants are directed to be released on bail on the terms and conditions imposed - application allowed.
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2022 (6) TMI 219
Jurisdiction - competency of the DRI to issue show cause notice - Section 28 of the Customs Act, 1962 - Power of Tribunal to remand the case without deciding the issues therein on the ground that jurisdiction of the officer to issue show cause notice is under dispute - HELD THAT:- The issues involved herein have been considered and decided by a Co-ordinate Bench of this Court, in the case of THE COMMISSIONER OF CUSTOMS VERSUS M/S. BOX CORRUGATORS AND OFFSET PRINTERS [ 2020 (5) TMI 475 - MADRAS HIGH COURT ] where it was held that The issue relating to jurisdiction of DRI Officials to issue show cause notice to the Assessee in such cases is said to be pending before the Hon'ble Supreme Court in the case of Mangli Impex vs. Union of India [ 2016 (5) TMI 225 - DELHI HIGH COURT ], in which the Hon'ble Supreme Court has granted stay order. T he matters are remanded to the Tribunal with a direction to keep the same pending and await the decision of the Hon'ble Supreme Court in the appeals filed against the decision in Mangali Impex - Petition closed.
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2022 (6) TMI 218
Seeking release of Confiscated goods - import of Digital Multifunction Machines (DMFM) - goods imported comes under the provisions of Hazardous and Other Wastes (Management Transboundary Movement) Rules, 2016 or not - HELD THAT:- The first respondent is directed to release the goods covered by Ext.P2 Order-in-Original to the petitioner on it paying the customs duty, redemption fine and penalty imposed as per Ext.P2 and on furnishing a surety bond for the market value of the goods minus that imposed on the petitioner as redemption fee within a period of two months from the date of receipt of a copy of this judgment, failing which the respondents shall be free to initiate proceedings. - Petition disposed off.
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2022 (6) TMI 217
Exemption from CVD - Classification of imported goods - Iron Ore (fines) or Iron Ore (concentrate) - Whether the process of crushing and screening undertaken on the Iron Ore after it was mined at Carajas, Para, Brazil and its subsequent blending at Oman with 5-10% iron ore concentrate, would result in the goods imported being classifiable under CTI 2601 11 50 as Iron Ore concentrate, as against CTI 2601 11 31 for Iron Ore fines? - benefit of the exemption from payment of CVD at Serial. No. 56 of notification available to the imported goods or not - burden on the appellant to establish its entitlement to exemption under the notification dated 17.3.2012 or the said burden had shifted on the Department, since the benefit of the exemption had been extended not only at the time of clearance of the imported goods but also at the time of finalisation of the provisional assessment? HELD THAT:- In the instant case, both the show cause notice as also the impugned order, after extracting the pictorial representation from the global website of Vale International have categorically asserted that the mined ore at Carajas, Para, Brazil underwent two preparatory processes mainly crushing and screening at Carajas, Para, Brazil, before shipment of the same. It is evident from the aforesaid pictorial representation of the stage-wise extraction process of Iron Ores, that there are total of 11 stages involved from the extraction of the ore from the Carajas Mine to its shipment from Brazil. These sequential stages are titled in the pictorial representation as Infrastructure, Extraction, Transport, Crushing, Conveyor Belt, Screening, Stockyard, Recovery, Loading, Rotary car dumpers and Shipment. Out of these 11 stages, only 2 stages deal with physically preparing the ore for shipment, which are crushing and screening. In the process of crushing, the ore which has been mined and is in the shape of a boulder/uneven blocks of upto 15 meters, is crushed using a primary crusher into smaller size - The pictorial representation records that Vale has 17 production lines at its screening site, where the crushed ore is sorted basis the size of the crushed ore. It needs to be noticed that both, the show cause notice and the impugned order, have in passing, contended that processes, beyond crushing and screening, have been undertaken on the Iron Ore at Carajas, Para, Brazil. However, no evidence has been led to even suggest, let alone prove, that other processing had taken place at Carajas, Para, Brazil. The burden to prove that processes beyond crushing and screening had been carried out was on the Revenue, but it failed to establish. It is, therefore, not possible to accept the said contention of the Revenue. Whether Iron Ore Carajas Sohar supplied from Oman, which is a blend of Iron Ore Carajas and Iron Ore concentrate, in which the proportion of Iron Ore Carajas is 90-95% and that of Iron Ore concentrate is 5-10%, is a concentrate or not? - HELD THAT:- The process of blending/mixing undertaken at Oman is a physical process where iron ore fines from the Carajas mines are mixed with iron ore concentrates from the Southeastern System in the ratio of 90-95% of iron ore fines from Carajas and 5-10% of Iron Ore concentrate. In this process, there is no removal of part or whole of the foreign matter and, therefore, the same cannot be said to be a special treatment resulting in the ore becoming a concentrate. This apart, the blend of iron ore fines (90-95%) with iron ore concentrate (5-10%) would, by applying Note 3(b) to the General Rules of Interpretation to the Import Tariff, be classified as iron ore fines, as the essential character to the mixture is derived from the iron ore fines. The impugned order, however, holds that Vale International was using water for removal of impurities. This finding has been arrived at by an incorrect extrapolation of the pictorial representation in the impugned order. It needs to be noted that the show cause notice had not made any reference to the aforesaid pictorial extract from the website. It is on the bases of the incorrect pictorial representation that the impugned order holds that at Cajaras, Vale was using several equipment such as filters, pumps, thickeners, magnetic separators, floatation column for removal of impurities. It is evident from the website of Vale that conventionally, where the ore is of a low grade, the use of water and equipment such as filters, pumps, thickeners, magnetic separators, floatation column, in addition to crushers and screens is envisaged. There can be no basis to impute any certainty that alumina to silica ratio would always be greater than 1 in case of natural ores. The appellant had, in the reply, demonstrated that naturally occurring high grade iron ores, even in India at the Bacheli and Bailadila of NMDC have the alumina to silica ratio less than 1. The impugned order as also the evidence relied in support of the same have not disputed this position. The report of Dr. Rathod could not, therefore, have been relied upon to hold that what had been imported by the appellant was Iron ore that had been concentrated. The contents of the letter dated 28.04.2016 of Shri D.K. Swamy, Administrative Officer in the Indian Bureau of Mines are contrary to the opinion of the Ministry of Mines, as communicated of the Circular dated 17.02.2012. The process of crushing and screening undertaken on the Iron Ore after they have been mined at Carajas, Brazil and subsequent blending at Oman with 5-10% iron ore concentrate would result in classification of the goods imported under CTI 2601 11 31 as Iron Ore fines and would consequently be entitled to the benefit of exemption from payment of CVD under the notification dated 17.03.2012. Appeal allowed.
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2022 (6) TMI 216
Seeking provisional release of seized goods - functus officio in the order impugned in the appeal - accountability in personam - section 110A of Customs Act, 1962 - import of betel nut product known as supari - Classification of goods - Prohibited goods or not - HELD THAT:- The applicability of a decision of constitutional courts to the facts of a particular dispute is a matter be considered by the quasi-judicial authority. However, discarding of binding precedent is contrary to judicial discipline which the Hon ble Supreme Court took note of in Union of India v. Kamlakshi Finance Corporation Ltd [1991 (9) TMI 72 - SUPREME COURT]. In the circumstances in which the cited decisions were found to be unreliable by the customs authorities, we must advise that these guidelines and guardrails, distinguishing tax administrators from brigands and highwaymen, must surely adorn the walls of every chamber in which the hallowed authority to adjudicate is exercised to immunize themselves of any inclination to delude themselves into taking the law into their hands even in face of superior wisdom. The ground of unfit for human consumption is, as admitted by the Principal Commissioner of Customs, no longer existent as far as proceedings initiated against the appellant is concerned. As we have premised supra, the issue before us is simple enough: the extent to which the provisions of section 110A of Customs Act, 1962 are intended by law for denying an importer access to his goods pending a dispute on classification that may have import policy ramifications. Classification does not, of itself, measure the gravity of intent of importer as it is the arena within which the rules of engagement between customs authorities, in any country or across time, and importers; every misclassification may not have been with deliberate intent and that is for the adjudicating authority to evaluate before allowing or denying provisional release. It is from the acknowledgement of such obligation to evaluate that section 110A of Customs Act, 1962 was amended to accord co-terminus jurisdiction under section 124 of Customs Act, 1962 and section 110A of Customs Act, 1962. In the present instance, the Principal Commissioner of Customs has sought to distance himself from that obligation by pleading lack of propriety engendered from the possibility of binding over the real adjudication authority who, however, did not have appear to have any scruples in snatching a process from the Principal Commissioner of Customs; such noble tolerance of assertiveness does not, however, ennoble the omission to consider the issue remanded to him in accordance with intendment of section 110A of Customs Act, 1962. There are no reason to believe that another remand would prompt a less apathetic response to binding precedent. This is a classification dispute and, being a classification dispute, denial of provisional release would be disproportionate detriment. The appellant is a regular importer and differential duty, if any, arising upon conclusion of proceedings should be recoverable without difficulty. Breach of policy prohibition, should that be determined, is also rectifiable for such is the authority to relax vested in the Director General of Foreign Trade and, hence, not warranting denial of provisional release. In the circumstances the execution of bond to the extent of three times the differential duty is considered suffice for safeguard of revenue. The application for implementation of the order is disposed off in view of grant of provisional release on grounds of attempt to evade the order of the Tribunal without recourse to appellate challenge of it.
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2022 (6) TMI 215
Validity of assessment order - enhancement of value as declared by the importer at the time of filing Bills of Entry - whether Customs authorities are correct in enhancing the value self-assessed by the importer on the Bill of Entry on the basis of the consent given by the importer without assigning any such reason for such enhancement? - Difference of opinion. HELD THAT:- In view of the divergent opinion expressed by various Benches of the Tribunal, this matter needs to be referred to the Larger Bench of the Tribunal. This matter is remanded to Hon ble President for considering making reference to Larger Bench of the Tribunal the following questions of law:- (i) Whether the enhanced value as accepted for early clearance or for any reason is equivalent to the declared value on the Bill of Entry. (ii) Whether such an acceptance of the enhanced value is binding on the importer in respect of the import made by him even if he is able to show that enhanced value does not specify the requirements of Section 14 of the Customs Act. (iii) What is the scope of the Section 17 (5) of the Customs Act, 1962 making it mandatory to pass an speaking order within prescribed period by the concerned authorities in case of any changes made to self assessment made by the importer while filing the bill of entry.
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2022 (6) TMI 214
Power of Commissioner (appeals) - appeal was considered on merit and directions were issued to the lower authority for re-assessing the Bills of Entry with consequential relief - contrary to the provisions of Section 128 (3) (b) (ii) of the Customs Act, 1962 or not - proper officer enhanced the value of the imported goods without citing any reasons - request for for passing of speaking order for re-assessment done in the Bill of Entry also not answered - HELD THAT:- The original authority had not passed any speaking order while enhancing the value in terms of Section 17 (5) ibid. The statutory provisions contained in sub-section (5) of Section 17ibidare amply clear that where any re-assessment done is contrary to the selfassessment done by the importer, involving in the issue of valuation of goods etc., then the proper officer shall pass a speaking order on the reassessment, within fifteen days from the date of the re-assessment of the Bill of Entry. It is an admitted fact on record that though the declared value of the imported goods was enhanced by the proper officer from USD 8 per unit to USD 30 per unit, but no speaking order to such effect, as contemplated under the statute has been passed by the proper officer of Customs. Certain amendments were carried out to Section 128 of Customs Act,1962 w.e.f.29.03.2018 by the Finance Act, 2018. The effect of amendment was that the Commissioner (Appeals) was empowered under the statute to refer the matter back to the adjudicating authority with direction for fresh adjudication or decision, concerning the situation, where no order or decision has been passed after reassessment under Section 17ibid. The learned Commissioner (Appeals) should have remanded the case back to the original authority with a direction for fresh adjudication or decision - Appeal allowed by way of remand to the original authority for passing of the speaking order with regard to the value enhanced in the Bills of Entry.
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2022 (6) TMI 213
Confiscation - redemption fine - penalty - tug M.T. Mansi - Smuggling of High Speed Diesel (HSD) - HELD THAT:- The value of the tug was ascertained by M/s. Esvee Associates, an independent valuer, and on the basis of the valuation report, the value of tug has been ascertained for imposition of the redemption fine on the tug. Accordingly, there are no error in the redemption fine imposed for the release of the said tug. Levy of Penalty under Section 112(a) and 112(b) of the Customs Act - HELD THAT:- It is now settled law that Section 112(a) and 112(b) are mutually exclusive and penalty cannot be imposed simultaneously under both the sections - the penalty imposed on the appellant needs to be reduced and the same is reduced to Rs.50,000/- under Section 112(b) of the Customs Act, 1962. The appeal is partly allowed.
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Insolvency & Bankruptcy
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2022 (6) TMI 212
Validity of directions issued by the NCLT after permitting the withdrawal of application - Direction to deposit the unpaid TDS amount, deducted from the employees, within the period of 15 days - HELD THAT:- The steps are being taken by the Income Tax Department for recovery of TDS amount. Present is a case where deposit of TDS amount deducted from the salary of the employees was not deposited by the Corporate Debtor inspite of specific clause entered into the Joint Settlement Agreement that the amount shall be deposited by the Appellant on or before 20.07.2021. The submission of the Counsel for the Appellant is that when Application under Section 9 was to be withdrawn by virtue of payment of all dues to employees under the Settlement Agreement, there was no occasion or jurisdiction of the Adjudicating Authority to issue direction to deposit TDS amount. While permitting withdrawal of Section 9 Application, the Adjudicating Authority could have passed an order taking into consideration the Settlement entered between the parties. Hence, direction to Appellant to deposit the deducted amount of TDS cannot be faulted. Company Appeals are disposed of upholding the direction of the Adjudicating Authority to the Appellant to deposit the TDS amount. We, however, set aside the period of 15 days as allowed by the Adjudicating Authority to the Appellant to deposit and we observe that the deposit shall be made by the Appellant during the period as provided by the Income Tax Authorities.
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2022 (6) TMI 211
Maintainability of application - initiation of CIRP - Personal Guarantor of the Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - service of demand notice - opportunity to seek replacement of Resolution Professional, was provided or not - violation of principles of natural justice - HELD THAT:- It is evident from a reading of the Section along with the Rule, that what the Creditor has to serve is the copy of the application made under sub-section (1) to the Debtor. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form -C and the Creditor will serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been submitted - The procedure thus prescribed will give the Personal Guarantor, notice of the application already filed before the Adjudicating Authority. Section 95(5) requires the Creditor to provide a copy of the application made under sub-section (1) , to the Debtor. Thus, serving advance copy is not contemplated. The arguments that Section 98 provides for replacement of the Resolution Professional and hence the Guarantor should have an opportunity to seek replacement of Resolution Professional and hence he should be heard before appointment of IRP was also considered and held that going through Section 98 of IBC, 2016, it is found that Section 98 is not stage specific. Section 98 itself shows that the section could be resorted to even at stages like implementation of repayment plan which would be a stage beyond Section 116, where implementation and supervision of repayment plan is provided for. Any amount of audience is provided to the debtor before the Resolution Professional submits a report. Section 99 (2) of IBC gives an opportunity to the debtor to prove repayment of debt claimed as unpaid by the creditor. Section 99 (4) of IBC, empowers the Resolution Professional to seek further information or explanation in connection with the application as may be required from the Debtor or the Creditor or any other person, who, in the opinion of the Resolution Professional, may provide such information. Hence it is not as if, the Debtor is not provided an audience before the submission of the report. Hence there are no violation of principles of natural justice by not giving an opportunity to the Debtor for making his submissions before the appointment of IRP. This Tribunal is of the considered opinion that there is no hurdle to entertain this application under Section 95 of IBC, 2016, since the application is found to be complete - Application admitted - moratorium declared.
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2022 (6) TMI 210
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - privity of contract - forum shopping - HELD THAT:- Undisputedly, the contract was given by NBCC to M/s. ERA Infra Engineering Limited and there was no agreement executed between the Applicant and the Respondent herein. No such agreement has been placed on record, whereby ERA Infra Engineering Limited might have been authorised to engage the sub-contractor and for that purpose the Respondent can be held liable and vice-versa. From the record, it is not proved on the record that there was any privity of contract between the applicant and the Respondent herein except to the extent that one letter, which has been written by the Respondent to the M/s. ERA Infra Engineering Limited, that too was only with request to 'due payment' if any of M/s. ERA Infra Engineering Limited. Further, on 08.05.2018 M/s. ERA Infra Engineering Limited had undergone CIR proceedings therefore, any amount lying even if any with the Respondent qua the contract with M/s. ERA Infra Engineering Limited that cannot be made payable to the Applicant herein due to 'Moratorium'. Apart that, there is a serious dispute qua the amount also, as the balance sheets of M/s. ERA Infra Engineering Limited is showing a sum of Rs. 51,79,028 due, whereas the Applicant has been claiming a sum of Rs. 7,10,07,021/-. Moreover, the Applicant has already availed the remedy before the Hon'ble High Court, Delhi by virtue of filing a writ petition 12427/2021, which was filed on 28.10.2021 against the respondent, whereas the demand notice was issued on 26.11.2021. The applicant also filed claim before Ld. R.P. of M/s. ERA Infra Engineering Limited, which was also rejected. Therefore, even otherwise, there is a preexisting dispute - Apart that the applicant is indulged in forum shopping. This Tribunal is also affirm view that there is a serious dispute about the 'due payment', which cannot be decided in a summary manner and requires a detailed enquiry - Application rejected.
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2022 (6) TMI 209
Approval of Resolution Plan - Seeking reconsideration of resolution plan submitted by the resolution applicant within the parameters of the provisions of the Code as required under regulation 39(3) of the CIRP Regulations, 2016 - alternatively seeking to place a revised resolution plan in consultation with the Committee of Creditors for the resolution of the Corporate Debtor - HELD THAT:- In the present case it is undisputed fact the Resolution Plans submitted by both the PRAs have been rejected by CoC. It is well settled that evaluation and acceptance of a resolution plan is exclusive domain of CoC who is expected to apply best of its commercial wisdom and arrive at appropriate decision. Further, RP is agreed upon that unsuccessful Resolution Applicant does not have any vested right for consideration or approval of its resolution plan. Accordingly, having regard to the judgment of Hon'ble Apex Court in Arcelormittal India Private Limited v. Satish Kumar Gupta Ors. [ 2018 (10) TMI 312 - SUPREME COURT ] and submissions made by RP, there are no merits in contentions of the Applicant in present. Application dismissed.
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2022 (6) TMI 208
Maintainability of present application - Setting aside and recall of order dated 23.11.2020 and 01.12.2020 u/r 49 r/w rule 11 of NCLT rules, 2016 - HELD THAT:- It is pertinent to discuss that Rule 49(2) of NCLT Rules, 2016 only provides that this Tribunal may set aside the order of ex-parte passed against the respondent, however, neither Rule 49(2) nor any other rule of NCLT Rules, 2016 provides that this Tribunal is empowered to recall its final order and review the same. The relief sought by the applicant is not only with respect to set aside of ex-parte order dated 23.11.2020 but also recall of order dated 01.12.2020, which this Tribunal is not empowered to do. Hence, this Tribunal is inclined to dismiss the present application in view of the above facts and circumstances. Application dismissed.
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PMLA
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2022 (6) TMI 207
Seeking grant of Bail - siphoning off huge amount to Australia - laundering of money in Australia and Dubai on the pretext of imports through banking channels and through hawala - proceeds of crime - HELD THAT:- There cannot be any dispute on the factual background of the case. The petitioner is the prime accused in large number of cases registered initially by the local police alleging offences under Sections 120B, 420, 406 and 409 read with 34 of the Indian Penal Code besides under Sections 3 and 4 read with Sections 21 and 22 of the BUDS Act. The sum and substance of the allegations is that he as the Managing Director of the Company by name Popular Finance, which has branches all over the State and also in some of the southern States of the country, had collected huge amounts as deposits promising to pay attractive interest. He is also having money lender licence under the Kerala Money Lenders Act and is lending money on the security of gold pledged by the customers. The petitioner and his daughter, the second accused, were interrogated in numerous occasions and ultimately, on 09.08.2021, he was arrested by the respondent. Initially he moved the Special Court and by the impugned order, the application was dismissed, though his daughter was granted bail under the proviso to Section 45(1) of the Act. During the pendency of the petition, the respondent filed a complaint, copy of which has been produced for perusal of the court; the petitioner was also served with a copy of the same. But according to the learned counsel for the petitioner, such a complaint was hurriedly filed to deny him statutory bail, so far the Special Court has not taken cognizance of the offence. But it is a fact that complaint has already been preferred. The petitioner has a case that investigation is complete, that all the material documents collected in electronic form are with them, that the conditions imposed by this Court and other courts while granting him bail in the predicate offences are rigorous, that there is no flight risk. It may be true that the respondent has already laid a complaint. All the same, the prime witnesses in the case are the staff members of the petitioner. If he is released on bail, the possibility of him influencing and winning over them cannot be ruled out. Having regard to the gravity of offence and the huge amounts involved, the expectation of the petitioner that he would be able to revive and resurrect the business, is only just like the dream of the milkmaid. The petitioner is justified in seeking bail. The learned Additional Solicitor General and the learned Central Government Counsel have seriously opposed the application for bail. Having regard to the nature of the allegations against the petitioner, the stake involved, the gravity of offences, the fact that the petitioner has business interests in Dubai, Australia etc., it cannot be said that there is no flight risk in the case - Bail application dismissed.
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Service Tax
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2022 (6) TMI 206
Levy of penalty u/s 78 of FA - wrongful interpretation on levy of tax under Section 66E(e) - concealment of facts or not - HELD THAT:- There is no case of concealment or contumacious conduct on the part of the appellant. Further, it is found that levy of service tax in the facts of the present case under Section 66E(e), is a matter of interpretation. Further on audit objection, the appellant have accepted the same and deposited the tax alongwith interest. In this view of the matter, it is found that no penalty is imposable under Section 78. Penalty set aside - appeal allowed - decided in favor of appellant.
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2022 (6) TMI 205
Rectification of mistake - error apparent on the face of record or not - inadvertent mention of Input Tax Credit instead of 'Tran-1 Credit' - HELD THAT:- It is observed that Tran-1 is the form prescribed for transferring the cenvat credit/VAT credit available with the applicant on the date of migration to the GST regime. Credit under the existing law once transferred to GST is nothing but an input tax credit and is used in the same manner. The applicant s claim that they have reversed the Tran-1 credit and not input tax credit does not substantiate the claim for rectification. As regards the second ground, Section 11B of the Central Excise Act, 1944, as claimed by the applicant, to be missing from the order, is erroneous. There are no substance in the claim made by the applicant in this regard - rectification application filed by the applicant cannot be substantiated and is accordingly dismissed.
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Central Excise
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2022 (6) TMI 204
Applicability of Exemption Notification No. 4/2006-C.E. - manufacture of Uncoated Kraft Paper, falling under Chapter sub-heading No. 48043100 of the Schedule to the Central Excise Tariff Act, 1985 - Sl. No. 90 prescribing the concessional rate of duty @ 8% advalorem or Sl. No.91 prescribing the concessional rate of duty of 12% advalorem or Sl. No.93, which was unconditional, also prescribing concessional rate of 12% advalorem - HELD THAT:- Section 5A of the Central Excise Act, 1944 recognizes two categorizes of exemption notification. The first category being that of an absolute exemption, where there was no condition attached to the exemption entry and the other one is a conditional exemption, which was subject to fulfilment of the conditions attached to the exemption entry. In the present case, the exemption entry at Sl. No.90 of Notification No. 4/2006-Central Excise was attached with two conditions for availing of the benefit of duty exemption and therefore, it was a conditional exemption and not an absolute exemption, as contemplated by Section 5A(1A) ibid. Since, the appellant had opted for payment of duty on clearance of the finished products and availed cenvat credit of Central Excise duty, such option exercised by the appellant cannot be questioned by the department inasmuch as there was no stipulation contained in the subject notification that only condition No. 90 appended thereto had to be followed and not otherwise. The appellant had correctly assessed the duty liability as provided under Sl. No. 93 contained in notification dated 01.03.1998, as amended. Thus, there was no contravention of the Cenvat statute. Further, it is not the case of Revenue that the duty amount collected by the appellant was not deposited with the Government Exchequer. Hence, under such circumstances, the provisions of Section 11D ibid cannot be invoked for recovery of the duty amount in question. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellant - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (6) TMI 203
Adverse remarks against the officer of VAT department acting as AO - Order of the High Court - Validity of provisional assessment order - ex-parte order - proper service of notice or not - HELD THAT:- In the impugned order dated 29.02.2016 relating to the merits of the case are concerned, no comments are required in that relation, for the same having not been challenged by the State. However, even when all the findings of the High Court in the principal part of order dated 29.02.2016 are accepted, they would only lead to the result that the impugned actions in drawing up ex parte assessment orders and then seeking to enforce recovery as also the impugned action in rejecting the application for registration of change of place of business did not meet with the approval of the High Court. Such disapproval of the High Court had been essentially based on its interpretation of the applicable rules as also its analysis of the factual aspects concerning the issues involved in the writ petition. Even if the High Court found that the impugned actions of the authorities concerned, particularly of the appellant, had not been strictly in conformity with law or were irregular or were illegal or even perverse, such findings, by themselves, were not leading to an inference as corollary that there had been any deliberate action or omission on the part of the Assessing Authority or the Registering Authority; or that any tactics were adopted, as per the expression employed by the High Court. Every erroneous, illegal or even perverse order/action, by itself, cannot be termed as wanting in good faith or suffering from malafide . In the present case, when admittedly the respondent No. 1 itself had applied for registration of the change of place of business nearly 11 months after the alleged event; and at the time of drawing up the assessment orders, the appellant as the Assessing Authority had no other registered address of the respondent No. 1 on record, his actions of passing ex parte assessment orders could not have been termed as being deliberate or wanting in good faith, particularly in view of the facts that attempts were indeed made from his office to get the notices served on the respondent No. 1 at its registered address and even at its alleged changed address at Ghaziabad. Even if such attempts, of serving notices, were held to be illegal or irregular by the High Court, its deduction that the impugned actions were deliberate or lacking in good faith is difficult to be endorsed - The appellant, while functioning as an Assessing Authority could not have kept the assessment proceedings pending for an indefinite length of time. The High Court seems to have taken rather a sterner view of the matter, which was not required in the given set of facts and circumstances. Noticeably, the appellant was not impleaded personally a party in the first two writ petitions which were decided by the common order dated 29.02.2016. The comments or remarks which were to operate personally against the appellant were not even called for without the appellant having been joined personally a party and having been extended an opportunity of hearing and explanation. There was no necessity of stretching the matter too far and passing further orders for imposition of costs and for departmental actions with other comments regarding competence of the appellant to discharge quasi-judicial functions. - Having said that, we deem it appropriate to close this matter with annulment of strictures and observations against the appellant in both the impugned orders dated 29.02.2016 and 02.08.2016. - It is deemed appropriate and hence order that the said amount of Rs. 2,00,000/- shall be deposited by the respondent No. 1 with the Uttar Pradesh State Legal Services Authority. The remarks and observations against the appellant in the impugned orders are expunged; and the questioned parts of the impugned orders, as reproduced hereinabove, are annulled and set aside. Appeal allowed.
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2022 (6) TMI 202
Recovery of dues towards tax - Right of secured creditors - creation of first charge - Section 48 of the GVAT Act, 2003 - HELD THAT:- What came to be purchased by the writ-applicant in the auction proceedings conducted by the Bank of Baroda was a secured asset under the provisions of the SARFAESI Act. In such circumstances, the State cannot claim preference over the subject property for the purpose of recovery of the dues towards tax. It is not in dispute that the first charge was created in favour of the bank and the bank in exercise of its powers under the SARFAESI Act, put the subject property to auction. It is hereby declared that the State cannot claim any first charge over the subject property by virtue of Section-48 of the GVAT Act, 2003. The decision of the Mamlatdar, Vadodara (Rural) contained in the Letter dated 04.02.2022 at Annexure-H to this writ-application is hereby quashed and set aside. This writ-application succeeds and is hereby allowed.
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2022 (6) TMI 201
Computation of compounding fee on the royalty amount - sand mining contract - Section 7-D of The U.P. Trade Tax Act, 1948 - HELD THAT:- In the matters of compounding of tax liability under Section 7-D of the Act, the Court has consistently interpreted the statutory provision in the manner as may allow the same to be treated as contractual. Remarkably, the actual turnover does not become the basis of determination of the tax liability. Upon agreement reached between the parties, a lump sum is accepted in lieu of the actual tax liability that may otherwise arise. In the present facts, the compounding scheme does not itself specify the rate of compounding fee to be 22% of the royalty amount for the entire period during which such scheme remained in force. It only provided, in the event of the applicant being admitted to that scheme of compounding, he may remain compelled to such benefit for all subsequent periods during which the scheme may remained in force. As to the amount of compounding fee to be calculated at the percentage rate of royalty, the State did not commit to maintain @ 22%. In fact, by virtue of the proviso to Section 7-D of the Act, the State retained the power to vary that rate. The Tribunal has not committed any error in rejecting the claim made by the applicant. Unless there was an enabling statutory provision or other law or unless there was a specific clause in the Compounding Scheme, the claim made by the present applicant would remain without basis. Revision dismissed.
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2022 (6) TMI 200
Levy of trade tax - service charge realized from the customers - Whether the Trade Tax Tribunal was legally justified in dismissingthe appeal in regard to the issue of levy of trade tax on the service charge realized from the customers when correct, factual and legal position was explained in the Written Argument? - HELD THAT:- The provisions of UP Trade Tax Act and the provisions of Tamil Nadu Sales Tax Act, are analogous. In view of the said fact, the order and judgement given in the case of M/s India Meters Limited (supra) is covers the issue as Hon ble the Apex Court has held that any amount for which the goods are being sold in whatever names, so called, are liable to be included in the taxable turnover. The record further reveals that the revisionist while issuing the bills for the period up to December 2001 has issued various bills on which 10 % amount has been charged on the total bill under the head of service charge. The explanation submitted by the revisionist is that the said amount has been charged from the customers for distributing the same on the staff who rendered their services in the banquet and not to any other staff of hotel / restaurants and therefore it was not form part of taxable turn over as defined under the Act. In the case in hand, the provisions of UP Trade Tax Act is absolutely clear. The amount charged by the revisionist in whatever name called i.e. services rendered by their employee to the banquet as alleged, cannot be excluded from the taxable turnover. Revision dismissed.
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Indian Laws
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2022 (6) TMI 199
Dishonor of Cheque - misuse of blank signed cheque of the petitioner - Section 138 of the Act of 1881 - HELD THAT:- With respect to the defence raised by the petitioner of blank signed cheque being misused, on suggestion put to CW1 as well as defence in statement recorded under Section 313 Cr.P.C. are not in consonance with evidence of DW2- Jitender Singh. It was observed that the suggestion given to CW1 was to the effect that by pressurizing DW2-Jitender Singh, the complainant had taken cheque of the petitioner and then filled the amount of Rs.5,00,000/- on his own and misused the same. It was further noticed that on the other hand, when DW2 was examined, he had stated that he alongwith complainant came to the house of the present petitioner and the petitioner was not present in the house and in his absence, the complainant took away two blank signed cheques of his brother including the cheque in question from the almirah of his brother i.e. Surender and it is the said cheque which has been misused. It was observed that version given by the DW2 to the effect that theft had been committed from almirah of the house was not mentioned in statement recorded under Section 313 Cr.P.C. nor suggested to CW1 in his cross-examination. The Hon'ble Supreme Court of India in a case titled as BIR SINGH VERSUS MUKESH KUMAR [ 2019 (2) TMI 547 - SUPREME COURT ], had held that the Court shall presume the liability of the drawer of the cheques for the amount for which the cheques are drawn. Even in the aforesaid case, the cheque was a signed blank cheque which had been subsequently filled up by the complainant. The Hon'ble Supreme Court in the said case had also held that the revisional Court should not interfere in the absence of jurisdictional error - In the said case, it has been held that the Revisional Court is not to interfere in the absence of jurisdictional error. In the present case, it is admitted case of the petitioner himself that the signatures on the cheque are his and his only defence to the effect that a blank signed cheque was kept by him has been held to be a concocted defence. The present Criminal Revision being sans merit, is accordingly dismissed.
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2022 (6) TMI 198
Dishonor of Cheque - insufficiency of funds - vicarious liability - petitioners are not Non-executive Independent Directors of the Company - Whether the petitioners can be proceeded against in the impugned criminal case? - HELD THAT:- What is narrated is, accused Nos.2 to 6 are responsible for day-to-day affairs of accused No.1/Company. Accused Nos.2 to 6 are the brain and soul of the Company and are responsible for all the acts and omissions of the Company. With this note the entire narration is against accused Nos.3, 4 and 5 as they are Managing Directors and Joint Managing Directors of the Company. The accused Nos.4 and 5 are also signatories to the cheque - There is no whisper in any of the documents depicting the petitioners to be Non-executive Independent Directors. Therefore, if the haze has to be warded off, it is necessary for the petitioners to participate in the trial and demonstrate that they have no role to play in the day-to-day affairs of the Company and that they are not even aware of the borrowing. It is no doubt settled principle of law that if the accused in a proceeding under Section 138 of the Act who are not signatories to the instrument are hauled into those proceedings and if they are Non-executive Independent Directors, who have no role to play in any affairs of the Company, they cannot be prosecuted. It is in those cases the Apex Court or the constitutional Courts have quashed such proceedings in favour of those Non-executive Independent Directors. The phrase non-executive independent director is not even shown to exist in any of the documents appended by the petitioners. The respondent has demonstrated varied nomenclature of the petitioners in several documents. Therefore, it becomes a matter of trial. In the light of what is held by the Apex Court in N. RANGACHARI VERSUS BHARAT SANCHAR NIGAM LTD [ 2007 (4) TMI 621 - SUPREME COURT ], the complaint clearly narrates that the petitioners were also in-charge of the affairs of the Company, they are the brain and soul of the Company and at the time when they borrowed the loan, the agreement clearly stipulated that with their permission, including others the said loan was borrowed and the cheque was issued and no where the petitioners are described as Non-executive Independent Directors. This being the factual scenario, exercise of jurisdiction under Section 482 of the Cr.P.C. in favour of the petitioners is declined. The contention of the learned counsel for the petitioners that the complaint nor the sworn statement anywhere attributes any role of the petitioners is unacceptable as the complaint or the sworn statement cannot be read splitting hairs as it has to be read as a whole and if it is so read, it does attribute the role played by the petitioners. Petition dismissed.
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2022 (6) TMI 197
Dishonor of Cheque - levy of compounding fees of lesser amount - Section 138 of Negotiable Instrument Act - HELD THAT:- In present case, the cheque amount was of Rs.4,50,000/-but amount of compensation is Rs.5,00,000/- and the matter has been compounded. As the petitioner/accused has paid Rs.4,45,000/- to the complainant and Rs.55,000/- is yet to be paid, for which petitioner has issued Cheque No. 000181 dated 30.4.2022 for Rs.15,000/-, Cheque No. 000177 dated 30.5.2022 for Rs.30,000/- and Cheque No. 000178 dated 30.6.2022 for Rs.10,000/- respectively to be drawn on Bandhan Bank Shimla in favour of complainant and in case of default, the judgment of conviction passed against him by trial Court impugned in this petition, shall revive and has prayed for imposing lesser compounding fee instead of 15% of the cheque amount, it is opined that it is an appropriate case to impose lesser compounding fee. Therefore, petitioner is directed to deposit compounding fee of Rs.5,000/- instead of 15% of cheque amount, with the H.P. State Legal Services Authority, Shimla within a period of four weeks from today. After depositing compounding fee/cost, petitioner shall place copy of receipt of deposit on record of this petition. In case of default in depositing compounding fee/cost with H.P. State Legal Services Authority, Shimla within stipulated period, the judgments of conviction and sentence shall automatically revive - petition disposed off.
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