Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 14, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
News
Notifications
Highlights / Catch Notes
Income Tax
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Electronic Verification Code (EVC) for electronically filed Income Tax Return - procedures, data structure and standards - Notification
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Interest payable by assessee on short payment of advance tax - The bona-fides of the assessee in estimating his income and paying the advance tax accordingly are relevant factors and if established fall within the ambit of Section 215(4) read with Rule 40(5). - HC
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Non deduction of TDS u/s 195 on payment for technical services received from singapore on the basis of Chartered Accountant (CA) certificate - No violation was reported by the Auditors in Form 3CD - No penalty - HC
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TDS - card swiping machine is used - HDFC Bank collects money from paying bank of the customers who use the credit card and gives credit to the Account of the assessee after deducting service charges (discount charge / Commission) thereon - No TDS u/s 194H - AT
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Validity of reopening of assessment - AO was required to first decide the objection of the assessee filed under sec. 148 - Since such compliance has not been made, the order is held as void ab initio - AT
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Treatment of agricultural income as 'Income from other sources' - assessee's contentions that the lands were being cultivated by cultivators and assessee gets only net income requires examination. - AT
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Addition invoking provisions of section 68 - if it was advance against sales then one fails to understand as to why dispatch of goods were not made during the year, more so, when the assessee itself had got its stock de-bonded for domestic sales.- AT
Customs
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Renewal / Cancellation of CHA license - The issue on hand is with regard to the cancellation of licence issued to the first respondent, whereas the Tribunal held that the order of the Adjudicating Authority is with regard to renewal of licence, which is administrative in nature - HC
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Validity of SCN - Proper officer - the show cause notice is neither pre-meditated nor pre-conceived rather it is an attempt to place all the facts, which have been recorded by the officers of the DRI in the course of investigation - HC
Corporate Law
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Acquisition of shares/ voting rights - mere change of name of a company does not wash away the liabilities despite the change of name of that of the promoters or the directors. - SAT
Service Tax
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Denial of refund claim - Refund of unutilized CENVAT Credit - Once the refunds are under the amended rules & notification issued thereunder, the same can’t be denied merely because they relate to exports made prior to date of amendment - AT
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Goods Transport Agency service - The stipulated declaration was stamped by the appellant on the invoices and all the goods transport agencies have given in writing that they had permitted the appellant to do so. - benefit of Notification No. 32/2004-ST allowed - AT
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Bonafide belief - Invocation of extended period of limitation - If the department was aware of writ petition filed by the appellants and have filed an affidavit in September 2006, nothing prevented them from issuing protective demand notices in order to safeguard the Revenue. - demand beyond normal period of limitation set aside - AT
Central Excise
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Imposition of penalty - the employee of the appellant company was involved in fraudulent act for his personal gain. - penalty imposed on the appellant company set aside while confirmed the interest liability - AT
VAT
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Forced recovery of VAT - It is apparent, prima facie that such a huge liability has been made out against the petitioner without giving him proper opportunity to put-forth his case - amount to be refunded - HC
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Best Judgement - scope of estimation - While best of judgment assessment may involve an element of guess work, but at the same time, it is settled law that it must be made bona fide and it cannot be whimsical or arbitrary. - HC
Case Laws:
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Income Tax
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2015 (7) TMI 413
Levy of interest u/s 234A & 234B on returned income or assessed income - Retrospective amendment made by the Finance Act, 2001 w.e.f. 01.04.1989 - Held that:- We are bound by the decision of this Court in Parkash Agro Industries Vs Dy. Commissioner of Income Tax [2007 (10) TMI 294 - PUNJAB AND HARYANA HIGH COURT ] which has answered this question in favour of the appellant i.e. interest was chargeable on the assessed income. - Decided in favour of appellant.
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2015 (7) TMI 412
Refund/ forfeiture of advance amount - Appellant unable to produce necessary facts during proceedings - Held that:- It is important to note that in the remand report the AO himself stated that the appellant was probably unable to adduce all the facts due to shortage of time in the original assessment proceedings. We are inclined to accept Mr. Alok Mittal’s alternate submission on behalf of the appellant that in view thereof the appellant must at least be afforded an opportunity of establishing her case. He rightly pointed out that in view of this finding the Tribunal ought to have remanded the matter to the AO to adduce the necessary facts on this limited issue. In these circumstances, the ends of justice would require granting the appellant an opportunity of establishing the facts in this regard. However, considering that the matter has been agitated at three levels before the authorities under the Income Tax Act, 1961, we deem it appropriate to remand the matter to the CIT (Appeals) to reconsider the issue in this regard alone. It will be open to the CIT (Appeals) to seek a remand report from the AO pertaining to the facts in this regard. The appellant will be entitled to adduce additional evidence in this regard including of the respective proposed purchasers and proposed sellers under the said three transactions. - Matter remanded back.
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2015 (7) TMI 411
Interest payable by assessee on short payment of advance tax - whether the assessee was liable to pay interest on account thereof under Section 215 in respect of the enhanced share - Held that:- The Deputy Commissioner, in the present case, considered the circumstances to justify a reduction or waiver. Sub-rule (5) of rule 40 is wide enough to cover cases where the assessee estimates his income bona fide and pays advance tax on the basis thereof. It is neither necessary nor proper to enumerate cases which fall within the ambit of Rule 40(5). It is sufficient to hold that the ambit of sub-rule(5) is wide and that the discretion thereunder must be exercised in a judicious manner. The bona-fides of the assessee in estimating his income and paying the advance tax accordingly are relevant factors and if established fall within the ambit of Section 215(4) read with Rule 40(5). The authorities, therefore, had the jurisdiction to reduce or even to waive the interest in the present case. We see no reason to interfere with the exercise of that discretion. - Decided against the revenue.
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2015 (7) TMI 410
Accrual of income - amount received under an interim order - Whether the Tribunal was justified in law in allowing the appeal of the assessee by deleting the entire addition of the amount received by virtue of an interim order of the Court and is not accrued to the assessee - Held that:- What has happened in Karnataka High Court decision in the case of CIT v/s Mysore Sugar Co. Ltd. [1989 (11) TMI 33 - KARNATAKA High Court] is that the assessee was permitted to collect the amount in question only pursuant to an interim order made by the court which was subject to several conditions to make the right absolute. Therefore, the collection made by the assessee at an enhanced rate at that stage was an inchoate one as this extra amount did not accrue to the assessee until the finalisation of the dispute pending before the Court. In fact, this is also the view taken by the Supreme Court in CIT v/s Hindustan Housing & Land Development Trust Ltd.[1986 (7) TMI 10 - SUPREME Court ]. - Decided against the revenue.
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2015 (7) TMI 409
Levy of penalty on addition made u/s 40(a)(ia) - Non deduction of TDS on payment for technical services received from singapore - Penalty for concealment of income and furnishing of inaccurate particulars of income u/s 271(1)(c) of the Act - Held that:- It is well settled principle that penalty proceedings are quite different from the assessment proceedings. It is by now well settled that levy of penalty is not automatic if the addition/disallowance is sustained by the appellate authorities. The ingredients of the provisions of Section 271(1)(c) are to be satisfied for levying the penalty. It is no doubt true that the payment made by the respondent-assessee to M/s. Filtrex Holdings Pte. Ltd., Singapore, was liable for deduction of tax at source. It is also not in dispute that such amount of tax was not deducted at source in respect of the payment made to M/s. Filtrex Holdings Pte. Ltd., Singapore. It appears that there was genuine confusion on the question as to whether the payment made to a foreign party was liable for levying tax in India or not. The Chartered Accountant has given a certificate to the effect that the assessee is not required to deduct tax at source while making the payment to M/s. Filtrex Holding Pte. Ltd., Singapore. Thus, the assessee acted on the basis of the certificate issued by the expert.The assessee has filed Form 3CD along with the return of income in which the Chartered Accountant has not reported any violation by the assessee under Chapter XVII B which would attract disallowance under Section 40(a)(ia) of the Act. Refer case Dilip N.Shroff vs. Joint Commissioner of Income Tax & another [2007 (5) TMI 198 - SUPREME Court ]. - Decided against the revenue.
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2015 (7) TMI 408
Depreciation on computers disallowed - CIT(A) deleted the addition - Held that:- Assessee had furnished all the necessary details of the purchases of 100 computer systems from Lavena Sales Co. Pvt. Ltd. like invoice for payment raised by the seller company wherein they had also levied value added tax on the same, their address and that the amount for these computers was paid through a cheque which was duly cleared from the bank account of the assessee. The assessee had also obtained copies of its VAT registration, memorandum and articles of association etc. Only because the said company was not found on the given address after the lapse of three years from the date of the purchase, the Assessing Officer disallowed the claimed depreciation by the assessee on those computers. There is no dispute that to examine genuineness of depreciation claimed under the provisions of sec. 32 of the Act, all that needs to be established is ownership of depreciable assets and their use in the business of the assessee. The Pune Bench of the ITAT in the case of U.B. Engineering Ltd. vs. JCIT (2007 (9) TMI 339 - ITAT PUNE) where the genuineness of purchase of certain gas cylinder was questioned in a claim of depreciation for the same, held that the ownership of the gas cylinder, their use in the business of the assessee and genuineness of payment for such gas cylinders was deemed to be sufficient to prove the genuineness of the transaction. Thus CIT(Appeals) was justified in deleting the disallowance of the claimed depreciation - Decided in favor of assessee. Disallowance of proportion of the Revenue expenditure incurred towards payment of software license fee - the license fee was valid for a period outside the assessment year - Held that:- The assessee had purchased software which were annual licenses to be used for the period of one year. These software licenses were not renewed in the next year. The assessee bought another software. The licenses were bought in between the financial years and worked for some part of the next financial year also. Keeping in view this material fact, the disallowance has been made on proportionate basis. The Assessing Officer has dealt with the issue in para Nos. 6.1 to 6.6 of the assessment order. In concluding para No. 6.6, he held that out of ₹ 78,20,800 claimed by the assessee, only ₹ 45,62,133 belong to financial year 2008-09 and remaining amount of ₹ 32,58,667 belong to financial year 2009-10. Therefore, only ₹ 45,62,133 is being allowed as expenses and remaining amount of ₹ 32,58,667 is being added to the income. The Learned CIT(Appeals) has upheld this finding of the Assessing Officer. The orders of the authorities below on the issue is reasoned one, hence, we are not inclined to interfere therewith. The cited decision of the ITAT in the case of assessee itself for the assessment year 2008-09 does not cover the issue - Decided against assessee.
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2015 (7) TMI 406
Non deduction of TDS - “ME Commission” - card swiping machine is used - HDFC Bank collects money from paying bank of the customers who use the credit card and gives credit to the Account of the assessee after deducting service charges (discount charge) thereon - According to the AO as per said agreement that the amount retained by HDFC Bank was in the nature of commission and therefore the Assessee ought to have deducted tax at source on the amount retained by HDFC Bank as per the provisions of Sec.194-H - CIT(A) deleted disallowance. Held that:- Payments to banks on account of utilization of credit card facilities would be in the nature of bank charge and not in the nature of commission within the meaning of sec.194H of the Act. The same cannot also be said to be in the nature of professional services as services rendered by Banks is neither a service specified in the section nor notified. The CBDT by notification u/s.197A of the Act vide notification NO.56/2012 dated 31.12.2012 specified that credit/debit card commission for transaction between the merchant establishment and acquirer bank need not be subject to TDS. The revenue has argued before us that before the said notification such charges were subject to TDS. We are of the view that the notification is only recognition of the position as it always prevailed and as interpreted by several decisions rendered by the different benches of ITAT. The notification therefore cannot be the basis on which it can be said that the amount retained by HDFC Bank was in the nature of commission within the meaning of Sec.194-H of the Act. For the reasons given above, we confirm the order of the CIT(Appeals) on this issue and dismiss the appeals of the Revenue. - Decided in favour of assessee.
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2015 (7) TMI 405
Revision u/s 263 - CIT-IV setting aside the assessment for the A.Y 2006-07 and directing the AO to redo the same - whether CIT-IV ought to have noted that the fact of execution of agreement of sale and receipt of advance for sale of land, the subsequent cancellation of the Agreement of Sale and refund of the monies stands fully proved beyond any doubt - tribunal directed the Assessing Officer to carry out the direction given by the CIT and pass consequential order in accordance with law, if it is not already passed - Held that:- From the reading of the grounds of appeal, we are of the opinion that para 31 of the order dated 18.05.2012 is not required for disposal of appeal before the Tribunal. In these circumstances, we are of the opinion that the entire para 31 of the Tribunal’s order be deleted and the Tribunal order shall end with Para No.30 and Para No.31 shall be read as follows: “31. In the result appeal of the assessee is dismissed”.
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2015 (7) TMI 404
Penalty levied u/s.271(l)(c) - addition made u/s.68 - Held that:- The only legal point which goes against the Assessee was that he has not furnished the evidences in support of the material facts pertaining to cash credits introduced in the books of account. In this case, the Assessee has offered an explanation giving reasons of his hardship of not producing certain confirmation letters, etc. Since the penalty proceedings are undisputedly a distinct proceedings from the assessment proceedings; therefore, the addition confirmed in the assessment proceedings are to be judged independently instead of drawing any conclusion from those proceedings in a matter concerned with the concealment penalty. We, therefore, hold that merely on the ground that a part confirmation was made u/s.68 of IT Act in the case of the Assessee should not be considered as a valid ground for levy of concealment penalty. We, therefore, reverse the factual as well as legal findings of the authorities below and direct to delete the penalty levied. - Decided in favour of assessee
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2015 (7) TMI 403
Addition u/s 68 - CIT(A) deleted the addition - Held that:- The assessee received the first gift of ₹ 2 lacs from Sh. Parveen Kumar. In the course of her statement recorded by the Assessing Officer, it was stated that Sh. Parveen Kumar is a close friend of her husband who gifted this amount on the occasion of her marriage anniversary. As regards the Inspector's report that Sh. Parveen Kumar was not traceable at the given address, we find that the assessee furnished not only the copy of ration card but also of the PAN card and other evidence divulging the correct address of Sh. Parveen Kumar which was given to the Assessing Officer. There cannot be any reason to accept the view point of the Assessing Officer that PAN and ration card can also be fraudulently obtained.learned CIT(A) was right in accepting the assessee's contention about the genuineness of the gift received by the assessee from Sh. Parveen Kumar. As regards the gifts received from NRI donors, namely, Sh. Manmeet Pal Singh and Sh. Harminder Singh, we find that the assessee categorically stated before the Assessing Officer during the course of her statement that both these persons are real brothers and their father Sh. Ajit Singh is very close friend of her father-in-law, Sh. Gurucharan Singh. Both these persons were stated to be family friends. Not only that, the assessee also gave personal particulars of these donors by explaining the nature of business carried out by them and also the names of their children. The assessee also submitted that the gifts were made by these two persons on the occasion of birthday of her daughters. A copy of the bank NRI account of Sh. Harminder Singh for six months period from 01.04.2002 to 30.09.2002 disclosed total deposits credited to his account at ₹ 51.61 lac, out of which a sum of ₹ 7 lacs was gifted to the assessee. During the same six months period, there were credits in the bank NRI account of Sh. Manmeet Pal Singh to the tune of ₹ 31.60 lac, out of which a sum of ₹ 8 lacs was gifted to the assessee. Thus no hesitation in holding that the assessee discharged her burden in not only proving the identity of the donors, but also their capacity and genuineness of the gift transactions. - Decided against revenue.
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2015 (7) TMI 402
Penalty u/s. 271(1)(c) - disallowance made u/s. 40(a)(ia) - CIT(A) deleted the levy - Held that:- The conduct of the assessee speaks for itself. We, therefore, set aside the findings of the Ld. CIT(A) and uphold the levy of penalty u/s. 271(1)(c) of the Act in so far as it relates to the claim of capital expenditure as revenue expenditure. Since the levy of penalty is deleted in respect of disallowance made u/s. 40(a)(ia) of the Act, we restore this issue to the file of the AO with a direction to recompute the penalty in respect of the claim of capital expenditure as revenue expenditure. - Decided partly in favour of assessee Addition on account of under statement (unbilled) of Revenue - CIT(A) deleted the levy - Held that:- - CIT(A) deleted the levy - Held that:- pears that the First Appellate authority has been simply carried away by the submissions made by the assessee that the issue is covered by the earlier order of the Tribunal. It is clear that the Ld. CIT(A) has decided the issue in favour of the assessee without understanding the facts of the case and without comparing it with the facts of the earlier assessment year. This make the order of the Ld. CIT(A) erroneous. In the interest of justice and fair play, we restore this issue to the file of the Ld. CIT(A) to be decided afresh - Decided in favour of assessee for statistical purpose.
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2015 (7) TMI 401
Disallowance of labour expenses - Held that:- No specific error in the order of the CIT(A) could be pointed out by the AR of the assessee. The AR of the assessee could not explain the discrepancy pointed out by the CIT(A) in the confirmation and statement of Shri Ajitbhai and Shri Harishbhai. No material was brought before us by the AR to show how much labour charge expenses was accepted in the case of the assessee in earlier years. In the circumstances, we do not find any good reason to interfere with the order of the CIT(A) - Decided against assessee. Addition on account of the difference in the value of closing stock - Held that:- Assessee maintained day-to-day stock register and after examination of the same no mistake could be pointed out by the Revenue in the same. The auditor of the assessee has also not made any adverse observation in respect of stock disclosed by the assessee in its books of accounts. In our considered view, the book result reflected by regularly maintained books of accounts cannot be rejected by the Revenue without pointing out any specific error in the entries in the books of accounts, merely on the basis of a statement made by the assessee to a third party. Possibility of mistake in the stock statement furnished to the bank cannot be ruled out. No material was brought before us by the Revenue to show that the statement furnished by the assessee himself to the bank was sacrosanct and the statement furnished by the very same assessee in the return of income was incorrect. In the above circumstances, in view of the decision of Hon’ble Madras High Court in the case of CIT Vs. N. Swamy (1998 (9) TMI 27 - MADRAS High Court) the addition made by the Revenue is not sustainable - Decided in favour of assessee.
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2015 (7) TMI 400
Penalty u/s 271(1)(c) - rental income from flat omitted to be included at the time of filing of original return of income - Held that:- Nothing has been mentioned or asked from the assessee regarding rental income of the assessee, nor any details of flats owned by the assessee. Later on, when the assessee had filed a revised return on 06.11.2010 including the rental income of ₹ 1,61,880, there was no specific query or enquiry by the AO prior to this date. Neither from the assessment order nor from the records as are available before us, it is borne out that the assessee had offered the rental income from the second flat, only when she was cornered or enquired by the AO. Even if the revised return is held to be invalid, then also the revised computation filed with the revised return declaring such an income is liable to be held as voluntarily, and therefore, such an offer of income during the course of the assessment proceedings cannot lead to a conclusion that the assessee is liable for penalty u/s 271(1)(c). The finding of the CIT(A) that the assessee had filed initial return with a view to conceal the income and the revised return was out of compulsion cannot be held to be correct because no such compulsion is borne out from the records, that the assessee came forward for offering the income only when the AO had carried out any inquiry or has cornered the assessee on the issue of non- offer of rental income in the original return of income. Thus, the penalty levied u/s 271(1)(c) is deleted - Decided in favour of assessee.
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2015 (7) TMI 399
Validity of reopening of assessment - Held that:- Assessing Officer is mandated to decide the objection to the notice under sec. 148 of the Act and supply or communicate it to the assessee. Thereafter, the assessee gets an opportunity to challenge the order in a writ petition. Thereafter, the Assessing Officer may pass the reassessment order. It is not open to the Assessing Officer to decide the objection raised against notice under sec. 148 by a composite assessment order. Thus, the Assessing Officer was required to first decide the objection of the assessee filed under sec. 148 and serve a copy of the order on assessee. And after giving some reasonable time to the assessee for challenging his order, it is open to him to pass an assessment order. Since such compliance has not been made by the Assessing Officer in the present case, we hold the impugned assessment order dated 03.10.2008 as not valid and the same is held as void ab initio. See G.K.N. Drive Shaft (India) Ltd. vs. ITO [2002 (11) TMI 7 - SUPREME Court] - Decided in favour of assessee.
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2015 (7) TMI 398
On Money paid on the purchases of two plots in the name of his family members - CIT(A) deleted the addition - Held that:- Copy of both the Affidavit itself disclosed all the facts regarding inquiry, assurance of investigating officer, statement recorded without any witness, statement proceedings prolong from 07.09.2006 to 21.09.2006, submissions of records etc. On plain reading of affidavit, any prudent person can feel & realize the intention of person who has recorded the statement. The assessee has no knowledge about using the statement against him till the Show Cause Notice was received from the assessing officer and hence affidavit which seems by the assessing officer is as a retraction of statement is not the afterthought. The assessee has filed affidavit immediately when he knew the facts. There was no just and fair disclosure by the assessee. He was forced to state only so that the Department and or so called investigating officer can use it & take action against the seller of the properties under such type of falsely confession. Before us, DR simply relied on the order of the AO and could not point out any specific error in the order of the CIT(A). The DR even before us could not explain why and in what circumstances statement under section 131 of the assessee was recorded by the AO. Therefore, we do not find any good reason to interfere with the order of the CIT(A), which is confirmed and the ground of appeal of the Revenue are dismissed. - Decided against revenue.
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2015 (7) TMI 397
Disallowance of interest expenses holding advances granted by the assessee to be not out of commercial expediency - CIT(A) deleted the interest - Held that:- CIT(A), while granting relief to the assessee, has noted that the assessee has given interest free advances to those parties with whom the assessee was having regular business transactions and some of them were suppliers of raw-material and packing material and the advance was made for purchase of material. He also noticed that most of the advances were given in earlier years and there were few transactions done during the year under consideration. The ld. CIT(A) has further given a finding that the assessee had no liquid funds for its day to day business transactions and did not make any borrowing during the year nor any new advances were granted by the assessee and the advances, which were granted in earlier years, were in connection with the business of the assessee. The ld. CIT(A) has also noted that no disallowance on account of interest was made by the Assessing Officer in earlier years and after examining the various loans and advances in the light of the ratio laid down by the Hon'ble Apex Court in the case of S.A. Builder Ltd. (2006 (12) TMI 82 - SUPREME COURT ) has given a categorical finding that the loans and advances given by the assessee were for business purposes. Before us, the Revenue has not brought any material on record to controvert the findings of the ld. CIT(A). Thus no reason to interfere with the order of the ld. CIT(A) for both the years under consideration. - Decided against revenue.
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2015 (7) TMI 396
Treatment of agricultural income as 'Income from other sources' - proceedings u/s.153A - Held that:- There is no dispute with reference to the fact that assessee owned land of 29 acres 4 guntas purchased way back in 1997 and holding the possession from then onwards. Even though on the basis of orders of the Principal Jr. Civil Judge, Siddipet, the registration took place in 2012, assessee has been offering agricultural income in earlier years. In fact, the same was also accepted in AY.2006-07. Therefore, in AY.2006- 07, treating the agricultural income which was assessed as such as 'income from other sources' cannot be upheld. Concluded matters cannot be re-agitated in the proceedings u/s.153A unless there is evidence to the contrary. Since there is no incriminating material during the search, the treatment of the said income as income from other sources in AY.2006-07 is set aside - Decided in favour of assessee With reference to other assessment years, assessee's contentions that the lands were being cultivated by cultivators and assessee gets only net income requires examination. Neither the Assessing Officer enquired into this aspect nor CIT(A) even though contended before her, did not order the Assessing Officer to make enquiries. Books of Accounts as seen from the assessment order, are stated to be with the department only. Therefore, in the interest of justice, we set aside the orders in AYs.2003-04 to 2005-06 and 2007-08 to 2009-10 to the file of Assessing Officer to examine assessee's contentions in correct perspective. - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 395
Treatment of rental income "Income from house property" OR "Business income" - Held that:- The assessee was the absolute owner of the property and, therefore, the rent realized from the exploitation of property rights was taxable under the head income from house property. We find ourselves in agreement with ld. CIT(A) that in view of various decisions noted by him in his order, this issue is no more res integra. As far as the decision of Hon'ble Supreme court in the case of Sultan Brothers Pvt. Ltd. (1963 (12) TMI 4 - SUPREME Court ) is concerned, the said decision is not applicable to the facts of the present case because in that case there was composite letting of building fitted with furniture and fixtures for the purpose of paying rent as a hotel. - Decided against assessee. Addition invoking provisions of section 68 - CIT(A) confirmed addition - Held that:- In the assessment order the AO observed that during the year under consideration the company did not show any receipt from its manufacturing activity. Therefore, it is not clear as to how the assessee could ask for advance. The assessee did not file any confirmation letter from the party or its bank statement or income-tax return details, PAN etc. Ld. CIT(A) has observed that on perusal of the relevant alleged account of the said party, it was seen that the amounts had been received by the assessee throughout the year beginning from April 2000 up to February 2001. He has observed that if it was advance against sales then one fails to understand as to why dispatch of goods were not made during the year, more so, when the assessee itself had got its stock de-bonded for domestic sales. We find ourselves in agreement with the findings of ld. CIT(A) on this issue who rightly referred to the decision of Hon'ble Delhi High Court in the case of Haciendra Farms (P) Ltd. Vs. CIT (2010 (9) TMI 154 - DELHI HIGH COURT ) wherein it has been held that if customer's advance was not proved by assessee by either producing the party or proving with sufficient evidence, then the same can be added u/s 68. The second contention advanced by ld. counsel is that since assessee had offered the amount in AY 2003-04, therefore, this should not be included in AY 2001-02. In this regard we find that the decision relied by ld. counsel were rendered in the context of accrual of income and the same have no application to the present case. We, therefore, confirm the finding of ld. CIT(A).- Decided against assessee.
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2015 (7) TMI 394
Assessment u/s. 144 - unexplained cash purchases/sales - additions/disallowances as unexplained income - Held that:- Commissioner of Income Tax (Appeals) duly examined the facts u/s. 68 along with various case laws and finally affirmed the additions as unexplained income u/s. 68 of the Act by examining each assessment year separately. We are satisfied with the reasoning contained in the impugned order under the facts and the circumstances available on record. We have also examined the material available on record and considered the submissions of ld. CIT-DR. before us also the attitude of the assessee is same as the assessee merely filed the appeals and neither filed necessary details nor represented its case and inspite of repeated final opportunities. Today, as mentioned earlier the assessee even did not bother to attend the proceedings or to seek adjournment. In the totality of the facts, material available on record, attitude of the assessee it clearly oozes out that the assessee has nothing to say in his defence. Thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals), consequently all these appeals are having no merit, therefore, dismissed. - Decided against assessee.
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Customs
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2015 (7) TMI 419
Imprisonment for non payment of dues - carrying smuggled gold - offences punishable under Sections 132 and 135(1)(a) of the Customs Act, 1962 - Held that:- It is a settled law that the confessional statement made by an accused under Section 108 of the Customs Act is admissible in evidence for prosecution under section 135 of the Customs Act. Though, it was the case of the petitioner that he had retracted his confessional statement, but he failed to show that the same was recorded under any inducement or promise or threat or the same was tutored one. It has been shown from the record that the petitioner made the statement voluntarily and the same is admissible in evidence. Though the High Court is not required to act as a court of appeal but at the same time, it is the duty of the court to correct manifest illegality resulting in gross miscarriage of justice. The High Court is not required to interfere in the concurrent finding of facts. This Court is of the considered opinion that the present case is not a fit case where the revisional jurisdiction is required to be exercised on the concurrent finding of facts recorded by the Courts below. This Court does not find any procedural irregularity, overlooking of material evidence, misreading of the same or miscarriage of justice. There is no jurisdictional error in the judgments passed by the Courts below. Neither there is any failure to exercise the jurisdiction or exceeding of jurisdiction by the learned trial Court and appellate Court while passing the judgment. The discussion made above in the light of evidence/material led by the prosecution, does not warrant any interference in the conclusion drawn by the Courts below. Thus, the judgment of conviction and order on sentence passed by the learned trial Court as well as the judgment passed by the learned appellate Court are upheld. The petitioner is directed to surrender before the learned trial court concerned to serve the sentence of imprisonment.
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2015 (7) TMI 418
Renewal / Cancellation of CHA license - proceedings in the nature of administrative or of quasi-judicial - non compliance of the regulations of the CHALR 2004 - Held that:- A perusal of the order of the Tribunal reveals that the Tribunal on the wrong premise passed an order that an appeal is not maintainable in a case of renewal of CHA licence, which is not a case on hand. The issue on hand is with regard to the cancellation of licence issued to the first respondent, whereas the Tribunal held that the order of the Adjudicating Authority is with regard to renewal of licence, which is administrative in nature. Hence, the Tribunal on the wrong premise dismissed the appeal filed by the Revenue. Accordingly, we set aside the order of the Tribunal and remanded the matter back to the Tribunal for fresh consideration. - Decided in favor of revenue.
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2015 (7) TMI 417
Validity of SCN - Proper officer - DRI officials have been appointed as customs officers - Seizure of 15.16kg of gold bars of foreign origin - confiscation and penalty - petitioner has retracted all the statements - whether the show cause notice has pre-determined the issue and it is the pre-meditated in nature - Held that:- the contention of the learned Senior Counsel that the insertion of sub-section (11) to Section 28 is only with regard to the power exercisable under Section 28 of the Act and would not apply to Section 124 is not tenable in the light of the fact that the notifications referred to supra states that all officers of the Directorate of Revenue Intelligence to be Officers of Customs and the Notifications dated 26-4-1990, 6-7-2011 and 21-6-2012 and the Circulars dated 15-2-1999 and 23-9-2009, make it manifestly clear that DRI officials have been appointed as customs officers by in exercise of the powers conferred under Section 4(1) of the Act. Issuance of SCN - Held that:- an act or omission which will render the goods liable for confiscation under Section 111 or 113 of the Act, is an act of smuggling as defined under Section 2(39) and where there is smuggling, Chapter 14 would get attracted. Section 113 provides for confiscation of goods attempted to be improperly exported and Section 122 refers only to the question of adjudication process and the limit of officers and it is only under Section 124, which says that before confiscating the goods or imposing any penalty, the show cause notice should be given to the person concern. The show cause notice runs to 41 pages and most of which are the summary of the statements given by the petitioner and other co-noticees, the material which was recovered the result of the search conducted in the residence etc. Therefore, this Court has no hesitation to hold that the show cause notice is neither pre-meditated nor pre-conceived rather it is an attempt to place all the facts, which have been recorded by the officers of the DRI in the course of investigation. Therefore, by elaborately setting out all the facts in the show cause notice in fact provides full and effective opportunity to the petitioner to put forth his objections to the show cause notice, which will be adjudicated by a different officer and not the respondent, who issued the show cause notice. The Writ Petition fails and it is dismissed - Decided against the appellant.
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Corporate Laws
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2015 (7) TMI 416
Liquidation of company - bonafide purchaser - Official Liquidator has filed a report seeking direction for taking physical possession of the premises - Held that:- the applicant had purchased the premises from the company under liquidation by paying an amount of ₹ 12,51,000/-. The report of the valuer shows that the premises have been renovated. The Co-operative Society has transferred the share certificate in the name of the applicant. The Sale Deed is registered. It is informed that the Chairman who had executed the Sale Deed in favour of the applicant is no more. The valuation is carried out. The applicant has shown her willingness to deposit the difference of the amount. In view thereof, I am of the opinion that a case is made out in the peculiar facts and circumstances of this case for validating the sale in favour of the applicant by accepting the undertaking of the applicant that the balance amount will be paid. - Thus, the applicant will deposit an amount of ₹ 15,35,000/- (Rs.27,86,000/- minus ₹ 12,51,000/-) within a period of four weeks from today.
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2015 (7) TMI 415
Liquidation of company - bonafide purchaser - the applicant seeks declaration that transaction of transfer of ownership rights of the company under liquidation be validated. By the Official Liquidator's Reports, Official Liquidator seeks possession of the property. - Held that:- The Applicant has taken search through Advocate and obtained title certificate. In the revenue record, there is no entry that the property was of the company under liquidation. The applicant had purchased the property from the person who had in turn purchased from the Company under liquidation. No collusion between the applicant and hte directors of the respondent company is established. In the circumstances the fact that the applicant was not aware that the property was initially belonging to the company under liquidation is probable. Apart from this position the applicant has offered to pay to the Official Liquidator the valuation property as on the date of the transfer. The valuation is ₹ 139 lacs. The Official Liquidator has no serious objection for receipt of the money in lieu of the possession of the property. - interest of justice will be served if the applicant deposits an amount of ₹ 139 lacs with the Official Liquidator within a period of six weeks from today. Accordingly the company application is allowed in terms prayer clauses (a) and (b).
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2015 (7) TMI 414
Acquisition of shares/ voting rights - Contravention of Regulation 10 of the SEBI (Takeover Regulations), 1997 - Ground taken by appellant that Management has changed through a Scheme of Arrangement - Held that:- The Scheme of Arrangement as approved by the two Hon’ble High Courts clearly provides that from the appointed date all debts, liabilities, duties, obligations of every kind, nature and description of the transferor companies shall also be deemed to be transferred to the transferee companies. In fact this is also the spirit of sections 391 to 394 of the Companies Act, 1956. Moreover, as noted in the impugned order, it is an undisputed fact that the appellants have not made any public announcement inspite of having acted in concert and acquiring more than 30 percent of the voting rights of Axon Infotect Limited. Therefore, we hold that mere change of name of a company does not wash away the liabilities despite the change of name of that of the promoters or the directors. - Decided against the appellant.
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Service Tax
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2015 (7) TMI 431
Denial of refund claim - Refund of unutilized CENVAT Credit - whether the appellant is eligible for the refund of an amount availed as Cenvat credit on the inputs services which were received by the appellant during the period April 2005 to September 2006 for providing output services which are exported. - Held that:- rule 5 which not provide for refund of unutilized credit to the producer of output services got substituted during relevant time - Once the refunds are under the amended rules & notification issued thereunder, the same can’t be denied merely because they relate to exports made prior to date of amendment - Decision in the case WNS GLOBAL SERVICES (P) LTD. Versus COMMISSIONER OF C. EX., MUMBAI [2008 (1) TMI 94 - CESTAT, MUMBAI] followed - Decided in favour of assessee.
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2015 (7) TMI 430
Goods Transport Agency service - availing benefit of Notification No. 32/2004-ST - Whether GTA have utilized the CENVAT Credit - Held that:- as per Rule 2(r) of Cenvat Credit Rules 2004, "provider of taxable service includes person liable for paying service tax". As the appellant was liable to pay service tax on GTA service it became provider of the said GTA service. In terms of Rule 2(p) of the said Rules (as it stood during the relevant period) "output service means any service provided by provider of taxable service." So GTA service became the appellant's output service and therefore payment of service tax thereon by utilising Cenvat credit was clearly in accordance with provisions of Rule 3(4) of Cenvat Credit Rules 2004 which inter alia provides that Cenvat credit may be utilised for payment of service tax on any output service. It is not the case of Revenue that GTA service was not an input service for the appellant in terms of Rule 2(1) of Cenvat Credit Rules. Therefore the service tax paid by them under GTA service was available to them as Cenvat Credit. Seen in this light, the observation of the adjudicating authority in para 14.2 of the impugned order that the appellant "intentionally prepared the bills in terms of Rule 4A of the Service Tax Rules 1994 and debited the amount from the Cenvat credit account in spite of the admitted fact that they were not the provider of any output service and that they prepared the said bills just for the purpose of creating papers to show the payment of service tax and to take the credit of such tax which was otherwise not admissible to them" is devoid of any legal basis. Thus, the demand of ₹ 1,17,75,703/- is not sustainable. The stipulated declaration was stamped by the appellant on the invoices and all the goods transport agencies have given in writing that they had permitted the appellant to do so. They have also affirmed that they had not taken any Cenvat credit or the benefit of Notification No. 12/2003-ST. These GTA service providers were not even registered with the Service Tax department. - appellant had correctly availed of the benefit of Notification No. 32/2004-ST and there is no legal basis to deny the said benefit. Consequently the demand of ₹ 6,75,96,097/- under GTA service is clearly unsustainable - impugned demand is not found to be sustainable.
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2015 (7) TMI 429
Liability to discharge service tax on amounts which have been remitted by the appellants to foreign entities for the commission on the import of rough diamonds - Bonafide belief - Invocation of extended period of limitation - Held that:- appellants have been taking a consistent plea before the adjudicating authority that they were under a bona fide belief that the writ petition which has been filed by them has been filed by them has been admitted and is still pending, hence they need not discharge any service tax liability. On perusal of the records, we find that factually appellants had filed writ petition on 8.9.2006 and it was admitted by the Hon'ble High Court and departments Affidavit was filed on 29.9.2006, which admitted the contentions that the appellants were engaged in importing of rough diamonds and have paid commission to the brokers through whom they procured diamonds from DTC. If the department was aware of writ petition filed by the appellants and have filed an affidavit in September 2006, nothing prevented them from issuing protective demand notices in order to safeguard the Revenue. Appellants could have entertained a bona fide belief that the constitutional validity having been challenged by them in writ petition and the same being pending before the Hon'ble High Court, they need not pay any service tax on the amount that is remitted to the brokers. This can be bona fide belief of the appellants, accordingly, the demand which has been confirmed against all the appellants by invoking the extended period of limitation are liable to be set aside - demands which are within the period of limitation from the date of issuance to the show cause notice needs to be upheld with interest and we do so, to that extent appeals are rejected. - Decided partly in favour of assessee.
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2015 (7) TMI 428
Extended period of limitation - Whether the learned Tribunal is justified in law to hold that the benefit of extended period of five years contemplated by Section 73(1) of Finance Act, 1994 was available to the Department in absence of a finding of fraud, collusion in the judgment impugned? Whether the learned Tribunal not erred in not holding that the Banquet Hall of the appellant would be covered under the definition of Mandap Keeper and chargeable to Service Tax and whereas the supply/sale of food would be an incident of sale and accordingly covered under Article 366(29A) of the Constitution of India? Whether the learned Tribunal not committed an error of jurisdiction by not holding that imposing a service tax on the incident of sale of food would amount to double taxation, the sale of food being already taxed under Maharashtra Value Added Tax Act? Liberty to move the Court after assessment is done.
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2015 (7) TMI 427
Waiver of pre-deposit - Tribunal directed the assessee to remit ₹ 30.65 lakhs against huge demand in its order [2014 (10) TMI 132 - CESTAT BANGALORE] - Held that:- The Tribunal recorded its reasons as to how the amount directed to be deposited was arrived at. The amount involved in the appeal was substantially higher than that directed to be deposited as a condition precedent for granting stay. The order under appeal however reflects the reasoning of the Tribunal for scaling down the amount. - Decided against the revenue.
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Central Excise
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2015 (7) TMI 432
Valuation of Glucon-D - Job work - whether job worker can be treated as related person and Job work charges are not at arm's length price - Clearance of Glucon-D on the basis of cost of raw-material received plus job charges plus the profit margin - revenue sought the duty on sales price of the goods - Held that:- A job worker and the principal manufacturer can be treated as related persons only when the terms of the job work are such that the job worker is not free to charge the job charges as per the market rate and the job charges are dictated by the principal manufacturer or that the terms of the agreement give unfair advantage to the principal manufacturer over the job worker which would indicate existence of extra commercial consideration and financial interest in the business of each other. On going through the terms of the agreement between the FHS & Heinz we do not find any such clause in the agreement. FHS & Heinz cannot be treated as related persons and accordingly the assessable value of the goods manufactured by FHS would have to be determined in accordance with the Apex Court’s Judgment in the case of Ujagar Prints and Ors. vs UOI [1989 (1) TMI 124 - SUPREME COURT OF INDIA] i.e. aggregate the cost of the raw material, job charges and job worker s profit and not the price at which the goods were being sold by Heinz form their depots and as such the judgments in the case of S. Kumars vs CCE [2005 (11) TMI 71 - SUPREME COURT OF INDIA] would not be applicable to the facts of this case. The impugned order is, therefore, set aside - Decided in favour of assessee.
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2015 (7) TMI 424
Imposition of penalty and interest - Imposition of equivalent penalty under Rule 15 of the Cenvat Credit Rules, 2004, read with Section 11AC of Central Excise Act, 1944 - demand of interest under Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11AB of Central Excise Act, 1944 - Held that:- one of the employee of the appellant has engaged himself in fraudulent act, so as to enrich himself, by availing Cenvat Credit on the invoices raised by the supplier without receipt of inputs. It is to be noted that the appellant company had lodged a FIR on 23.01.2007 against the said employee with local police station. At the outset, I would record that the interest liability needs to be discharged by the appellant as per Rule 14 of Cenvat Credit Rules, 2004. The liability arises even if the improperly availed Cenvat Credit is not utilized, as per law settled by the Supreme Court. Accordingly, I uphold the interest liability on the appellant and direct them to pay the same without 30 days, on being informed by lower authority or their own ascertainment. As regards the penalty of an amount equivalent to the confirmed demand, I find that there is no dispute as to the fact, that the employee of the appellant company was involved in fraudulent act for his personal gain. The act of the individual employee in availing improper Cenvat Credit cannot be attributed to appellant as a mala-fide act, as the act of fraud admittedly is not authorized and can never be authorized by the management of the appellant company. In my considered view, equal penalty imposed is unwarranted. In view of the foregoing, in the facts and circumstances in this case, I set aside the equal penalty imposed on the appellant company. - Decided partly in favour of assessee.
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2015 (7) TMI 423
Waiver of pre deposit - Excisability of edible refined palm oil - goods have become excisable goods inasmuch as the same are sold for a consideration in the market - Held that:- Circular No.904/24/09-CX dated 28.10.2009 stands struck down by the Hon’ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. vs. UOI reported as [2013 (1) TMI 525 - ALLAHABAD HIGH COURT]. In a recent decision, the Hon’ble High Court of Bombay in the case of Hindalco Industries Ltd. vs. UOI: [2014 (12) TMI 657 - BOMBAY HIGH COURT] has again held the said Circular to be bad and has observed that amendment in Section 2(d) of Central Excise Act, when corresponding amendment in Section 2(f) defining manufacture, will not bring the waste or by-products under the category of excisable goods. By observing so, the Larger Bench decision of the Tribunal in the case of Hindalco Industries Ltd.: [2014 (11) TMI 385 - CESTAT MUMBAI (LB)] stand set aside. - appellant has a good prima facie case in his favour so as to allow the stay petition unconditionally - Stay granted.
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2015 (7) TMI 422
Condonation of delay in filing an appeal - Bar of limitation - Denial of refund claim - Held that:- OIA was passed on 04.10.14 and in the said order while allowing the Revenue appeal he allowed the appellants to take cenvat credit by way of re-credit. The department again issued show cause notice for demand of interest on the refund sanctioned, which was already paid by the appellant in pursuant to the OIA. We find the reasons of delay is fully justified and beyond their control due to initiation of another round of proceedings against the appellants. By respectfully, following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Anantnag and Another Vs. MST. Katiji and Others (1987 (2) TMI 61 - SUPREME Court) and this Tribunal decision in the case of ARR Enterprise Vs. CCE, Trichy - [2013 (12) TMI 346 - CESTAT CHENNAI], the delay in filing the appeal is condoned - Delay condoned.
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2015 (7) TMI 421
Waiver of pre deposit - Notification No.63/1995-CE dt. 16/03/1995 - CENVAT Credit - when the dumpers are not attracted any duty of excise, would there be a legal liability on the assessee to pay cess under the Industries (Development & Regulation) Act, 1951 - Invocation of extended period of limitation - Held that:- Out of the total confirmed demand of ₹ 1,32,47,138/-, involved in all the appeals, ₹ 34,11,070/- would be barred by limitation and the balance amount of ₹ 98,36,068/- would fall within the limitation period. Since the issue is contentious and arguable and the entire activities were within the knowledge of the Revenue, no suppression can be attributable to Assessee. He, thus, agrees to pay the duty falling within the limitation period but makes a prayer for allowing such deposit through their CENVAT credit account. - issue on merits already stand, prima facie, decided against the appellant by the earlier Stay Order - Partial stay granted.
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2015 (7) TMI 420
Extension of stay order - Held that:- stay orders passed by this Tribunal are in force beyond 7.8.2014 and therefore, it would continue till the disposal of the appeals. Therefore, as held by the Tribunal, there is no need for filing any further applications for extension of the orders granting stay either fully or partially in these cases. - Decision in the case of Venkateshwara Filaments Pvt. Ltd. & Others vs. Commissioner of Central Excise and Service Tax, Vapi [2014 (12) TMI 227 - CESTAT AHMEDABAD] - Stay extended.
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CST, VAT & Sales Tax
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2015 (7) TMI 426
Forced recovery of VAT - It is submitted that respondent had also taken the signatures of the petitioner on blank papers and thereafter, encashed one cheque bearing No.053461 on 21.02.2015, as per the bank's statement. Thereafter, notice had been served upon the petitioner on 09.03.2015 to which a reply had been filed that the two cheques were forcibly taken and one of the cheque, amounting to ₹ 3 lacs had already been encashed and the payment of the second cheque had been stopped by the petitioner. Resultantly, the present writ petition has been filed for the necessary relief, mentioned above. Held that:- The said procedure smacks of arbitrariness and highhandedness of the authorities on the face of the record itself, which cannot be appreciated, in any manner. In the absence of any assessment, the action of respondent No.3 to take two cheques on 16.02.2015 amounting to ₹ 3 lacs each in favour of the respondent-Department, was not justified. The encashment five days later to the tune of ₹ 3 lacs, allegedly in discharge of the anticipated liability, as per the reply filed, cannot be appreciated, in any manner. The eagerness of the official-respondents to meet their targets at the end of the financial year, by following this method of recovery, cannot be approved. It is apparent, prima facie that such a huge liability has been made out against the petitioner without giving him proper opportunity to put-forth his case merely on account of the fact that the petitioner was prosecuting his remedy, in accordance with law. The said order, though not specifically challenged, has apparently been passed to spite the petitioner and is necessarily to be quashed. Accordingly, the provisional assessment order dated 26.06.2015 is hereby quashed. Respondents shall refund a sum of ₹ 3,10,000/-, within a period of one week from the receipt of a certified copy of this order and a sum of ₹ 10,000/- shall be recovered from respondent No.3, by the State, for his arbitrary action. The said proceedings shall be decided by an officer of competent jurisdiction, who was not associated with the inspection conducted on 16.02.2015 and who would be appointed by respondent No.2 - Decided in favor of assessee.
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2015 (7) TMI 425
Best Judgement - scope of estimation - Finding no cooperation from him as the petitioner did not care to respond to the notices, best of judgment assessments were completed - Held that:- While best of judgment assessment may involve an element of guess work, but at the same time, it is settled law that it must be made bona fide and it cannot be whimsical or arbitrary. Therefore, as far as the CTR No. 67 of 2011 is concerned, we would grant relief by holding that there was an element of perversity in the turnover arrived at in regard to readymade garments, instead of remanding the matter as we think that no purpose will be served by remanding the matter as the petitioner did not avail of the opportunities, which were given by the statutory Authorities to respond to the notices, which were issued and we cannot give an opportunity again. Therefore, we would, instead, fix the turnover at ₹ 12 lacs in relation to readymade garments and the revision will stand allowed to that extent only and his assessment will stand modified as above on the said basis. - Decided partly in favor of assessee.
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