Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 23, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members.
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Entitlement of having GST registration - deemed registration - power of the officers to seek additional details or clarifications under Rule 9(2) - on verification of such application, if it is found to be deficient in terms of any document required to be furnished under Rule 8(4), the proper officer is entitled to require the first respondent to furnish such document.
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Constitution of GST tribunal - jurisdiction to decide the location of bench - The role of the State is confined to determine the place of area benches - Insofar as the determination of location of the State Bench is concerned, it remains in the domain of the Central Government for which the matter is under consideration before the Central Government.
Income Tax
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Treatment to the loss as speculation loss - NBFC - trading in shares - there could be no set off of the speculative business loss as against the income from other sources for the year, since the exception under the Explanation to Section 73 does not apply to the Company.
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Accrual of income - Revenue declaration in respect of expired pre-paid cards - Rendering of Services - Income recognition - AO would ensure that the “the unutilised talk time has been accounted for and included in the receipt of the year in which the amount had lapsed and has forgone.
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Disallowance on account of setting of STCG against depreciation - carry forward of unabsorbed depreciation - set off allowed.
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Grant deduction u/s 54G - LTCG on the sale of its godown situated in Bangalore, an urban area and which has been relocated in a non urban area - the activity done by the assessee namely storage and repacking would also, in our opinion, fall within the definition of the word 'manufacture'.
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Additional Depreciation on the wind mill - period of trial run - to deny the benefit of additional depreciation to generating entity on the basis of electricity is not an “article” or “thing”, is an artificially restrictive meaning of the provision and the benefit of additional depreciation under Section 32(1)(iia) has to be granted to the assessee.
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Reopening of assessment u/s 147 - it is not permissible to adopt different standards while interpreting the words “reason to believe” vis-a-vis Section 143(1) and Section 143(3) - to reopen an assessment based on the return filed by the assessee, will clearly be a case of change of opinion and consequently bad in law.
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Estimation of income - the AO was not justified in estimating the turnover on the basis of information received from the Excise Department by rejecting books of accounts u/s 145(3) of the Act, 1961 and taxing entire suppressed sale as income, but only the net profit part could have been taxed as income.
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Penalty u/s 271AAA - assessee failed to substantiate the manner in which undisclosed income was derived - from the statement of director, no such question had been asked to the assessee - the failure on the part of the AO in not inquiring specifically should not go against the assessee - No penalty.
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Reopening of assessment u/s 147 where assessment proceedings already pending - Unless the return of income already filed is disposed of, the notice for reassessment u/s 148 cannot be issued, i.e. no reassessment proceedings can be initiated so long as the assessment proceedings pending on the basis of the return already filed are not terminated - it looks absurd to call for a return u/s 148
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Selection of Members of the Income Tax Appellate Tribunal - the decision of the Search-Cum-Selection Committee to short-list candidates with 19 years of experience cannot be said to be arbitrary.
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Withdrawal of unutilized amount from the Capital Gain Account Scheme after 3 years - Proviso appended to Section 58[4][f] has to be read as a whole along with the Clauses [a] and [b] therein which would explain the real intendment of the phrase “not utilized wholly or partly” - Withdrawal allowed subject to deduction of Tax
Customs
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Importer sought recall of bill of entry and amend the same and allow refund - Though reassessment prescribed for in section 17 of Customs Act, 1962 is not an option to be invoked by the importer, the erroneous deployment of that in the said letter does not preclude the application of any other relevant provision in the statute.
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Imposition of penalties on CHA - appellant allowed another person to file export documents on their behalf - As separate provisions exist in the Customs House Agents Licensing Regulation, 2004, the invoking of such for violations for imposing of penalty under section 114 of Customs Act, 1962 is patently incorrect.
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Ship breaking activity - When excise duty is exempted, there is no question of payment of additional duty.
Indian Laws
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Finance Bill (No.2) As Passed by Lok Sabha
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Dishonor of Cheque - Plea that pleading not guilty was singed by the advocate on behalf of petitioner accused - The magistrate is empowered to record the plea of the accused even when his counsel makes such plea on behalf of the accused in a case where the personal appearance of the accused is dispensed with.
Service Tax
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Reverse charge - foreign remittances - sponsorship services or not - Appellant claims that the same as donations - Since the contract against which the payments have been made has been not produced just by looking at antecedents of project UKEIRI, this amount can never be called as donation made.
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Once the assessee is not required to reverse any credit availed by him on valid input services availed during the period 2010 till obtaining of completion certificate, the said amounts reversed by the assessee under protest cannot be retained by the Revenue authorities and those have been refunded to him.
Central Excise
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Extended period of Limitation - the Revenue was in fact aware of the activities of the appellants. The stand of the Revenue as to suppression is, therefore, only on imaginations, which is not supported by any documentary evidence, which cannot sustain.
Case Laws:
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GST
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2019 (7) TMI 1071
Constitution of GST tribunal - jurisdiction to decide the location of bench - Section 109 (6) of Central Goods Services Tax Act, 2017 - non-consideration of various provisions - principles of natural justice - HELD THAT:- From a bare reading of the provision of the Act itself it is clear that it is not in the domain of the State Government to make a recommendation for deciding the place of the State Bench of the Tribunal. The role of the State is confined to determine the place of area benches. Insofar as the determination of location of the State Bench is concerned, it remains in the domain of the Central Government for which the matter is under consideration before the Central Government. This provisions have not been considered at all, hence, prima facie the judgement appears to be bereft with non-consideration of the facts. The Central Government shall proceed in accordance with Section 109 (6) of C.G.S.T. Act, 2017. List this matter on 19.08.2019.
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2019 (7) TMI 1070
Transitional credit - Vires of Rules 117 and 120A of CGST Rules - Input Tax Credit - submission of declaration electronically in FORM GST TRAN-1 - HELD THAT:- Learned counsel for the respondents pray for and are allowed one month's time to file a counter affidavit. In the meantime, we allow the petitioner 15 days' time to file the revised return manually. If the petitioner does so, his revised return may be considered in accordance with law - List this matter on 20.08.2019.
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2019 (7) TMI 1069
Entitlement of having GST registration - deemed registration - power of the officers to seek additional details or clarifications - Rule 9(2) of the Central Goods and Services Tax Rules, 2017 - Furnishing of clarification, information and documents in relation to an application for registration made u/s 25 of the CGST Act, 2017 - benefit of deemed registration. It is contended by the senior counsel for the appellants that, a close scrutiny of the provision contained in Rule 9(2) would show that, neither under the first limb nor under the second limb of Rule 9(2), the proper officer had power to require the first respondent to produce the documents enumerated as item No.2 in Ext.P8 notice. Held that:- The explanation provided to Rule 9(2) is not exhaustive. It only provides that clarification includes modification or correction of particulars required in the application for registration. It does not mean that no other clarification can be sought in respect of information furnished or documents produced along with the application for registration. The officer concerned is empowered under Rule 9(2) to issue notice to a person who has filed application for registration under Rule 8 to furnish clarification with regard to any information provided in that application or documents furnished therewith. Such clarification may include information to ascertain the legality of the business proposed to be conducted by the applicant but it does not include furnishing of any documents other than the documents required to be uploaded under Rule 8(4). The application, which may be submitted by the first respondent afresh, shall be considered by the appellants de hors the documents mentioned under item No.2 in Ext.P8 notice. However, on verification of such application, if it is found to be deficient in terms of any document required to be furnished under Rule 8(4), the proper officer is entitled to require the first respondent to furnish such document - Appeal disposed off.
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2019 (7) TMI 1068
Cancellation of registration certificate - Grant of relief - HELD THAT:- The writ applicants have been able to make out a strong prima facie case to have an adinterim order in terms of para 7.0 (B) (iii). We, accordingly, grant such relief. The respondents are directed to file their reply by the next returnable date and make their stance clear. In the meantime, the respondents shall not take any action as regards cancelling the GST registration of the writ applicants. Let Notice be issued to the respondents, returnable on 28th August 2019.
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2019 (7) TMI 1067
Seizure of truck alongwith goods - sections 129 and 130 of the GST Act - HELD THAT:- The larger issue as regards the sections 129 and 130 of the GST Act is being looked into by this Court. However, taking into consideration the fact that the amount towards the tax and penalty has been deposited, we direct the authorities to immediately release the goods in question owned by the writ applicant at the earliest.
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2019 (7) TMI 1066
Maintainability of petition - Detention order - compliance with the mandate of Section 129 of the Act - HELD THAT:- The issues raised are at preliminary stage and this Court is not convinced to entertain the writ petition and adjudicate upon merits at this stage. To confirm to the scheme under the Act, the writ petition is disposed of by directing that the petitioner submits bank guarantee for the tax and penalty as shown in Ext.P8 and applies for release of goods by enclosing a copy of this order within two days from today. The respondent shall release the goods detained under Ext.P7 and subjected to enquiry in Ext.P8 within twelve hours from the date and time of receipt of bank guarantee. Petition disposed off.
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Income Tax
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2019 (7) TMI 1058
Unutilized capital gain to tax as per Section 54 F(4) - Withdrawal of unutilized amount from the Capital Gain Account Scheme after 3 years - interpretation of the phrase wholly or partly employed in the proviso - unutilized capital gain amount under Section 54 F[4] has to be charged under Section 45 as income of the previous year - entitlement to the withdrawal of the amount deposited under Sub-Section (4) of Section 54F of the Act under the capital gain account subject to deduction of tax - HELD THAT:- Proviso appended to Section 58[4][f] has to be read as a whole along with the Clauses [a] and [b] therein which would explain the real intendment of the phrase not utilized wholly or partly . In the context, the proviso to Section 54 F[4] becomes an integral part of the enactment acquiring the tenor and colour of the main provision. To make the provision workable, the arguments of the petitioner that the Clauses [a] and [b] of the proviso need not be addressed to, cannot be countenanced for the reasons aforesaid. Thus, it can be held that on reading of the provision as a whole along with Clauses [a] and [b] to the proviso, the intention of the Legislature would be gathered that the unutilized capital gain amount under Section 54 F[4] has to be charged under Section 45 as income of the previous year, after the expiry of three years from the date of sale of the capital asset which in the present case is the assessment year 2016-17. In the circumstances, the assessee is entitled to the withdrawal of the amount deposited under Sub-Section (4) of Section 54F of the Act under the capital gain account subject to deduction of tax applicable to the case on hand. The respondent shall consider the petitioner s application in Form G submitted in terms of the observations made hereinabove. With the aforesaid observations and directions, writ petition stands disposed of.
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2019 (7) TMI 1057
Selection of Members of the Income Tax Appellate Tribunal - Applications for appointment to the posts of Member (Judicial/Accountant), Income Tax Appellate Tribunal (ITAT) - After first round of interviews, the Search-Cum-Selection Committee decided to call the candidates with 19 years of experience in the second round of interview, which is under challenge in these petitions. - HELD THAT:- This Court is of the view that Rule 4A of the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 empowers the Search-Cum-Selection Committee to evolve its own procedure. It is not in dispute that on conjoint reading of Section 252 of the Income Tax Act, 1961 and Rule Rule 4A of the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963, the candidates with less than 20 years of experience can be short-listed and called for interview. In that view of the matter, the decision of the Search-Cum-Selection Committee to short-list candidates with 19 years of experience cannot be said to be arbitrary. Reference be made to Madhya Pradesh Public Service Commission v. Navnit Kumar Potdar [ 1994 (9) TMI 363 - SUPREME COURT] in which the Supreme Court upheld the action of Madhya Pradesh Public Service Commission to call for interview only 71 applicants out of 188 applicants on the ground that only candidates with 7 years experience be called for interview whereas five years experience was the eligibility criteria. 9. There is no merit in both these writ petitions which are hereby dismissed. Pending applications are disposed of.
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2019 (7) TMI 1056
Estimation rate (for the additions with respect to the partially disclosed bank accounts in connection with the non-operative finance) - HELD THAT:- Ends of justice would be met if the matters are remitted to the Tribunal for deciding the issue as regards the uniformity of the estimation rates for addition regarding the partially disclosed bank account in connection with the non-operative finance afresh. In view of the aforesaid, the Appeals are allowed in part. The impugned orders passed by the ITAT are hereby quashed and set-aside. The matter is remitted to the ITAT for fresh consideration of the issue as discussed above. We also permit the department to request the Tribunal to take up the Miscellaneous Applications preferred by the Revenue and hear both the sets of appeals together.
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2019 (7) TMI 1055
Non-issuance of notice u/s 143(2) - scrutiny assessment u/s 143(2) r.w.s. 158BC - validity of assessment - HELD THAT:- In the present case, admittedly, no notice under Section 143(2) of the said Act was ever issued to the Assessee. By applying the law laid down by the Hon'ble Apex Court in Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] we will have to hold that the assessment made in the present case stands vitiated. Therefore, even if we were to hold in favour of the Revenue with regard to the other substantial questions of law framed at the time of admission of this appeal, the assessment made in the present matter would nevertheless stand vitiated for want of mandatory notice under Section 143(2) of the said Act. - Decided against revenue
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2019 (7) TMI 1054
Addition on account of loss shown in the Gross Profit - Tribunal upholding the order of CIT(A) in deleting the addition - HELD THAT:- It appears from the materials on record that the Appellate Tribunal concurred with the findings recorded by the CIT(A) and took the view that there was evidence to substantiate the claim of the assessee that he had to sell his goods at the agreed price which was lesser than the cost of purchase. There is a finding of fact arrived at by the two Revenue authorities that the assessee was able to furnish copies of the sales bill and nothing was found suspicious about the transaction. There is a concurrent finding recorded by the two Revenue authorities that there is nothing to indicate that the assessee had sold the goods at a higher value, but had deliberately declared the same at a lesser value in the books. In view of the concurrent findings arrived at by the two revenue authorities, we are not inclined to disturb the same. There is no perversity in the factual findings recorded by the Revenue authorities. Appeal dismissed.
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2019 (7) TMI 1053
Reopening of assessment u/s 147 - assessment proceedings initiated under Section 142(1) - unexplained expenditure u/s 69C - as per assessee assessment order u/s 143(3) r.w.s. 147 was illegal and erroneous in law as the assessment proceedings initiated under Section 142(1) of the Act were pending on the date of the issue of the notice u/s 148 - revenue submitted that the assessee could not have questioned the jurisdiction of the Assessing Officer having failed to file his return allowed by the notice under sub-section (1) of Section 142 or under Section 148 or under the first proviso to Section 144 of the Act - HELD THAT:- It is settled law that unless the return of income already filed is disposed of, the notice for reassessment under Section 148 of the Act cannot be issued, i.e. no reassessment proceedings can be initiated so long as the assessment proceedings pending on the basis of the return already filed are not terminated. (see Trustees of H.E.H. The Nizam's Supplemental Family Trust v. Commissioner of Income-Tax [ 2000 (2) TMI 4 - SUPREME COURT] If an assessment is pending either by way of original assessment or by way of reassessment proceedings, the Assessing Officer cannot issue a notice under Section 148, but if no proceedings are pending either by way of original assessment or by way of reassessment, he can issue a notice under Section 148 within the time as stipulated. (see Nilofer Hameed and another v. Income Tax Officer, [ 1998 (8) TMI 75 - KERALA HIGH COURT] We are afraid, Section 124(3)(b) of the Act would not save the situation. Section 124 talks about the lack of jurisdiction on the part of the Assessing Officer. In other words, Section 124(3) of the Act stipulates a bar to any contention about lack of jurisdiction of an Assessing Officer. The illegality in the case on hand would not be saved by virtue of Section 124(3) of the Act. We are convinced that the Tribunal applied the correct principle of law and passed the impugned order. We may only say that Section 142(1) and Section 148 of the Act cannot operate simultaneously. There is no discretion vested with the Assessing Officer to utilize any one of them. Such a view would be directly opposed to the decision of the Supreme Court in the case of Commissioner of Income Tax, Bombay City, I, Bombay v. M/s.Narsee Nagsee and Co. Bombay, [ 1960 (5) TMI 5 - SUPREME COURT] . The very same contention was raised before the Supreme Court and was specifically rejected. The two provisions govern different fields and can be exercised in different circumstances. If income escapes assessment, then the only way to initiate assessment proceedings is to issue notice under Section 148 of the Act. In fact, if notice has already been issued under Section 142 of the Act and the proceedings are pending, it looks absurd to call for a return under Section 148 of the Act. It is settled law that income cannot be said to have escaped assessment when the assessment proceedings are pending. - Decided against revenue
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2019 (7) TMI 1052
Penalty u/s 271AAA - assessee failed to substantiate the manner in which undisclosed income was derived - Tribunal deleted the addition - HELD THAT:- The findings of fact recorded by the two revenue authorities is that the assessee offered the total unaccounted income of ₹ 9.29 Crores for the assessment year 2011-12 in his statement recorded during the search and seizure operation u/s. 132(4) of the Act. The Tribunal, by placing reliance on the decision of this Court in the case of CIT vs. Mahendra C. Shah [ 2008 (2) TMI 32 - GUJARAT HIGH COURT] took the view that the Assessing Officer is obliged to specifically ask the assessee to explain the manner in which the undisclosed income had been derived and the failure on the part of the Assessing Officer in not inquiring specifically should not go against the assessee and the assessee should not be penalised. The Revenue took notice of the statement of Shri Prajapati, a Director of the company, recorded under Section 132(4) of the Act during the search and seizure. In such statement, no such question had been asked to the assessee. We are convinced with the findings recorded by the Tribunal. In our opinion, there is no substantial question of law involved in the present appeal.
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2019 (7) TMI 1051
Section 14A application in respect of the income not being taxable on account of deduction under Section 80P(2)(d) - no nexus between the interest /dividend income earned from the Cooperative Societies and the interest expenditure incurred by the assessee on borrowed funds on the ground that there is no proof of the investment of such interest bearing funds to earn the said income without appreciating the fact that the assessee has failed to substantiate the above in full measure with proper evidences? - HELD THAT:- As relying on SURAT DISTRICT CO. OP. MILK PRODUCER UNION LTD. [ 2014 (6) TMI 1027 - GUJARAT HIGH COURT] in view of decision decision of the Hon'ble Supreme Court in the case of Distributors (Baroda) P. Ltd vs. Union of India [ 1985 (7) TMI 1 - SUPREME COURT] we are in complete agreement with the view taken by the learned Tribunal allowing the deduction to the assessee under Section 80P(2)(d) of the Act on the amount of interest and dividend earned on the investment / deposits with the other cooperative societies. We see no reason to interfere with the impugned judgment and order passed by the learned Tribunal. Under the circumstances, in all these appeals with respect to grant of deduction under Section 80P(2)(d) of the Act is held against the revenue
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2019 (7) TMI 1050
Assessment u/s 153A - no incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search - HELD THAT:- As in present case as no incriminating documents during course of search are found, the order in appeal cannot be said to have suffered the illegality as would give rise to the proposed substantial question of law. SEE KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT]
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2019 (7) TMI 1049
Rejection of books of accounts u/s 145 - Estimating the turnover on the basis of information received from the Excise Department - taxing entire suppressed sale as income - Assessee is engaged in liquor business - ITAT affirmed with modification by applying net profit of 2.7% on the estimated sales - HELD THAT:- The findings arrived at by the Tribunal are finding of facts. And as to proposed substantial question as to whether in view of the facts as regard to defects of the sales unsupported by day to day shop wise register of stock and sales, the assessing officer was not justified in estimating the turnover on the basis of information received from the Excise Department by rejecting books of accounts under section 145 (3) of the Act, 1961 and taxing entire suppressed sale as income, but only the net profit part could have been taxed as income. We perceive that a Division of the High Court in CIT Vs. Balchand Ajit Kumar [ 2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT] has held that the total sales cannot be regarded as the profit of the assessee. - Decided against revenue
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2019 (7) TMI 1048
Reopening of assessment u/s 147 - intimation under Section 143(1) justifying reopening - as alleged reassessment by the respondent in the second attempt even though there were no fresh materials in his possession justifying the action - HELD THAT:- Language employed in Section 147 does not make any distinction between an order passed under Section 143(3) and the intimation issued under Section 143(1) and therefore, it is not permissible to adopt different standards while interpreting the words reason to believe vis-a-vis Section 143(1) and Section 143(3). In the instant case, it is not in dispute that reopening is based upon the return of income filed by the assessee at the first instance. There is no allegation against the assessee that there was failure on the part of the assessee to make a true disclosure, nor the assessing officer had relied on any tangible material, which has come to his knowledge after the filing of the return and intimation under Section 143(1), justifying reopening. Therefore, to reopen an assessment based on the return filed by the assessee, will clearly be a case of change of opinion and consequently bad in law. - Decided in favour of assessee
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2019 (7) TMI 1047
Additional depreciation on the wind mill - passive use of machinery - period of trial run - as per assessee said wind mill was commissioned as well as started generation of electricity based on the materials placed on record - HELD THAT:- Even trial production machineries kept ready for use etc., were considered to be used for the purpose of business to qualify for depreciation. In CIT -Vs- Geo Tech Construction [ 2000 (3) TMI 42 - KERALA HIGH COURT] , the machinery which was purchased by the assess from Pondicherry was yet to reach work site at Kochi and were in transit, and the Court held that it would amount to passive use and would qualify for depreciation. Thus, we are of the considered view that the Tribunal erred in reversing the order passed by the CIT (Appeals). For all the above reasons, the substantial question of law No.1 is answered in favour of the assessee. Claim of additional depreciation - generating entity on the basis of electricity is not an article or thing - HELD THAT:- Whether generation of electricity would fall within the ambit of business of manufacture or production of any article or not issue appears to be no longer res integra and decided in favour of the assessee in CIT -Vs- NTPC [ 2019 (3) TMI 207 - DELHI HIGH COURT] . In the said case, the assessee was engaged in the production of thermal power and was held to be eligible to claim additional depreciation under Section 32(1)(iia). The Court took into consideration the decision of the Constitution Bench of the Honourable Supreme Court in State of A.P. -Vs- NTPC [ 2002 (4) TMI 694 - SUPREME COURT] wherein the Apex Court held electricity to be goods for the purpose of sales tax. Electricity is capable of abstraction, transmission, transfer, delivery, possession, consumption and use like any other movable property. Following the same logic, to deny the benefit of additional depreciation to generating entity on the basis of electricity is not an article or thing , is an artificially restrictive meaning of the provision and the benefit of additional depreciation under Section 32(1)(iia) has to be granted to the assessee. This decision will fully apply to the facts of the present case and consequently, it has to be held that the assessee is entitled for additional depreciation as well. Accordingly, the substantial question of law No.2 is also answered in favour of the assessee.
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2019 (7) TMI 1046
Grant deduction u/s 54G with respect to the long term capital gain earned by the assessee on the sale of its godown situated in Bangalore, an urban area and which has been relocated in a non urban area - assessee sold an explosive godown/property at Bangalore and invested in a property located in a non urban area i.e in the outskirts of Sivakasi town - whether property sold at Bangalore was only a depot/godown/storage place and not an industrial undertaking - ITAT allowed the claim noted that the assessee shifted its godown storing hazardous products to a non urban area and that the activity carried on in the godown being storage and repacking, which is severable from the other activities of the industrial establishment and held that the assessee is entitled to claim exemption of capital gains as per the provisions of Section 54G HELD THAT:- Assessing Officer failed to take note of the vital factor namely that the property, which was sold by the assessee in Bangalore, was a 'magazine'. Rule 2(31) of the Explosives Rules, 2008 defines the word 'magazine' to mean a building or structure (other than an explosives manufacturing building) intended for storage of explosives, specially constructed in accordance with the specification provided under these Rules or of a design and approved by the Chief Controller. The expression 'Chief Controller' is defined under Rule 2(9) of the Explosives Rules, 2008 to mean the Chief Controller of Explosives. In terms of Rule 71 of the Explosives Rules, 2008, a person holding licence for possession of explosives granted under these Rules shall store the explosives only in the premises specified in the licence. Thus, possession, usage and sale of explosives are strictly regulated under the provisions of the Explosives Act and the relevant Rules framed thereunder. AO did not take note of this vital factor, but was guided by the common parlance test given to an industrial undertaking. One more factor, which the Assessing Officer lost sight of, was the manner, in which, the first limb of Section 54G(1) of the Act is worded wherein the transfer of a capital asset includes machinery or plant or building or land or any rights in the building or land used for the purpose of business of an industrial undertaking situated in an urban area. T The second limb of Section 54G(1) of the Act is what had weighed in the mind of the Assessing Officer while denying the deduction under Section 54G of the Act. However, what was important to note is that where the capital gains arising from transfer of capital asset, being machinery or plant or land or building used for the purposes of business of an industrial undertaking situated in an urban area effected in the course of or in consequence of the shifting of such industrial undertaking to any area other than an urban area, the assessee is entitled to the benefit of deduction under Section 54G of the Act. The scheme of the Explosives Act and the relevant Rules framed thereunder would clearly bring a 'magazine', which was referred to by the Assessing Officer as a godown to qualify to be a place used for the purpose of business of an industrial undertaking and in fact, going by the definition of the word 'manufacture' under the Explosives Act, the activity done by the assessee namely storage and repacking would also, in our opinion, fall within the definition of the word 'manufacture'. The Tribunal, in paragraph 4.6 of its order, has specifically recorded that the facts are not in dispute. In the light of the above, we find that the interpretation given by the Tribunal to the facts of the case of the assessee is perfectly legal and valid. For the above reasons, the Revenue has not made out any ground to interfere with the order passed by the Tribunal. - Decided against Revenue.
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2019 (7) TMI 1045
Disallowance on account of setting of STCG against depreciation - carry forward of unabsorbed depreciation - HELD THAT:- Tribunal held that as Respectfully following the judgment passed in MAHALAXMI SUGAR MILLS COMPANY LIMITED [ 1986 (7) TMI 83 - SUPREME COURT] which decided the issue of the present case relating to setting off STCG against brought forward unabsorbed depreciation in favour of the assessee, we find no justification to interfere with the order passed by the Ld. CIT(A) and dismiss this ground of appeal preferred by the Department. Addition u/s 68 - Tribunal upholding the decision of CIT(A) deleting the addition - HELD THAT:- The finding of fact recorded by the CIT(A) is that loan was accepted through banking channel and the details furnished by the authorized signatory of the Director were not verified vis-a-vis the records available with the AO in its proper perspective. This finding of the CIT(A) also came to be affirmed by the Appellate Tribunal. Disallowance on account of bad debts written off - Tribunal upholding the decision of CIT(A) deleting the addition - HELD THAT:- After Hon ble Supreme Court decision in the case of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] it is not mandatory on the part of appellant to establish that debt has become bad or appellant s bonafide about the irrecoverability of debt. The only conditions required for claim of bad debt are (as per provisions) . The debt must be trade debt and the same should have been taken in computing income of appellant of any year i.e current year and earlier years. The debt should be written off from the books of accounts of appellant. Relying upon the judgment of TRF Ltd. (supra) as being settled principle of law, we find no infirmity in the order passed by the Ld. CIT(A) and the same if hereby upheld Addition on account of cash deposit - Tribunal upholding the decision of CIT(A) deleting the addition - HELD THAT:- CIT(A) found the addition is based on surmises conjectures in the absence of verification made by the Ld. Assessing Officer. Relying upon the judgment of the Saurin Nandkumar Shodhan [ 2013 (6) TMI 522 - ITAT AHMEDABAD] holding that presumption on surmises by the Ld. Assessing Officer cannot be justified for such audited cash book and bank book the Ld.CIT(A) deleted such addition. Taking into consideration the ratio laid down by the Co-ordinate Bench in the matter of Saurin Nandkumar Shodhan, we find no infirmity in the order passed by the ld.CIT(A), same is hereby upheld. Thus, this ground of appeal raised by the Revenue is dismissed
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2019 (7) TMI 1044
Accrual of income - Revenue declaration in respect of expired pre-paid cards - Rendering of Services - Income recognition - HELD THAT:- Assessee has no objection to this Court reiterating, as in para 20 of the above order in Shyam Telelink Ltd. [ 2018 (12) TMI 585 - DELHI HIGH COURT] that while passing the appeal effect order the AO would ensure that the the unutilised talk time has been accounted for and included in the receipt of the year in which the amount had lapsed and has forgone. While reiterating the above direction for the AY in question i.e. 2010- 2011, this Court also directs the AO to verify whether the Assessee has declared the revenue in respect of the expired pre-paid cards or not .
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2019 (7) TMI 1043
Employee's contribution to PF and ESI funds beyond the due dates - Addition u/s 36(va) read with Section 2(24)(x) - HELD THAT:- A Division Bench of the Kerala High Court in the case of CIT Vs. M/s.Merchem Lt [ 2015 (9) TMI 560 - KERALA HIGH COURT] held in favour of the Revenue. Similarly, another Division Bench of the Kerala High Court in the case of Popular Vehicles Services Private Limited Vs. CIT, Ernakulam [ 2018 (8) TMI 133 - KERALA HIGH COURT] has recently taken note of all the earlier decisions including the decisions, which have been referred to by the Tribunal and the CIT(A) and held in favour of the Revenue. Considering these facts, we are of the view that the matters should be remanded to the CIT(A) for a fresh consideration. We propose to send the matters back to the CIT(A) for the reason that the CIT(A) did not give a reasoned finding on this aspect while deleting the addition on account of the delay in payment of provident fund and delayed payment of the employees state insurance. Hence, we deem it appropriate that the matters should be remanded to the CIT(A) for a fresh consideration
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2019 (7) TMI 1042
Addition of unexplained receipts - method of accountancy followed - ITAT deleted the addition - HELD THAT:- The appellant has disclosed additional 50 lac rupees in its return filed. The net profit of 50 lac on unrecorded-receipts for the year worked out at ₹ 2,12,91,706/-; gives a net profit rate of 23.48%. Therefore, the profits declared are held reasonable looking to the profit in the business even after reducing the fixed expense. Without prejudice to the above, even otherwise, if unrecorded receipts as worked out by the AO at ₹ 2,57,41,751/- were considered the net profit rate on undeclared receipts comes to 19.42% which is much above the average of last 5 years and is reasonable considering the decreasing trend. As already held that the actual profits and not the entire suppressed receipts are to be added. The profits declared on suppressed receipts (extrapolated for the whole year) at ₹ 50 lac are held reasonable and therefore, any further addition is uncalled for. - Decided against revenue
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2019 (7) TMI 1041
Revision u/s 263 - service of order barred by limitation - Tribunal held that it was communicated well beyond the period of limitation prescribed under Section 263(2) - HELD THAT:- Tribunal took note of the decision of the Kerala High Court in the case of Government Wood Workshop Vs. State of Kerala [ 1987 (1) TMI 451 - KERALA HIGH COURT] wherein it was held that the Authority cannot pass an order and keep it on his file and should not, on his own will and pleasure, communicate the same to the person aggrieved well beyond the period of limitation stating that the date, on which, he passed the order, would be the relevant date. It is not enough that the Authority should pass the order, but it should be communicated to the aggrieved individual in a manner known to law and acknowledgment card should be obtained and the Departmental Representative, who appeared before the Tribunal could not controvert the submissions of the authorized representative of the assessee. No substantial question of law arises for consideration.
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2019 (7) TMI 1040
Validity of Block Assessment - whether a satisfaction note was recorded by the Assessing Officer before issuance of notice under Section 158BD ? - HELD THAT:- In the instant case the assessee preferred an appeal against the Block Assessment Order dated 30.04.2002 before the CIT(A) and it is non-recording of the satisfaction note by the Assessing Officer which was specifically raised before the CIT(A). CIT(A) called for remand report from the AO and found that there was no satisfaction note recorded either by the Assessing Officer, who assessed Mr.C.S.Raju, whose premises was searched, or by the Assessing Officer of the respondent/assessee before issuance of notice under Section 158BD. This finding of the CIT(A) was assailed before the Tribunal by the revenue. The revenue contended that recording of satisfaction note, as mandated for issuance of notice under Section 158BD of the Act, need not be in the order sheet and the letter, which he referred to would be considered as sufficient compliance. The said letter has been referred to in paragraph 19.2 of the order passed by the CIT(A). As rightly pointed out by the Tribunal, the letter does not indicate any recording of satisfaction note and this is only the issuance of notice under Section 158BD of the Act. Thus, in the absence of mandatory procedure having not been followed, the Tribunal was right in dismissing the appeal filed by the revenue. In the result, the appeal filed by the revenue is dismissed,
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2019 (7) TMI 1039
Stay of proceedings u/s 147/148 for reopening of assessment - HELD THAT:- The petitioner did draw the attention of the authorities, after the confirmation of the interim order was passed on 09.01.2018 vide his representation dated 11.01.2018 as manifest from Annexure -A to the supplementary counter affidavit filed in the present proceedings but before the said date the final order had already been passed on the assessment proceedings. The legal position is very well settled and any order passed during operation of the order of stay, is held a nullity. There is no dispute that the assessment order was passed by the Assessing authority i.e the Assistant Commissioner, Income Tax, Circle I, Bhagalpur in purported exercise of power under Section 144/148/143(3) of the Act on 20.12.2017 i.e while the interim order staying further proceedings passed by this Court on 13.12.2017 [ 2017 (12) TMI 1717 - PATNA HIGH COURT] was in operation. On this simple note that the assessment order dated 20.12.2017 was passed in violation of the interim order dated 13.12.2017 and without examining the same on merits, we hold the order dated 20.12.2017 of the Assistant Commissioner, Income Tax Circle-1(1), Bhagalpur, void and accordingly quash the same together with demand if any, issued pursuant thereto. We remit this matter back to the Assistant Commissioner, Income Tax, Circle- 1(I), Bhagalpur to pass order afresh but after opportunity of hearing to the petitioner who shall appear before the Assistant Commissioner together with the copy of this order on 15.07.2019 at 11 A.M. and when he shall proceed to dispose of the proceedings in the manner above.
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2019 (7) TMI 1038
Transfer under Section 127 - mandatory requirements of recording reasons for the conclusion ignored - transfer from one Income-tax officer to another income tax officer in the same city - HELD THAT:- Under Rule 56 the Central Government in disposing of the revision application must record its reasons and communicate these reasons to the parties affected thereby. It was further held that the reasons could not be gathered from the nothing in the file of the Central Government. Recording of reasons and disclosure thereof is not a mere formality. Revenue drew our attention to a decision of this Court in Kashiram Aggarwalla v. Union of India and Ors. (4) [ 1964 (10) TMI 8 - SUPREME COURT] as submitted that this Court took the view that orders under Section 127(1) are held in that decision to be purely administrative in nature passed for consideration of convenience and no possible prejudice could be involved in the transfer. It was also held therein that under the proviso to Section 127(1) it was not necessary to give the appellant an opportunity to be held and there was consequently no need to record reasons for the transfer. This decision is not of any assistance to the Revenue in the present case since that was a transfer from one Income-tax officer to another income tax officer in the same city, or, as stated in the judgment itself, in the same locality and the proviso to Section 127(1), therefore, applied. When Law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court, it cease to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated Applying the principle deducible from the opinion of the Apex Court of the land, as extracted hereinabove, it is evident that the impugned order dated 27th September, 2018, is in infraction to mandatory requirements of recording reasons for the conclusion. Accordingly, instant writ application succeeds, and is, hereby allowed. The impugned order dated 27th September, 2018, is hereby quashed. Matter is remanded back to the Principal, Commissioner of Income Tax-2, Jaipur, for adjudication afresh, in accordance with law.
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2019 (7) TMI 1037
Treatment to the loss as speculation loss - non-banking financial company (NBFC) engaged in the business of sale and purchase of shares - revenue appeal dismissed by ITAT holding that Explanation to Section 73 is not applicable to the case of the assessee - chargeability for the purpose of exemption - HELD THAT:- In the present case for the subject assessment year the assessee had an income from other sources, which was a refund of income tax. It is against this refund of income tax that the assessee claims set off of business loss. If we accept the contention raised by the assessee, then the exception as provided in the Explanation in Section 73 has to be understood as being applied to each of the assessment years where there is a change in the gross total income from any other sources other than the profits and gains arising from business or profession. The question of chargeability for the purpose of exemption as argued by the learned Counsel for the assessee even if found to be acceptable, it has to be held that though the negative income would be chargeable; for reason of it being negative there could be no tax leviable since that would also be a negative figure. It could only be understood as, when there is a loss, then there would be no payability of tax at all. In such circumstances, we are of the opinion that there could be no set off of the speculative business loss as against the income from other sources for the year, since the exception under the Explanation to Section 73 does not apply to the Company. Assessee also has a contention that sub-section (2) refers to the specific assessment year in which it has to be applied. We cannot accept the said contention also, since the prohibition is insofar as sub-section (1) of Section 73, which provides that any loss in a speculation business shall not be set off except against profits and gains, if any, of another speculation business. This does not provide for looking at the profits and gains arising in each year in which the assessee is carrying on the business. Sub-section (2) of Section 73 is a provision for carry forward as found in Sections 70 to 72 itself. In fact, Section 73 culls out a particular type of business loss out of Section 72 and places it under Section 73, being one occasioned by a speculative business. Hence, the very same carry forward under Section 72 has been permitted with respect to speculation loss also, but subject to the condition under Section 73. In the light of the findings above, we set aside the orders of the first appellate authority and the Tribunal, and restore that of the A.O. We answer the questions of law in favour of the revenue and against the assessee.
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2019 (7) TMI 1036
Penalty levied u/s 271(1)(c) - no proper satisfaction for initiating penalty proceedings and in the absence of proper show cause notice to the assessee - HELD THAT:- In number of cases in turn, relying on the ratio laid down in CIT Vs. Shri Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein it was held that where there is no proper satisfaction for initiating penalty proceedings and in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty. In the facts of the said case, the Tribunal had deleted penalty imposed under section 271(1)(c) of the Act by holding that initiation of penalty proceedings by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty was for concealment of income. As in the present case where no charge is mentioned in assessment order, then also for non recording of proper satisfaction, the initiation of penalty proceedings is not as per law and the penalty order passed in such cases thus, cannot be upheld. Where, in some cases, penalty has been levied for non fulfillment of both limbs of section 271(1)(c) of the Act and / or for one of the limbs for initiating, for other limb for levy and in some cases, no limb is mentioned, such orders levying penalty under section 271(1)(c) of the Act cannot stand in the eyes of law. We accordingly, delete penalty levied under section 271(1)(c) of the Act - Decided in favour of assessee.
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2019 (7) TMI 1035
Penalty u/sec. 271(1)(c) - Defective notice - non-striking of the irrelevant portion of the notice issued u/sec. 274 case of the assessee was selected for scrutiny and assessment is completed under section 143(3) - HELD THAT:- It is not clear whether AO has initiated penalty proceedings for concealment of particulars of income or for furnished inaccurate particulars. Therefore, the notice issued by the Assessing Officer is a vague notice and is liable to be quashed in the light of the decision of the Hon'ble High Court of Telangana A.P. in the case of Smt. Baisetty Revathi [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] and SSA‟s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] has considered the validity of notice by following the above referred to judgments and held that notice issued by the Assessing Officer is not a valid notice and accordingly quashed - Decided in favour of assessee
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2019 (7) TMI 1034
Penalty u/s 271(1)(c) - defective notice - non striking of irrelevant column in notice - HELD THAT:- Since the facts are identical, respectfully following the decision of Hon ble High Court of Andhra Pradesh in Baisetty Revathi [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] and decision of this Tribunal cited (supra), we hold that the notice issued u/s 271(1)(c) without striking of irrelevant column is invalid and consequent penalty imposed by the AO is cancelled. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee.
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2019 (7) TMI 1033
Disallowance of expenses made u/s.14A r.w.s. Rule 8D - HELD THAT:- Earning of exempt income is not a criteria for making addition u/s.14A since it is a deeming provision. In our considered opinion, the Hon‟ble Apex Court in the case of CIT Vs. Walfort Share Stock Brokers (P) Ltd. [ 2010 (7) TMI 15 - SUPREME COURT] has made it clear that there has to be proximate relationship between exempt income and disallowance u/s.14A. In this backdrop, we have examined the Schedule-11 of the Balance Sheet of the assessee and we find that there is no exempt income during the year in respect of the assessee. Thus, we set aside the order of the Ld. CIT(Appeals) and direct deletion of disallowance made u/s.14A of the Act. Thus, ground No.1 raised in appeal by the assessee is allowed. Bogus purchase of machinery and interest thereon on borrowed funds - HELD THAT:- Assessee could have furnished additional evidences which could have demonstrated in a way that the assessee‟s transactions were genuine and therefore, the acceptance of the addition made before the Assessing Officer was an ad-hoc one. However, no such evidences were brought on record by the assessee. The entire scenario clearly reflects that the assessee knew that the transactions were not genuine and therefore, in order to buy peace of mind it accepted the addition before the AO and therefore, it in no circumstances, can be termed as ad-doc acceptance of the addition. It is rather well planed action on the part of the assessee. That further, the assessee with regard to the bogus purchases of machinery is only harping upon case laws but those judicial pronouncements have been decided based on specific evidences on record. In the instant case, the assessee as clearly seen from the records, has not brought in any evidences as to the fact of showing the genuineness of the transactions in respect of purchase of machinery. In view of the matter, we find no infirmity with the findings of the Ld. CIT(Appeals) and the additions made on bogus purchases of machinery and interest thereon on borrowed funds are upheld. Thus, ground No.2 raised in appeal by the assessee is dismissed. Nature of expenditure - expenditures in respect of professional fees paid which was in connection with the installation of a machinery or set up of new assets - revenue or capital in nature - HELD THAT:- We have also given considerable thought to the findings arrived at by the Assessing Officer as well as by the Ld. CIT(Appeals). We observe in the findings of the AO on perusal of the detailed chart provided for installation of machinery, all expenses are in the nature of capital expenditure. Therefore, we reverse the findings of the Ld. CIT(Appeals) and uphold the order of the AO. The additions made by the Assessing Officer are therefore sustained. Thus, ground No.1 of the Revenue s appeal is allowed. Addition u/s 40A(3) - HELD THAT:- As perused the exceptions as contained therein and we find that the criteria for which the CIT(Appeals) has allowed the amount though it is in contravention to Section 40A(3) of the Act, is not supported by any exceptions covered under Rule 6DD of the Income Tax Rules, 1962. The legislature in its own wisdom has created the provision of Section 40A(3) of the Act and even though the objective is to curb black money transactions, in additions to it, Rule 6DD is also provided by the legislature stating specific exceptions under which payments can be made in contravention to Section 40A(3) of the Act. The payment made in pursuance to Consumer Dispute Redressal Forum order is not an exception under Rule 6DD. We reverse the findings of the CIT(Appeals) on the issue and uphold the findings of the Assessing Officer. The additions made by the Assessing Officer u/s.40A(3) of the Act is therefore sustained. Thus, ground No.2 raised in appeal by the Revenue is allowed. Rejection of books of account - addition made by the Assessing Officer on account of extra profit on manufacturing sale and also deleting the addition made on account of unexplained investment towards extra production - HELD THAT:- As decided in assessee's own case for assessment year 2009-10 Tribunal has accepted the findings of the Ld. CIT(Appeals) and deleted all the additions from the hands of the assessee.
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2019 (7) TMI 1032
Ex-parte orders - denial of natural justice - CIT-A without hearing / considering and adjudicating on the assessee s contentions before passing ex-parte order - HELD THAT:- Admittedly the assessee did attend before the CIT(A) in the first two hearings and that the notices of hearing on 21.05.2018 and for the last hearing on 18.09.2018 were returned unserved resulting in impossibility of compliance by the assessee. In these circumstances, it certainly cannot be inferred that the assessee s actions were either malafide or deliberate and we are therefore of the view that the CIT(A) s action in passing the impugned order ex-parte, without hearing / considering and adjudicating on the assessee s contentions on merits is a clear case of violation of the principles of natural justice. More so, when the assessee has been fastened with a huge liability of ₹ 44,65,340/-; which she entirely disputes. In this view of the matter, we are of the considered opinion that the interests of substantial justice would be well served if the impugned ex-parte order of the CIT(A) be set aside and do so. No opportunity to cross examine was provided to the appellant and hence the order passed was in violation of principles of natural justice and consequently the assessment order passed was bad in law - HELD THAT:- From the above Para 8 of the judgment of Hon ble Karnataka High Court in the case of Chandra Devi Kothari [ 2015 (2) TMI 1313 - KARNATAKA HIGH COURT] it is seen that matter was restored back to the file of the AO for fresh decision after providing copy of the statements and other related details relied on by the AO. As per the facts noted by the High Court in the earlier paras of judgment (supra) and as per the facts of the case on hand, there appears to be no difference in facts and therefore by respectfully following this judgment in the case of Chandra Devi Kothari (Supra), we set aside the impugned order of learned CIT(A) for Assessment Year 2014-15 and restore the matters of treatment of consideration received on sale of shares of NCL Research and Financials Pvt. Ltd., to the file of the AO for fresh decision
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2019 (7) TMI 1031
Deduction u/sec. 80P - earning of income relating to the letting of godowns, the correct income derived from the business or profession - CIT-A observed that the assessee had received the income from letting out of godowns to the extent of ₹ 1.11 crores and earned the dividend income of ₹ 3.43 crores thus entitled for deduction - HELD THAT:- As per the computation of income the assessee had earned free interest income of ₹ 15.96 crores and except for income from other sources, the income from business and profession resulted in loss. The assessee admitted income from house property, but did not show any income from letting out of godowns or warehouses. For a query from the Bench, ld.AR submitted that the income received from letting out of godown was included in the income from house property or income from business, but he could not specifically show or confirm in which head of income it was included/clubbed. As per the act the Income received from letting out of godown or warehouses is allowable deduction u/sec. 80P(2)(e) - AR submitted that the assessee had received the interest the income of ₹ 15.96 crores and paid the interest of ₹ 51.02 crores and argued that if the interest payment on loans related to the deposits is excluded from business income it would result in positive income. However, during the appeal hearing, ld.AR could not furnish matching details of interest payment, the interest receipts with the loans and deposits. Therefore, we are of considered opinion that the above information is required to decide whether the assessee derived income from business or not? Therefore, in the interest of justice we are of the considered view that the issue needs to be remitted back to the file of the Assessing Officer to examine the earning of income relating to the letting of godowns, the correct income derived from the business or profession. AO should exclude the interest related to the loans for arriving the income business or profession. Therefore, we set aside the order of the AO on the issue of disallowance made u/s 80P and remit the matter back to the file of the AO to decide the issue afresh on merits and as per law. - Appeal of the assessee is allowed for statistical purpose
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2019 (7) TMI 1030
Assessment u/s 153C or 153A - assessee submitted that a search u/s 132 was conducted on 12.09.2013 in the case of the assessee as evidenced from panchnama dated 12.09.2013 and argued the AO ought to have initiated the proceedings u/s 153A, but not u/s 153C - HELD THAT:- As per the provisions of section 153C of the Act, assessments required to be completed u/s 153A in the case of the person where the search is initiated. In the instant case, search was initiated in the case of G.S.L.Educational Society and the assessee s premises were also searched for incriminating material of G.S.L.Educational Society. Apart from the above, during the search in the premises of Shri Adapa Rambabu, Accountant of the firm, incriminating material belonging to the assessee was found. Therefore, in the assessee s case, correct action for search assessment is initiation of proceedings u/s 153C. Accordingly, we uphold the action of the AO in issuing the notice u/s 153C of the Act and dismiss the assessee s appeal on this ground. Time limit for issue of notice u/s 143(2) was expired for all the impugned assessment years and no addition is permissible without the incriminating material - HELD THAT:- It is settled issue that for initiating the proceedings u/s 153C of the Act, it is incumbent upon the A.O. to have the incriminating material evidencing the undisclosed income. In the assessee s case no such evidence was found during the course of search in the case of G.S.L.Educational Society. As per the provisions of section 153C of the Act, it is mandatory to have the satisfaction of the A.O. that money, bullion, jewellery or other valuable article or thing or any books of accounts, documents seized or requisitioned pertains to or relates to the assessee, which means that unless there is an incriminating material belonging to the assessee is found, the action u/s 153C of the Act is not permissible. In the assessee s case there was no incriminating material found and seized from the premises of the searched person. As discussed earlier the material found during the course of search was related to the A.Y.2014-15. Therefore, we hold that the notices issued u/s 153C for the impugned assessment years are unsustainable. See SINHGAD TECHNICAL EDUCATION SOCIETY [ 2017 (8) TMI 1298 - SUPREME COURT] - Decided in favour of assessee.
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2019 (7) TMI 1029
Addition of the differences in bank balances as per books and as per bank statements - HELD THAT:- A survey operation u/sec. 133A was conducted at the business premises of the assessee on 21/03/2014 and certain incriminating material was found and impounded. Consequent to the survey, the return of income filed on 21/03/2014 was selected for scrutiny manually by issuing notice u/sec. 143(2) on 17/09/2014. During the course of assessment proceedings, the AO has noticed on verification of the balance sheet that the assessee has disclosed balance with the banks to the tune of ₹ 26,614/-, however, as per the statements obtained, credit balances available in the name of the assessee are of ₹ 71,323/- A0 has asked the assessee to file reconciliation, but of no avail. As such difference of (₹ 71,323 ₹ 26,614) ₹ 44,709/- is added to the total income of the assessee. CIT(A) confirmed the order of the Assessing Officer. Even before us, no reconciliation statement has been filed, therefore, we find no reason to interfere with the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. Allowance of interest claim - HELD THAT:- Before us assessee has submitted that the assessee is having jewellery business also and interest paid is belonging to the jewellery business in pawn broking business. This fact was not brought to the notice of the Assessing Officer, only submitted before the ld. CIT(A) and pointed out that the ld. CIT(A) has not considered the same and confirmed the order of the Assessing Officer. We find that the submissions of the assessee that the interest paid belonging to the jewellery business is only an afterthought for the reason that the assessee has not placed any material before us to show that it relates to jewellery business.We are of the opinion that no interfere is warranted in the order passed by the ld. CIT(A). Thus, this ground of appeal filed by the assessee is dismissed. Addition treating the gold ornaments of 187 gms pledged to Union Bank of India, Mundur Branch as belonging to the appellant - HELD THAT:- Veracity of assessee s contention has been examined. During the course of survey, inventory of pawn broking items was taken and the assessee is unable to attribute a particular item pledged by her with the bank to the item pledged with her by her customers. She is not able to explain the total 187 grams of gold, which items are belonging to the customers. As per the loan information furnished to the bank the assessee has categorically certified that she is the true owner of the said ornaments/jewellery that is being pledged with the bank and no prior lien or charge has been created on the said gold ornaments/jewellery. AO by considering the above certificate issued to the bank and by considering the value made by the qualified appraiser at ₹ 4,64,000/-, the same is treated as the assessee s undisclosed investment in gold ornaments and added to the total income of the assessee. CIT(A) confirmed the order of the Assessing Officer. Even before us, the AR of the assessee is not able to place any material to show that the gold ornaments to the extent of 187 grams belonging to the assessee. We find no infirmity in the order passed by the CIT(A). Thus, this ground of appeal raised by the assessee is dismissed.
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2019 (7) TMI 1028
Penalty levied u/s 271(1)(c) - non striking irrelevant column in notice - difference between the remuneration claimed by the partners and the remuneration allowed as per the Act - HELD THAT:- There is no dispute that the AO had issued the notice seeking explanation of the assessee without referring to the specific charge of concealment of income or furnishing of inaccurate particulars. As per the notice the AO sought explanation for concealment of income or furnishing of inaccurate particulars which leads to ambiguity and confusion to the assessee as well as the AO. On identical facts, this Tribunal in KONCHADA SREERAM VERSUS INCOME TAX OFFICER, WARD-1 (1) , VISAKHAPATNAM [ 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM] held that the notice issued u/s 271(1)(c) without striking irrelevant column renders the notice invalid. Since the Ld.CIT(A) has followed the decision of SMT. BAISETTY REVATHI [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] and the order of this Tribunal in KONCHADA SREERAM, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Appeal of the revenue is dismissed.
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2019 (7) TMI 1027
Levy of penalty u/s 271(1)(c) - defective notice without striking irrelevant columns in the notice in the pre-printed proforma - HELD THAT:- In the instant case, the AO initiated penalty by issue of defective notice without striking irrelevant columns in the notice in the pre-printed proforma thus causing ambiguity to the assessee for which act of the assessee the AO sought explanation whether it is for concealment of income or for furnishing inaccurate particulars. It is settled issue by Hon ble High Court of Andhra Pradesh SMT. BAISETTY REVATHI [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH ] that the penalty proceedings initiated without indicating the specific charge is invalid. The Ld.CIT(A) considered the decision of jurisdictional High Court and the decision of this Tribunal and held that the initiation of penalty proceedings are invalid and accordingly cancelled the penalty There is no dispute that in the instant case, the AO had initiated the penalty without striking irrelevant columns and created ambiguity with regard to which act of the assessee, penalty was initiated whether for concealment of income or for furnishing inaccurate particulars. The case laws relied upon by the Ld.CIT(A) are squarely covered in favour of the assessee and against the revenue
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2019 (7) TMI 1026
Revision u/s 263 - Not disallowing the deduction claimed by the assessee u/sec. 36(1)(iv) r.w.s. 43B of the Act, relating to the contribution to the Superannuation Fund paid to SBI Life Cap Superannuation Fund towards 80% of employer s contribution for the F.Y. 2013-14 - HELD THAT:- The deduction u/sec. 36(1)(v) and the deduction u/sec. 36(1)(iv) both are for the benefit of the employees and pertained to the superannuation funds. Therefore the judgment of the Hon ble apex court squarely applies to section 36(1)(iv) also, since the Superannuation Fund is also for the benefit of the employees. Having made the payments to the SBI Life Cap Assured Gold Superannuation Scheme and the Superannuation Fund of the company was approved by CIT subsequently, we hold that the decision of this Tribunal in the case of The District Co-operative Central Bank (supra) and the decision of Hon ble apex court is equally applies to the assessee s case also and accordingly we hold that the assessee is entitled for deduction u/sec. 36(1)(iv) r.w.s. 43B of the Act. As during the course of assessment proceedings, the Assessing Officer had examined the issue and taken a conscience decision for allowing deduction. The assessee placed a copy of note filed before the Assessing Officer. DR did not place any evidence to support that note was not placed before the Assessing Officer during the course of assessment proceedings. The assessee duly certified in the paper book that the note was filed before the Assessing Officer. Since the issue has been examined and the deduction was allowed by the Assessing Officer, the assessment framed u/sec. 143(3) cannot be held to be erroneous, hence, order passed by the Pr.CIT is unsustainable. Accordingly, we set aside the order passed u/sec. 263 and restore the assessment order. Thus, this appeal filed by the assessee is allowed.
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2019 (7) TMI 1025
Disallowance u/s.40A(3) - payment in Cash - Assessee made payments to transporters in violation of the provisions of section 40A(3) - AR canvasseda view that since the transporters were representing the assessee in supplying the goods, they assumed the character of agents - HELD THAT:- Such a contention is a farfetchedpr oposition. Delivering goods by a transporter on behalf of the assessee to customers is one thing, which is entirely different from paying freight by the assessee to such transporter. Further,exception carved out in the Rule applies where the payment is made by the assessee to his agent for making further payment in cash and not for the self consumption by the agent. Since no principal-agent relation exists between the assessee and transporters to whom the assessee made payments in violation of section 40A(3) of the Act, it is held that the assessee cannot get shelter of clause (k) of Rule 6DD. We, therefore, uphold the impugned order on this score. Addition u/s.14A read with Rule 8D - no exempt income discovered - HELD THAT:- The Hon'ble Delhi High Court in Cheminvest Ltd. vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] has held that if there is no exempt income, there can be no question of making any disallowance u/s14A of the Act. Similar view has been taken in CIT vs. Holcim India P. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] . No contrary decision has been brought to our notice by the ld. DR. In view of the fact that the assessee did not earn any exempt dividend income during the year, we hold that no disallowance can be sustained u/s 14A of the Act. We, therefore,overturn the impugned order to this extent. This ground is, thus,allowed. Rejection of books of account - addition of extra profit on sale of goods manufactured outside the books of account and unexplained investment in such outside production - HELD THAT:- Valuation of stock given by the assessee in its balance sheet is as per the regular method of stock valuation followed by the assessee. It, therefore, transpires that the difference in the amounts of stocks as per bank and annual accounts has arisen because of valuation and not quantitative details and further the value declared in the annual accounts is not fallacious and is as per the regular method of valuation. Once the value reflected by the assessee in its annual accounts has been accepted by the AO, in our considered opinion, no addition can be made simply on the ground that the assessee declared high ervalue to the banks. See CIT Vs. Acrow India Ltd. [ 2006 (11) TMI 118 - BOMBAY HIGH COURT]] . Excess manufacturing out side the books of account on the basis of certain ratio given by the assessee of some raw materials to final product - As seen that the assessee submitted that it was just a standard in a particular situation which varied from situation to situation. We also concur with the contention of the assessee that there cannot be any yard stick of ratio of raw material to output. Variation arises in such standard ratio because of several reasons, such as, quality of products required, normal wastage, abnormal wastage, disruption in manufacturing process, seasonal reasons, at al. The thing which is pertinent to note is that if the AO was coming to the conclusion of the assessee having manufactured goods outside the books of accounts, there should have been some material to substantiate the same. The assessee has maintained proper stock registers and is subjected to excise duty. There is nothing on record that the Excise Department or Sales-tax Department, for that purpose, did not accept the figures of manufacturing or sales as tendered by the assessee. In case of Excise duty levy, movement of goods is strictly monitored. No manufacturer can remove the manufactured goods without paying excise duty, for which entries in necessary registers are made. Here is a case in which the assessee has maintained all the requisite registers.Simply because consumption of electricity varied from month to month or did not match with the manufacturing shown by the assessee, cannot be a reason to infer that the assessee was engaged in carrying out manufacturing activity outside books of account. We are of the considered opinion that the ld. CIT(A) was justified in overturning the view point of the AO in rejecting the books of account. Once the books of accounts are held to be properly maintained, there cannot be any question of making addition on the basis of suppressed production or undisclosed investment. We, therefore, affirm the opinion of the ld. first appellate authority in deleting both the additions above. - Appeal of the Revenue is dismissed and that of the assessee is partly allowed.
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2019 (7) TMI 1002
Penalty u/s 271(1)(c) - Assessee had not filed returns within the due date - Assessee were claimed to have filed returns after a search was conducted in their premises u/s 132 - Department's case was that but for such search, the income now offered to tax by the Assessee would not have been so offered - HELD THAT:- Tribunal has correctly observed in its impugned order that the penalty notices in these cases were not issued for any specific charge, that is to say, for concealment of particulars of income or furnishing of inaccurate particulars. When the matter was before the CIT (A), he referred to the decision of Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] held that no notice could be issued under Section 274, read with Section 271(1)(c) of the Income Tax Act, without indicating which particular limb of Section 271(1)(c) was invoked for initiating the penalty proceedings. The Court took the view that the matter was covered by an earlier decision of a Division Bench of that Court and did not involve any substantial question of law.
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Customs
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2019 (7) TMI 1065
Whether in the facts and circumstances of the case M/s. Khanbhai Esoofbhai in whose hands the vessel was actually broken up is liable to pay customs duty that became leviable in accordance with proviso to N/N. 163/65Cus dated 16.10.1965, or otherwise? - HELD THAT:- Following the judgment of this Court in [ 2016 (4) TMI 490 - SUPREME COURT] , the appeal is allowed. - when excise duty is exempted, there is no question of payment of additional duty. Consequent to the appeal being allowed it shall be open for the appellant to request for refund of the custom duty paid by the appellant.
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2019 (7) TMI 1064
Extension of ADD - Initiation of sunset review - HELD THAT:- As the notification in question is expiring on 23.7.2019, no harm is envisaged if it is kept on 19.7.2019, with a specific observation that the authorities shall not overlook the fact that mere passage of time may not render the petition and now the order infructuous in any manner without there being any contest on merits as it is submitted by learned counsel for the other side that as per his information order in question has so far not been challenged in the Supreme Court. Put up on 19.7.2019.
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2019 (7) TMI 1063
Interest on delayed refund - Section 27-A of the Customs Act, 1962 - HELD THAT:- The Court is of the view that when the interest prayer is covered by the statutory provision and when the refund is also processed and paid, we need not advert to the facts for avoiding the consumption of time and save it for dealing with other matters, but suffice it to say that the provisions of Section 27-A of the Customs Act, 1962 does provide for interest on delayed payment and even the rate is provided. On the refund which was otherwise admissible from 29.12.2009, appropriate interest deserves to be awarded so as the interest to start running from 1.3.2010 till the date of payment, and we propose to award 6% of interest amount to the petitioner. Such interest amount be paid on or before 30.9.2019. Petition disposed off.
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2019 (7) TMI 1062
Imposition of Safeguard Duty - N/N. 1/2018 dated 30th July, 2018 - Import of solar panels and solar cells - provisional release of goods - HELD THAT:- The goods covered by the two bills of entries dated 1st July, 2019 being Bills of Entry Nos. 3863778 and 3863813 be cleared on payment of 50% safeguard duty and balance 50% being secured by a bond. It is made clear that at this stage, we have not independently examined the grievance of the petitioners in view of the fact that the respondent nos. 1 and 2 are not represented at this stage and nor are the parties in whose favour the impugned Notification has been issued made parties to this petition. Petition is adjourned to 29th July, 2019.
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2019 (7) TMI 1061
Imposition of penalties on CHA - appellant allowed another person to file export documents on their behalf - Duty Drawback - alleged overvaluation of export goods with intention to avail excess drawback - claim of the appellant is that they had nothing to do with the exporter and that there was no evidence of any involvement in abetment of fraud. Whether a custom house agent, who, under the statute as well as under the Regulations framed for implementation of the statute, are required to be associated with the goods can, independently, be proceeded against, for imposition of penalties under some other provisions? HELD THAT:- It is seen from the impugned order that it is the role of the appellant herein as a custom house agent that was found sufficient to invoke the penal provision. As separate provisions exist in the Customs House Agents Licensing Regulation, 2004, the invoking of such for violations for imposing of penalty under section 114 of Customs Act, 1962 is patently incorrect. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 1060
Maintainability of appeal - refund claim - appropriate forum - importer sought recall of bill of entry and amend the same and allow refund - HELD THAT:- In the regime of self-assessment, reassessment by an assessing officer requires issue of order of justification which may be challenged in appeal. However, duty paid in excess of that prescribed by law cannot be retained by the exchequer and eligibility to the benefit of notification no. 21/2002- Cus dated 1st March 2002 is not in question here. It would appear that the letter dated 9th September 2011 sought for recall of the bills of entry to make the necessary emendations therein to restrict liability to duties as imposed by law. Though reassessment prescribed for in section 17 of Customs Act, 1962 is not an option to be invoked by the importer, the erroneous deployment of that in the said letter does not preclude the application of any other relevant provision in the statute. The request for re-assessment be treated as application under section 149 of Customs Act, 1962 for amendment of the bills of entry. The proper officer may therefore consider this application and pass appropriate order in accordance with law - appeal disposed off.
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2019 (7) TMI 1059
Smuggling - illegal export of Red Sanders - absolute confiscation - imposition of penalties - HELD THAT:- In the present case, while imposing penalty on the Appellants more or less similar role of the Appellants has been recorded by the adjudicating authority in the impugned order. In these circumstances following the aforesaid observation of the Tribunal and considering that the present Appellants are situated at the same plane, the penalty on M/s Perma Shipping Line India Pvt Ltd is reduced from ₹ 130.00 lakh to 1.00 lakh and penalty on the director of the company is set aside. Appeal disposed off.
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Corporate Laws
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2019 (7) TMI 1024
Maintainability of application - Rule 9 of the Company (Court) Rules - approval of the scheme of amalgamation under Section 391 of the Act and not Section 394 of the Act - whether the present appeal, directed against an order dismissing a review petition is maintainable? - HELD THAT:- The approval of the scheme of amalgamation was under Section 391 of the Act and not Section 394 of the Act. The corresponding provision in the Companies Act, 2013 ( 2013 Act ) is Section 230. However, at the relevant time when the appeal was filed, the provision relevant for that purpose was Section 391(7) of the Act. Although in terms of the Companies (Second Amendment Act) 2002, Section 391 (7) stood omitted, the said amendment was to take effect only from date notified by the Central Government. The purpose behind omitting the Section 391 (7) of the Act was to provide jurisdiction in respect of the matters in relation to mergers and amalgamations to the National Company Law Tribunal (NCLT) which was constituted under the 2002 Amendment. Till such time the NCLT was not constituted, there was no question of matters involving Section 391 of the Act being transferred to it. The NCLT came into being finally when the 2013 Act came into force 1st June 2016. The fact remained that when the appeal was filed on 18th February 2013, Section 391(7) of the Act continued in the statute book. The entire 2002 Amendment omitting Section 391(7) of the Act stood repealed finally only on 14th May 2015 with the passing of the Repealing and Amendment (Second) Act, 2015. This Court is also not persuaded with the plea of the Appellant that he was not seeking a review of the main order by filing CA 730 of 2002 but invoking the inherent jurisdiction on the basis that a fraud had been committed by the answering Respondents - The Appellant was seeking to explain away the limitation on that basis since he was seeking a review of the main order nearly three years after it was passed. Once it is clear that CA 730 of 2002 was nothing but a review petition, the corollary is that the impugned order is one that dismisses a review petition and against such order no appeal is maintainable. The present appeal is not maintainable and is dismissed as such.
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2019 (7) TMI 1023
Oppression and mismanagement - rectification of members' register of respondent No. 1-company - forfeiture of shares - HELD THAT:- The burden to prove facts constituting oppression or membership of respondent No. 1-company was heavily placed on the petitioner. It was required to be shown successfully that the petitioner became member of respondent No. 1-company. The petitioner has failed to place on record any authentic document issued by the Registrar of Companies recognizing the petitioner as a member of respondent No. 1-company as defined in section 41 read with section 2(27) of the 1956 Act. The legal position is evident from a bare perusal of definition of a member of a company which shows that there should be an application in writing and the name of a member should be entered in the register of members. The provision requires as a condition precedent for membership that the name of the person in question is entered in the register. Secondly such a person may be regarded as a member if he has acquired the right of membership although his name is not in the register. One may become a shareholder in a company by subscribing to memorandum as provided by section 41 of the 1956 Act by allotment apart from other modes - every company making an allotment of shares is obliged to deliver to an allottee a certificate of shares within three months after the allotment. In the case of a transfer, the certificate has to be delivered within two months unless extended by the Tribunal. Transfer of share - compliance with section 108 of the Act 1956 - HELD THAT:- There are numerous conditions laid down which are required to be fulfilled before a company can lawfully register a transfer. We have failed to understand why the agreements between the parties have not been produced on record and why Ms. Renu Data has also not been made a party. In the facts and circumstances of the case Ms. Renu Data has been a necessary party as her presence before the court was most important. However, we are of the considered view that the version adopted by the petitioner is far from satisfactory and does not inspire confidence by keeping in view the rudimentary principles and pleadings and law of evidence. Petition dismissed.
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Insolvency & Bankruptcy
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2019 (7) TMI 1022
Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - default in repayment of operational debt - Existence of debt and default or not - HELD THAT:- On perusal of the documents it is found that operational debt is due to the Applicant and in support of that operational creditor has annexed invoices as per the details given in preceding para No. 5. Therefore, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default. The Application filed by the Applicant is complete in all respects - it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code. Petition admitted - moratorium declared.
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2019 (7) TMI 1021
Admissibility of petition - initiation of Corporate Insolvency Resolution Process (CIRP) - default in repayment of loan amount by the corporate debtor to the applicant - section 7 of the Insolvency and Bankruptcy Code, 2016 read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- The corporate debtor has neither denied nor disputed the loan facilities given by the Reliance Capital Ltd. The corporate debtor has not brought forward any record with respect to the payment being made of the debt as claimed in the application. The only defence raised by the corporate debtor is with respect to two technical points : (i) the status of applicant is disputed as the financial creditor, (ii) the authority to file the present application is defective. Jurisdiction - HELD THAT:- The registered office of the corporate debtor is situated within the territorial jurisdiction of this Tribunal. Hence this Tribunal has jurisdiction to entertain and try this application. This application is complete and is admitted.
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2019 (7) TMI 1020
Condonation of delay in filing claims before Resolution Professional - power of Tribunal to condone delay - Rule 11 of NCLT Rules, 2016 - Resolution Professional rejected the claim of the Applicant only on the ground the claim was not submitted within 90 days of the insolvency commencement date - HELD THAT:- The Applicant stated reasons for non-submission of claims within time. The Applicant is not aware of submitting Form -C to the Resolution Professional. The CIRP of Corporate Debtor is still pending. The Applicant claiming that it will come under the ambit of Financial Creditor, even if the claim of the Applicant is accepted by the RP that does not affect the Corporate Insolvency Resolution Process. The Resolution Professional has not considered the claim of the Applicant simply on the ground that the claim was submitted beyond 90 days. The Resolution Professional has not decided the claim on merits whether the claim is to be admitted or to be rejected. The Resolution Professional has not gone into this question because he considered that the claim filed by the Applicant was beyond 90 day from the date of admission of the Petition it is an undisputed fac Applicant submitted claim beyond 90 days. However, Regulation 12(2) of IBBI (Insolvency Resolution Process for Corporate Persons Regulations, 2016 provides that claims by creditors to be filed within 90 days from the date of commencement of insolvency. This Application is filed seeking condonation of delay in submitting the claim before the Resolution Professional. I am satisfied with the reasons given for the delay. The CIRP is pending. Therefore, delay can be condoned but it is for the Resolution Professional to decide whether claim to be admitted or not - The delay in submitting the claim by Applicant/creditor is condoned and Resolution Professional to decide accordingly to law whether the claim submitted by the Applicant to be admitted or not. Application allowed.
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2019 (7) TMI 1019
Change of supply of power from High Transmission category to Low Transmission category for lighting purpose alone to safeguard the assets of the Company - It is the case of Applicant / Liquidator that electricity connection to the Corporate Debtor is only for lighting purpose to safeguard the assets of the Corporate Debtor for which HT Power Service Line is not necessary and thus, prayed this Tribunal to direct the Respondent to change the supply of power from High Transmission Category to Low Transmission Category - HELD THAT:- This Application is filed by Liquidator for a direction to Eastern Power Distribution Company of A.P Limited (APEPDCL) to change the supply of power to M/s Sree Ramakrishna Alloys Limited (Corporate Debtor) from High Tension category to Low Tension category for reasons stated in the Application. The Liquidator is first directed to move the APEPDCL by making necessary application for change of supply of power to Corporate Debtor/ M/s Sree Ramakrishna Alloys Limited from High Tension category to LT category. The procedure if any prescribed for change be first followed by Liquidator. The APEPDCL is directed to respond to the request if any made by the Liquidator on behalf of M/s Sree Ramakrishna Alloys Limited for change of category of supply of power, as requested. Application is allowed directing the Liquidator at the first instance to apply to APEPDCL for change of power supply to the Corporate Debtor / M/s Sree Ramakrishna Alloys Limited from HT category to LT category and in case such request is made and if it is in accordance with the Rules, the APEPDCL is directed to consider the request favourably and effect change from HT category to LT category for the Corporate Debtor / M/s Sree Ramakrishna Alloys Limited. Application allowed.
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Service Tax
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2019 (7) TMI 1072
Levy of service tax - reverse charge - foreign remittances - sponsorship services or not - Appellant claims that the amounts paid by them to UKEIRI were towards donations made by them to UKEIRI - HELD THAT:- The invoice has been indicating British Council Trading and is issued against the contract number: UKIERI for an amount of GBP 100,000/- towards payment of the fourth year re sponsorship fee for UKIERI. In our view the invoice itself justifies the correctness of the stand taken by revenue. If the invoice has been issued against a contract, appellant could have easily contradicted the stand taken by the revenue by producing the contract UKEIRI referred to in invoice. Since the contract against which the payments have been made has been not produced just by looking at antecedents of project UKEIRI, this amount can never be called as donation made - the details do not clearly establish the nature of the payments made. In absence of any conclusive evidence coming on record in respect of the payments made we are left with no option but to remit the matter back to Commissioner, after looking into contract under which this payment has been made - matter on remand. Club or Association Services - Amounts paid as membership fees to SPE - levy of service tax - time limitation - revenue neutrality - HELD THAT:- In case of payment of the tax on reverse charge basis the services recipient steps into the shoes of the service provider and pays the tax as if he has himself provided the service. That transaction of is complete when the person paying the tax makes the payment for the service received and tax needs to be paid on receipt of service. Since the tax is paid by the service recipient by stepping into the shoes of service provider, even the persons paying the tax and taking the credit though have same identity differ and hence the principle of revenue neutrality should not apply to such cases - Since Commissioner has dropped the demand holding the same to be barred by limitation on ground of revenue neutrality we remit the matter back to Commissioner for examining the issue of limitation on the basis of other evidences adduced in the show cause notice for invoking extended period of limitation. Benefit of N/N. 17/2004-ST - recipient of service - HELD THAT:- Commissioner has allowed the benefit of notification and dropped the demand in this respect. Revenue has challenged the order of Commissioner on the ground that the order of CESTAT relied upon by the Commissioner while extending the benefit is under challenge before the High Court of Bombay - there is no merits in the appeal of Revenue - benefit remains allowed. Penalty u/s 78 - revenue neutrality - HELD THAT:- On the issue of revenue neutrality we have discussed the issue in substantial detail in para 5.4 and have held that revenue neutrality cannot be valid ground for non-payment/ short payment of taxes required to be paid under the reverse charge mechanism. Hence we do not find any merits in the order of Commissioner holding that for the reason of admissibility of CENVAT Credit in respect of the tax sought to be recovered the issue is revenue neutral - the Commissioner has himself rejected the arguments advanced by the respondents in respect of system inaccuracies and bonafide belief. Once the Commissioner has rejected such arguments then in respect of the amount of tax paid by the appellants during the investigation he could not have dropped the penal proceedings. Commissioner is necessarily mandated in the present case to record the findings in respect of the above referred para of show cause notice. If commissioner finds that that was has been stated in this para of show cause notice is correct, he has no option but to impose penalty equivalent to the duty demanded - Since order of Commissioner has not considered this aspect the matter needs to be remanded back to him for re-determination of the issue on limitation. Appeal allowed in part and part matter on remand.
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2019 (7) TMI 1018
Reversal of CENVAT Credit - input service - maintenance of separate records for providing taxable service and exempted service - Rule 6(3) of the CCR, 2004 - HELD THAT:- The ratio of the decision of this Court in THE PRINCIPAL COMMISSIONER VERSUS M/S ALEMBIC LTD. [ 2019 (7) TMI 908 - GUJARAT HIGH COURT] is that once the assessee is not required to reverse any credit availed by him on valid input services availed during the period 2010 till obtaining of completion certificate, the said amounts reversed by the assessee under protest cannot be retained by the Revenue authorities and those have been refunded to him. Appeal dismissed.
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2019 (7) TMI 1017
Maintainability of appeal - Section 35L of the Central Excise Act, 1944 - Scope of Service - HELD THAT:- The issue decided in the case of CCE., C. ST., THIRUVANANTHAPURAM VERSUS KERALA STATE BEVERAGES [ 2014 (5) TMI 170 - KERALA HIGH COURT ] where it was held that Reverting to Section 35L, we notice that clause (b) thereof provides for an appeal to the Supreme Court from any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise. Appeal dismissed.
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2019 (7) TMI 1016
Time Limitation - Refund claim - Section 102 of the Finance Act, 1994 - refund claim in respect of Service Tax paid from 1st April, 2015 to 29th February, 2016 filed by appellant on 06.02.2017 - HELD THAT:- Sub-section (3) of Section 102 of the Finance Act, 1994 provides for submission of refund claim in respect of Service Tax paid from 1st April, 2015 to 29th February, 2016 in respect of taxable services provided to Government within a period of 6 months from the date on which Finance Bill, 2016 received the assent of the President of India. It was further informed that the said Finance Bill, 2016 received assent of the President of India on 14.05.2016 and therefore the last date for filing refund claim under Section 102 of the Finance Act, 1994 was 13.11.2016. The Lower Authorities have held that the appellant s application for refund was filed by appellant on 06.02.2017 and therefore, the same was hit by limitation under Sub-section (3) of Section 102 ibid. Appeal dismissed - decided against appellant.
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2019 (7) TMI 1015
Rectification of Mistake - error apparent on the face of record or not - demand of service tax liability in respect of Membership of Clubs or Association Services and Renting of Immovable Property service - HELD THAT:- There is indeed an error apparent from the records as pointed out in the Miscellaneous Application for rectification of mistake filed by the Revenue - Necessary rectification carried out. The Miscellaneous Applications for rectification of mistake are therefore allowed.
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2019 (7) TMI 1003
Condonation of delay of 420 days in filing appeal - person dealing with the files had fallen ill and both were in the wrong impression that appeals had already been filed - HELD THAT:- The delay in these three appeals can be condoned on terms. Appellants will have to pay up an amount of ₹ 15,000/- in respect of each appeal. In other words, totally ₹ 45,000/- should be paid to Revenue for hearing the appeals on or before 08.04.2019. Compliance to be reported on 08.04.2019.
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Central Excise
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2019 (7) TMI 1014
Reversal of CENVAT credit - inputs/capital goods - M.S. Angles, M.S. Plates, Foundation bolts and Channels, etc., which were used in their factory - period January 2012 to January 2014 - credit was reversed but there was short reversal - HELD THAT:- As per the stand of the appellant, he has reversed CENVAT credit of ₹ 16,60,408/- in CENVAT account vide Entry 66 and 419 but as per the verification done by the Superintendent of Bijapur, the appellant has reversed only an amount of ₹ 16,55,919/- and balance of ₹ 10,329/- is yet to be paid by the appellant along with interest and penalty. Since there is discrepancy in the reversal of the CENVAT credit, the matter is remanded to the Original Authority for verification of the same. Interest and penalty - HELD THAT:- If on verification, it is found that the appellant has reversed less amount, then the appellant would be liable to pay the differential amount along with interest but if it is found that he has reversed more than what was required then he is not liable to pay any interest and the penalty because he has not utilized the CENVAT credit availed and reversed the same before the issuance of show-cause notice. Appeal allowed by way of remand.
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2019 (7) TMI 1013
Process amounting to manufacture - printing of glass bottles - provisional release of detained goods - HELD THAT:- On provisional release the goods were placed at the disposal of the appellant and as per the submissions during hearing appellant has cleared the said goods on payment of duty whenever the occasion for clearance arose. Therefore, it is not established that the goods which were confiscated were cleared without payment of duty and therefore, there was no occasion to demand central excise duty on the same. There was no occasion for invocation of provisions of Section 11AC of Central Excise Act, 1944 in respect of the confiscated goods - the order of confiscation under Rule 25 of Central Excise Rules, 2002 is not as per the provision of law in the present case - Whereas the confiscation is not as per the provision of law, the charge of abatement for clandestine removal does not survive. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 1012
CENVAT Credit - input services through ISD invoices passed on by their head office - construction service - period May 2012 to January 2014 - Suppression of facts or not - invocation of Extended period of Limitation - HELD THAT:- In the present case, the period involved is May 2012 to January 2014 and the SCN is dated 17.11.2016. From the documents placed on record there have been queries and replies by the assessee and one of the earliest queries by the Revenue is dated 20.09.2013. There were also replies filed on various dates and one of such replies is dated 10.06.2014 wherein, the details have been explained very clearly covering all the points in dispute. These points clearly show that the Revenue was in fact aware of the activities of the appellants. The stand of the Revenue as to suppression is, therefore, only on imaginations, which is not supported by any documentary evidence, which cannot sustain. Revenue has miserably failed to justify invoking larger period of limitation and therefore, the impugned order cannot sustain. Hence the same is set aside. Appeal allowed on limitation.
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2019 (7) TMI 1004
Valuation - inclusion of storage charges in assessable value - post manufacturing activity or not - time limitation - HELD THAT:- The issue is covered by this Tribunal Larger Bench Judgment in the case of Victory Electricals Ltd. [ 2013 (12) TMI 81 - CESTAT CHENNAI ] where it was held that The value payable in a case where liquidated damages is applied would therefore be the consequent value and this would constitute the transaction value . Time limitation - HELD THAT:- Since the issue involved is interpretation of Section 4, therefore, there were various contrary decisions and for this reason also the matter was referred to Larger bench and finally in 2013, the Larger Bench has decided the issue and in the present case, the period involved is November 2004 to December 2005 and SCN was issued in June 2009. In these facts, suppression of fact on the part of the appellant cannot be alleged. Hence the demand of duty of storage charges is hit by limitation. Appeal allowed in part.
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CST, VAT & Sales Tax
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2019 (7) TMI 1011
Validity of re-assessment order - Section 39(1) of the KVAT Act - power of rectification of assessment or re-assessment - HELD THAT:- Section 41(1) of the KVAT Act is applicable where the order of re-assessment is found to be erroneous insofar it is prejudicial to the interest of the public revenue by the judgment or order of any Court - the re-assessment orders impugned dated 08.08.2017 at Annexure A to the writ petitions passed under Section 39(2) of the KVAT Act as well as the consequent notices of demand at Annexure-B to the writ petitions are quashed reserving liberty to the Department to initiate appropriate proceedings in accordance with law. Petition disposed off.
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2019 (7) TMI 1010
Compounded rate of tax - cancellation of permission to pay tax at compounded rate by the petitioner u/s 8(f) of the KVAT Act, 2003 - HELD THAT:- By referring to Ext.P8 this Court while directing the appeal to be disposed of within time frame ought not to either keep in abeyance or stay Ext.P5 notice issued under Section 25 of the Act. Sri.Tomson T. Emmanuel insists for consideration of his alternate prayer: direct the Tribunal to dispose of Ext.P6 appeal on 24.07.2019. The Kerala Value Added Tax Appellate Tribunal, Kochi/ second respondent considers completing argument on 24.07.2019 or on a shorter date to which the appeal stands posted to and disposes of the appeal not later than 09.08.2019 - Petition disposed off.
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2019 (7) TMI 1009
Maintainability of appeal - availability of alternative remedy - Validity of revised Assessment Order - Section 51 of TNVAT Act - It is the specific and pointed case of the learned counsel for writ petitioner that the directions of the Appellate Authority have not been adhered to - principles of natural justice - HELD THAT:- This Court is convinced that directions of the Appellate Authority and principle of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] , have not been violated in the instant case. In JKM principle factually the dealer was not given the opportunity of going through the website and the dealer was not provided with copies of invoices. Therefore, grievance of the writ petitioner turns on merits of the matter and it can at best qualify as errors, (if at all), in the impugned order in carrying out this exercise. These can therefore only be grounds for appeal and not for interference in writ jurisdiction. Interference in writ jurisdiction notwithstanding alternate remedy is a rule of discretion. It is also a self-imposed restraint. In other words it is not a rule of compulsion. Though alternate remedy rule is a rule of discretion and not a rule of compulsion Hon'ble Supreme Court in the case of UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS [ 2010 (7) TMI 829 - SUPREME COURT] has held that with regard to cases pertaining to taxes, cess etc., i.e., fiscal laws in general, alternate remedy rule has to be applied with utmost rigour. This Court is convinced that this is a fit case to relegate the writ petitioner to avail alternate remedy by filing a statutory appeal under Section 51 of TNVAT Act. If the writ petitioner chooses to avail the alternate remedy and files a statutory appeal, as the writ petitioner has already paid 25% of the tax liability for preferring the earlier appeal being A.P.No.241 of 2018, which was disposed of on 31.12.2018, appeal that may be filed now shall be entertained by the Appellate Authority (subject of course to limitation and delay condonation if that be the scenario) without insisting on any payment of 25% of tax liability all over again. Appellate Authority shall decide the appeal, uninfluenced by and untrammelled by any view/s expressed in instant order as they are for the limited purpose of disposing of instant writ petition. Petition disposed off.
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2019 (7) TMI 1008
Time limitation of impugned order - TNVAT Act - the impugned order-I made and served on writ petitioner in June of 2017 has been assailed in the instant writ petition, which has been filed more than two years later i.e., in July of 2019 i.e., 01.07.2019 - HELD THAT:- In the instant case, the impugned order itself makes it clear that an appeal lies to the jurisdictional Deputy Commissioner within 30 days from the date of receipt of a copy of the order, but writ petitioner has not chosen to file a statutory appeal - There is no disputation before this Court that a statutory appeal lies to jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act. As rightly pointed out by learned counsel for Revenue, writ petitioner has gone into slumber after service of impugned order in the writ petition and has woken up only after the distraint notice was served on the writ petitioner on 15.04.2019 and has chosen to come to this Court on 1st July 2019 with the instant writ petition - There is no explanation whatsoever as to why the writ petitioner did not choose either to come to this Court or prefer a statutory appeal immediately after the receipt of the impugned order. It is now too late in the day to assail the impugned order. Petition dismissed.
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Indian Laws
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2019 (7) TMI 1007
Penalty of removal from service - disagreement with the Inquiry Report - HELD THAT:- The requirement of second show cause notice of proposed punishment has been dispensed with. The mandate now is only to apprise the delinquent of the Inquiry Officer s report. There is no necessity of communicating proposed punishment which was specifically contemplated by clause (2) of Article 311 prior to 42nd Amendment. The previous punishments could not be subject matter of the charge sheet as it is beyond the scope of inquiry to be conducted by the Inquiry Officer as such punishments have attained finality in the proceedings. The requirement of second show cause notice stands specifically omitted by 42nd Amendment. Therefore, the only requirement now is to send a copy of Inquiry Report to the delinquent to meet the principle of natural justice being the adverse material against the delinquent. There is no mandatory requirement of communicating the proposed punishment. Therefore, there cannot be any bar to take into consideration previous punishments in the constitutional scheme as interpreted by this Court. Thus, the non-communication of the previous punishments in the show cause notice will not vitiate the punishment imposed. In the present case, the High Court has set aside the order of punishment on the ground that it violates the principle of natural justice. This Court has not found reasons to set aside the order of punishment whereas in a case where order of punishment has been set aside, the principles of natural justice would warrant that the matter is remitted back to the Disciplinary Authority to consider whether the removal of the delinquent on the basis of charge No. 4 alone can be sustained or not. The order of punishment passed on the basis of uncommunicated reasons of disagreement recorded in respect of charge Nos. 1 and 5 cannot be faulted with. In fact, the argument of Mr. Vishwanathan is that charge No. 4 alone is sufficient to maintain the order of punishment of removal from service. Though, charge No. 4 may be sufficient to inflict punishment but it is not necessary that the charge No. 4 alone will entail punishment of removal from service. While exercising the power of judicial review, it will not be within our jurisdiction to maintain the order of punishment of removal from service in view of findings recorded on charge No. 4 itself. It is for the Disciplinary Authority to inflict punishment as it may consider appropriate after finding the charge No. 4 proved against the delinquent. Since the delinquent has attained the age of superannuation, there cannot be any order of reinstatement or of suspension. In view thereof, the order of punishment dated November 4, 1993 as also the order of the Appellate Authority are set aside and the matter is remanded back to the Disciplinary Authority to consider as to whether it would like to record reasons of disagreement on charge Nos. 1 and 5 and/or impose punishment on the basis of charge No. 4 with which there is no disagreement, as it may consider appropriate - Appeal allowed by way of remand.
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2019 (7) TMI 1006
Dishonor of Cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act, 1881 - maintainability of complaint on the ground of time limitation - HELD THAT:- It appears from the material on record that the trial Court will have to find out after appreciation of documents on record, whether the complaint filed by the first Respondent was within time or otherwise. Prima facie it appears that notice sent on residential address of the applicant was received by the complainant i.e. by first Respondent on 15th February 2018 and complaint was filed on 14th March 2018. Therefore, at the threshold it cannot be concluded that complaint was not filed within limitation. Therefore, trial Court will have to find out upon appreciation of documents placed on record, whether the applicant had knowledge of accessing email, and as a matter of fact, whether he received the email sent by the applicant on 27th January 2018. Prima facie it appears that signature on the subject cheque is not denied by the present applicant. In the light of the discussion in forgoing paragraphs this Court is of the opinion that no interference is called for in the order of issuance of process. Hence, application stands rejected. Application dismissed.
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2019 (7) TMI 1005
Dishonor of Cheque - Plea that pleading not guilty was singed by the advocate on behalf of petitioner accused - whether advocate was property instructed - Section 138 of Negotiable Instruments Act, 1881 - repayment of debt - HELD THAT:- The impugned order makes it abundantly clear that in case the Advocate is willing to sign on plea in that case only such application/prayer for exemption was granted. If the contention of the petitioner is accepted that the Advocate was not instructed to sign on plea, in that case it was open for the Advocate not to sign on plea. Since the Advocate for the petitioner has signed the plea and pleaded not guilty, it is not open for the petitioner to say that Advocate was not instructed accordingly. The Supreme Court in the case of BHASKAR INDUSTRIES LTD. VERSUS M/S. BHIWANI DENIM APPARELS LTD. ORS. [ 2001 (8) TMI 1407 - SUPREME COURT] has taken a view that magistrate can allow an accused to make even the first appearance through a counsel. The magistrate is empowered to record the plea of the accused even when his counsel makes such plea on behalf of the accused in a case where the personal appearance of the accused is dispensed with. Petition dismissed.
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