TMI Tax Updates - e-Newsletter
July 25, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy FEMA Service Tax Central Excise Indian Laws

Articles

• GIST OF RECENT CBIC NOTIFICATIONS ON RATE CHANGES
• RELEASE OF CURRENCY SEIZED UNDER FEMA LAW
• Suppression of facts cannot be alleged when the trading activities in form of Balance Sheet are declared

News

• Government sets a target of 75% procurement by 15th August and 100% by the end of current financial year for procurement through GeM

  ---

Notifications

GST - States

• (06/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Seeks to amend Notification FD 48 CSL 2017, dated the 29th June, 2017

  ---

• (05/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Seeks to amend Notification (13/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

  ---

• (04/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Seek to amend Notification (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

  ---

• (03/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Seeks to amend Notification (11/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

  ---

• F.12(15)FD/Tax/2022-41 - dated 16-7-2022 - Rajasthan SGST
  Seeks to make amendments in notification no. 167/2019- State Tax, dated the 7th March, 2019

  ---

• F.12(15)FD/Tax/2022-40 - dated 16-7-2022 - Rajasthan SGST
  Seeks to make amendments in notification no. 166/2019- State Tax dated the 7th March, 2019

  ---

• F.12(15)FD/Tax/2022-39 - dated 16-7-2022 - Rajasthan SGST
  Seeks to rescinds notification no. 136/2017- State Tax (Rate) dated the 14th November, 2017

  ---

Circulars / Instructions / Orders

GST - States

• GST-06 /2022 - dated 8-7-2022
  Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification

Customs

• Instruction No.16/2022 - dated 21-7-2022
  Compendium of orders/ circulars/ guidelines issued from WPC Wing, DoT in regard to Import licensing requirement from WPC wing for import of wireless equipment

Highlights / Catch Notes

GST

• Seeking Grant of Regular Bail - availment of fraudulent Input Tax Credit - From the documents adduced, role of the applicant prima-facie appears to be serious in nature and as per the prosecution, further investigation is going on to find out more suspicious and fake suppliers with whom the applicant alleged to have made transactions in order to avail Input Tax Credit illegally. - the allegations made against the applicant, the evidence collected by the prosecution, seriousness of the offence the applicant cannot be released on bail. - HC
  Visit to Get Source

  ---

• Scope of the show cause notice (SCN) - in case if the authority intend to add interest and penalty on the amount fixed in the show cause notice, separate notices ought to have been issued to the petitioner for the said demand, which was not done in the instant case. Apart from that a perusal of the order would show that except extracting the explanation given to the show cause notice, there is no discussion raised on the objections - It is also to be noted that, while dealing with the objections raised, the authority goes into the aspect of claim of ITC alleged to have been made by the petitioner which was not the content of the show cause notice. - HC
  Visit to Get Source

  ---

• Recovery of demand - initiation of Garnishee proceedings - The assessment order and the demand does not remain merely a piece of paper, unless an assessee gets relief by a higher authority against the assessment order and demand arising from it, it is the statutory duty of the officer to see that the demand arising out of an adjudication order is being realised. Further, adjudication order in question out of which the demand in question arises is an appealable order and till date petitioner has not availed any remedy under the statute by way of filing appeal against the same. - Petition dismissed - HC
  Visit to Get Source

  ---

• Levy of GST - Long term lease of 99 years - Validity and legality of the recovery notice - It is clearly stated that “the petitioner has misconstrued the simple communication letter as recovery notice and filed the present petition taking such an insignificant ground” - thus, nothing further survives in the petition. - HC
  Visit to Get Source

  ---

Income Tax

• Deduction u/s 80IC - process amounted to ‘manufacture’ or ‘production’ of the Anchors or not - The term ‘manufacture’ or ‘produce’ used in Section 80IC has to be construed in the true context of the object and purpose of the said provision. The ITAT has failed to consider this important aspect which, in our considered view, necessarily was mixed question of fact and law required to be decided by the Appellate Tribunal in exercise of jurisdiction vested in it under law. - HC
  Visit to Get Source

  ---

• Penalty levied u/s 271(1)(C) - exemption u/s 80-IC - income in the garb of fictitious cash sales - Assessing Officer as well as the Appellate Authority, rightly gave finding of fact that the cash sales putforth by the respondent were not genuine and the respondent had introduced its unaccounted income in the garb of cash sales. The Tribunal erred in deleting the penalty levied under Section 271(1)(c) of the Act despite there being sufficient material on record to show that the cash sales set up by the respondent were fabricated and not genuine. - HC
  Visit to Get Source

  ---

• Unexplained income - unexplained money under section 69A - gifts received by the assessee from brother and sister - It is a general practice followed that in time of medical emergencies, the near and dear ones of the family, close friends and relatives generally pool their resources to help the family in need. - gifts received by the assessee from her brother and sister cannot be added as unexplained income - AT
  Visit to Get Source

  ---

• Addition on account of service tax that was collected but not paid - Grievance of the assessee that as he had not claimed any deduction of the amount of service-tax - Additions u/s 43B - no infirmity emerges from the accounting of the contract receipts by the assessee on the basis of exclusion method (i.e net of service-tax), which as observed by us hereinabove had consistently been followed by it since last many years. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) who had held that the accounting of the contract receipts by the assessee by adopting the exclusion method (i.e net of service-tax) was not proper. - AT
  Visit to Get Source

  ---

• Penalty levied u/s 271F - assessee had failed to furnish return of income within due date - from the submission of assessee, we find that the assessee has a reasonable cause for not filing the return of income on the pretext that he is not having taxable income. AO has not brought on record that the assessee is habitual in filing return belatedly. - AT
  Visit to Get Source

  ---

• Depreciation on power plant at written down value method as against claimed by the appellant at straight line method - There is no bar under law that a captive undertaking is not eligible for deprecation under SLM basis - we note that in the past and subsequent years, the depreciation has been allowed under SLM basis and therefore, we see no rationale and justifiable basis for the CIT(A) to disturb the basis of allowing the depreciation under WDV instead of SLM basis as so claimed and allowed to the assessee over the years where there are no changes in the facts and circumstances of the case. - AT
  Visit to Get Source

  ---

• Addition under Section 56(2) (x) - difference in sale consideration and stamp duty value of 7 properties sold - application of tolerance band limit - - introduction of tolerance band is for removing the hardship in the section. once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced - the benefit of enhanced tolerance band limit of 10% allowed - AT
  Visit to Get Source

  ---

• Revision u/s 263 by CIT - claim of higher depreciation at the rate of 30% on vehicles - Even in the 263 proceedings before Ld. Pr. CIT and in the proceedings before us, the learned counsel for the assessee has not been able to bring anything on record to substantiate that the assessee was primarily engaged in the business of letting out vehicles on hire, so as to be eligible for claim of higher rate of depreciation on vehicles @30%. - AT
  Visit to Get Source

  ---

• Revision u/s 263 by CIT - A reading of the same clearly shows that after having made a contradictory observation on issue of lack of enquiry of cash deposit aspect for which the assessment was taken up, the ld. PCIT went on virtually issue a notice u/s 143(2) and embark upon fishing and roving expedition. PCIT never mentioned in his order before issuing this second notice as to how the Assessment Order in this regard was erroneous so as to be prejudicial to the interest of the revenue. Hence, this part of the ld. PCIT’s order wherein notice was issued dehors any finding or even mention of the AO’s order being erroneous or prejudicial to the interest of the revenue is not at all sustainable. - AT
  Visit to Get Source

  ---

• Revision u/s 263 - Addition u/s 56(2)(viib) for the excess share issue price - the AO has conducted sufficient inquiry by calling all necessary details and information and accepted the genuineness of the said transactions after being satisfied with the identity, creditworthiness and genuineness of the shareholders and examining fair market value of the equity shares issued. Under these given facts and circumstances wherein neither the order of the Assessing Officer is erroneous nor it is prejudicial to the interest of the revenue, there remains no scope for ld. PCIT to invoke the provision of section 263 of the Act. - AT
  Visit to Get Source

  ---

Customs

• Seeking grant of Bail - Smuggling - Foreign Gold - Considering the value of gold already seized, the manner in which the gold were received in this country and the attendant circumstances, there can be no doubt that the occurrence is flagrant violation of the provisions of Customs Act. The relevant provisions of the Customs Act are intended to protect the fiscal and commercial interest of the nation. An offence like this must be viewed with all the seriousness. - HC
  Visit to Get Source

  ---

• Seeking Conversion of shipping bills - conversion of Export Promotion Scheme from Duty Drawback (DBK) to Advance Licence - there is a clear and independent provision under section 149 that without challenging the assessment an assessee can seek amendment under shipping bill even after assessment of export documents. Moreover, the learned principal commissioner has denied the conversion only on the ground that the appellant had violated condition prescribed under para 3 (e) of Circular no. 36/2010-Cus dated 23.09.2010, thus condition does not get violated therefore, the revenue’s submission is not relevant. - AT
  Visit to Get Source

  ---

FEMA

• Offence under FEMA - Levy of penalty post compounding orders - We cannot hold petitioners responsible for contravention once the compounding orders have been passed. We have noted that there is a gap of “one day” between the passing of the two sets of orders, i.e., compounding orders and adjudicating order. Be that as it may, petitioners cannot be faulted and held liable for contravention once the compounding orders are passed by the Compounding Authority. That is the mandate of the statute. - HC
  Visit to Get Source

  ---

Indian Laws

• Appointment of Arbitrator in applications - notified claims or not - Section 11(6) of the Arbitration Act - It is observed that the learned Arbitrator shall first decide the aspect with regard to ‘accord and satisfaction’ of the claims and arbitrability of the disputes with regard to such claims by deciding an application under Section 16 of the Arbitration Act, which is reported to be pending. The learned Arbitrator shall first decide the jurisdiction of the Arbitral Tribunal and the arbitrability of the claims within a period of three months from the date of first sitting which shall be within a period of one month from today. - SC
  Visit to Get Source

  ---

• Dishonor of Cheque - Funds Insufficient - rebuttal of presumption - it is strange that a person with a meagre income would lend such a huge amount to someone and that too without getting any writing executed at the time of advancing of the loan - The respondent accused has been able to rebut the presumption that the cheque was issued in the discharge of a legally enforceable debt and the view taken by the Trial Court while acquitting the accused is a reasonable view based on the evidence on the record - HC
  Visit to Get Source

  ---

IBC

• Validity of order of NCLT admitting the application for CIRP - Although, pendency of winding-up petition before the High Court may not preclude filing of Section 7 Application, but in the present case, when there are various orders passed by Company Judge, in Company Petition No.355 of 1997, which has relevance and consequence on Section 7 Application, the orders passed in Company Petition ought to have been adverted by the Adjudicating Authority before admitting Section 7 Application - thus, Adjudicating Authority committed error in admitting Section 7 Application, which did not deserve admission in the facts of the present case. - Adjudicating Authority committed error in admitting Section 7 Application, which did not deserve admission in the facts of the present case as noticed above. - AT
  Visit to Get Source

  ---

Central Excise

• Levy of penalty imposed under Rule 26 of the Central Excise Rules, 2002 - wrongful availment of CENVAT Credit - There are no whisper about any retraction or any disputes as to their statements being not voluntary. The same are not even rebutted as having been obtained per force. Hence, the statements are relevant documents. The present appeal was filed in the year 2013 and the appellant had sufficient time to place all such relevant documents on record, but no such attempt is made. - levy of penalty confirmed - AT
  Visit to Get Source

  ---

• CENVAT Credit of 2% CVD paid - the assessee/respondents are eligible for Cenvat credit in respect of 1% or 2% CVD, as the case may be, paid under Notification No. 12/2012-Cus. Otherwise also, the issue involved in these appeals is no more res integra and is covered in favour of assessee in view of various decisions of this Tribunal on the identical issue. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (7) TMI 1023
  Constitutional Validity of para 3.2 of Circular No.135/05/2020-GST, dated 31.03.2020, of the Central Board of Indirect Taxes and Customs - ultra vires Section 54(3)(ii) of the Central Goods and Services Tax Act, 2017 or not - Refund of GST - HELD THAT:- As per Circular No.173/05/2022-GST, dated 06.07.2022, it has been clarified that in cases where the supplier is making supply of goods under a concessional notification and the rate of tax of output supply is less than the rate of tax on input supply (of the same goods) at the same point of time due to supply of goods by the supplier under such concessional notification, refund of accumulated input tax credit on account of inverted structure as per clause (ii) of sub-section (3) of Section 54 of the CGST Act would be allowed in those cases where accumulation of input tax credit is on account of rate of tax on outward supply being less than the rate of tax on inputs (same goods) at the same point of time, as per some concessional notification issued by the Government providing for lower rate of tax for some specified supplies subject to fulfilment of other conditions. The respondent No.4 is directed to process the claim of refund of the petitioner in terms of Section 54 of the CGST Act. The said exercise shall be completed within a period of eight weeks from the date of receipt of a copy of this order - petition disposed off.

  ---

• 2022 (7) TMI 1022
  Seeking Grant of Regular Bail - availment of fraudulent Input Tax Credit - purchase of iron scrap from M/s Kalodia Traders and M/s S.R. Enterprises and eight others firms whose GST registration have already been cancelled - HELD THAT:- A bare perusal of case diary goes to show that initially on the basis of two Alert Letters C. No.IV(6)13/AE/RKL/2022/1056-A and F.No.DGGI/BbZU/INV/123/GST/2019/2539 issued by Assistant Commissioner (AE), Rourkela and Additional Director, DGGI, Bhubaneswar respectively, regarding sharing of information in case of non-existent business entity, the business premises of the applicant from where the business activities were being performed, searched out and upon scrutiny of document it is found that the applicant has illegally availed Input Tax Credit of more than Rs.5,00,00,000/- by purchasing the goods from several suspicious and fake suppliers whose registration had already been cancelled. During search, it also came to the forefront that more than 700 vehicles, against which invoices were submitted by the applicant wherein only vehicle numbers were mentioned, have not fount to be passed through the relevant toll gate. From the documents adduced, role of the applicant prima-facie appears to be serious in nature and as per the prosecution, further investigation is going on to find out more suspicious and fake suppliers with whom the applicant alleged to have made transactions in order to avail Input Tax Credit illegally. In the instant case, charge sheet has been filed against the applicant, however, further investigation is going on and as per respondent, there is much more probability of detecting more fake and suspicious firms. The economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Economic offence is always committed with calculated design profiting himself regardless of the consequence to the community. Considering the facts and circumstances of the case, the allegations made against the applicant, the evidence collected by the prosecution, seriousness of the offence the applicant cannot be released on bail. Bail application dismissed.

  ---

• 2022 (7) TMI 1021
  Scope of the show cause notice (SCN) - Violation of of principles of natural justice - petitioner has been filing returns regularly after adjusting the tax credit in terms of Section 16 of CGST/SGST Act, 2017 - HELD THAT:- The show cause notice was issued on 10.08.2021, by the Office of the Assistant Commissioner (ST)(FAC), Tadipatri, demanding the petitioner to pay a sum of Rs.69,12,114/- under CGST. On the very same day, another show cause notice was issued demanding payment of Rs.69,12,114/- under SGST Act - The petitioner submitted his explanation on 09.09.2021 explaining the mistake committed by the authority in arriving at the said figures. The representation was received on 09.09.2021. Thereafter, the impugned order came to be passed on 17.11.2021 fixing the liability at Rs.5,20,39,891/-. The said amount was arrived at after calculating interest and penalty to be paid by the petitioner, on the amount demanded. Not only that, an amount of Rs.84,16,365/- was added towards Integrated Goods and Services Tax (IGST) which is impermissible under law. It is also to be noted here that in case if the authority intend to add interest and penalty on the amount fixed in the show cause notice, separate notices ought to have been issued to the petitioner for the said demand, which was not done in the instant case. Apart from that a perusal of the order would show that except extracting the explanation given to the show cause notice, there is no discussion raised on the objections - It is also to be noted that, while dealing with the objections raised, the authority goes into the aspect of claim of ITC alleged to have been made by the petitioner which was not the content of the show cause notice. The matter is remanded back to the authority to issue fresh notice and there after proceed further in accordance with law - Appeal allowed by way of remand.

  ---

• 2022 (7) TMI 1020
  Recovery of demand - initiation of Garnishee proceedings - petitioner has not availed any remedy under the statute by way of filing appeal - HELD THAT:- Considering the facts and circumstances of the case that till date petitioner has not filed any appeal against the impugned adjudication order out of which the demand in question arises and for realization of which impugned garnishee proceeding has been initiated. The officer concerned is perfectly justified in initiating garnishee proceeding for realization of the demand arising out of the adjudication order in question. When assessment orders are passed and demands are raised it is the duty of an officer to take steps for realization of the demand. The assessment order and the demand does not remain merely a piece of paper, unless an assessee gets relief by a higher authority against the assessment order and demand arising from it, it is the statutory duty of the officer to see that the demand arising out of an adjudication order is being realised. Further, adjudication order in question out of which the demand in question arises is an appealable order and till date petitioner has not availed any remedy under the statute by way of filing appeal against the same. Petition dismissed.

  ---

• 2022 (7) TMI 1019
  Levy of GST - Long term lease of 99 years - Validity and legality of the recovery notice - whether long term lease of 99 years is nothing but sale of land and building in terms of Entry 5 of Schedule III to Section 7 of the CGST Act,2017 and that it would not attract the levy of GST? - HELD THAT:- Stating the bare minimum facts, the petitioner purchased the Plot Nos. 2201 and 2202 in the Ankleshwar Industrial Area of Gujarat Industrial Development Corporation. Deed of Assignment-cum- Slup Deed dated 28.10.2010 was executed. Subsequently, the petitioner sold of the said property by sale deed dated 08.06.2018 transferring rights thereunder to one Siddharth Interchem Private Limited. It was stated that the said Siddharth Interchem Private Limited would be using the plot for manufacturing operations. It further appears that the petitioner received impugned recovery notice as is styled by the petitioner in relation to the said transaction - On bare reading of the said communication dated 28.05.2021, described by the petitioner as recovery notice , we find that it is a mere communication from respondent No.3. We are at a loss at to why such communicative exercise has been undertaken by the department. Be that as it may. It is clearly stated that the petitioner has misconstrued the simple communication letter as recovery notice and filed the present petition taking such an insignificant ground - thus, nothing further survives in the petition. There exists no cause of action whatsoever in the present set of facts. Petition dismissed.

  ---

• Income Tax

• 2022 (7) TMI 1018
  Deduction u/s 80IC - whether the process undertaken by the assessee in its industrial unit at Parwanoo amounted to manufacture or production of the Anchors so as to qualify the requirements of Section 80IC - AO and CIT(A) concurrently held that since the substantial process involved in production of Anchors was being got done by the assessee from Ludhiana on work order basis and only a small part of it was being done at Parwanoo, the assessee could not be said to have the necessary qualification to avail deduction under Section 80IC - ITAT allowed the deduction - HELD THAT:- Section 80IC of the Act allows deduction from the profits and gains in computing the total income of the assessee in specific cases enumerated in said provision. The assessee should be an undertaking or enterprises, which had begun to manufacture or produce any article or thing not being an article or thing specified in 13th schedule, between 07.01.2003 to 01.04.2012 in an Industrial Area notified by the CBDT. In the State of Himachal Pradesh, the industrial area of Parwanoo was so notified by the CBDT vide Notification No. 273/2003 dated 04.11.2003. The purpose of incorporation of Section 80IC manifestly was to invite long term investment, entrepreneurship etc. in the areas which were industrially backward. The incentive of deduction from the income generated from such enterprise for the limited years could not be used to negate the very purpose of the inclusion of Section 80IC. This facility could not be allowed to be used to camouflage the production by making only small investment in the areas specified in Section 80IC on one hand and abandon the production after lapse of incentive period on the other. The very small quantum of capital investment made by the assessee in establishing its unit at Parwanoo had also weighed with the Assessing Officer as one of the reasons to hold as above. The term manufacture or produce used in Section 80IC has to be construed in the true context of the object and purpose of the said provision. The ITAT has failed to consider this important aspect which, in our considered view, necessarily was mixed question of fact and law required to be decided by the Appellate Tribunal in exercise of jurisdiction vested in it under law. The substantial questions of law at Serial No. 1 and 2 are answered accordingly. Entire profit declared by the assessee was allowable as deduction u/s 80IC - Whether ITAT has misconstrued and misunderstood the facts on record while setting aside the clear finding that the profit had been inflated by the assessee for the purpose of deduction u/s 80IC - HELD THAT:- ITAT being the final fact finding authority, in our considered view, has drawn the conclusions on the basis of records. There is nothing in the order of Assessing Officer that the books of account of assessee were rejected. In the Assessment Order passed for Assessment Year 2006-07 the Assessing Officer had only observed that such books were not reliable, which cannot be taken to compliance of Section 145 of the Act. Further, the orders passed by Assessing Officer with respect to capping of profits earned by the assessee at 7% only on the alleged basis of comparison of accounts of Kay Pee Industries coupled with deduction of amount equivalent to 10% of the total sales towards non-payment of know how charges and towards usage of goodwill etc. have rightly been rejected by the ITAT being without any legal material or evidence. The Appellate Tribunal found nothing on record which could warrant the conclusions drawn by the Assessing Officer. To that extent, we are in agreement with the findings recorded by the ITAT. Questions No. 3 and 4 are answered accordingly.

  ---

• 2022 (7) TMI 1017
  Penalty levied u/s 271(1)(C) - assessee has furnished inaccurate particulars of income in the garb of fictitious cash sales and thereby claimed exemption u/s 80-IC - HELD THAT:- The finding of fact arrived by the Assessing Officer as well as the Appellate Authority, has been set aside by the Tribunal mainly on the ground that the respondent had substantiated its explanation by sale bills, sale tax Challan and sale tax order passed by the VAT Authorities. Thus, the Tribunal was mainly influenced by the fact that as the VAT authority had accepted the cash transactions in question, the cash sales put up by the respondents were genuine. However, we are of the opinion that merely because the VAT Authorities had accepted the cash sales set up by the respondent in itself, is not a sufficient ground to hold that the cash sales set up by the respondent were genuine. Assessing Officer was liable to independently look into the cash sales to come to a conclusion as to whether the said sales were genuine or not. Assessing Officer as well as the Appellate Authority, rightly gave finding of fact that the cash sales putforth by the respondent were not genuine and the respondent had introduced its unaccounted income in the garb of cash sales. The Tribunal erred in deleting the penalty levied under Section 271(1)(c) of the Act despite there being sufficient material on record to show that the cash sales set up by the respondent were fabricated and not genuine. As we are of the considered opinion that the order passed by the Tribunal is liable to be set aside as the penalty levied under Section 271(1)(c) of the Act against the respondent was liable to be upheld in view of inaccurate particulars of income furnished by the respondent in the garb of fictitious cash sales with a view to claim exemption under Section 80-IC - Decided in favour of revenue.

  ---

• 2022 (7) TMI 1016
  Maintainability of appeal in High court - denial of Deduction u/s 80IB - scope of statutory remedy available under Section 260A - whether the High Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India ought to have entertain a challenge to the assessment order on the sole ground that the statutory remedy of appeal against that order stood foreclosed by the law of limitation? - HELD THAT:- As held in M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT ] once an efficacious alternative remedy by way of statutory appeal as provided under the special enactment and the assessee having failed to avail that statutory efficacious remedy, the High Court in exercise of powers conferred under Article 226 of the Constitution of India, cannot extend the statutory period of appeal which has otherwise expired. Thus, this Court cannot disregard the substantive provisions of special enactment and pass orders which otherwise can be settled only through a mechanism prescribed under the statute. This Court finds entertaining the writ petition as a matter of course without relegating the writ applicant to avail statutory remedy would be in disregard to the legal settled position of law as held by the Supreme Court. Even other wise, entertaining the writ petition beyond the statutory period of limitation would amount to taking a view inconsistent with legislative intent as explicitly provided under Section 260A(2a) of the Act, as the same would render the legislative scheme and intention behind the provisions otiose. Thus, in light of the aforesaid legal position, the petition fails on the count of preliminary objections of maintainability. We are in agreement with the argument advanced by the department that the statutory time period for filing appeal had expired long back in the month of, itself whereas instead of filing application seeking condonation of delay which had occurred in filing statutory appeal, the writ applicant has preferred present writ application without substantiating the plea of inability to file appeal within prescribed period of limitation. In such circumstances, no indulgence could be shown to the writ applicant. However, we make it clear that we have otherwise not gone into the merits of the impugned order under challenged. We make it clear that it would be open for the writ applicant to approach any other forum under the statute in accordance with law.

  ---

• 2022 (7) TMI 1015
  Disallowance of expenditure - assessee has not produced any supporting evidences for the expenditure debited in the P L account - HELD THAT:- The assessee has admitted total sales which is not possible without incurring expenditure. The contention of the assessee is that the entire extent of land is about 30 acres and it is difficult to develop the entire land in one financial year. Therefore, the assessee developed certain portion of land and sold the plots. After completion of sale of certain plots, the assessee developed some plots and sold them. We are of the view that the AO is not correct in disallowing the entire expenditure. The Ld.CIT(A) has considered all these aspects and directed the AO to make disallowance of Rs.5,00,000/- due to deficiency of bills and vouchers by comparing the A.Y.2012-13. Therefore, we do not find any infirmity in the order passed by the Ld.CIT(A). So far as the violation of 46A is concerned, CIT(A) has categorically mentioned in the order that he has gone through the bills and vouchers which were submitted by the assessee for verification. CIT(A) has found that most of the vouchers were defaced and torn out due to HudHud cyclone, therefore, no useful purpose would be served by sending these bills and vouchers for verification of AO. Hence he has not called for remand report and the Ld.CIT(A) has examined the disallowances made by the AO for the A.Y.2012-13 and disallowed an amount - Therefore, we are of the view that there is no force in the arguments of the DR. Hence the grounds raised are dismissed.

  ---

• 2022 (7) TMI 1014
  Unexplained cash credits u/s. 68 - non-transfer of the shares even after 9 years from the date of receiving the advances towards sale of shares - CIT-A deleted the addition - HELD THAT:- AO has not disputed the identity and has also erred in not causing any enquiry with the parties. AO concluded the assessment simply on the basis of non-transferability of the shares to the prospective investors even after nine years and considered it as a non-genuine transaction. We find from the MoU that the assessee has relinquished all its rights over the plant and has given possession to the prospective investors. The MoU terms clearly establishes that the intention of the assessee is to sell the plant to the prospective buyers and merely because of delay in transfer of shares does not entitle the Assessing Officer to treat it as unexplained cash credit U/s. 68 of the Act. We note from the records that the shares deemed to have been transferred in FY 2017-18. Assessing Officer, as rightly pointed out by the CIT(A) should have examined this aspect and should have taxed the income as capital gains in the hands of the assessee instead of treating it as unexplained investment U/s. 68. In view of the above findings, we find no infirmity in the order of the Ld. CIT(A) and we hereby direct the Assessing Officer to examine the aspect of treating the sale of shares as capital gains in the hands of the assessee. Needless to say the assessee has to be provided with one more opportunity before passing any order in accordance with law by the Ld. AO. Advances received from the sale of flats - AR submission that the project has been taken over by M/s. Aishwarya Constructions wherein the assessee is a Managing Partner and has received advances which are to be adjusted by M/s. Aishwarya Constructions as the original project supposed to be constructed by Sthira Infra Projects Pvt. Ltd, could not be executed due to pending litigation. The assessee has also submitted that since the advances paid by the prospective buyers has been taken by the assessee in its personal concern the CIT(A) has rightly directed the AO to delete the addition received as advanced from the prospective buyers. However the assessee has also admitted the fact that an amount of Rs. 11,35,000/- is pending for settlement with the prospective buyers as they could not be identified. CIT(A) has rightly disallowed the amount of Rs. 11,35,000/- which is pending for settlement and were are of the considered view that there is no infirmity in the order of the Ld. CIT(A) on this ground. Additions of Rs 45,08,000/- made during the AY 2013-14 it is observed that the assessee has produced confirmation letters from Sri BV Rao, Sri JRG Verma, Sri N. Apparao, Sri P. Kondala Rao, Sri P. Srinu and Sri Y. Balaraju as per the sale agreement executed. The Ld. AO has also confirmed that the amount was not refunded through prospective buyers by the assessee. Since the Agreement of Sale produced by the assessee confirms the intention of the buyers to buy the flats from the assessee the contention of the assessee that the identity of the creditors and the genuineness of the transaction was not proved by the assessee was not accepted. We therefore find no infirmity in the order of the Ld. CIT(A) and hence no interference is required with respect to the ground adjudicated by the Ld. CIT(A). Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We find from the record that the assessee has not earned any exempt income to invoke the provisions of section 14A r.w.r 8D - Various High Court and Coordinate Benches of the Tribunal have laid down the ratio that there is no requirement for disallowance U/s.14A of the Act where the assessee has not earned any exempt income. We, therefore respectfully following the judicial precedents on this issue, find no infirmity in the order of the Ld. CIT(A) and this ground raised by the Revenue is dismissed. Credit entry in the capital account of the assessee as unexplained cash credits U/s. 68 - CIT-A deleted the addition - HELD THAT:- In order to match with the investments the assessee has increased the cost of investment by crediting the capital account of the assessee in the books of account. Further, it is noted that Akash Engineering and Tech Pte Ltd, Singapore is not a domestic company and provisions of section 115(O) of the Act are not applicable to the said transaction. We also find from the page 59 of the paper book that Akash Engineering and Tech Pte Ltd have confirmed issue of 1,25,000 bonus shares to the assessee during the year 2012 and also has stated that no dividend has been declared by the company to its members. We are of the considered view that the issue of bonus shares cannot partake the character of the dividend in the hands of the assessee. CIT(A) has rightly appreciated these facts and we therefore find no infirmity in the order of the Ld. CIT(A) and this ground raised by the Revenue is dismissed. Disallowing the agricultural income - HELD THAT:- We find that the Ld. AR failed to produce any evidences regarding the sale of Mangoes from the said agricultural land of the assessee. In the absence of any supporting evidences regarding quantity of the Mangoes sold and expenses incurred in earning of such agricultural income, the Ld. AO has rightly disallowed the agricultural income and treated it as income from other sources. In view of the above, we find no infirmity in the order of the Ld. AO and we uphold the order of the AO on this ground and accordingly Ground raised by the Revenue is allowed.

  ---

• 2022 (7) TMI 1013
  Claim set off of loss against income determined under section 115BBE - HELD THAT:- As mentioned in the circular No.11/2019 wherein that an assessee is entitled to claim set off of loss against income determined under section 115BBE of the Act till the assessment year 2016-17. Moreover, as noted by us, ld. DR for the Revenue fairly accepted that in view of the aforesaid CBDT Circular, the decision of ld. CIT (A) is a correct one and it does not need any interference on our part. Accordingly, we uphold the order of ld. CIT (A) and decide the issue in favour of the assessee.

  ---

• 2022 (7) TMI 1012
  Unexplained income - unexplained money under section 69A - gifts received by the assessee from brother and sister - HELD THAT:- As assessee has discharged her initial onus by proving the identity, creditworthiness and genuineness of the transactions. A.O. cannot insist the assessee to prove the source of source. A.O. has not pointed out any defect in the Affidavits filed by both the donors viz., Mrs. Kamlesh Devi and Sh. Rakesh Jain and, therefore, the decision of the Hon ble Supreme Court in the case of M/s. Mehta Parikh Co. [ 1956 (5) TMI 4 - SUPREME COURT] relied upon by the assessee is squarely applicable to the facts and circumstances of the case. Further the submission of assessee that her husband was suffering from cancer and for the treatment, a lot of medical expenses was required to be incurred. The aforesaid contention of assessee has not been found to be false. It is a general practice followed that in time of medical emergencies, the near and dear ones of the family, close friends and relatives generally pool their resources to help the family in need. Considering the totality of the facts and circumstances of the case and following the decision of Hon ble Supreme Court in the case of M/s. Mehta Parikh Co. vs., CIT (supra) gifts received by the assessee from her brother and sister cannot be added as unexplained income. We, therefore, direct the deletion of the addition made by the A.O. and allow the grounds of the assessee.

  ---

• 2022 (7) TMI 1011
  Assessment u/s 153A - Exemption u/s 11 - developer fees collected from students by assessee as revenue in nature - HELD THAT:- As following binding decision of CIT Vs. Continental Ware housing Ltd. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] as well as relying upon the decision of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and other judicial precedents on this issue, we confirm the impugned order of the Ld. CIT(A) and dismiss the revenue appeal. Carry forward the deficit being excess expenditure of receipt to subsequent years and holding the same as eligible to be set off with the income of the subsequent years - Since we find the facts to be similar and no change in law, we respectfully following the ratio of the Co--ordinate Bench decision on this issue in assessee s sister trust case DCIT vs Dr. DY Patil Educational Academy ( 2022 (2) TMI 590 - ITAT MUMBAI ] and further we find that there was no incriminating material found during search qua assessee qua this issue qua the relevant AYs, the AO ought not to have disturbed the assessment for the relevant year as held by the Hon ble jurisdictional High Court in the case of CIT Vs. Continental Ware housing Ltd. Vs. DCIT (supra) as well as relying upon the decision in the case CIT Vs. Kabul Chawla (supra) and other judicial precedents on this issue, we confirm the impugned order of the Ld. CIT(A) and dismiss the revenue appeal.

  ---

• 2022 (7) TMI 1010
  Delayed deposit of employee s share of contribution of Provident fund - Addition u/s 36(1)(va) r.w.s. 43B - Scope of amendment - HELD THAT:- As the amendments made available on the statue vide the Finance Act, 2021 i.e Explanation 5 to Section 43B and Explanation 2 to Section 36(1)(va) are applicable w.e.f 01.04.2021, i.e, from A.Y 2021-22 onwards, therefore, the same would not have any bearing on the case of the assessee before us, i.e, for A.Y 2011-12. Accordingly,we, herein conclude, that as the employees contributions to PF and ESI was deposited by the assessee before the due date of filing of its return of income for the year under consideration, therefore, the same being saved by the provisions of Sec. 43B of the Act could not have been disallowed by the A.O As the facts and the issue involved in the aforesaid order of the Tribunal in the case of Ind Synergy Lyd. [ 2022 (4) TMI 36 - ITAT RAIPUR] remains the same as are there before us in the case of the present assessee, therefore, we respectfully follow the same. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the AO to vacate the disallowance made by him u/s.36(1)(va) of the Act qua the delayed deposit of the employees share of contribution of EPF/ESIC. - Decided in favour of assessee.

  ---

• 2022 (7) TMI 1009
  Disallowance of bogus freight/transport expenses - HELD THAT:- No doubt, the turnover of the assessee in AY 2008-09 being substantially lower than that of the year under consideration, we are of the view that it would not be fair and proper to take the figures for AY 2008-09 for comparison. Moreover, the issue before us is relating to the claim of the assessee on account of freight/transportation charges and it would, therefore, be fair and proper to consider and compare the freight expenses claimed by the assessee for the immediately succeeding two years i.e. AYs 2010-11 and 2011-12, wherein the turnover of the assessee was comparable to that of the year under consideration. As noted that the freight expenses claimed by the assessee for both these years were about 56% of the total turnover as against 66% of the total turnover as claimed by the assessee for the year under consideration. Based on this comparative analysis, the claim of the assessee for freight/transportation charges for the year under consideration thus was higher by 10% of the turnover; and, in our opinion, it would be fair and reasonable to disallow the claim of the assessee for freight/transportation expenses being about 10% of the total turnover of the assessee for the year under consideration. We accordingly modify the impugned order of the learned CIT(A) and restrict the disallowance made by him on account of freight/transportation charges - Decided against revenue. Bogus liabilities in respect of certain creditors - HELD THAT:- The entire liability appearing in the name of the concerned four creditors was fully settled by the assessee in the subsequent year by making payments through proper banking channel and keeping in view this undisputed position, it was held by the learned CIT(A) that the genuineness of the said creditors could not be doubted merely because notices issued by the Assessing Officer to them under Section 133(6) of the Act could not be served. It is thus clear that this issue was decided by the learned CIT(A) in favour of the assessee on merit accepting the genuineness of the concerned four creditors; and, as an alternative, it was also held by him that this addition even otherwise was covered by the trading addition made by him by estimating the income of the assessee by applying net profit rate. Keeping in view all the facts of the case, we find no justifiable reason to interfere with the order of the learned CIT(A) on this issue and upholding the same, we dismiss Ground No.4 of the Revenue s appeal. Addition on account of unexplained gift - unexplained gift claimed to be received from own son - HELD THAT:- CIT-A understood and appreciated the accounting entries made by the assessee for the relevant transactions in his books of account and after satisfying himself about the correctness of the same, he found that the objections raised by the Assessing Officer to treat the amount in question as unexplained were frivolous and unsustainable. The learned CIT(A) also found that all the corresponding cheques were duly cleared in the immediately succeeding year and since the identity and capacity of the donor as well as genuineness of the relevant transactions involving gift given by son to his father was duly found to be established, the learned CIT(A) deleted the addition made by the Assessing Officer on this issue. At the time of hearing before us, the learned DR has not been able to bring anything on record to rebut or controvert these findings recorded by the learned CIT(A) on appreciation of the details and documents furnished by the assessee and keeping in view the same as well as all the facts of the case, we do not find any justifiable reason to interfere with the impugned order of the learned CIT(A) giving relief to the assessee on this issue; the same is, therefore, upheld and Ground No.5 of the Revenue s appeal is dismissed. Unexplained cash credit - CIT-A deleted the addition - HELD THAT:- On verification of the additional evidence filed by the assessee, the learned CIT(A) found that both the credits in question were duly cleared by the assessee by making payments through banking channel in the subsequent year. He also found that the issue was squarely covered by the decision in the case of Chandrashekhar Ayachi ( 2013 (12) TMI 372 - GUJARAT HIGH COURT] cited on behalf of the assessee wherein it was held that where the repayment of loan was accepted by the Department in the subsequent year, no addition on account of the same could be made in the preceding year on account of unexplained cash credit. CIT(A) deleted the addition made by the Assessing Officer under Section 68 of the Act; and, keeping in view all the facts of the case, we find no infirmity in the impugned order of the learned CIT(A) on this issue warranting any interference. The same is accordingly upheld and the Ground No.6 of the Revenue s appeal is dismissed. Disallowance under Section 40(a)(ia) - Additional evidence was filed by the assessee to show that TDS was duly made from the payment of dumper hire charges and the same was also paid before the due date of filing of return - CIT-A deleted the addition - HELD THAT:- It is observed that the tax at source from the payment of dumper hire charges in question was found to have been deducted and paid by the assessee before the due date of filing of return of income for the year under consideration and on the basis of this finding, CIT(A) deleted the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act by following the decision of Virgin Creations ( 2011 (11) TMI 348 - CALCUTTA HIGH COURT] wherein it was held that the amendment made in Section 40(a)(ia) by the Finance Act, 2010 was applicable retrospectively. This issue thus is squarely covered by the decision Virgin Creations (supra), which has been followed by the Rajakot Bench of this Tribunal in various decisions to give relief to the assessee. We, therefore, find no justifiable reason to interfere with the impugned order of the learned CIT(A) and upholding the same, dismiss Ground No.7 of the Revenue s appeal.

  ---

• 2022 (7) TMI 1008
  Revision u/s 263 by CIT - addition u/s 68 - AO has not made any detailed enquiry at the time of assessment before accepting the accommodation entry as genuine transactions - AO in re-assessment proceedings had issued notices under section 133(6) of the Act to four parties and only on the basis of replies filed by those parties through a tapal/post, the AO accepted the purchases from the parties as genuine - HELD THAT:- A perusal of the bank statement shows that substantial amounts have been deposited and that too not on a regular basis. However, the Ld. Assessing Officer without making any further enquiries accepted the same at their face value as representing business income of the assessee. It is further observed that the Ld. Assessing Officer called for the statements of four parties and accepted the statements of parties on the basis of confirmation given through post / tapal. However, no effort was made to call them or personally examine them, especially in light of the fact when case has been set aside u/s 263 of the Act on the basis of specific allegations of the assessee being engaged in providing accommodation entries. The confirmation letters furnished by the parties, sent through post, were accepted as genuine by the ld. Assessing officer on their face value, without carrying out any further examination regarding the genuineness of parties, especially when the matter was set aside on the basis of specific allegations of the assessee being an accommodation entry provider. No further enquiry was made regarding the genuineness of the parties or their capacity to advance such huge amounts of money to the assessee. As during the assessment proceedings, the Ld. Assessing Officer did not make any enquiry regarding why such a miniscule net profit rate of 0.0025% has been offered to tax on the huge turnover. Further, AO during the course of assessment proceedings made no enquiries as to the mode of delivery of such substantial amount of bullion and jewellery. Thus, there seems to be an evident lack of enquiry / investigation into the facts of the case during the course of assessment proceedings and all contentions made by the assessee have been accepted, without detailed examination / analysis. As we are of the considered view that there was a lack of enquiry by the ld. Assessing officer during the course of assessment proceedings, and therefore the Principal Commissioner of Income Tax has not erred in facts and in law in concluding that the assessment order passed was erroneous and prejudicial to the interests of the Revenue. - Decided against assessee.

  ---

• 2022 (7) TMI 1007
  Addition u/s 43B for service tax payable - Assessee submitted that mistake in the observations made in the audit report on Form No. 3CD attached with the audit report u/s. 44AB in Form 3CB at the time of filing return of income, wherein wrongly it was mentioned that service tax was routed through P L account - HELD THAT:- Since in the instant case the processing u/s. 143(1) of the Act was completed on 15-03-2019, whereas the revised audit report is dt. 05-04-2019 in which claim of the assessee is that service tax of Rs.79,701/- was not routed through P L account, therefore, this fact needs examination at the end of the ld. AO before whom the assessee shall place the relevant documents including the revised audit report and the financial statement to prove that the alleged amount of service tax of Rs.79,701/- has not been claimed as an expenditure in the P L account. After affording reasonable opportunity of hearing to the assessee the ld. AO will decide this issue afresh in accordance with law. Thus, ground no.1 raised by the assessee is allowed for statistical purpose as per terms indicated above. Disallowances u/s. 43B and u/s. 36(1)(va) - delayed payment of PF/ESI of employees contribution and towards payment of PF/ESI of employer s contribution - HELD THAT:- As the uncontroverted facts remains that alleged amount is claimed as an expenditure in Profit Loss account and the same stands duly deposited with the regulating authority of Provident Fund ESI before the due date of filing of return of income u/s. 139(1) of the Act. Though there is a delay in depositing the same within the time limit as prescribed under the PF/ESI Act, but since the alleged sum has been paid before the due date of filing of return u/s. 139(1) of the Act no disallowance u/s. 43B of the Act is called for. Therefore, we find no merit in the finding of the ld. CIT(A) confirming the disallowanc towards employer s contribution of PF/ESI and the same stands deleted. As regards employees contribution of PF/ESI we find that the case of the assessee is squarely covered by the decision of this Tribunal in the case of Deloitte Haskins Sells ( 2022 (3) TMI 1399 - ITAT KOLKATA] wherein this Tribunal has considered the ratio laid down by case of Vijayshree Ltd. 2011 (9) TMI 30 - CALCUTTA HIGH COURT] and also case of Lumino Industries Ltd [ 2021 (11) TMI 926 - ITAT KOLKATA] - We, therefore held that since the details of payment of PF/ESI are duly captured in the audit report and the same was placed before the ld. CIT(A), it is an admitted fact that alleged sum of employees contribution stands duly deposited before the due date of filing of return of income provided u/s. 139(1) of the Act and also the amendments brought w.e.f 1-4-2021 in provisions of section 36(1)(va) as well as section 43B of the Act are held to be prospective in nature, the impugned disallowance of Rs. 5,26,357/- u/s. 36(1)(va) of the Act towards employees contribution to PF/ESI deserves to be deleted. Accordingly, we set aside the finding of the ld. CIT(A) and allow ground nos. 2,3 4 raised by the assessee.

  ---

• 2022 (7) TMI 1006
  Delayed employees contribution to EPF - Deposits before the due date of filling ROI - HELD THAT:- When the employees share of contribution towards EPF had been deposited by the assessee prior to the due date of filing of his return of income for the year under consideration, therefore, no disallowance of the same was called for in his hands. We find that the aforesaid issue in question is squarely covered by a recent order of the Tribunal in the case of M/s Ind Synergy Limited [ 2022 (4) TMI 36 - ITAT RAIPUR ] Accordingly, as the assessee in the case before us had deposited the employees share of contribution of EPF much prior to the due date of filing of his return of income as contemplated in Sec. 139(1) of the Act i.e 30.09.2012, therefore, the same as per the concession provided in Proviso to Sec. 43B(b) would not be liable for any disallowance. - Decided in favour of assessee. Addition on account of service tax that was collected but not paid by treating the same as his business income under Sec. 28 r.w.s 5 of the Act - HELD THAT:- As during the year consideration i.e AY 201213 Sec. 145A(a)(ii) only contemplated valuation of purchase and sale of goods and inventory and thus covered cases where the amount of tax, duty, cess or fee was actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation and had no bearing to rendering of services, therefore, no infirmity emerges from the accounting of the contract receipts by the assessee on the basis of exclusion method (i.e net of service-tax), which as observed by us hereinabove had consistently been followed by it since last many years. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) who had held that the accounting of the contract receipts by the assessee by adopting the exclusion method (i.e net of service-tax) was not proper. Grievance of the assessee that as he had not claimed any deduction of the amount of service-tax, therefore, there could be no justification for disallowance of the same by triggering the provisions of Sec. 43B - As we have approved the exclusion method (i.e net of service-tax) of accounting of contract receipts by the assessee, therefore, the adjudication of the present issue, i.e, disallowance of the unpaid amount of service-tax would rest on the edifice of our said observation. As observed by us hereinabove the disallowance under Sec. 43B presupposes a claim of deduction by the assessee. However, as in the present case before us, as averred by the ld. AR, and rightly so, now when the assessee had not claimed any deduction for the amount of the service-tax, thus, the failure on his part to deposit the same in the government account within the stipulated time period would not entail or lead to any disallowance of the said amount. We, thus, in terms of our aforesaid observations taking cognizance of the fact that the assessee had not claimed any deduction for the amount of service-tax while determining his taxable income, vacate the disallowance of the same u/s 43B of the Act by the lower authorities. Accordingly, in terms of our aforesaid deliberations we herein set-aside the order of the CIT(Appeals) and vacate the addition/disallowance of the unpaid amount of service-tax so made by the AO. - Decided in favour of assessee.

  ---

• 2022 (7) TMI 1005
  TDS u/s 194C - horse transportation charges paid - whether CIT(A) erred in not considering that the charges were in effect reimbursement of expenses paid by the horse owners for the transportation and the subsidy for each horse which is an allowable business expenditure - CIT-A categorizing race horses as livestock and including them within the definition of Goods u/s.194C - HELD THAT:- We noted that these payments in the name of horse transportation charges or transport subsidy provided to horse owners by the assessee is nothing but reimbursement on account of fodder charges, food of horse or to meet part of the transportation expenses. Once, this is the fact that these are reimbursement of expenses, the assessee is not liable to TDS u/s.194C of the Act. Further, this issue is covered by the decision of Bangalore Bench of ITAT in the case of Mysore Race Club Limited, [ 2022 (4) TMI 1426 - ITAT BANGALORE] - Respectfully following the same, we delete the disallowance and allow this ground of assessee s appeal. Addition of entrance fee paid by non-voting members - Scope of principle of mutuality - HELD THAT:- In view of the recent decision of Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited, [ 2021 (1) TMI 488 - SUPREME COURT] and the decision of Hon ble Supreme Court in the case of Bankipur Club Ltd. [ 1997 (5) TMI 392 - SUPREME COURT] we are of the view that the assessee is entitled for claim of principle of mutuality in regard to entrance fee received from non-voting members. Hence, we allow this issue of assessee s appeal. TDS u/s 194J - telecast expenses as Host Club expenses - disallowance of reimbursement of expenses for non-deduction of TDS u/s.194J by invoking the provisions of section 40(a)(ia) - HELD THAT:- We noted that the AO as well as the CIT(A) was of the view that the explanation of reimbursement cannot be accepted and according to them, the full facts of the telecast charges incurred by Hyderabad Race Club not being on record and the profit element in the reimbursement made by Hyderabad Race Club cannot be ruled out. According to AO as well as the CIT(A), the assessee has to deduct TDS u/s.194J of the Act and therefore, the disallowance was made u/s.40(a)(ia) of the Act. We noted that in the similar state of facts, the Bangalore Bench of ITAT in the case of M/s. Mysore Race Club Limited in [ 2022 (4) TMI 1426 - ITAT BANGALORE] has considered this issue of reimbursement of expenses given to Bangalore Turf Club by Mysore Race Club Ltd., and on these reimbursement of expenses, TDS was not deducted and Tribunal i.e., Bangalore Bench of the Tribunal held that the matter was restored back to the file of the AO - Thus we restore this issue back to the file of the AO. The AO will decide in term of directions given by Bangalore Bench, which is reproduced above. This issue of assessee s appeal is set aside to the file of the AO. Disallowance of police and fire service charges - HELD THAT:- We noted that the AO has disallowed these charges as the assessee has not filed any evidence to prove the payments made. Even the CIT(A) has disallowed stating that the assessee is unable to produce any vouchers or unable to put any defense in support of its ground. Now, before us, the ld.counsel made a simple plea that let the matter go back to the file of AO to provide one more opportunity to the assessee to produce the evidence. Hence, we set aside this issue back to the file of the AO.

  ---

• 2022 (7) TMI 1004
  Revision u/s 263 - Exemption u/s 11 and 12 - entitlement to benefit of section 10(23C)(iv) - CIT(E) held that the assessee is not carrying out any charitable activities and in view of the proviso to section 2(15) the assessee is not entitled to exemption u/s 11 and 12 - HELD THAT:- As relying on ANDHRA PRADESH STATE SEED CERTIFICATION AGENCY [ 2013 (1) TMI 63 - ANDHRA PRADESH HIGH COURT] we hold that the CIT(E) is justified in invoking the revisionary powers u/s 263 of the I.T.Act and denying the benefit of exemption u/s 11 and 12 of the I.T.Act. The judgment of the Hon ble Rajasthan High Court [ 2022 (1) TMI 693 - RAJASTHAN HIGH COURT] held that when registration u/s 12AA is still in force and the revenue does not dispute the nature of charitable activities, CIT(E) is not entitled to invoke the revisionary jurisdiction u/s 263 - This judgment of the Hon ble Rajasthan High Court is of no assistance to the assessee. As mentioned earlier, the CIT(E) has not cancelled the registration u/s 12AA but only denied the exemption u/s 11 of the I.T.Act for the reason that the assessee s activities are hit by proviso to section 2(15) since it is charged fees for the services rendered and the receipt of such fee exceeds 20% of the total turnover. As in the case of Karnataka Badminton Association [ 2015 (1) TMI 1202 - KARNATAKA HIGH COURT] had held that cancellation of registration u/s 12AA(3) of the I.T.Act is not warranted for the reason that the assessee is hit by first proviso to section 2(15) of the I.T.Act. It was observed by the Hon ble High Court that the revenue s interest is protected by virtue of section 13(8) introduced by the Finance Act, 2012 with effect from 1st April, 2009. Section 13(8) provides that nothing contained in section 11 or 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year . Thereby meaning irrespective whether the registration u/s 12A is in force when assessee is hit by first proviso to section 2(15) of the I.T.Act, exemption u/s 11 or 12 can be denied by virtue of section 13(8) of the I.T.Act. For the aforesaid reasoning and the judicial pronouncements, cited supra, we hold that the CIT(E) is justified in cancelling the benefit of exemption u/s 11 - Decided against assessee.

  ---

• 2022 (7) TMI 1003
  Deduction u/s 10B - assessee has not furnished any evidence like date of purchase of plant and machinery, place of instalment date and bank account - AO took his view that assessee-firm failed to establish that assessee set-up new plant and machinery for producing article for claiming deduction under section 10B in the initial year and also made certain other observation, which leads him to disallow the benefits under section 10B - HELD THAT:- The Act does not specify that business has to be approved by Competent Authority of SEZ after 01.04.2004 for claiming such deduction. CIT(A) held that such fact is irrelevant and that the assessee commenced its business on 01.01.2009 and accordingly claim of deduction under section 10B in assessment year 2010-11 which was allowed in assessment order under section 143(3). CIT(A) further noted that the second reason for assessing officer was about the splitting of re-construction existing business. The Ld. CIT(A) after summarizing of objection of AO and the reply of assessee held that the AO has not doubted the purchased of plant and machinery in the earlier assessment order, otherwise the issue was to be examine in the scrutiny assessment for assessment year 2010-11. AO has not been able to point out any specific defect in the record in fulfilling the condition. The Ld. CIT(A) also noted that once the claim is similar deduction is allowed in the scrutiny assessment, in an initial year, the similar cannot be disallowed without withdrawing or disturbing the similar claim or relief in the earlier year as has been held in the case of Saurashtra Cement And Chemicals Industries Ltd. ( 1979 (2) TMI 21 - GUJARAT HIGH COURT] held that assessee is eligible for deduction under section 10B. We find that during the hearing of the present appeal, no contrary facts or law is brought to our notice to take other view. The ld CIT(A) allowed relief to the assessee by following the binding decision of Jurisdictional High Court in Saurashtra Cement And Chemicals Industries Ltd. (supra). Therefore, we do not find any reason to interfere with the order passed by Ld. CIT(A), which we affirm. The ground of appeal raised by the Revenue is dismissed.

  ---

• 2022 (7) TMI 1002
  Penalty levied u/s 271F - assessee had failed to furnish return of income within due time as prescribed under the provisions of Section 139(1) - HELD THAT:- As Before us, assessee vehemently submitted that the assessee was under bonafide belief that he is not having taxable income, therefore is not liable to file return of income. AR also submitted that subsequently, the assessee under legal advice, filed return of income, though it was filed belatedly. Thus, from the submission of assessee, we find that the assessee has a reasonable cause for not filing the return of income on the pretext that he is not having taxable income. AO has not brought on record that the assessee is habitual in filing return belatedly. We find that the assessee has shown reasonable cause for not filing the return of income before due date of return. Therefore, we direct the Assessing Officer to delete the penalty levied under Section 271F - Accordingly, the grounds raised by the assessee are allowed.

  ---

• 2022 (7) TMI 1001
  Estimation of profit - assessee failed to submit complete details about this work contract - HELD THAT:- As assessee failed to demonstrate as to how this contract has generated 2.94% of the profit only. The Assessing Officer after going through all the details rejected the claim of the assessee and estimated the profit at 8%. He accordingly worked out an addition - After going through the well-reasoned finding of both the lower authorities, we do not find any reason to interfere with the same, because according to the finding of the Assessing Officer, no details were submitted by the assessee. Accordingly, this ground of the assessee s appeal is dismissed. Disallowing the deduction of interest income - investment made out of the surplus funds with Jharkhand State Co-operative Bank - Whether interest income earned from that investment is eligible for deduction or not - HELD THAT:- A perusal of sub-Section (d) would indicate that in respect of any income by way of interest or dividend derives by the co-operative society from its investment with any other co-operative society, the whole of such income shall be eligible for deduction. The whole of income earned from co-operative society by an assessee by way of the interest or dividend shall be eligible for deduction u/s 80P(2)(d) of the Act. The Jharkhand State Cooperative Bank, happens to be a society first and thereafter a bank. Therefore, interest income earned from this bank on investment of surplus fund will qualify for grant of deduction u/s 80P(2)(d) of the Act. We accordingly, delete this disallowance and allow this ground of the appeal.

  ---

• 2022 (7) TMI 1000
  Depreciation on power plant at written down value method as against claimed by the appellant at straight line method since last more than five years - HELD THAT:- The provisions of section 32(1)(i) of the Act provides that an undertaking engaged in generation or generation and distribution of power shall be allowed depreciation on such percentage on actual cost basis as per specified rules. What is relevant to note that the term used is an undertaking and not an entity or an assessee . Therefore, what is relevant to examine in the instant case is whether the assessee has more than one undertaking and if the answer to the same is in affirmative and whether one of the undertakings is engaged in generation or generation and distribution of power, in that case, the undertaking and in turn the assessee at the entity level shall be eligible for depreciation under SLM basis. As per the Inspector report who has carried out on the spot verification of the assessee's premises, the assessee has a captive power plant which is used to generate electricity which was utilized in the various units of the assessee including towel unit, spinning unit and WTP Plan plant of the assessee. We therefore find that the undisputed facts are that there are multiple units or undertakings of the assessee company and one of the undertakings is engaged in generation of power and which is captively consumed by other units. There is no bar under law that a captive undertaking is not eligible for deprecation under SLM basis - we note that in the past and subsequent years, the depreciation has been allowed under SLM basis and therefore, we see no rationale and justifiable basis for the CIT(A) to disturb the basis of allowing the depreciation under WDV instead of SLM basis as so claimed and allowed to the assessee over the years where there are no changes in the facts and circumstances of the case. We hereby set-aside the order of the CIT(A) and direct the AO to allow the depreciation on SLM basis as so claimed by the assessee and the ground of appeal is thus allowed.

  ---

• 2022 (7) TMI 999
  Addition u/s 28 - Addition on account of benefit arising from business u/s 28(iv) by writing back unsecured loan - assessee has borrowed interest free money from Singhi Associates for his personal use and before the commencement of previous year, assessee has repaid it partly and outstanding amount were written back by the assessee - AO taxed this write back u/s 28 (iv) - HELD THAT:- In the present case the addition has been made by the LD AO u/s 28 (iv) of The Act relying on the decision of Honourable Bombay High court in case of Solid Containers Limited [ 2008 (8) TMI 156 - BOMBAY HIGH COURT] - We find that CIT (A) is justified in rejecting the argument of the ld AO for the reason that in that case was not at all on the issue of section 28 (iv) and thus Honourable High court did not have any occasion to consider that provision. In case of Mahindra Mahindra [ 2018 (5) TMI 358 - SUPREME COURT ] honourable SC specifically considered that provision and held that in waiver of loan , as it is not in kind but in cash, section 28 (iv) does not apply. Thus we do not find any reason to disturb the appellate order of The LD CIT (A) on this issue. We confirm his findings that the write back of loan is not chargeable as business income u/s 28 (iv) of The Act. Accordingly, Ground No 1 of the appeal is dismissed. Addition under Section 56(2) (x) - difference in sale consideration and stamp duty value of 7 properties sold - application of tolerance band limit - HELD THAT:- Coordinate bench in case of Maria Fernandes Cheryl [ 2021 (1) TMI 620 - ITAT MUMBAI ] has already held that the amendment made by Introducing proviso [ Introduction of tolerance band of 5 % and later on 10 % ] applies with effect from 1/4/2003 when the provision of section 50 C were introduced. Further introduction of tolerance band is for removing the hardship in the section. once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced as held by Hon Supreme Court in Alom Enterprises [ 2009 (11) TMI 27 - SUPREME COURT ] Respectfully following the decision of the coordinate bench in Maria Fernandes Cheryl. [ 2021 (1) TMI 620 - ITAT MUMBAI ] we do not find any infirmity in the orders of the ld CIT (A) in applying the tolerance band limit of 10 % in the impugned assessment year also and thereby deleting the addition - Accordingly, Ground no 2 is dismissed.

  ---

• 2022 (7) TMI 998
  Disallowing the interest expenditure - Addition u/s. 36(1)(iii) the same was not incurred for the purpose of business - As per assessee he has more interest free funds available with it for making investment in the interest free advances - HELD THAT:- We direct the AO to restrict the disallowance of interest as the factual situation categorically states that the assessee has more interest free funds available with it than the interest free advances given by assessee. In such situation, we restrict the disallowance and direct the AO accordingly. The appeal of the assessee is partly allowed.

  ---

• 2022 (7) TMI 997
  Addition w.r. to Advertisement, Consultancy expenses classified as other expenses - As transpired that the assessee claimed expenditure whereas there was no revenue from operations and the construction activity was going on - assessee defended the claim on the ground that all direct costs of constructions activity have been classified as construction cost whereas indirect costs not specifically allocable to any specific project have been debited to Profit Loss Account - HELD THAT:- As observed that the assessee is following percentage of completion method of accounting to recognize the revenue under the project. Since the project has not commenced, the assessee has capitalized the direct costs. However, indirect costs which are in the nature of selling costs and professional costs could not be attributed to any specific project and it is a period cost. The applicable guidance note issued by ICAI mandate the assessee to claim the same as period cost and the assessee has followed the same treatment. The action of the assessee is in consonance with the mandatory guidance note and therefore, the same could not be faulted with.

  ---

• 2022 (7) TMI 996
  Revision u/s 263 - validity of proceedings were initiated u/s. 147 against assessee - earnest money receipts - earnest money was available to the assessee on account of forfeiture and the specific property owned by the assessee continued to remain with the assessee - HELD THAT:- The relationship of Shri Sahil Gupta as the nephew of the assessee has not been assailed. His PAN details made available to the AO and presumably enquired into have not been upset by the Ld. PCIT. The fact that he has given a gift of Rs. One Lac accepted by the AO has not been shown to be an incorrect decision of the AO. Thus, the decision to further enquire into the said issue stated on an affidavit which have remained unrebutted, we find cannot be upheld. Without upsetting the contents of the affidavit, the exercise in the peculiar facts of the present case is an arbitrary exercise of power. Hence, cannot be sustained in law. Similarly, the documents relied upon in support of the earnest money available to the assessee, we find are dismissed as a cock and bull story without any evidence to come to the said conclusion. The fact that transaction for the property was being contemplated is an evidence on record which remains unrebutted. In pursuance thereof, earnest money has been received which remains unrebutted. The name of the purchaser and the address etc. of the witness and the parties to the document is available to the Ld. PCIT as was available to the AO. The terms and conditions stated to have been honored therein vis-a-vis. the parties to the agreement is evidence available on record. The document records that that in case the seller backs out, double the amount of earnest money is to be paid and in case sale is not completed on account of the purchaser, then earnest money is to be forfeited. Sale did not fructify. The evidence is available on record. The ownership of the said asset continues to remain vested with the assessee. In the absence of any evidence or fact rebutting the claim of the assessee, the order passed after due enquiries as per record by the AO cannot be set aside on mere inferences and presumptions. The suspicions of the Ld. PCIT cannot be the basis for setting aside a validly passed assessment order. Law requires the Ld. PCIT to meet the twin conditions of pointing to the error in the order passed and that too such an error which can be termed to be prejudicial to the interests of the Revenue. These mandatory conditions in the facts of the present case are not satisfied. Hence, on a consideration of the peculiar facts and circumstances of the present case which are borne out from the record, the impugned order cannot be upheld. Accordingly, allowing the grounds of the assessee, for the reasons given hereinabove, the impugned order is quashed. Appeal of assessee allowed.

  ---

• 2022 (7) TMI 995
  Exemption u/s 11 - rejecting its application seeking registration u/s 12AA - voluntary contributions including corpus donations received - whether the objects of the assessee society were charitable in nature and whether the actual activities of the assessee society in pursuance of the stated objects were genuine or not? - HELD THAT:- As far as voluntary contributions including corpus donations received by the assessee society and treatment thereof for tax purposes, prior to grant of registration is concerned, though the Ld. CIT(E) has expressed his reservation regarding treatment thereof by the assessee society by not disclosing the same as its income and paying taxes thereon, at the same time, he has himself stated that AO will be intimated to take remedial action in the matter which supports the contentions advanced by the Ld. AR that the same is a subject matter of examination by the AO at the time of assessment proceedings and cannot form the basis for denial of registration. Therefore, we agree that the said apprehension and reservation so expressed by the Ld. CIT(E) regarding treatment of donations for tax purposes where the remedy thereof admittedly and undisputedly lies with the Assessing officer at the assessment stage cannot act as the basis for denial of registration u/s. 12AA where the conditions for grant of such registration otherwise stand duly fulfilled. No adverse finding has been recorded by the Ld. CIT(E) regarding the objects of the assessee society being charitable in nature whereas the Ld. CIT D/R has contended that a presumption cannot be drawn in this regard and a specific finding is required to be recorded in this regard - On perusal of the provisions of section 12AA, we find that it talks about the Ld. CIT(E) satisfying himself about the objects of the assessee society and genuineness of its activities and thereafter, where he is satisfied, he shall pass an order in writing registrating the society and where he is not satisfied, he is again required to pass an order in writing refusing to grant the registration. We therefore find that the recording of satisfaction in either case has to be manifested by way of written order and the Ld. CIT(E) therefore has to pass an order specifying as to why he is satisfied or not satisfied in a particular case. Therefore, we agree with the contention of the Ld. CIT D/R that the Ld. CIT(E) has to record a specific finding as to his satisfaction regarding the objects of the assessee society being charitable in nature and genuineness of its activities carried out in pursuance of its stated objects. Therefore, for this limited purpose, the matter is set-aside to the file of the Ld. CIT(E) to examine and pass a speaking order after providing reasonable opportunity to the assessee.

  ---

• 2022 (7) TMI 994
  Revision u/s 263 by CIT - claim of higher depreciation at the rate of 30% on vehicles - HELD THAT:- In the instant set of facts, we note that the claim of higher depreciation at the rate of 30%, which is available to the assessees engaged in the business of letting out vehicles on hire was not examined by the assessing officer during the course of assessment proceedings. Even in the 263 proceedings before Ld. Pr. CIT and in the proceedings before us, the learned counsel for the assessee has not been able to bring anything on record to substantiate that the assessee was primarily engaged in the business of letting out vehicles on hire, so as to be eligible for claim of higher rate of depreciation on vehicles @30%. We are of the considered view that Ld. Pr. CIT has not erred in facts and in law in coming to the conclusion that the assessment order is erroneous and prejudicial to the interests of the revenue. - Decided against assessee.

  ---

• 2022 (7) TMI 993
  Addition u/s 68 - Assessee failed to prove the identity, credit worthiness of the creditors and genuineness of the transaction of receiving loan - HELD THAT:- So far as the loan taken by Mr. Ram Mohan alias A. R. Arinaya though the loan is in the name Mr. Ram Mohan @ A.R.Arinaya, the funds have come from Smt. Lalitha, mother of Mr.Rammohan @ A.R.Arinaya. Smt. Lalitha has filed her return of income for AY 2016-17 declaring a total income - CIT(A) has however held that creditworthiness has not been proved. This finding of the CIT(A) is incorrect in the light of the fact that Smt. Lalitha is an income tax assessee having reasonable quantum of income. Mr. Ram Mohan alias A. R. Arinaya has also filed return of income for Assessment Year 2016-17 declaring a total income - In these circumstances, credit to the extent of Rs.10 lakhs in the name of Mr. Ram Mohan is duly explained and the said addition is deleted. Addition made in respect of loans by Mr. Ajit Hebbar and Ms. Mridula Hebbar - The evidence on record shows their sources are reflected in the form of their bank accounts indicating sufficient funds and there are no circumstances indicating that the funds in their bank accounts is assessee s money. The assessee has thus established the source of the creditors. As pointed out for the assessee, the PAN and the addresses of the creditors was very much available with the AO and he did not choose to issue any summons calling upon them to prove their source or any other explanation. In these circumstances, as assessee has duly discharged his onus all satisfactorily the credits in question under section 68 of the Act. Consequently, the aforesaid addition being credits from Mr. Ajit Hebbar and Ms. Mridula Hebbar are also deleted. We find support from the decision of Orissa Development Corporation Pvt. Ltd., (s 1986 (3) TMI 3 - SUPREME COURT] . Disallowance of depreciation - AO disallowed the claim of the assessee for depreciation on the ground that the assessee did not file any evidence to substantiate the claim for depreciation - HELD THAT:- As the assessee has established that it is entitled to claim depreciation. The depreciation in our view has to be allowed as claimed by the assessee.

  ---

• 2022 (7) TMI 992
  Revision u/s 263 by CIT - unexplained source of cash deposited in bank account - HELD THAT:- This case was selected for CASS for verifying the source of cash deposit. Thereafter, the ld. PCIT referred to order sheet entry from which AO sought explanation from the assessee regarding cash deposit. Despite noting the above and noting that assessee replied to the same, the ld. PCIT contradicted himself by the observation that no enquiry has been done on this issue and the AO simply accepted the version of the assessee. The above line mentions that firstly there is no enquiry and in the same breath it states that AO simply accepted the version of the assessee. There is no whisper as to what was the version of the assessee which according to ld. PCIT was to be further examined. Hence, it is amply clear that ld. PCIT invoked his jurisdiction u/s 263 without any application of mind. As noted by the ld. PCIT himself enquiries were made by the AO and due replies were given by the assessee. As after duly considering the replies, AO found that assessee agreed to surrender the amount of Rs.3,20,000/- and the same was added. There is no whisper by the ld. PCIT as to why the explanation accepted by the AO is not acceptable or wrong. In the paper book submitted before us, it has been submitted that AO has issued several notices to the assessee. We note that AO has made comprehensive enquiry regarding various aspects. The observation of ld. PCIT that no enquiry was done by the AO is absolutely not sustainable as a proper enquiry has been done. Moreover, the amendment in this regard is not applicable in this assessment year - observation that AO accepted the reply without further enquiry has no substance as to what further enquiries was required is also not stated by ld. PCIT. There is no mention by ld. PCIT what was wrong in the explanation given by assessee and what more enquiries were required. It is a classic case of ld. PCIT directing for roving enquiries totally unsustainable in law. This is further amplified by the second notice by ld. PCIT dated 02.11.2015 after initial notice on 16.09.2015, which was issued after issue of notice about cash deposit. The said notice has already been reproduced by us hereinabove. Though the said notice is said to be in continuation of earlier notice, by no stretch of imagination it can be said to be in continuation of the earlier notice. A reading of the same clearly shows that after having made a contradictory observation on issue of lack of enquiry of cash deposit aspect for which the assessment was taken up, the ld. PCIT went on virtually issue a notice u/s 143(2) and embark upon fishing and roving expedition. PCIT never mentioned in his order before issuing this second notice as to how the Assessment Order in this regard was erroneous so as to be prejudicial to the interest of the revenue. Hence, this part of the ld. PCIT s order wherein notice was issued dehors any finding or even mention of the AO s order being erroneous or prejudicial to the interest of the revenue is not at all sustainable. - Decided in favour of assessee.

  ---

• 2022 (7) TMI 991
  Revision u/s 263 - Addition u/s 56(2)(viib) for the excess share issue price received by the assessee and assessed the loss - as per CIT- A AO has not carried out the detailed investigation/verification /independent inquiry regarding identity, creditworthiness of the shareholders and the genuineness of the transactions of receiving share capital - HELD THAT:- In the light of the provisions of section 263 and a settled position of law, powers u/s 263 can be exercised by the Pr. Commissioner/Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and also prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. In the present case Assessing Officer observed that the fair market value determined by the Chartered Accountant is Rs.90.34 whereas the assessee issued for a price of Rs.91/- each. The excess amount charged by the assessee-company was added by the Assessing Officer by invoking the provisions of section 56(2)(viib). We come to the conclusion that the transaction of issuing 76923 equity shares at Rs.91/- per share (face value of Rs.10/- and share premium of Rs.81/-) issued by the assesseecompany to the two shareholder companies namely Zigzag Vanijya Private Limited (43,956 equity shares) and Ganadipati Estate Private Limited (32,967 equity shares) has been examined in detail by the Assessing Officer and an addition was made on this issue. It is neither a case of no enquiry or lack of enquiry . In our considered view, the Assessing Officer has conducted sufficient inquiry by calling all necessary details and information and accepted the genuineness of the said transactions after being satisfied with the identity, creditworthiness and genuineness of the shareholders and examining fair market value of the equity shares issued. Under these given facts and circumstances wherein neither the order of the Assessing Officer is erroneous nor it is prejudicial to the interest of the revenue, there remains no scope for ld. PCIT to invoke the provision of section 263 of the Act. - Appeal of assessee allowed.

  ---

• 2022 (7) TMI 990
  TDS u/s 194J or 194C - Non-deduction of TDS on Auto Roaming Charges paid to other Telecom operators - Demand and interest raised u/s 201(1) 201(1A) - HELD THAT:- We hold that there is no obligation to deduct tax at source for the assessee payer in terms of section 194C or 194J of the Act and hence the assessee cannot be treated as 'assessee in default' u/s 201(1) of the Act. Hence consequentially the interest u/s 201(1A) cannot be charged on the assessee in the instant case. Accordingly, we set aside the common order passed by the CIT(A) in all the appeals under consideration and allow the grounds raised by the assessee in all the appeals under consideration. - Decided in favour of assessee.

  ---

• 2022 (7) TMI 989
  Profits arising on sale of lands - nature of land - capital income or business income - subject lands were classified in the revenue record as agricultural lands as per entries in 7/12 extracts of the lands - HELD THAT:- As in the light of the fact that the entries in the 7/12 extracts shows that lands were agricultural lands at the time of transfer and the lands have been put to agricultural operations, it can be said that the assessee company had discharged his burden and proved that the lands were agricultural lands - the fact that the purchaser of the lands had used the lands for non-agricultural purpose has no bearing in determining the nature of assets sold by the assessee on the date of sale as held by the Hon ble Madras High Court in the case of M. S. Srinivas Naicker [ 2007 (1) TMI 149 - MADRAS HIGH COURT] Further, in the present case, the seller of the land had not taken any steps which would indicate the intention to exploit the land for non-agricultural use, it is only the buyer of the land who sought the permission for conversion of land into agricultural to nonagricultural on 05.09.2014 which is subsequent to the sale of land by the respondent. Recently the Hon ble Kerala High Court in the case of CIT vs. Cochin Malabar Estates and Industries Ltd. [ 2022 (2) TMI 1146 - KERALA HIGH COURT] after referring to the judgement of the Hon ble Madras High Court in the case of Mansi Finance Chennai Ltd. [ 2017 (1) TMI 1209 - MADRAS HIGH COURT] and MS. Srinivasa Naicker [ 2007 (1) TMI 149 - MADRAS HIGH COURT] Thus, the argument of the ld. CIT-DR that the land was used for non-agricultural purpose by the purchaser of the land has no impact in determining the issue whether the land is agricultural or not at the time of sale. The mere fact that the assessee company made huge amount of profit cannot be ground to treat the profit arising on sale of agricultural land as business income as held by the Hon ble Gujarat High Court in the case of PCIT vs. Heenaben Bhadresh Mehta [ 2018 (8) TMI 987 - GUJARAT HIGH COURT] Thus we are of the considered opinion that the assessee company had brought on record a conclusive proof to infer that the lands sold were agricultural lands. Accordingly, we uphold that the findings of the ld. CIT(A) that the lands sold were agricultural lands. As the statements of directors of the assessee company, do not support the findings of the A.O. that the lands are held as business assets. Therefore, we do not find any illegality or perversity in the findings of the ld. CIT(A) in holding that the profits arising on sale of land cannot be brought to tax as business income or capital gains . Thus, we do not find any merit in the grounds of appeal filed by the Revenue. Hence, the grounds of appeal raised by the Revenue are dismissed.

  ---

• 2022 (7) TMI 971
  Assessment order passed on a date subsequent to the dissolution - Notice of striking off and dissolution petitioner/company stood dissolved w.e.f. the date of issuance of notice itself as issued by the Government of India, Ministry of Corporate Affairs - HELD THAT:- There would be an alternate statutory remedy available under Section 246-A of the Income Tax Act which ought to be availed of. As we may refer to the judgment of the Hon'ble Supreme Court in Munshi Ram vs. Municipal Committee, Chheharta, [ 1979 (3) TMI 58 - SUPREME COURT ] wherein it had been observed that where a revenue statute provides for a person aggrieved by an assessment thereunder, a particular remedy to be sought in a particular forum, in a particular way, it must be sought in that forum and in that manner, and all other forums and modes of seeking remedy are excluded. Such view was reiterated by the Apex Court in Union of India vs. Guwahati Carbon Limited 2012 (11) TMI 885 - SUPREME COURT] and subsequently in Commissioner of Income Tax and another vs. Chhabil Dass Aggarwal and another [ 2013 (8) TMI 458 - SUPREME COURT] Learned counsel apart from citing other judgments has placed reliance upon a recent judgment of the Hon'ble Supreme Court in Magadh Sugar and Energy Ltd. Vs. State of Bihar and others [ 2021 (10) TMI 691 - SUPREME COURT ] wherein the issue as regards the exercise of writ jurisdiction under Article 226 of the Constitution of India, against the availability of an alternative remedy of an appeal was dealt with and certain principles were summarised. It was argued that as per parameters laid down, a writ petition under Article 226 of the Constitution of India would be maintainable. We are of the view that it is only in a case under extraordinary circumstances and where there is a patent infirmity on the face of record that we would be inclined to entertain a writ petition under Article 226 of the Constitution of India. In the facts of the present case, the assertion as regards violation of Instructions/Circular of CBDT is an issue which the petitioner-company ought to raise in appeal itself. Even in the case of Magadh Sugar's case (supra), it had been observed as follows : Wherein a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion. Writ petition is disposed of in terms of granting liberty to the petitioner to avail of its statutory remedy of appeal.

  ---

• Customs

• 2022 (7) TMI 988
  Seeking grant of Bail - Smuggling - Foreign Gold - case of appellant is that their confessional statements were forcefully extracted by the DRI officers - it is also alleged that mandatory compliance of Section 154 to 157 of Cr.P.C. is not done by the DRI officers - HELD THAT:- Considering the nature and gravity of allegation as also the fact that present applicant Mukesh Valecha admits in his confessional statement under Section 108 of Customs Act, 1962 that he has supplied the said 3 gold bars of foreign origin having the same marking to Vishal Jain and Vaibhav Jain and he has not been issued any sale invoice for the said 3 foreign origin gold bars having weight of 3 k.g. worth Rs.1,58,20,500/-, which was allegedly recovered by the DRI officials from the possession of the co-accused Vishal Jain, Vaibhav Jain, Dheeraj and Shankar Singh Yadav. Considering the value of gold already seized, the manner in which the gold were received in this country and the attendant circumstances, there can be no doubt that the occurrence is flagrant violation of the provisions of Customs Act. The relevant provisions of the Customs Act are intended to protect the fiscal and commercial interest of the nation. An offence like this must be viewed with all the seriousness. There is no doubt that the instant release of the applicant, who is involved in such activities, would hamper the investigation and the applicant may tamper with the evidence. At this stage this Court is not inclined to grant regular bail to the present applicant - Application dismissed.

  ---

• 2022 (7) TMI 987
  Seeking Conversion of shipping bills - conversion of Export Promotion Scheme from Duty Drawback(DBK) to Advance Licence - violation of condition No. 3(e) of Circular no. 36/2010-Cus dated 23.09.2010 - case of appellant is that though at the time of the clearance of the export goods the appellant have inadvertently claimed the drawback scheme but subsequently they offered to surrender the drawback amount along with interest - HELD THAT:- The Learned Principal Commissioner has rejected the claim interpreting the clause 3(e) of the Para 3 of Circular no. 36/2010-Cus dated 23.09.2010 that since the appellant have availed the DBK Scheme under which the goods were exported the appellant had violated the Condition 3(e) of the Circular. On the careful reading of the said clause we find that the contention of the Principal Commissioner is incorrect in as much as though the appellant were granted the DBK but the appellant had already informed the department that they do not wish to get the DBK amount credited in their Bank account and if at all it is credited they offered to surrender same amount along with interest. This approach of the appellant, is as good as non availment of any Export Promotion Scheme. It is undisputed fact that the appellant though claimed the DBK in Shipping Bill but before receiving the amount of DBK informed the department that they do not want the credit of DBK amount - As per Section 149 it is clear that the amendment of export promotion scheme under the shipping bill can be permitted even if the goods have been exported only on the condition that the documentary evidence on the basis of which the amendment is claimed was in existence at the time when goods were exported. In the present case the goods were exported vide Shipping Bill No 3055417 dated 23.02.2018 whereas Advance Authorization (DEEC) No. 0810139972/2/03/00 is of dated 30.03.2017. Therefore, there is no doubt that the DEEC licence on the basis of which amendment is being sought by the appellant was very much in existence at the time of export. In this undisputed fact the condition of Section 149 of the Customs Act for the purpose of amendment in shipping bill stands satisfied - it is almost settled that when the condition prescribed under Section 149 is satisfied the conversion should be allowed. This is not a case of department, also there is a clear and independent provision under section 149 that without challenging the assessment an assessee can seek amendment under shipping bill even after assessment of export documents. Moreover, the learned principal commissioner has denied the conversion only on the ground that the appellant had violated condition prescribed under para 3 (e) of Circular no. 36/2010-Cus dated 23.09.2010, thus condition does not get violated therefore, the revenue s submission is not relevant. As regard the fact that whether the DBK amount has been received by the appellant or otherwise, the department is at liberty to verify the same. Needless to say that before making conversion of DBK shipping bill to advance license scheme the department has to ensure that if at all the DBK amount is credited to the appellant the same needs to be returned back to the department. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (7) TMI 986
  Refund of SAD - rejection of refund on the ground of non-compliance of furnishing of Chartered Accountant s certificate and correlation certificate - HELD THAT:- On perusal of the orders passed by the authorities below, it is seen that the refund claim has been rejected for non-submission of the required documents. The counsel for the appellant has submitted that they are ready to furnish the documents - In the interest of justice, the appellant has to be given a further chance to submit the documents. The impugned order is set aside. The matter is remanded to the adjudicating authority who shall give an opportunity of personal hearing to the appellant as well as for submission of documents and consider the refund claim afresh. The appeal is allowed by way of remand.

  ---

• Insolvency & Bankruptcy

• 2022 (7) TMI 985
  Validity of order of NCLT admitting the application for CIRP - suppression of facts and concealment by Respondent No.1 in his Section 7 Application - HELD THAT:- When there was specific order of the Division bench restraining Respondent No.1 to file any Application in any other forum without disclosing the order dated 09.08.2017, it was incumbent upon Respondent No.1 to file the copy of the said order before the Adjudicating Authority. Respondent No.1 has concealed the said order from the Adjudicating Authority, since the order had made adverse observation against Respondent No.1, which would have resulted in rejection of Section 7 Application. Further, the order dated 14.07.2014, where the assignments were observed by the High Court as a dubious, were also not brought before the Adjudicating Authority. We are thus satisfied that Respondent No.1 has concealed the relevant orders passed by the Company Judge in CP No.355 of 1997, which Respondent No.1 was obliged to place before the Adjudicating Authority, especially the order dated 09.08.2017 of the Division Bench, which was passed on the Application filed by Respondent No.1 himself, that is, CA No.107 of 2016. We are, thus, satisfied that Respondent No.1 is guilty of suppression of material facts and relevant orders before the Adjudicating Authority and the submission of learned Counsel for the Appellant is correct that the suppression was made only with the motive to obtain an admission order to somehow grab the assets of the Corporate Debtor. Locus of the appellant - HELD THAT:- The Application of Appellant as well as Respondent No.1 was considered and rejected by Company Judge by order dated 14.07.2014. Thus, when the Appellant was before the Company Judge claiming his right as unsecured creditor, he has every right to file an I.A. No.1069 of 2021. When Adjudicating Authority heard the Appellant and considered his claim and rejected the same, we see no reason, as to why the Appellant cannot be held to be aggrieved by the order impugned, so as to enable him to file Appeal under Section 61 of the Code. Default in payment of dues - period of limitation - company is under liquidation - HELD THAT:- Initiation of proceedings for recovery indicate that default has occurred prior to initiation default by Company. The Application under Section 7 by Respondent No.1 does not indicate as to on what basis it can claim that it has right to file an Application under Section 7 on 18.02.2020. As observed above, the date of default of debt fell due mentioned in the Application as 19.12.2019, is wholly fictious and incorrect, the said date has no relevance with regard to debt falling due on 19.12.2019. 19.12.2019 is the date when Company Petition was dismissed in default, which order also came to an end on 20.02.2020, when Company Petition was revived. The Application under Section 7 filed by Respondent No.1 was highly barred by time and in the entire Application there is no explanation as to how the limitation for filing the Application is there till 18.02.2020. The limitation for filing an Application by Respondent No.1 has long expired and the Application ought to have been rejected as barred by time on which aspect, Adjudicating Authority failed to advert - It is well settled by catena of judgments of Hon ble Supreme Court that limitation for filing an Application under Section 7 of the IBC is three years, which is governed by the Article 137 of the Limitation Act, 1963. Admittedly, the Company was in liquidation with effect from 26.11.1997 and all assets of the Corporate Debtor were custodial legis and in the control and possession of the Official Liquidator. How default can be committed by Corporate Debtor after liquidation process has commenced from 26.11.1997 has also not been explained in Section 7 Application. Although, the learned Senior Counsel for the Appellant also attacked on un-registered assignment deeds executed in the year 2007 and 2008, which is the basis of the claim of Respondent No.1, but without entering into the aforesaid issue, on the facts which have been claimed by Respondent No.1 itself in Section 7 Application, it is clear that claim of Respondent No.1 in respect of debt was highly time barred. There shall be default of debt, only when debt is due - Adjudicating Authority has committed error in admitting Section 7 Application without adverting to the question as to whether the debt as claimed was due when Section 7 Application was filed. The question of limitation of an Application has to be gone into by the Court, even though no defence has been taken by the Respondent. In the present case, the Corporate Debtor being into liquidation, it appears that no reply has been filed in Section 7 Application. The position of law is clear by the aforesaid pronouncement of the Hon ble Supreme Court. Although, pendency of winding-up petition before the High Court may not preclude filing of Section 7 Application, but in the present case, when there are various orders passed by Company Judge, in Company Petition No.355 of 1997, which has relevance and consequence on Section 7 Application, the orders passed in Company Petition ought to have been adverted by the Adjudicating Authority before admitting Section 7 Application - thus, Adjudicating Authority committed error in admitting Section 7 Application, which did not deserve admission in the facts of the present case. Appeal allowed - Application which was admitted by the NCLT dismissed.

  ---

• 2022 (7) TMI 984
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtor - Financial Creditors - existence of debt and dispute or not - HELD THAT:- From the report, there does not appear to be any request of the Resolution Professional for issuance of the instructions for the purpose of conducting negotiations between the debtor and creditors for arriving at the repayment plan. Therefore, based on the reasons recorded in the report submitted by the Resolution Professional, the application, i.e., CP(IB)/262(KB)2021 filed under the provisions of section 95 of the IBC, 2016 is hereby admitted under section 100 of the IBC, 2016. The Insolvency Resolution Process is initiated against the respondent and the moratorium is declared, which begins with the date of admission of the application and shall cease to have effect at the end of the period of 180 days, as provided u/s. 101 of IBC, 2016 or until this Adjudicating Authority approves the repayment plan under sub-section (1) of section 114 of the Code. The Resolution Professional in exercise of the powers conferred u/s. 104 of the IBC, 2016 shall prepare a list of creditors within thirty days from the date of the notice. The personal guarantor shall prepare a repayment plan in consultation with the Resolution Professional as provided u/s. 105 of the IBC, 2016, which shall include the provisions for payment of fee to the Resolution Professional - In case the Resolution Professional recommends that a meeting of the creditors is not required to be summoned, he shall record the reasons therefor. If the Resolution Professional is of the opinion that the meeting of the creditors should be summoned, he shall specify the details as provided u/s. 106(3) of the IBC, 2016. The date of meeting should not be less than 14 days or more than 28 days from the date of submission of the Report under sub-section (1) of section 106 of the IBC, 2016, for which at least 14 days notice to the creditors, as per the list prepared, shall be issued by all modes. Such notice must contain the details as provided under the provisions of section 107 of the IBC, 2016. The meeting of the creditors shall be conducted in accordance with sections 108, 109, 110 and 111 of the IBC, 2016. The Resolution Professional shall prepare a report of the meeting of the creditors on repayment plan with all details as provided under section 112 of the IBC, 2016 and submit the same to this Adjudicating Authority, copies of which shall be provided to the personal Guarantor and the Creditors as per section 113 of the IBC, 2016. It is made clear that the Resolution Professional shall perform his functions and duties in compliance with the Code of Conduct provided u/s. 208 of the IBC, 2016. Petition admitted - moratorium declared.

  ---

• FEMA

• 2022 (7) TMI 983
  Offence under FEMA - Levy of penalty post compounding orders - Power to compound contravention - HELD THAT:- The compounding order is passed on 20.11.2008 and the adjudication order levying penalty is passed on 21.11.2008, i.e., one day after the passing of the compounding order. Sub-section (2) of section 15 as alluded to hereinabove clearly envisages a position that once a contravention has been compounded under sub-section (1) (which in the present case has been compounded on 20.11.2008), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing the contravention. We cannot hold petitioners responsible for contravention once the compounding orders have been passed. We have noted that there is a gap of one day between the passing of the two sets of orders, i.e., compounding orders and adjudicating order. Be that as it may, petitioners cannot be faulted and held liable for contravention once the compounding orders are passed by the Compounding Authority. That is the mandate of the statute. As also fairly conceded that respondents though aggrieved with the five compounding orders, have not challenged the said orders. If respondents were indeed aggrieved with the compounding orders, it was open for respondents to challenge the said orders. Having not done so, respondents cannot justify passing the adjudication order once the compounding orders have been passed and complied with by petitioners. Passing of the adjudication order after the offence has been compounded, is thus contrary to the statutory provisions discussed hereinabove, is not maintainable and thus without jurisdiction. The impugned adjudication order passed by respondent No.1 is an appealable order and petitioners should be relegated to the alternate remedy of filing the statutory appeal under section 19 of the said Act before the Appellate Tribunal. This submission deserves to be rejected at the threshold. As held by us, the impugned adjudication order has been passed without jurisdiction in view of the fact that the offence contravened by petitioners have been compounded by the statutory Compounding Authority before the passing of the impugned order. Hence, we reject this submission advanced by Mr. Patil. Writ Petition stands allowed in terms of prayer clause c which reads as under: c) that a writ in the nature of Mandamus may be issued commanding the Respondents to act according to law and/or cancel and/or withdraw and/or rescind the impugned order dated 21st November, 2008 passed by the Respondent No.1 and the Show Cause Notice dated 11th June, 2008 issued by the Respondent No.1 and all proceedings there under and/or in pursuance thereof.

  ---

• Service Tax

• 2022 (7) TMI 982
  Reopening of appeal - mechanism set up for getting approval from the Committee of Disputes (CoD) - HELD THAT:- A perusal of the impugned order would reveal that the Division Bench of the Jharkhand High Court has agreed with the proposition that in view of the law laid down in Electronic Corporation of India Ltd. [ 2011 (2) TMI 3 - SUPREME COURT ], the matters which were refused permissions by the CoD to pursue the appeal cannot be reopened. However, it is observed that everything will depend on the peculiar facts and circumstances of each case - It has been found that in the peculiar facts and circumstances of the case, the CoD had granted an opportunity to the Revenue to challenge and refused the permission to the respondent-assessee. No doubt that Mr. Prasad submits that the permission granted was for the subsequent year and not for the same assessment year. However, it cannot be disputed that the issues in both the appeals of the Revenue and appeal of the assessee were interconnected. In the peculiar circumstances the High Court exercised its discretion to sub-serve the interest of justice. It cannot said that the discretion exercised by the High Court was exercised in a perverse or erroneous manner, to warrant interference in the appellate jurisdiction - Appeal dismissed.

  ---

• 2022 (7) TMI 981
  Refund of the unutilized CENVAT credit - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE (NT) - non-fulfillment of the conditions as required under clause 2(g) and clause 2(h) of the said Notification - HELD THAT:- As per clause 2(h)of the Notification, the assessee is required to debit the amount that is claimed as refund. The said issue as to whether refund claim can be rejected on the ground that the balance of credit at the end of the quarter is nil was discussed by the Tribunal in the case of SCRIBETECH INDIA HEALTHCARE PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU SOUTH COMMISSIONERATE [ 2020 (10) TMI 675 - CESTAT BANGALORE] where it was held that the respondent while rejecting the refund claims has not properly appreciated the condition/limitation envisaged in paragraphs 2(g) and 2(h) in Notification No. 27/2012-C.E. (N.T.), dated 18-6-2012. The said paragraph only provides that the amount of refund claim shall not be more than the amount lies in the Cenvat credit account at the end of the quarter for which the claim is filed or at the time of filing of refund claim, whichever is less. This condition has been interpreted out of context by the respondent in the impugned order and the respondent has erred in not appreciating the facts as also the condition envisaged in Notification No. 27/2012. Thus, rejection of refund claim on this ground is not justified and requires to be set aside. The other ground for rejection of refund is that the invoice with regard to maintenance of cafeteria has been issued on unregistered premises - HELD THAT:- The invoice issued with regard to rent paid for office has been rejected stating that the rent for the month of July 2016 has been paid in June 2016. When the rent has been paid in advance, the invoices will be issued in advance. This cannot be a reason for rejecting the credit. The rejection of refund is not justified. The impugned orders are set aside - Appeal allowed.

  ---

• Central Excise

• 2022 (7) TMI 980
  Levy of penalty imposed under Rule 26 of the Central Excise Rules, 2002 - wrongful availment of CENVAT Credit - Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- From a perusal of the Order-in-Original and the impugned Order-in-Appeal, it is not clear as to the stand of the appellant other than a common statement of all the noticees that the credit was availed based on the invoices issued under Rule 11 ibid. and that the said invoices contained all required particulars in terms of Rule 9 of the CENVAT Credit Rules, 2004 and that the duty amount mentioned in the said invoices were paid to M/s. Santhi Steels, Coimbatore. When they were asked to explain / corroborate the discrepancies pointed out in the Show Cause Notice, the noticees took a stand that the evidences procured by the Revenue were vague and that no tangible or cogent evidences were adduced. A perusal of the Show Cause Notice reveals the quantification of the wrongfully availed CENVAT Credit of Rs.4,96,719/- during the years 2006-07, 2007-08 and 2008-09. When the Revenue entertained a genuine doubt as to the wrongful availment of CENVAT Credit after verifying documents like invoices, Daily Sheets, etc., and since there were discrepancies, a Show Cause Notice was issued. When a statutory notice was issued, it was incumbent upon the appellant to at least offer an explanation to clear the doubts pointed out. The appellant, however, without bothering to do so, has only contended that the documents / evidences relied upon by the Revenue were vague, etc., despite the fact that the Revenue had also relied on his statement recorded, which is not rebutted - the fact remains that M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. had wrongfully availed CENVAT Credit and the appellant being any person who has abetted in making such documents that helped M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. in availing such wrongful CENVAT Credit, cannot escape from the rigours of Rule 26 of the Central Excise Rules, 2002. There are no whisper about any retraction or any disputes as to their statements being not voluntary. The same are not even rebutted as having been obtained per force. Hence, the statements are relevant documents. The present appeal was filed in the year 2013 and the appellant had sufficient time to place all such relevant documents on record, but no such attempt is made. Appeal dismissed.

  ---

• 2022 (7) TMI 979
  Levy of penalty imposed under Rule 26 of the Central Excise Rules, 2002 - wrongful availment of CENVAT Credit - Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- From a perusal of the Order-in-Original and the impugned Order-in-Appeal, it is not clear as to the stand of the appellant other than a common statement of all the noticees that the credit was availed based on the invoices issued under Rule 11 ibid. and that the said invoices contained all required particulars in terms of Rule 9 of the CENVAT Credit Rules, 2004 and that the duty amount mentioned in the said invoices were paid to M/s. Santhi Steels, Coimbatore. When they were asked to explain / corroborate the discrepancies pointed out in the Show Cause Notice, the noticees took a stand that the evidences procured by the Revenue were vague and that no tangible or cogent evidences were adduced. A perusal of the Show Cause Notice reveals the quantification of the wrongfully availed CENVAT Credit of Rs.4,96,719/- during the years 2006-07, 2007-08 and 2008-09. When the Revenue entertained a genuine doubt as to the wrongful availment of CENVAT Credit after verifying documents like invoices, Daily Sheets, etc., and since there were discrepancies, a Show Cause Notice was issued. When a statutory notice was issued, it was incumbent upon the appellant to at least offer an explanation to clear the doubts pointed out. The appellant, however, without bothering to do so, has only contended that the documents / evidences relied upon by the Revenue were vague, etc., despite the fact that the Revenue had also relied on his statement recorded, which is not rebutted - the fact remains that M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. had wrongfully availed CENVAT Credit and the appellant being any person who has abetted in making such documents that helped M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. in availing such wrongful CENVAT Credit, cannot escape from the rigours of Rule 26 of the Central Excise Rules, 2002. There are no whisper about any retraction or any disputes as to their statements being not voluntary. The same are not even rebutted as having been obtained per force. Hence, the statements are relevant documents. The present appeal was filed in the year 2013 and the appellant had sufficient time to place all such relevant documents on record, but no such attempt is made. Appeal dismissed.

  ---

• 2022 (7) TMI 978
  CENVAT Credit of 2% CVD paid - Cenvat credit in respect of goods exempted from payment of excise duty under Notification No. 1/2011-CE and 12/2012-CE - import of steam coal - whether Cenvat credit of 2% CVD paid on import of steam coal is admissible or not to the assessee/respondents in accordance with Notification No. 12/2012-Cus dated 17/03/2012 as amended, in terms of embargo contained under Rule 3 of the Cenvat Credit Rules, 2004? - HELD THAT:- The assessee herein have availed Cenvat credit, in respect of 1%/2% CVD paid as per Notification No. 12/2012-Cus. The specific bar on which the Revenue is harping upon is provided under Rule 3 (1) (i) (a) (b) ibid for availing Cenvat credit in respect of goods exempted from payment of excise duty under Notification No. 1/2011-CE and 12/2012-CE but, there is no such bar in respect of CVD paid under Customs Notification No.12/2012-Cus, therefore the assessee/respondents are eligible for Cenvat credit in respect of 1% or 2% CVD, as the case may be, paid under Notification No. 12/2012-Cus. Otherwise also, the issue involved in these appeals is no more res integra and is covered in favour of assessee in view of various decisions of this Tribunal on the identical issue. In the case of SHREE ARIHANT TRADELINKS INDIA PRIVATE LIMITED AND MAHA SHAKTI COKE VERSUS C.C.E., KUTCH (GANDHIDHAM) [ 2021 (12) TMI 581 - CESTAT AHMEDABAD] it was held that the appellants/assessee therein are eligible for Cenvat credit in respect of 2% CVD paid under Notification No. 12/2012-Cus. Since a consistent view has been taken by this Tribunal in favour of assessee on this issue from time to time, there are no reason to take a contrary view, and therefore there are no merits in the appeals filed by Revenue and the same are hereby dismissed.

  ---

• 2022 (7) TMI 977
  100% EOU - CENVAT Credit - clearance of goods in domestic tariff area in excess of the value permitted by the Development Commissioner during various years of operation - extended period of limitation - Scope of appeal - HELD THAT:- The Commissioner came to a conclusion that the issue on limitation was not raised by the appellant in their earlier appeal and therefore it was not examined by the Tribunal. M/s. Flex Foods Limited in this appeal has enclosed copy of the appeal earlier filed by them before Tribunal, which was numbered as E/51809/2015- EX [DB]. A perusal of the said appeal shows that the issue of invocation of the extended period and limitation was specifically challenged by the appellant in paragraph 7 of the said appeal memorandum. It is seen that arguments on limitation were also raised by the appellant. The Tribunal, however, did not take note of the said argument nor gave any findings, presumably because the matter was being remanded on merit itself. In this background it is found that the observation of the Commissioner in the impugned order that the issue on limitation was not raised by the appellant before Tribunal is incorrect. It is also noticed that the remand order of Tribunal dated 16.05.2017 had also kept all issues open, which implies that the issue of limitation was also open. The impugned order cannot be sustained and is, therefore, set aside - the matter is remanded to the Commissioner for fresh adjudication on merits as well as on limitation.

  ---

• 2022 (7) TMI 976
  Valuation of goods - interconnected undertakings - undervaluation of goods cleared to their interconnected undertakings or related persons - mutuality of Interest - penalty - HELD THAT:- On going through the new definition of the related person after amendment and the facts of the case, it is found that amendment in the definition is of no much consequence having regard to the facts of the case as the case of the Department is not that the respondents are selling their entire goods through related person nor interconnected undertakings - Having gone through the findings of the commissioner, it is opined that when the respondents are selling their goods at the same price to the unrelated independent buyers and the alleged related buyers or undertakings, the question of going in to valuation Rules does not arise. Such value can be adopted as a transaction value. Moreover, it has been held by the adjudicating authority that if the supplementary invoices are taken into consideration, the price at which the goods sold to related person is same as the price at which the goods are sold to unrelated independent buyers. Therefore, it is found that the case heavily hinges on the fact of the issuance of supplementary invoices by the respondent to their related buyers. The learned AR submits during the course of hearing that in view of the Letter F. No. TC/KOP/372/12 dated 10.03.2022, it was informed that no supplementary invoices had been issued by the assessee during the period 2004 to 2008. However, this letter was neither before the adjudicating authority for consideration nor the respondents have not been given any opportunity to represent themselves and to show the evidence of issuance of supplementary invoices. Thus, reasonable opportunity should be given to either parties in the interest of justice. Therefore, the issue needs to go back to the adjudicating authority to verify the claims of the respondents with documentary evidence. Penalties - HELD THAT:- The show-cause notice has not substantiated with any evidence to levy penalty on Shri Chandrakant Vasudev Deshpande, partner of M/s Fie Spherotech except stating that they are actively participated in contraventions. Similarly, it was alleged that Shri Rajendra Krishanji Pujari, Excise Incharge of the respondent has willfully not paid the applicable Central Excise duty. However, his role also has not been established with evidence. It is also not brought on record as to whom was a pecuniary or any other benefits obtained by these two persons in the alleged undervaluation by the respondent company. Therefore, it is found that appeals as far as penalties on these two persons are concerned do not merit consideration. Appeal allowed in part and part matter on remand.

  ---

• 2022 (7) TMI 975
  Clandestine procurement of raw-material, production and clearance of MS ingots and TMT Bars, flats, etc. - demand of duty and penalty on the basis of third party records - HELD THAT:- On the basis of incriminating documents seized from the premises of M/s Pankaj Ispat Ltd. and also as per the statement of its Director, Mr. Pankaj Agarwal, revenue segregated the entries relating to this appellant as per private records of Pankaj Ispat, as mentioned in the Annexure A1 A2 to the Show Cause Notice, wherein it appeared that this appellant had purchased rejected moulds from M/s PIL and have also sold Ingots, without accounting for the same in their records regarding purchase, sales, production etc., they have also sold ingots. The statement of Manager of appellant Mr. V.N. Mishra was recorded during investigation, who inter alia stated that he looks after the work relating to sales, accounting etc. during 2010-11 and 2011- 12 and also purchased/rejected moulds from PIL. It is further evident from the Show Cause Notice that neither M/s Pankaj Ispat Ltd. nor its director, Mr. Pankaj Agarwal has been made co-noticee. Thus, it is found that the show cause notice is bad for non joinder of necessary party. Appeal allowed - decided in favor of appellant.

  ---

• Indian Laws

• 2022 (7) TMI 974
  Appointment of Arbitrator in applications - notified claims or not - Section 11(6) of the Arbitration Act - HELD THAT:- It cannot be disputed that both the parties are governed by the General Conditions of Contract (GCC). The GCC are the part of the Agreements / Contracts between the parties. Under the GCC, the parties have agreed to resolve the dispute between them only in terms of the relevant clauses of the GCC. The parties have agreed that certain specified disputes alone will be the subject of arbitration. In the case of Narbheram Power Steel (P) Ltd. [ 2018 (5) TMI 327 - SUPREME COURT ], it is observed and held that the parties are bound by the Clauses enumerated in the policy and the Court does not transplant any equity to the same by rewriting a clause. It is further observed and held that an arbitration clause is required to be strictly construed. Any expression in the clause must unequivocally express the intent of arbitration. It can also lay the postulate in which situations the arbitration clause cannot be given effect to. It is further observed that if a clause stipulates that under certain circumstances there can be no arbitration and they are demonstrably clear then the controversy pertaining to appointment of Arbitrator has to be put to rest. In the recent decision of this Court in the case of DLF Home Developers Limited v. Rajapura Homes Private Limited and Another [ 2021 (9) TMI 1053 - SUPREME COURT ] in which this Court also had an occasion to consider Section 11(6A) of the Arbitration Act and ultimately has observed, after referring to and considering the decision of three Judges Bench of this Court in the case of Vidya Drolia [ 2020 (12) TMI 1227 - SUPREME COURT ] that the jurisdiction of the Court under Section 11 of the Arbitration Act is primarily to find out whether there existed a written agreement between the parties for resolution of the dispute and whether the aggrieved party has made out a prima facie arguable case, it is further observed that limited jurisdiction, however, does not denude the Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood. The issue / aspect with regard to accord and satisfaction of claims is seriously disputed and is debatable. Whether, in view of the acceptance of Rs.4,53,04,021/by the respondent NCCL which was released by IOCL on the offer / letter made by the respondent NCCL dated 02.11.2016 there is an instance of accord and satisfaction of the claims is a good and reasonably arguable case. It cannot be said to be an open and shut case. Therefore, even when it is observed and held that such an aspect with regard to accord and satisfaction of the claims may/can be considered by the Court at the stage of deciding Section 11 application, it is always advisable and appropriate that in cases of debatable and disputable facts, good reasonably arguable case, the same should be left to the Arbitral Tribunal - though the Arbitral Tribunal may have jurisdiction and authority to decide the disputes including the question of jurisdiction and nonarbitrability, the same can also be considered by the Court at the stage of deciding Section 11 application if the facts are very clear and glaring and in view of the specific clauses in the agreement binding between the parties, whether the dispute is nonarbitrable and/or it falls within the excepted clause. Even at the stage of deciding Section 11 application, the Court may prima facie consider even the aspect with regard to accord and satisfaction of the claims. The parties to the contract are free to agree on applicability of (1) proper law of contract, (2) proper law of arbitration agreement and (3) proper law of the conduct of arbitration. Parties to the contract also may agree for matters excluded from the purview of arbitration. It is observed that the learned Arbitrator shall first decide the aspect with regard to accord and satisfaction of the claims and arbitrability of the disputes with regard to such claims by deciding an application under Section 16 of the Arbitration Act, which is reported to be pending. The learned Arbitrator shall first decide the jurisdiction of the Arbitral Tribunal and the arbitrability of the claims within a period of three months from the date of first sitting which shall be within a period of one month from today. All the contentions and/or defences which may be available to the respective parties are kept open to be considered by the learned Arbitrator in accordance with law and on its own merits and considering the relevant clauses of the contract and the material on record - The impugned judgment and order passed by the High Court in Arbitration Petition No.407/2018 is hereby modified to the extent and it is directed that only one claim of the respondent which is declared by the General Manager as a Notified Claim shall have to be referred to arbitration and the learned Arbitrator shall adjudicate only that claim which is declared by the General Manager as a Notified Claim and the learned Arbitral Tribunal shall not have any jurisdiction to adjudicate on any other claims which as such are not declared as Notified Claims. Application disposed off.

  ---

• 2022 (7) TMI 973
  Dishonor of Cheque - Funds Insufficient - application for grant of leave to appeal against the order of acquittal - acquittal of accused - rebuttal of presumption - respondent from the charges under Section 138 of the Negotiable Instruments Act, 1881 - primary argument of appellant is that once the execution of the cheque was admitted, a presumption arose in favour of the complainant and the said presumption could not be rebutted by the accused and thus, the judgment of acquittal ought to be set aside - situation in case of possibility of two reasonable conclusions. HELD THAT:- The Hon ble Supreme Court has dealt with the issue of statutory presumptions and rebuttal thereof in a number of judgments - In M.S. Narayana Menon @ Mani Versus State of Kerala, [ 2006 (7) TMI 576 - SUPREME COURT] , while dealing with the issue of statutory presumptions and rebuttal thereof the Hon'ble Supreme Court held that the accused has discharged the onus of proving that the cheques were not received by the holder for discharge of a debt or liability. Under the circumstances the defence of the appellant that blank cheques were obtained by the respondent as advance payment also becomes probable and the onus of burden would shift on the complainant. The complainant did not produce any books of account or stock register maintained by him in the course of his regular business or any acknowledgement for delivery of goods, to establish that as a matter of fact woolen carpets were sold by him to the appellant on August 6, 1994 for a sum of Rs. 1,90,348.39. Having regard to the materials on record, this Court is of the opinion that the respondent failed to establish his case under Section 138 of the Act as required by law and, therefore, the impugned judgment of the High Court is liable to be set aside. Thus it can be inferred that the presumption under the provisions of the Negotiable Instruments Act is a rebuttable one and the onus is on the accused to raise a probable defence. He can either show that the consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent ought to suppose that no consideration and debt existed. Further, specific defence in this regard may not have to be led by the accused but he can rely on the cross-examination of the complainant and his witnesses to rebut the said presumption. The standard of proof for rebutting the presumption is that of preponderance of probabilities. In the present case, firstly, no date of the advancement of the loan has been mentioned in the complaint or in the testimony of the complainant-CW4 only the month and year being April, 2017 is mentioned. In the cross-examination, there is an improvement and the complainant states that the loan was advanced on 09.04.2017. This makes the case of the complainant doubtful - Secondly, the complainant has not been able to show as to how he was able to generate and save a sum of Rs.90,000/- and provide the same to the accused as a loan. As per the complainant, he was an employee of a Karyana Shop when he was being paid Rs.13000/- per month and also did repair work of electric appliances. The Karyana Shop was owned by one Murari Lal, who was also not examined by the complainant. In fact, the complainant did not even mention the name and style of the Karyana Shop. He also did not provide any details of his income from repairing electrical appliances. Thus, it is strange that a person with a meagre income would lend such a huge amount to someone and that too without getting any writing executed at the time of advancing of the loan - Thirdly, the complainant was unable to tell as to what amount was left with him after he had given the amount of Rs.90,000/- to the accused - Fourthly, in the Income Tax Return of the complainant, there is no reference that an amount of Rs.90,000/- was to be paid by the accused to the complainant and neither was there any balance-sheet attached to the Income Tax Return Ex.C7. Thus, it is apparent that the accused has been able to rebut the presumption of there being a legally enforceable debt. As regards the legal position in an appeal against acquittal and the scope of interference called for by the Court, the Hon'ble Supreme Court in the matter of State of Rajasthan Versus Mohan Lal [ 2009 (4) TMI 559 - SUPREME COURT] has held that If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court. The judgments of the Hon'ble Supreme Court and this Court are to the effect that while an Appellate Court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded, it is equally true that there is a double presumption in favour of the innocence of the accused, firstly on account of the presumption of innocence available to an accused and secondly on account of the fact that the competent Court has acquitted the accused and therefore, if two reasonable conclusions were possible on the basis of the evidence on record, the Appellate Court should not disturb the finding of acquittal recorded by the Trial Court, merely, because the Appellate Court could have arrived at a different conclusion than that of the Trial Court - However, where the judgment appealed against is totally perverse and the findings have been arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant or inadmissible material, then the Appellate Court would be well within its powers to interfere with the said findings and set them aside. The respondentaccused has been able to rebut the presumption that the cheque was issued in the discharge of a legally enforceable debt and the view taken by the Trial Court while acquitting the accused is a reasonable view based on the evidence on the record cannot be said to be perverse and as such is not required to be interfered with - leave to appeal dismissed.

  ---

• 2022 (7) TMI 972
  Dishonor of Cheque - entire amount of the cheque has been paid to the the respondent-Bank - compounding of offences u/s 147 of the Negotiable Instrument Act - HELD THAT:- The issue as regards compounding under the Negotiable Instruments Act at the stage of appeal as well as revision has come before this court as well as before the Hon'ble Supreme Court and they have upheld that the powers under Section 147 of the Negotiable Instruments Act can be invoked at any stage of the proceedings i.e. at the stage of trial, appeal or at the revisional jurisdiction and that the courts should be liberal in exercising such powers. It was also held in the matter of Damodar S. Prabhu Vs. Sayed Babalal H., [ 2010 (5) TMI 380 - SUPREME COURT ] and Kaushalya Devi Massand Vs. Roopkishore, [ 2011 (3) TMI 1491 - SUPREME COURT ], to the effect that compromise in question would definitely go a long way to strengthen the mutual relationship between the parties and would serve as an ever lasting tool in their favour. Such an exercise would be in consonance with the spirit of Section 147 of the Negotiable Instruments Act. In view of the parties having settled the matter and the amount having been deposited by the petitioner with the respondent-Bank and in the light of consent of the parties, it appropriate to invoke the power vested by virtue of Section 147 of the Negotiable Instruments Act, 1881 and allow the compounding of the offence under Section 138 of the Negotiable Instruments Act - Petition allowed.

  ---