Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 25, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Violation of natural justice - notices on GST Portal led to unawareness. Case remitted for fresh order after depositing 10% tax. Impugned order quashed.
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Order quashed for lack of natural justice. Tax demand remanded. Petitioner to pay 10% & reply. Monitor GST portal.
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Petition maintainable despite alternative remedy. Order appealable. Govt issued clarification on appeal due to non-constitution of Tribunal. HC disposed writ petition.
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Ruling: KSTP status not covered. Govt contractor's road/bridge works for public use taxable 12% till 17.07.2022, 18% after. KSTP is Kerala PWD wing.
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KLDC, a govt undertaking, classified as "Governmental Entity", subject to 18% GST for works executed 01.01.2022-17.07.2022 as per SGST Circular.
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Discount eligibility hinges on invoice recording or prior agreement. Supplier liable for full tax sans proof.
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Petitioner challenged GST notices for not generating e-invoices during PETN explosives transfer. Court: Pay penalty, exemption needs examination. Directed adjudication conclusion.
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GST refund claim filed within time limit as period from Mar'20-Feb'22 excluded based on GST Council's recommendations. Order set aside.
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Excess stock found during survey can't initiate proceedings u/s 130 of UPGST Act. Tax liability to be determined u/s 35(6) & 74.
Income Tax
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Notices by JAO u/s 148 invalid after Finance Act 2021. Faceless assessment mandatory from notice stage. Circulars can't override statutes.
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Guest-house expenses disallowed, food/beverage=entertainment. 50% dealer conference allowed. Presentation articles=ad expense.
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High Court bars reassessment notices issued after April 1, 2021, under old provisions. Follows Supreme Court's Ashish Agarwal case.
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Undisclosed receipts added to profit, assessee claimed corresponding expenditure. CIT(A) deleted addition as double assessment, ITAT upheld.
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Long-term capital gain exemption denied for not depositing unutilized sale proceeds, construction delay & multiple properties.
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Lower tax rate option once exercised applies to subsequent years. Cannot be withdrawn for same/previous years. Validly opted for AY 2020-21.
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Deduction denied for income from shop sale, as not owned/operated as multiplex part. Lost ownership/control over integral shop. Previous year's treatment irrelevant.
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Reassessment notice invalid due to lack of jurisdiction. ACIT lacked pecuniary jurisdiction. Defect incurable u/s 292BB.
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Development pact doesn't trigger capital gain tax in year of agreement; taxable when built area transferred. Rental income & loans from kin accepted. Rs. 90k unexplained, taxable. Relief granted.
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Trust denied tax exemption due to undisclosed income, bogus donations, staff salary recovery & fraud. Violated Sections 13(1)(c)&(d).
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TP adjustment on guarantee fees paid to AE deleted as borrowing cost+fee<bank rate. Economic rationale upheld.
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Tribunal accepted purchases, GST payments, and expenses. CIT(A) erred in applying profit rate, defying logic. Assessee discharged onus with evidence.
Customs
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Bail granted in e-cig import case. Applicant not directly involved. Evidence weak. Released on bail with conditions.
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Fraudulent IGST refund, drawback benefits violate Regulation 10(n). Suspension permissible during probe, not penalty. Reliance on DGFT, GST docs valid. CESTAT erred.
Indian Laws
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Builder forfeited right to file statement, but could argue legal points. No new grounds/inconsistent pleadings allowed. No error found.
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Failure to provide relied upon docs with show cause notice violates natural justice by denying fair response opportunity. Supplying underlying docs is vital for effective reply.
IBC
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During CIRP, RP liable for pending payments like maintenance, electricity as per IBC & RERA. CoC decisions on dues recovery paramount.
PMLA
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Judges must be cautious in staying bail orders, as it curtails liberty. Stays should be rare & exceptional, not ex parte or mechanical.
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Sec 50 PMLA upheld, not violating Art 14, 20, 21 & Sec 132 Evidence Act. Accused admitted paying crores for favors, is money laundering.
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Property owner's rights upheld. Provisional attachment quashed for lack of notice, violating natural justice. Duty to issue notice before confirming attachment.
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Bail extension denied for knee surgery; court says procedure can be done in custody. Applicant allowed to reschedule & reapply.
Service Tax
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Construction services for non-profit edu trusts exempt from service tax as per Board's Circular deeming edu institutions non-commercial.
TMI Short Notes
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Bill:
Rates of income-tax in respect of income liable to tax for the assessment year 2024-25.
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Bill:
Rates for deduction of income-tax at source during the financial year (FY) 2024-25 from certain incomes other than “Salaries”.
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Bill:
Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the FY 2024-25 (Assessment Year 2025-26).
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Bill:
Individual, HUF, association of persons, body of individuals, artificial juridical person. [Rates for deduction of income-tax at source (TDS) from “Salaries”, computation of “advance tax” during the FY 2024-25 (Assessment Year 2025-26)]
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Bill:
Co-operative Societies [Computation of “advance tax” and charging of income-tax in special cases during the FY 2024-25 (Assessment Year 2025-26).]
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Bill:
Firms [Computation of “advance tax” and charging of income-tax in special cases during the FY 2024-25 (Assessment Year 2025-26).]
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Bill:
Local authorities [Computation of “advance tax” and charging of income-tax in special cases during the FY 2024-25 (Assessment Year 2025-26).]
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Bill:
Companies [Computation of “advance tax” and charging of income-tax in special cases during the FY 2024-25 (Assessment Year 2025-26).]
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Bill:
Increase in Standard Deduction and deduction from family pension for taxpayers in tax regime
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Bill:
Increase in amount allowed as deduction to non-government employers and their employees for employer contribution to a Pension Scheme referred in section 80CCD
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Bill:
Tax incentives to International Financial Services Centre (MEASURES TO PROMOTE INVESTMENT AND EMPLOYMENT)
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Bill:
Amendment of Section 56 of the Act (MEASURES TO PROMOTE INVESTMENT AND EMPLOYMENT)
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Bill:
Promotion of domestic cruise ship operations by non-residents (MEASURES TO PROMOTE INVESTMENT AND EMPLOYMENT)
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Bill:
Introduction of block assessment provisions in cases of search under section 132 and requisition under section 132A (SIMPLIFICATION AND RATIONALISATION)
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Bill:
Rationalisation of provisions relating to assessment and reassessment under the Act (SIMPLIFICATION AND RATIONALISATION)
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Bill:
Rationalisation of provisions relating to period of limitation for imposing penalties (SIMPLIFICATION AND RATIONALISATION)
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Bill:
Amendment in provisions relating to set off and withholding of refunds (SIMPLIFICATION AND RATIONALISATION)
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Bill:
Rationalisation of the time-limit for filing appeals to the Income Tax Appellate Tribunal (SIMPLIFICATION AND RATIONALISATION)
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Bill:
Merger of trusts under first regime with second regime ((Rationalisation of the provisions of Charitable Trusts and Institutions))
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Bill:
Condonation of delay in filing application for registration by trusts or institutions (Rationalisation of the provisions of Charitable Trusts and Institutions)
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Bill:
Rationalisation of timelines for funds or institutions to file applications seeking approval under section 80G (Rationalisation of the provisions of Charitable Trusts and Institutions)
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Bill:
Rationalisation of timelines for disposing applications made by trusts or funds or institutions, seeking registration for exemption under section 12AB or approval under section 80G (Rationalisation of the provisions of Charitable Trusts and Institutions)
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Bill:
Merger of trusts under the exemption regime with other trusts (Rationalisation of the provisions of Charitable Trusts and Institutions)
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Bill:
Inclusion of reference of clause (23EA), clause (23ED) and clause (46B) of section 10 in sub-section (7) of section 11 (Rationalisation of the provisions of Charitable Trusts and Institutions)
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Bill:
Rationalisation and Simplification of taxation of Capital Gains
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Bill:
Amendment to definition of Specified Mutual Fund under section 50AA (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Rationalisation of Tax Deducted at Source rates (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194D - Payment of insurance commission (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194DA - Payment in respect of life insurance policy (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194G – Commission, etc on sale of lottery tickets (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194H - Payment of commission or brokerage (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194-IB - Payment of rent by certain individuals or HUF (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194M - Payment of certain sums by certain individuals or Hindu undivided family (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194-O - Payment of certain sums by e-commerce operator to e-commerce participant (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Section 194F - TDS on payments on repurchase of units by mutual fund or UTI (Rationalisation and Simplification of taxation of Capital Gains)
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Bill:
Ease in claiming credit for TCS collected/TDS deducted by salaried employees
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Bill:
Alignment of interest rates for late payment to Government account of TCS
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Bill:
Increase in limit of remuneration to working partners of a firm allowed as deduction
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Bill:
Claiming credit for TCS of minor in the hands of parent
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Bill:
Tax on distributed income of domestic company for buy-back of shares (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Revision of rates of securities transaction tax by amendment to the Finance (No.2) Act, 2004 (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Reporting of income from letting out of house property under ‘Income from House Property’ (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Amendment of section 47 (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
TDS on payment of salary, remuneration, interest, bonus or commission by partnership firm to partners (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
TCS under sub-section (1F) of section 206C on notified goods (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Amendment of provisions of TDS on sale of immovable property (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Tax Deduction at source on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Preventing misuse of deductions of expenses claimed by life insurance business (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Inclusion of taxes withheld outside India for purposes of calculating total income (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Excluding sums paid under section 194J from section 194C (Payments to Contractors) (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Disallowance of settlement amounts being paid to settle contraventions (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Amendment of Section 55 of the Act (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)
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Bill:
Direct Tax Vivad se Vishwas Scheme, 2024 (TAX ADMINISTRATION)
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Bill:
Amendment of provisions related to Equalisation Levy (TAX ADMINISTRATION)
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Bill:
Amendments in section 42 and 43 of the Black Money Act, 2015 relating to penalty for failure to disclose foreign income and asset in the ITR (TAX ADMINISTRATION)
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Bill:
Amendments proposed in section 276B of the Act for rationalisation of provisions (TAX ADMINISTRATION)
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Bill:
Reducing time limitation for orders deeming any person to be assessee in default (TAX ADMINISTRATION)
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Bill:
Widening ambit of section 200A of the Act for processing of statements other than those filed by deductor (TAX ADMINISTRATION)
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Bill:
Extending the scope for lower deduction / collection certificate of tax at source (TAX ADMINISTRATION)
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Bill:
Notification of certain persons or class of persons as exempt from TCS (TAX ADMINISTRATION)
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Bill:
Time limit to file correction statement in respect of TDS/ TCS statements (TAX ADMINISTRATION)
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Bill:
Penalty for failure to furnish statements (TAX ADMINISTRATION)
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Bill:
Submission of statement by liaison office of non-resident in India (TAX ADMINISTRATION)
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Bill:
Determination of Arms Length Price in respect of specified domestic transactions in proceedings before Transfer Pricing Officer (TAX ADMINISTRATION)
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Bill:
Discontinuation of the provisions allowing quoting of Aadhaar Enrolment ID in place of Aadhaar number (TAX ADMINISTRATION)
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Bill:
Amendments in sections 245Q and 245R related to Advance Rulings (TAX ADMINISTRATION)
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Bill:
Powers of the Commissioner (Appeals) (TAX ADMINISTRATION)
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Bill:
Amendment of section 271FAA to comply with the Automatic Exchange of Information (AEOI) framework (TAX ADMINISTRATION)
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Bill:
Amendment to include the reference of Black Money Act, 2015 for the purposes of obtaining a tax clearance certificate (TAX ADMINISTRATION)
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Bill:
Rationalisation of provisions related to time-limit for completion of assessment, reassessment and recomputation
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Bill:
Amendment of Section 80G (TAX ADMINISTRATION)
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Bill:
Removing reference to National Housing Board in Section 43D of the Act (TAX ADMINISTRATION)
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Bill:
Adjusting liability under Black Money Act, 2015 against seized assets (TAX ADMINISTRATION)
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Bill:
Amendment of Section 24 of the Prohibition of Benami Property
Transactions Act, 1988 (Amendments to the Prohibition of Benami Property Transactions Act, 1988)
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Bill:
Insertion of Section 55A in the Prohibition of Benami Property Transactions Act, 1988 (Amendments to the Prohibition of Benami Property Transactions Act, 1988)
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Bill:
AMENDMENTS TO THE CUSTOMS ACT, 1962
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Bill:
AMENDMENTS TO THE CUSTOMS TARIFF ACT, 1975
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Bill:
AMENDMENTS TO THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975
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Bill:
CUSTOMS - OTHER PROPOSALS INVOLVING CHANGES IN BASIC CUSTOMS DUTY RATES IN NOTIFICATIONS
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Bill:
CUSTOMS - OTHER MISCELLANEOUS AMENDMENTS
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Bill:
Amendment of Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995
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Bill:
Customs - Other notification changes
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Bill:
Review of Customs duty Exemptions - Review of conditional exemption rates of BCD
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Bill:
Customs - Review of exemptions prescribed by other notifications:
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Bill:
CUSTOMS DUTY EXEMPTIONS / CONCESSIONS BEING ALLOWED TO LAPSE
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Bill:
CUSTOMS - SOCIAL WELFARE SURCHARGE (SWS)
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Bill:
CUSTOMS - AGRICULTURE INFRASTRUCTURE AND DEVELOPMENT CESS (AIDC)
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Bill:
Amendment of Central Excise Notification
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Bill:
AMENDMENTS IN THE CGST ACT, 2017
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Bill:
AMENDMENTS IN THE IGST ACT, 2017
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Bill:
AMENDMENTS IN THE UTGST ACT, 2017
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Bill:
AMENDMENTS IN THE GST (Compensation to States) Act, 2017
Articles
News
Case Laws:
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GST
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2024 (7) TMI 1207
Violation of principles of natural justice - petitioner was unaware of the impugned order that came to be passed as notices that preceded the impugned order were hosted in the GST Common Portal and the petitioner being the Proprietary Concern was unaware of the same - HELD THAT:- This Writ Petition is disposed off by remitting the case back to the fourth respondent to pass a fresh order subject to the petitioner depositing 10% of the disputed tax from its Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order. The impugned order which stands quashed in this order shall be treated as Addendum to the show cause notice issued to the petitioner. Subject to the petitioner complying with the above requirement within a period of 30 days, the fourth respondent shall proceed to pass fresh orders on merits and in accordance with law after hearing the petitioner. This Writ Petition stands disposed of.
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2024 (7) TMI 1206
Violation of principles of natural justice - seeking one opportunity to explain the position - it is submitted that the petitioner was unaware of the impugned order - HELD THAT:- The petitioner deserves a chance to redress its grievance subject to the fulfilment of conditions imposed - The impugned order stands quashed and the same shall be treated as Addendum to the Show Cause Notices that preceded with the impugned order. This Writ Petition stands disposed of.
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2024 (7) TMI 1205
Initiation of proceedings u/s 130, read with section 122 of the UPGST Act - case of the petitioner is that once the survey was conducted and alleged excess stock was found, then sections 73 74 of the UPGST Act come into play - HELD THAT:- The issue in hand is covered by the judgement of this Court in M/S METENERE LTD. VERSUS UNION OF INDIA AND ANOTHER [ 2020 (12) TMI 790 - ALLAHABAD HIGH COURT] , in which it was held that ' In the present case, the proper officer was empowered to determine the liability of payment of tax in terms of the powers conferred under Section 35 (6) after resorting to the procedure as established under Section 74 of the Act.' In the aforesaid case, this Court has specifically held that even if excess stock is found, the proceedings under section 130 of the UPGST Act cannot be initiated. The impugned orders passed by the authorities below in all the writ petitions cannot be sustained in the eyes of law. The same are hereby quashed - Petition allowed.
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2024 (7) TMI 1204
Refund claim - time limitation - sole objection of respondent is that the petitioner has not preferred appeal against the impugned order - HELD THAT:- The case of petitioner is squarely covered by recommendations of GST Council. The respondent is not disputing applicability of aforesaid recommendations of GST Council to case in hand. As soon as period from March 2020 to February 2022 is excluded from limitation period prescribed for filing refund claim, the application dated 29.09.2020 filed by petitioner becomes within limitation period as prescribed under Section 53 (3) of the CGST Act. The impugned order set aside - the present petition deserves to be allowed and accordingly allowed.
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2024 (7) TMI 1203
Challenge to notices, which were issued in Form GST MOV-01 and MOV-07 - petitioner had not generated e-invoices - transfort of PETN explosives from Salem to Vietnam - HELD THAT:- On examining the petitioner's undertaking dated 15.06.2024 and the reply dated 18.06.2024, it is noticeable that the petitioner undertook to pay the penalty. It is also noticeable that the petitioner did not assert that the goods are exempted. In any event, whether goods are exempted or not is a mixed question of fact and law. This is required to be examined by the respondent. Since notices were issued and the petitioner replied thereto, it is just and appropriate that the adjudication process be concluded. Petition is disposed of by directing the respondent to conclude the adjudication in respect of the penalty proceedings against the petitioner within four weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the revised notice within one week from the date of receipt of a copy of this order.
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2024 (7) TMI 1202
Reversal of Input Tax Credit in respect of credit notes issued by the supplier - HELD THAT:- Sub-section (3) of Section 15 of applicable GST statutes provides for a reduction in the value of supply, on account of a discount, if such discount has been duly recorded in the invoice issued in respect of such supply or if such discount is established in terms of an agreement entered into either before or at the time of supply although the supply may be subsequent to such agreement. In this case, the petitioner has prima facie established that neither of the requirements under sub-section (3) were satisfied. In such event, the supplier would be liable to pay tax on the full value of supply. The exercise of jurisdiction under Article 226 is discretionary and subject to self imposed fetters. One such fetter is when an efficacious alternative remedy is available. It should be borne in mind that the existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction. In the case at hand, on the basis that the other issues require reappraisal of evidence, the petitioner has approached the appellate authority in respect thereof. As regards this issue, since it is a pure legal issue, the petitioner has chosen to approach this Court. As recorded earlier, the conclusion is ex facie erroneous on this issue, and the appellate authority under applicable GST statutes does not have the power to remand. The impugned order dated 26.02.2024 is set aside only insofar relating to reversal of Input Tax Credit for the value of credit notes issued by the supplier is concerned. As a corollary, defect no.3 is remanded for reconsideration by the original authority. After providing a reasonable opportunity to the petitioner, including a personal hearing, the assessing officer is directed to issue a fresh order within three months from the date of receipt of a copy of this order. Petition disposed off by way of remand.
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2024 (7) TMI 1201
Challenge to impugned order - whether the Show Cause Notice in Form GST DRC-01 dated 12.01.2024 does not contain any ingredients to invoke the period of limitation under Section 74(10) of the respective GST Enactments? - HELD THAT:- It is noticed that there is allegation in the Show Cause Notice that the petitioner has reported the turnover as detailed in the Show Cause Notice and has willfully failed to pay the corresponding tax with intention to evade the tax lability. Therefore, it cannot be said that the Show Cause Notice does not contain any ingredients to invoke Section 74 of the respective GST Enactments. The petitioner may have a case on merits. However, that would be subject matter of appeal - this Writ Petition is disposed of with liberty to the petitioner to file statutory appeal under Section 107 of the respective GST Enactments before the Appellate Authority namely, Appellate Deputy Commissioner (ST) (GST Appeal), C.T.Building, Dr.Thangarajsalai, Madurai 625020, the first respondent herein, within a period of 30 days from today subject to the petitioner depositing 10% of the disputed tax. Petition disposed off.
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2024 (7) TMI 1200
Cancellation of petitioner s registration, on the ground of delay in filing the return - HELD THAT:- Considering the facts and circumstances of the case, this writ petition is disposed of by directing the respondent GST authority concerned to intimate the petitioner the revenue due, if any, which is required to be paid by the petitioner within 7 working days from date and petitioner shall make such payment within 7 days from date of receipt of such intimation. If petitioner makes such payment of revenue due, petitioner s registration shall be restored. If it is found by the department that there is no revenue due, it shall restore the petitioner s registration at once. Petition disposed off.
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2024 (7) TMI 1199
Challeneg to assessment order - petitioner was not provided a reasonable opportunity to contest the tax demand on merits - petitioner asserts that he was unaware of proceedings since the notices and the impugned order were uploaded in the view additional notices and orders tab on the GST portal - HELD THAT:- On perusal of the impugned order, it is evident that ITC was reversed for violation of sub-section(4) of Section 16 of applicable GST enactments. It is also evident that the tax proposal was confirmed for the reason that the petitioner did not reply to the notice. In these circumstances, albeit by putting the petitioner on terms, it is just and appropriate that the petitioner be provided an opportunity to contest the tax demand on merits. Therefore, impugned order dated 02.06.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is permitted to submit a reply to the show cause notice - Petition disposed off.
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2024 (7) TMI 1198
Violation of principles of natural justice - petitioner was not provided a reasonable opportunity - inadvertent error was made while filling up the GSTR 3B returns, whereby the available ITC was mentioned in row 4(A)(3) pertaining to inward supply liable to reverse charge - HELD THAT:- On perusal of the impugned order, it is evident that the tax liability pertains to alleged discrepancy in availment of ITC. Such conclusion has been reached on the basis of the petitioner's GSTR 3B return. In view of the explanation provided by the petitioner in the affidavit, it is just and appropriate that the petitioner be provided an opportunity to contest the tax demand by putting the petitioner on terms. The impugned order dated 23.11.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is permitted to submit a reply to the show cause notice - petition disposed off.
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2024 (7) TMI 1197
Challenge to assessment order - breach of principles of natural justice - Since the notices were uploaded on the GST portal, the petitioner asserts that she was unaware of the initiation of proceedings - HELD THAT:- On perusal of the impugned order, it is evident that the tax demand pertains to the alleged disparity between the GSTR 3B returns filed by the petitioner and the auto populated GSTR 2A returns. In recognition of difficulties encounted by taxpayers in this regard, Circular no.183 was issued. On account of the petitioner not being heard before the impugned order was issued, the petitioner was unable to contest the tax demand. However, it should be noticed that the petitioner did not fulfil the obligation of monitoring the GST portal continually in spite of being a registered person. Solely with a view to provide an opportunity to the petitioner to contest the tax demand on merits, the impugned order is quashed subject to the petitioner remitting 10% of the disputed tax demand as agreed to within fifteen days from the date of receipt of a copy of this order and the matter is remanded for re-consideration. The petitioner is permitted to submit a reply to the show cause notice within fifteen days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (7) TMI 1196
Violation of principles of natural justice - Challenge to assessment order - personal hearing was not offered - petitioner's reply was disregarded - disparity between the turnover reported in returns filed under the GST enactments and the turnover reflected in the profit and loss account - HELD THAT:- Upon examining the petitioner's reply dated 12.12.2023, it follows that the explanation of the petitioner is that the turnover of Rs.6,73,26,009/- is attributable to the pre-GST period running from 01.04.2017 to 30.06.2017. It also appears that the petitioner did not place on record documents to establish that this turnover is attributable to the pre-GST period. In the impugned order, the respondent has taken note of the fact that the VAT returns for the said period indicated 'Nil' turnover. The conclusion of the respondent on this count cannot be completely disregarded as devoid of merit. The petitioner's explanation is that an inadvertent mistake was committed while filing the GSTR 9C return. In support of this contention, the certificate dated 02.12.2023 of the Chartered Accountant was submitted. On this issue, it appears that the profit and loss account corroborates the assertion in the Chartered Accountant's certificate. These aspects were disregarded while confirming the demand. Significantly, it is noticeable that no personal hearing was offered after the petitioner submitted a reply dated 12.12.2023. When all these facts and circumstances are considered cumulatively, the impugned order calls for interference so as to provide another opportunity to the petitioner. The petitioner is permitted to submit all relevant documents before the respondent within a period of 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to reconsider the matter - petition disposed off by way of remand.
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2024 (7) TMI 1195
Maintainability of petition - availability of alternative remedy - appealable order or not - non-constitution of Tribunal - HELD THAT:- The petitioner is desirous of availing the statutory remedy of Appeal under the said provisions. Apparently, acknowledging the absence of constitution of Appellate Tribunal, in exercise of the power conferred under section 172 of the CGST Act, 2017, the Government of India based on the recommendation made by the G.S.T. Council, has issued Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 on 03.12.2019 - In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No.132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal. Taking into account the aforesaid Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. The writ petition is disposed off.
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2024 (7) TMI 1194
Scope of Advance Ruling - Status of Kerala State Transport Project (KSTP) in GST - Government Authority or Government Entity or Government Department - GST rate on the works contract services provided by a Government Contractor to KSTP i.e., construction of Roads and bridges for public use Scope of Advance Ruling - What is the status of KSTP in GST viz, Government Authority or Government Entity or Government Department? - HELD THAT:- This question is not covered in any of the matters enumerated under sub-section (2) of Section 97 of the CGST Act. Hence, there is no need to pronounce ruling on the same. What is the GST rate on the works contract services provided by a Government contractor to KSTP, ie., construction of roads and bridges for public use? - HELD THAT:- In the instant case, the recipient of the applicant i.e, Kerala State Transport Project (KSTP) is a wing constituted under the Kerala Public Works Department to execute externally aided projects and specialized projects. The main aim of this wing is the upgradation of the State highway roads. The strategic option study made for the upgradation of State highways and major district roads conducted by M/s. Rail India Technical and Economic Service Limited led to the formation of KSTP under the Kerala Public Works Department - the works contract services provided by the applicant to KSTP by way of construction of roads and bridges is for the use of the general public. As such, the rate of tax for works contract services provided by the applicant to KSTP by way of construction of roads and bridges for public use will be taxable @ 12% - till 17.07.2022 the rate of tax for works contract services by way of construction of roads and bridges for public use was 12% (CGST @ 6% and SGST @ 6%) and thereafter, i.e, w.e.f 18.07.2022 it is 18%. The services provided by the applicant by way of construction of roads and bridges for public use will be taxable @ 12% (CGST @ 6% and SGST @ 6%) if the time of supply as determined in accordance with section 14 of the CGST Act falls any date prior to 18.07.2022, otherwise it will be taxable @ 18%.
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2024 (7) TMI 1193
Rate of GST - works executed by the company for the period from 01/01/2022 to 17/07/202 - GST rate as per notification from State Goods and Services Tax Department, Government of Kerala vide Circular No. 01/2022, No CT/3/2021-C1 dated 19/01/2022 - Government entity or not - HELD THAT:- The applicant M/s. Kerala Land Development Corporation Ltd. (M/s. KLDC) was incorporated in 1972 under the Companies Act, 1956 as a fully owned Government Undertaking with 4.77% of the shares of the company are in possession with the Central Government and 95.23% of the shares are with the Government of Kerala. M/s. KLDC is established with more than 90% or more participation of the Govt, and falls under the definition of Governmental Entity as the same is established and controlled by the State Government. The applicant has sought clarification on the matter that whether GST @12% is applicable for the works executed by them for the period 01.01.2022 to 17.07.2022 as per SGST Cir. No. 01/2022 dated 19.01.2022. As per Clause 4 of the said circular, it is clarified that w.e.f 01.01.2022, the benefit of the reduced tax rate, i.e., 12% instead of 18% on works contract supplied to a Governmental Authority or a Government Entity regarding the works contract services mentioned in the corresponding entry, stands discontinued. It is evident that the works contract services supplied to the applicant being a Govt, entity are liable for the taxable rate of 18% w.e.f 01.01.2022. Further, the services rendered by the applicant do not fall under SI. Nos. 3 in column (3) - (iii), (vi) (ix) above, the rate of tax 12% is not applicable in this case and the proper entry to the services provided may be the entry at column (3) (xii), i.e, @ 18 % w.e.f 01.01.2022.
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Income Tax
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2024 (7) TMI 1192
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (7) TMI 1191
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- Similar issue came up for consideration before a Division Bench of Bombay High Court in Hexaware Technology Ltd.( 2024 (5) TMI 302 - BOMBAY HIGH COURT] which vide judgment dated 03.05.2024 discussed the issue at length and held that notice under Section 148 after introduction of Finance Act, 2021, cannot be issued by Jurisdictional Assessing Officer. Scheme of faceless assessment is applicable from the stage of show cause notice u/s 148 as well as 148A. Clause 3 (b) of notification dated 29.03.2022 issued u/s 151A clearly provides that scheme would be applicable to notice u/s 148. Even otherwise, it is a settled proposition of law that assessment proceedings commence from the stage of issuance of show cause notice. The object of introduction of faceless assessment would be defeated if show cause notice u/s 148 is issued by Jurisdictional AO. The respondents are heavily placing reliance upon office memorandum and letter issued by departmental authorities. It is axiomatic in tax jurisprudence that circulars, instructions and letters issued by Board or any other authority cannot override statutory provisions. The circulars are binding upon authorities and Courts are not bound by circulars. The mandate of Section 144B, 151A readwith notification dated 29.03.2022 issued thereunder is quite lucid. There is no ambiguity in the language of statutory provisions, thus, office memorandum or any other instruction issued by Board or any other authority cannot be relied upon. Instructions/circulars can supplement but cannot supplant statutory provisions. The notices issued by Jurisdictional Assessing Officer under Section 148 are hereby quashed with liberty to respondent to proceed in accordance with procedure prescribed by law.
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2024 (7) TMI 1190
Validity of assessment order passed u/s 143(3) r.w.s. 144B - no opportunity of hearing was provided to the petitioner - allegation of lack of opportunity for personal hearing and violation of principles of natural justice - shorter period to respond - DR submits that the petitioner was given an option to request for personal hearing. The request can only be made by clicking the Seek Video Conferencing button available against the show cause notice in the e-proceeding tab on e-filing portal, but petitioner did not click such button HELD THAT:- The time provided to the petitioner was adequate enough, at least, for the purpose of clicking Seek Video Conferencing button, if the petitioner was at all interested to seek personal hearing. The request made by the petitioner for personal hearing in the response dated 14th November, 2023, could not have mandated the respondent no.2 to give personal hearing to the petitioner without the petitioner applying for personal hearing in the manner prescribed on the portal. As correctly pointed out by respondent no.2 had duly afforded an opportunity of hearing to the petitioner. If the petitioner has failed to take such opportunity, the respondent no. 2 cannot be made responsible therefor. The same conclusion may not be drawn while considering whether appropriate opportunity of hearing was given to the petitioner to respond to the show cause notice dated 15th March, 2024, which proposed the variations. The show-cause notice is dated 15th March, 2024 and from the stamp on it and the digital signature it would appear that the same was signed on 15th March, 2024 at 16.46.43 hrs., which was a Friday. The petitioner was required to respond to the said show cause notice within 11 a.m. of 19th March, 2024. Therefore, the petitioner had hardly one working day s time to respond to the same. From the Standard Operating Procedure (SOP) circulated by the Commissioner of Income Tax vide letter dated 3rd August, 2022, it would transpire that in terms of paragraph N.1.3, Faceless Assessment Unit is required to afford response time of 7 days from the date of issuance of show cause notice. It would also appear from the aforesaid SOP that 7 days time may be curtailed keeping in view the limitation date for completing the assessment. In this case, it may be noticed that the limitation period would end on 31st March, 2025. As such, there being no urgency find that the respondent no.2 had acted in derogation of the SOP. The opportunity to respond also does not appear to be adequate. The aforesaid, in my view, constitutes violation of principles of natural justice, inasmuch as, the petitioner was prevented from appropriately responding to the show cause. It is true that the respondent no.2 had passed the order beyond the period of 7 days from the date of issuance of such notice, but there was nothing on record to demonstrate that any notice was given to the petitioner intimating that the order shall not be passed prior to the expiry of 7 days from the date of issuance of show-cause, for the petitioner to respond to the same. The order passed by the respondent no.2 dated 26th March, 2024 for the assessment year 2022-23 stands vitiated by reasons of violation of principles of natural justice. For reasons indicated morefully hereinabove, I set aside the order dated 26th March, 2024 and remand the matter back to the respondent no.2. Since, the petitioner has already received the show cause notice, the petitioner shall be at liberty to file her response to the said show cause notice within a period of 15 days from the date of receipt of the server copy of this order. The respondent no.2 is directed to forthwith activate the portal for the petitioner to submit her response and to express her option of personal hearing, if she so chooses
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2024 (7) TMI 1189
Validity of reopening of assessment - notice issued u/s 148 challenged on the ground that the same has been issued by JAO although the same was required to be issued in a faceless manner in terms of the provisions contained u/s 151A - HELD THAT:- Petitioner had sought for an opportunity of personal hearing and despite making such request, the respondents had not afforded the same and having regard to the fact that a lesser period was given to the petitioner to respond to the show cause notice, the mater should be remanded back to the jurisdictional assessing officer for a decision afresh. We, set aside the order passed by the jurisdictional assessing officer dated 30th March 2024 passed u/s 148A(d), for the assessment year 2017-18. The petitioner shall be at liberty to file its additional response to the aforesaid show cause, within a period of 10 days from date. If the petitioner files its additional response or in absence thereto, the jurisdictional assessing officer upon affording opportunity of hearing to the petitioner, shall dispose of such proceeding in accordance with law by passing a reasoned order, within 8 weeks from the date of communication of this order. Notice issued u/s 148 of the said Act dated 30th March 2024 for the assessment year 2017-18 stands set aside. Having regard to the above, it is not necessary at this stage to go into the issue of competence of the jurisdictional assessing officer to issue a notice u/s 148 of the said Act.
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2024 (7) TMI 1188
Allowable business expenditure - expenses incurred in respect of municipal taxes, maintenance and repair of rest / guest house - HELD THAT:- Issue answered against the assessee in assessee s own case for the assessment year 1993-94 [ 2008 (8) TMI 1029 - BOMABY HIGH COURT] , wherein, this Court following the decision of Britannia Industries Ltd. [ 2005 (10) TMI 30 - SUPREME COURT] held that the expenses incurred by the assessee towards municipal taxes, maintenance and repairs of guest-house could not be allowed as a deduction. In Britannia Industries Ltd. [ 2005 (10) TMI 30 - SUPREME COURT] the question which fell for consideration of the Supreme Court was whether the expression premises and buildings referred to in Sections 30 and 32 and used for the purposes of the business or profession would include within its scope and ambit the expression residential accommodation including any accommodation in the nature of guest house used in Sub-sections (3), (4) and (5) of Section 37 of the Act. The Supreme Court rejected the assessee s contention to hold that the intention of the legislature appeared to be clear and unambiguous, so as to exclude the expenses towards rents, repairs and also maintenance of premises/ accommodation used for the purposes of a guest house of the nature indicated in sub-section (4) of Section 37. It was observed that if the Legislature had intended that deduction would be allowable in respect of all types of buildings / accommodations used for the purposes of business or profession, then it would not have felt the need to amend the provisions of Section 37 so as to make a definite distinction with regard to buildings used as guest houses as defined in sub-section (5) of Section 37 and the provisions of Section 31 and 32 would have been sufficient for the said purpose. Hence this question of law stands concluded against the appellant and in favour of the Revenue. Expenses incurred in respect of provisions of food and beverages and employee s salary for providing food and beverages at rest / guest house - deduction u/s 37(2) - CIT (A) was of a contrary view from the one taken by the AO, when he reached to a conclusion that such expenditure was the normal expenses on routine courtesy and hospitality. He accordingly, allowed the claim of the assessee for deduction of the amount. The proceedings in such circumstances reached the High Court. The High Court considering the provisions of Section 37 (2A) and the enlargement of the meaning of entertainment expenditure by insertion of Explanation 2 to sub-section (2A) of section 37 of the Act by Finance Act, 1983 with the retrospective effect from 1 April 1976, held that by such explanation , the meaning of the words entertainment expenditure in sub-section (2A) of Section 37 had stood enlarged to include expenditure on provision of hospitality of every kind, by the assessee to any person whether by way of provision of food and beverages or in any other manner. The Court accordingly upheld the view taken by the AO and held it to be in consonance with Section 37 (2A) read with Explanation 2 to hold that the deduction could not be allowed in respect of such expenses as entertainment expenditure u/s 37 (1) and accordingly, set aside the orders passed by the tribunal which had held that the assessee was entitled to deduction of such expenses. In these circumstances, question No. 2 would stand covered by the decision in the case of Indian Plastics Ltd. [ 1999 (8) TMI 49 - BOMBAY HIGH COURT] and would be required to be answered in the negative and against the appellant-assessee and in favour of the revenue. Expenses being 50% of the expenses incurred in organising conference of dealers is allowable as deduction - HELD THAT:- Since the assessee s guest house was small, accommodation was arranged in hotels and clubs. The assessee had claimed that the expenditure incurred in arranging the seminar should be allowed as business expenditure. The Court held that the seminar was arranged in connection with the assessee s business and therefore, the expenditure incurred for travel, boarding, lodging of the assessees distributors, attending the seminar and the expenditure involved in giving presentation articles to the assessee s foreign distributors was expenditure incurred in connection with the assessee s business and was allowable as deduction. The Court held that such items of expenditure could be considered as entertainment expenditure. It was held that such question thus needs to be answered in favour of the assessee and against the Revenue. The position is not different in the facts and circumstances of the present case accordingly, we answer this question in the affirmative in favour of the appellant-assessee and against the Revenue. Expenses incurred in buying presentation articles - HELD THAT:- In West Coast Paper Mills Ltd. [ 2000 (2) TMI 30 - BOMBAY HIGH COURT] wherein the Court answered such question in the affirmative in favour of the appellant and against the Revenue, when it was held that the amounts which were expended to buy presentation articles was allowable as a deduction. We may also refer to another decision of West Coast Papers Mills Ltd. [ 2000 (2) TMI 30 - BOMBAY HIGH COURT] wherein expenses incurred by the assessee in buying presentation articles was allowed as advertisement expenses by the Tribunal which in the nature of articles like sarees, dress materials, dry fruits, silver glass etc. The view of the Tribunal was upheld by this Court in such decision. This question would stand answered in favour of the appellant and against Revenue.
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2024 (7) TMI 1187
Revision u/s 263 - validity of Assessment Order passed by the AO by holding that it suffered from lack of territorial jurisdiction - HELD THAT:- From perusal of the provisions of Section 124(3) it is clear that it has no application with respect to the proceedings u/s 263. The power of CBDT to confer jurisdiction under the Act, 1961 is undisputed. Neither the appellant has disputed the issuance of Notification dated 22.10.2014 by the CBDT nor it has been disputed for the appellant that the Jurisdictional Commissioner of Income Tax with respect to the assessee was the CIT 11, Kolkata when the order u/s 263 was passed. Thus, as on the date when the order u/s 263 was passed by the Commissioner of Income Tax IV, Kolkata, he was not the jurisdictional Commissioner and, thus, he inherently lacked jurisdiction to pass the order u/s 263. So far as Section 292BB is concerned, as reflected in substantial question of law no.(ii) aforequoted; we find that Section 292BB has no application on facts and circumstances of the present case. It relates to deemed service of notice and not to the territorial jurisdiction of an authority under the Act. Where an authority or court lacks inherent jurisdiction in passing a decree or order, the decree or order passed by such authority or court would be without jurisdiction, non est and void abinitio. Lack of territorial jurisdiction of the Commissioner of Income Tax IV who passed the order u/s 263 to exercise supervisory jurisdiction goes to the root of the matter and strikes at his very authority to pass the said order. Such defect is basic and fundamental and, therefore, the order passed by the aforesaid C.I.T having no territorial jurisdiction over the assessee, is nullity. Order or decree passed by a court having no jurisdiction, has been held to be nullity by Hon ble Supreme Court in Kiran Singh Vs. Chaman Paswan [ 1954 (4) TMI 48 - SUPREME COURT] Hira Patari Vs. Kali Nath [ 1961 (5) TMI 58 - SUPREME COURT] Balwant N Vishwamitra and Others Vs. Yadav Sada Shiv Mull [ 2004 (8) TMI 689 - SUPREME COURT] The question of territorial jurisdiction as raised by the assessee has gone to the very root of the case. Such a question could be raised at any stage of the proceedings, to contend that the order passed by the CIT u/s 263 was without jurisdiction. In appeal the ground of territorial jurisdiction on the undisputed facts of the present case, as afore-noted, was rightly entertained by the ITAT. Substantial questions of law are answered in favour of the assessee.
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2024 (7) TMI 1186
Validity of notice issued u/s 148 - period of limitation - dispatch and service of notices issued on or after 01.04.2021 - HELD THAT:- Though there were some discrepancies reflected in the screen-shots taken from the portal pages, but on actual verification of the records which has come before us and which clearly indicate that the notices have been issued in all these writ petitions (not served) itself on 01.04.2021 or on a later date. The question of service of these notices and the date of service of notices upon the petitioners is of no relevance or consequence in all these writ petitions, as the notices itself have been dispatched from the office of the I.T. Department on or before 01.04.2021 which itself is beyond the period of limitation. It is relevant at this juncture to note that upon coming into force of the Finance Act, 2021, certain amendments were brought to the Income Tax Act, 1961 wherein Section 148 stood substituted with Section 148A by the Finance Act, 2021 w.e.f. 01.04.2021. In the landmark decision of the Hon ble Apex Court in the case of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] which has also been followed by practically every High Court in the country, held that for any notice of re-assessment on or after 01.04.2021 it would be the new amended law which would be governing the field, as the un-amended provisions were valid only till 31.03.2021. We also are fully in agreement and endorse the views laid down by the Division Bench of the Delhi High Court in the case of Suman Jeet Agarwal [ 2022 (9) TMI 1384 - DELHI HIGH COURT] and hold that the impugned notices in all these batch of writ petitions are barred by limitation under Sections 148 and 149 of the Act, since the said notices have left the I.T.B.A. portal on or after 01.04.2021. WP allowed.
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2024 (7) TMI 1185
Addition being the cash deposited during the demonetization period - HELD THAT:- AO has not considered the sales and nature of business of the assessee. Though, the AO has doubted the source of cash deposit, yet did not point out any error or infirmity in the books of accounts of the assessee. No defect was pointed out nor found by any of the lower authorities and since the entire deposits have gone through the books of accounts regularly maintained by the assessee duly audited, therefore, we are of the considered view that the entire addition has been made on the basis of surmises and conjectures which have no legs to stand. Moreover, though the AO has alleged unexplained cash deposit during demonetization period but has not brought on record anything to show that the said cash deposits were made in specified bank notes (SBN). AO has referred to huge variation in the cash deposited during the demonetization period and has also referred to the huge surge of revenue from operations but has not pointed out any error or defect in the books of accounts. We find that at clause (iv) at page 5, the AO has mentioned that the assessee has produced the accounts at the fag end of the assessment proceedings. Therefore, AO should examine the books of accounts thoroughly and decide the issue afresh after affording reasonable and adequate opportunity of being heard to the assessee. AO is also directed to examine the authenticity of the bills furnished by the assessee. Accordingly, this ground is allowed for statistical purposes. Carry forward of the claim of business loss - HELD THAT:- We are of the concerned view that all that the AO is required is to inform the assessee about the amount of loss as computed by him. Whether the loss in any year may be carry forward to the following year and set off against the profits, has to be determined by the AO who deals with the assessment of the subsequent year. It is for the AO dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. See MANMOHAN DAS (DECEASED) [ 1965 (11) TMI 33 - SUPREME COURT] as held decision recorded by the Income-tax Officer who computes the loss in the previous year that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. Appeal of the assessee is allowed.
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2024 (7) TMI 1184
Estimation of Gross profit - undisclosed receipts - CIT(A) deleted the addition made on gross receipt as the assessee company never filed the Return of Income for the A.Y. 2012-13 - As per DR assessee herein has neither filed any return for the impugned assessment year nor had he disclosed the turnover in question which saw light of the day only as per verification of 26AS detail - Assessee drawn strong support from the CIT(A)-NFAC s foregoing detailed discussion terming the impugned addition is as a case of double assessment, than estimating GP @ 20% only. HELD THAT:- Neither there is any rebuttal from the department side that the AO had made double addition of the impugned alleged undisclosed receipts nor could it deny the involvement of the corresponding expenditure incurred at the assessee s behest regarding the contractual services provided to the payee concerned. Faced with this situation, we are of the considered view that the AO could not have simply brushed aside the assessee s claim of corresponding expenditure which has been duly considered in the lower appellate discussion. We further wish to highlight the fact that even the Revenue s grounds are fair enough in not disputing correctness of the said expenditure items in it s instant lead appeal. Rejected accordingly.
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2024 (7) TMI 1183
LTCG - denial of exemption u/s 54F - appellant has utilized all the consideration received from the sale of Land for the construction of the residential house before the filling of the return u/s 139 - HELD THAT:- As on the basis of material available on record, we are of the considered view that the assessee has not been able to establish that it has satisfied any of the conditions stipulated in Section 54F of the Act for the claim of exemption with respect to capital gains made on sale of property. Neither has the assessee deposited the unutilised/un-appropriated portion of capital gains made on sale of property in the specified capital gains account before the due date of filing of return u/s 139(1) of the Act and nor has the assessee been able to establish that the construction of the new property was completed by the assessee within the period of 3 years from the date of sale of property as mandated by Section 54F. In addition to the above, CIT(Appeals) has also observed that the assessee has not been able to establish that the assessee did not own more than one property as on the date of the sale of such property, against which exemption u/s 54F of the Act has been sought to be claimed. Appeal of the assessee is dismissed.
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2024 (7) TMI 1182
Tax on income of certain domestic companies u/s 115BAA - Rate of tax charged @ 40% OR 22% when the assessee has exercised the option u/s 115BAA(5) - denial of benefit of lower rate of tax provided u/s 115BAA on the ground that the assessee has not opted for falling under this scheme by filing Form 10IC - HELD THAT:- Sub-section (5) of section 115BAA provides that nothing contained in section 115BAA of the Act shall apply if the option is exercised by the person in the prescribed manner on or before the due date specified under section 139(1) for furnishing the return of income for any previous year relevant to the assessment year commencing on or after 1st April, 2020 and it is also provided that such option once exercised shall apply to subsequent years. 2nd proviso to section 115BAA(5) provides that once the option has been exercised for any previous year, then it cannot be subsequently withdrawn for the same or any other previous year. Now in the instant case, the fact is not disputed at the end of revenue authorities that the assessee opted for section 115BAA for the first time for A.Y. 2020-21 and Form 10IC filed on 07.02.2021 and further the assessee was allowed the option exercised for lower tax rate for A.Y. 2020-21. Once the assessee has validly opted for 115BAA of the Act for A.Y. 2020-21 and revenue authorities having not found any error in such valid claim and has allowed the option exercised for lower tax rate for A.Y. 2020-21, then in my humble understanding, the assessee was not required to exercise the option for the subsequent assessment year under the provision of section 115BAA(5) of the Act, unless the first option is rendered invalid due to violation of any condition contained in sub-clause (ii) or sub-clause (iii) of clause (a) or clause (b) of section 115BAB(2) of the Act. Since there is no violation at the end of assessee for A.Y. 2020-21 and the valid option has been exercised u/s 115BAA for A.Y. 2020-21, the assessee is eligible for lower rate of tax for the subsequent assessment years also subject to the other conditions provided under the Act. Assessee appeal allowed.
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2024 (7) TMI 1181
Deduction u/s 80IB(7A) - income on sale of the shop credited in the Profit Loss Account is business income derived from multiplex - HELD THAT:- The legal definition of owning of the property means having the title to a property in the owner name. This title grants him the right to possess, use, and transfer the property as deem fit. The legal owner of the property has control over its management, development and potential sale. Assessee loses both ownership and operating power over the shop as integral part of the multiplex theatre at the time of earning income from sale/transfer of the shop. Hence, we find force in the argument and contention of the Sr. DR that the shop which sold was though built by the appellant/assessee; however, the shop was neither owned nor operated as an integral part of multiplex theatre by the appellant/assessee at the time of accrual/receivable of income on sale/transfer of the shop. No merit in the contention of the Ld. AR that the similar disallowance of deduction under section 80IB(7A) of the Act has not been made in AY 2007-08 in scrutiny assessment because the appellant/assessee has shown income on sale/transfer of the shop under the head Capital Gains in AY 2007-08. Hence, there is no precedent of consistency of assessing the income accrued/received on sale/transfer of the shop under the head Business income . Therefore, the case law relied upon in this regard by the Ld. AR is of no relevance. Decided against assessee.
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2024 (7) TMI 1180
Validity of reassessment proceedings - proper jurisdiction to issue notice - assessment order has not been passed by the person issuing the notice u/s 148 - curable defect u/s 292BB or not? - HELD THAT:- As we find that as on the date of issue of notice u/s 148, the Assistant Commissioner of Income Tax did not have the pecuniary jurisdiction. It is very clear that the jurisdiction as on the date of seeking approval was not with the ACIT because returns of non-corporate assessee upto Rs. 20,00,000/- was with Income Tax Officer. The total income for assessment year 2017-18 as per the income tax return acknowledgement was Rs. 4,40,070/-. Therefore, the proper jurisdiction was with the ITO Ward 4(1), Nagpur. Thus, it is clear that the notice was issued by a non-jurisdictional officer and the assessment being conducted pursuant thereto cannot be held to be valid. Subsequent transfer of assessment records by ACIT Circle, Nagpur to ITO Ward 4(1) Nagpur is also illegal, since transfer of case can only be done u/s 127 of the IT Act, 1961. The defect is incurable and is not amenable to be corrected under Section 292BB also. Accordingly, we find no merit to interfere with the cogent order passed by the CIT(A). In fact, upon perusal of the judgment of Ashok Devichand Jain v. Union of India Ors [ 2022 (3) TMI 1466 - BOMBAY HIGH COURT] we find that it is in favour of the assessee. Thusnotice issued u/s 148 is clearly without jurisdiction and consequent assessment order has no legal legs to stand upon. Decided in favour of assessee.
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2024 (7) TMI 1179
LTCG in respect of development agreement entered for development of land - HELD THAT:- We find that the matter is already covered by the Hon ble ITAT, Nagpur Bench, in case of Shri Ajay Trivedi [ 2024 (2) TMI 1403 - ITAT NAGPUR] holding that there is no transfer u/s. 2(47)(v) of the Act and no capital gain is chargeable thereon in the year under consideration - we absolutely find no compelling reason to differ with the decision taken in the case of the brothers who were also the co-signatories to the joint development agreement as held as per the said agreement, the owners has permitted the said developer to develop the property belonging to the owners only as a licensee which did not have the effect of transfer of property to the licensee. The developer has given possession of the assessee's share in June, 2017 which is also not disputed by the DR. CIT(A) clearly recorded that the assessee offered the capital gain in the year in which share in the constructed area is given to the assessee, which is subjected to tax in A.Y. 2018-19 which is also not disputed by the ld. DR. If we accept the contention of the ld. DR that the capital gain was rightly determined by the AO in A.Y. 2012-13, certainly, it amounts to double taxation, having offered the same in A.Y. 2018-19, as rightly pointed by the AR. Addition in the bank account - AR strenuously argued that the rental income from house property was received during the year - HELD THAT:- Accepting assessee submission we direct the addition as income from house property. Loan receipts - asessee as submitted that Rs. 1,70,000/- has been received by the assessee from his daughter and wife. The bank statement of daughter was enclosed. Thus, the genuineness, identity and correctworthyness is never in doubt. However, as far as his wife is concerned, he could not submit any document. But, in view of the fact that it is a loan from his own wife, we accept the same to be duly explained in view of the fact that the amount is negligible and further normally wives help husband in distress. Balance unexplained addition - It is quite possible that a person can always have some minimum savings for which perhaps no detailed explanation is required. It is also a fact that the case pertains to financial year 2011-12 and as on date 12 years have passed. So it may not be possible for a person to meticulously remember such minuscule transactions which have transpired about such a long period ago. So, we deem it fit not to make any separate addition of Rs. 90,625/- as well as Rs. 1,70,000/- towards loan received from the relatives. In effect, only a sum of Rs. 90,237/- is considered to be taxable. The appellant gets a relief of Rs. 2,75,188/-. In view of dismissal of appeal of department, Ground Nos. 1 2 have become of academic importance and we need not delve on the same. In the result cross objection of the assessee is partly allowed.
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2024 (7) TMI 1178
Denial of Exemption u/s 11 - assessment of trust - undisclosed income declared under the PMGKY Scheme - AO calculated total cash withdrawals and bogus corpus donations based on incriminating documents and extrapolating the available data - AO concluded that the unaccounted cash thus generated was not available with the assessee trust on survey action, thus said cash was diverted to the trustees and other for investments in bullions and properties before commencement of PMGKY as well as before survey action - AO further concluded that the assessee violated the basic objects for which it is established and recognized /approved u/s. 12 and 10(23C) - as stated amount of undisclosed income declared under the PMGKY Scheme should not be included in the total income of the assessee. HELD THAT:- Simply participation in some amnesty scheme like PMGKY does not absolve the assessee from the wrongdoing. Intent of any amnesty scheme is to comply and rectify previous non-compliance. In the judgement of Union of India v. Dharmendra Textile Processors [ 2008 (9) TMI 52 - SUPREME COURT] held that mens rea (intention) is an essential ingredient of fraud and that heavy penalties can be imposed for fraudulent acts. In the present case, we have no hesitation to say that the intent was to defraud the object of the trust. In case of CIT v. Suresh N. Gupta [ 2008 (1) TMI 396 - SUPREME COURT] . discussed the principles of amnesty schemes and held that such schemes aim to promote voluntary compliance and cannot be equated with fraudulent conduct. Thus, in the present case, the stand of assessee that their participation in PMGKY is absolving them from defaults is not correct. CIT(A) failed to provide specific reasons demonstrating how the assessee was meeting the objects of the trust. Given the systematic fraudulent activities uncovered, the accounts of the trust cannot be relied upon. Additionally, the principle of res judicata does not apply in income tax proceedings, and each assessment year must be evaluated based on its facts and circumstances. Therefore the Ld.CIT(A) s contention that AO has granted credit of PMGKY in A.Y. 2014-15 cannot be the basis to decide the merit of denial of exemption u/s 11 of the Act. The trust's consistent involvement in fraudulent activities was evident from the systematic recovery of staff salaries, bogus corpus donations, and other manipulative practices. The admission of undisclosed income under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) itself is an acknowledgment that the trust deviated from its objects and violated the conditions of Section 13. Furthermore, the tax paid under PMGKY represents a gross misuse of the trust s funds, which were supposed to be applied exclusively for charitable purposes. The present case involves direct evidence of the trust's fraudulent activities, including cash recoveries from salaries and bogus corpus donations, which provide a reasonable basis for the AO's extrapolation. Unlike Nepute Reality, where extrapolation was challenged for lack of direct evidence, the evidence here is robust and systematic. AO s estimates are not merely assumptions but are grounded in substantial and corroborative evidence of systematic fraud and misappropriation of funds by the trust, providing a strong basis for the extrapolation of income. We conclude that the evidence presented by the AO, including the systematic recovery of staff salaries, bogus corpus donations, and other fraudulent activities, constitutes violations under Sections 13(1)(c) and 13(1)(d). The trustees' direct involvement in fraudulent activities, admission of the same during the course of survey and disclosing unaccounted cash transaction in PMGKY and gaining direct benefit from these activities disqualifies the trust from exemptions under Sections 11 and 12. CIT(A)'s failure to specifically justify how the trust met its objects, coupled with the unreliable accounts and the consistent fraudulent activities by trustees, further supports this conclusion. The admission of undisclosed income under PMGKY and the misuse of trust funds to pay taxes under the scheme are clear indicators of deviation from charitable objectives. Revenue s appeals are allowed to the extent that the exemptions under Sections 11 and 12 are denied, and the additions based on the AO s findings are confirmed. AO is directed to recompute the income of the assessee in accordance with Section 164 of the Income Tax Act. Since the trust is found to have violated the provisions of Sections 13(1)(c) and 13(1)(d) of the Act, resulting in the denial of exemptions under Sections 11 and 12 of the Act, the income of the assessee trust should be taxed at the maximum marginal rate as specified under Section 164(2) of the Act. This recalculation should exclude any benefits of exemptions previously claimed under Sections 11 and 12, and all additions made on account of unaccounted income and bogus expenses should be included in the taxable income. The AO should take care in avoiding duplication of addition as pointed out by Ld.CIT(A) and give due credit of income disclosed in PMGKY with taxes paid.
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2024 (7) TMI 1177
TP Adjustment - international transaction of payment of guarantee fees to AE - HELD THAT:- We observe that the assessee demonstrated that the effective borrowing cost, including the guarantee fee, was (11.75%) lower than the bank's quoted interest rate (16%), thus justifying the economic rationale for the guarantee fee. TPO did not present compelling evidence to establish that the guarantee fee was unwarranted. The benefits derived, as seen in lower interest rates and favorable operating margins, substantiate the transaction's arm's length nature. For A.Y. 2009-10, the Tribunal had deleted a similar addition, justifying the payment of guarantee commission. This decision was upheld by the Hon ble Gujarat High Court [ 2018 (7) TMI 2349 - GUJARAT HIGH COURT] which noted the consistency of the assessee's operating margin and the benefit of lower borrowing costs compared to bank rates, thereby justifying the guarantee fee. The present case mirrors the facts and circumstances of A.Y. 2009-10, where the addition was deleted by the Tribunal and upheld by the Hon ble Gujarat High Court. Consistency in judicial decisions is crucial to maintain legal certainty and fairness. Thus, we find that the TP adjustment made by the AO/TPO and upheld by the DRP is unjustified. The addition on account of the guarantee fee payment to AE is hereby deleted. Ground raised by the assessee is allowed.
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2024 (7) TMI 1176
Estimation of income - Bogus purchases - CIT(A) who determined the profit @ 5.47% on the total purchases - HELD THAT:- It is a case where the appellant company has produced sufficient evidences in respect of the purchases made by it. Sufficient evidences have also been produced in respect of actual movement of the goods by filing the copy of the transport receipt, copy of Form C, trip sheet, e-way bill, kantaparchi, weighing slip, transportation bills, vehicle RC status. In fact it has also filed the GST paid by it by way of Reverse Charge Mechanism applicable on transportation charges. The assessee has also produced evidences regarding the expenses relating to the freight which has been duly accounted in the books of account and which has not been doubted by the AO and in fact deduction of the same has also been allowed. There is no evidence whatsoever even to suggest that the payment made to the suppliers have been routed back to the assessee in any form. The supplier s bank account quoted by the assessing officer nowhere shows that cash has been withdrawn from these accounts. On the contrary, the payments have been made to the various parties. The appellant company has also submitted the detailed analysis of the stock register, yield, production, sale, complete quantitative details. Revenue has not doubted on quantitative details of sale declared by the appellant company which has also been accepted. The profit earned by the appellant company from these sales have also been taxed. CIT(A) has also endorsed above contention of the appellant company. However, the ld. CIT(A) having endorsed the entire contentions of the assessee erred in directing to apply gross profit rate on the purchases which defies logic. CIT(A) having not pointed out any defect in any of the document or explanation submitted by the assessee in respect of the purchases made by it, the entire addition has to be deleted. Assessee has duly discharged their onus relating to purchases made by it from those purchase which have not been doubted by the AO by submitting the necessary evidence in support thereof. Hence, we decline to interfere with the order of the ld. CIT(A) to the extent of deletion of addition made on account of alleged bogus purchases. Thus, abundant evidences furnished by the assessee in order to substantiate the genuineness of the purchases, there was nothing whatsoever for the ld. CIT(A) to sustain gross profit addition on alleged purchases over and above the gross profit declared by the assessee. Gross profit determined by the CIT(A) is directed to be deleted. Addition made u/s. 56(2) - Addition of difference in purchase price and the stamp duty value of the property purchased by the assessee - Estimation of value of assets by Valuation Officer - HELD THAT:- Addition has been made u/s 56(2)(x) of the Act, in such circumstances also, the addition made by the AO and confirmed by the CIT(A) is bad in law and liable to be deleted in the absence of the valuation being referred to the DVO for determination of the value of the property. It is pertinent to note here the provisions of Section of 56(2)(x) which also states that in case the assessee disputes the stamp duty value of the immovable property, the AO has no option but to refer the same to the Valuation Officer - CIT(A) has gone wrong in interpreting the word may so as to hold that assessing officer has an option to make or not to make a reference to the DVO. It is pertinent to note here that the assessee has repeatedly submitted that it was a distressed sale and therefore the value of such immovable property was less than the stamp duty value. The submission of the assessee has been arbitrarily ignored by the AO as well as by the CIT(A) and no efforts had been made to find out the value of the property either by the AO or CIT(A). In such circumstances of the case where the assessee has been continuously stating that the fair market value of the property is much lower than the stamp duty value, the AO has to mandatorily refer the valuation of the property to the Valuation Officer and having failed to do so, the addition made by the AO is unsustainable and liable to be deleted. There are a number of judgments on this issue wherein it has been held that once the assessee has disputed the stamp duty value and has submitted the valuation report, AO is duty bound to refer the valuation to DVO in case he proposes to make an addition. Having failed to do so, the addition is not sustainable and liable to be deleted. Addition made by AO and confirmed by CIT(A), in the absence of reference to the DVO is unsustainable and hence liable to be deleted. Decided in favour of assessee.
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2024 (7) TMI 1164
Estimation of income - Bogus purchases - HELD THAT:- The matter is covered by the Co-ordinate Bench of ITAT, Mumbai in assessee s own case for AY 2009-10 wherein profit rate of 4% has been directed to be applied on the alleged bogus purchases. As in the case of Mohammed Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] had held to restrict the addition to the extent of bringing the gross profit rate on purchases at the same rate of other genuine purchases. In the present case, assessee has claimed that he had earned gross profit rate of 4.13%. Accordingly, we direct the AO to apply the rate of 4% on the alleged bogus purchases. Appeal of the assessee is partly allowed.
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Customs
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2024 (7) TMI 1175
Seeking grant of bail - import of prohibited goods - e-cigarettes - mis-declared goods - recovery of 64084 pieces of E- cigarettes along with 8 unbranded bottles (10 ml each) and 113 bottles (60 ml) of Tokyo brand liquid refill of e-cigarettes - HELD THAT:- Evidently, the applicant is not a proprietor of, or otherwise connected with, M/s. Shreeji Corporation, the entity which had imported the subject consignment. Nor the applicant is connected with M/s. Perfecto Logistics, the Customs broker. The applicant allegedly operates M/s.Dinshaw Shipping Agency, another customs brokerage firm. The gravamen of indictment against the applicant is that the applicant instead of submitting the documents through M/s. Dinshaw Shipping Agency, which was put on alert list, had imported the prohibited goods through other firms and the co-accused. Prima facie, it appears that the complicity of the applicant is sought to be established primarily on the basis of the statements of the co-accused. Evidently, on the own showing of Respondent No.1, the applicant is neither an importer, nor CHA or ICE in respect of the subject consignment. The money trail is pressed into service as the evidence of the complicity of the applicant. The situation which thus obtains is that there is prima facie no material to show the involvement of the applicant with the subject consignment, either as an importer or CHS or ICE. The applicant is sought to be roped in on the basis of the statements of the co-accused. There does not appear such credible material as to make out a prima facie case against the applicant so as to warrant his custodial interrogation. In the event of the arrest of the Applicant Mohamad Hanif Papa Shaikh in connection with the investigation at Special Investigation Intelligence Branch (Import), Jawaharlal Nehru Customs House, Uran, the Applicant be released on bail on furnishing a PR bond in the sum of Rs.50,000/- with one or two sureties in the like amount. Bail application allowed.
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2024 (7) TMI 1174
Fraudulent availment of Integrated Goods and Services Tax (IGST) refund as well as drawback benefits - infarction of Regulation 10 (n) of CBLR - CESTAT observed that suspension of the license of the appellant was a proportionate penalty - HELD THAT:- The CESTAT has clearly committed a patent illegality in construing suspension to be a penalty which is otherwise contemplated under the CBLR 2018. It is pertinent to note that suspension is a measure which can be adopted by the respondents in situations where they be of the opinion that immediate action is required to be taken against a CB pending investigation and inquiry as is contemplated under Regulation 16 - the CESTAT has in effect handed down an order as a result of which an order of suspension would continue in perpetuity. The impugned is thus rendered unsustainable on this score alone. A reading of Regulation 10 (n) reveals that the CB would not be in violation of its obligations if he has relied on reliable, independent, authentic documents, data or information such as the IEC and GSTIN which are issued by the Director General of Foreign Trade [DGFT] and GST Officers respectively. Furthermore, Regulation 10 (n) does not necessitate a physical verification of the veracity of the exporter. There are merit in the contention of the appellant that the CESTAT committed a manifest illegality in holding that the appellant was guilty of having failed to discharge the obligation placed in terms of Regulation 10 (n) of CBLR 2018 - It is thus apparent that the judgment handed down by the CESTAT is patently erroneous and cannot be sustained. The order of the CESTAT dated 03 October 2023 is set aside - appeal allowed.
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Insolvency & Bankruptcy
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2024 (7) TMI 1173
Payment of maintenance charges including electricity charges - payment of dues arising from essential services supply during CIRP period - electricity charges - propriety of the directions issued by the Adjudicating Authority that the RP shall be free to take coercive steps with regard to the non-payment of maintenance charges including the electricity charges of the common area and make the payment to the NPCL - HELD THAT:- It is an undisputed fact that when the RP took over the charge of the Corporate Debtor, there was shortfall in maintenance charges collected from the Home Buyers and an outstanding electricity due payable to NPCL. In the present case since the Corporate Debtor was admitted into CIRP and RP had been appointed, the responsibility to discharge the pending payments of maintenance charges including electricity dues fell on the RP in terms of the statutory construct of IBC. It is also an admitted fact that in terms of Section 11(4)(d) of RERA Act, the Corporate Debtor was obligated to provide essential services including electricity supply till the maintenance of the project was taken over by the association of allottees. Besides the RP placing the issue of maintenance charges and electricity dues before the CoC for its deliberations and consideration, it is also found that the RP, in all fairness, had from time to time sent communications to the allottees regarding the electricity overdue amount and emphasised the need to clear the outstanding dues of NPCL to avoid disconnection of electricity supply - the communications though not an exhaustive list, clearly depicts that the RP had been making bonafide efforts to apprise the allottees of the need to clear the outstanding electricity dues to stave off the stark possibility of electricity disconnection. There are no credible ground which has been brought before us by the Appellants to substantiate any impropriety, procedural or otherwise, to have been committed by the RP in placing the correct facts before the allottees and the CoC members regarding the need to enhance the maintenance charges and need to clear the cascading electricity dues to avoid any possible power disconnection by the NPCL. In the given facts of the case, since it was the prime responsibility of the RP to run the Corporate Debtor as a going concern, it was entirely appropriate on the part of the RP to seek the approval of the CoC in the determination of maintenance fees and recovery of electricity dues - After having been present in the CoC meetings and exercised their voting rights on the determination of the maintenance fees and electricity dues, the allottees cannot question the authority of the CoC to have made these business decisions. It goes without saying that the commercial decision of the CoC is paramount and nonjusticiable and every dissatisfaction cannot partake the character of a legal grievance. Whether payment of electricity charges being an essential service, such amount can be accounted towards CIRP costs and that the Corporate Debtor is not liable to pay the amount till the completion of the period of moratorium? - HELD THAT:- This issue has been squarely covered by the judgement of this Tribunal in Shailesh Verma vs Maharashtra State Electricity Distribution Company [ 2022 (9) TMI 143 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ]. This Tribunal by making a contextual and purposive interpretation of statutory provisions of moratorium and its subsequent amendment by Act 1 of 2020 had held that while benefit of essential services should be continued, there should not be any default in the discharge of the dues arising therefrom. In the present case, the RP has admitted that electricity supply by NPCL, being in the nature of supply of essential goods and services, was necessary to be continued so as to protect and preserve the value of the Corporate Debtor and hence dues arising from electricity supply require to be discharged. This subject matter has been considered and deliberated at length by the CoC from time to time in its various meetings and resolutions passed to collect the outstanding amount from the allottees to square off the dues of NPCL - There is no prohibition or bar imposed by the IBC towards payment of dues arising from essential services supply during CIRP period nor is there any statutory provision which stipulates that the Corporate Debtor is not liable to pay such amounts till completion of the period of moratorium. There are no infirmity in the impugned order of the Adjudicating Authority holding that the Corporate Debtor through the RP was obligated to make payment of the electricity dues as approved by the CoC and apply coercive measures to collect the same to make payment to the NPCL - appeal dismissed.
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PMLA
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2024 (7) TMI 1172
Power of the High Court or Sessions Court to grant an interim order of stay of operation of an order granting bail till the disposal of the application for cancellation of bail under Sub-Section (2) of Section 439 of the Code of Criminal Procedure, 1973 - Sub-Section (3) of Section 483 of Bharatiya Nagarik Suraksha Sanhita, 2023 - HELD THAT:- When a person is arrested, the rights guaranteed by Article 21 of the Constitution of India get substantially curtailed. The law permits arrests of the accused as provided in the CrPC or the BNSS. The effect of the grant of bail under the provisions of Sections 437 and 439 of the CrPC (Sections 480 and 483 of the BNSS) is that the liberty of the undertrial accused is restored pending the trial, subject to the accused complying with the conditions of bail. When the High Court or Sessions Court stays such an order, it amounts to taking away the liberty granted under the order of bail. When an application for cancellation of bail is filed, the High Court or Sessions Court should be very slow in granting drastic interim relief of stay of the order granting bail. The undertrial is not a convict. An interim relief can be granted in the aid of the final relief, which could be finally granted in proceedings. After cancellation of bail, the accused has to be taken into custody. Hence, it cannot be said that if the stay is not granted, the final order of cancellation of bail, if passed, cannot be implemented. If the accused is released on bail before the application for stay is heard, the application/proceedings filed for cancellation of bail do not become infructuous. The interim relief of the stay of the order granting bail is not necessarily in the aid of final relief. An exparte stay of the order granting bail, as a standard rule, should not be granted. The power to grant an exparte interim stay of an order granting bail has to be exercised in very rare and exceptional cases where the situation demands the passing of such an order - Liberty granted to an accused under the order granting bail cannot be lightly and causally interfered with by mechanically granting an exparte order of stay of the bail order. The exparte order staying the order of bail passed without considering merits cannot continue to operate for one year without the appellant getting a hearing on the issue of continuation of the interim order. All Courts have to be sensitive about the most important fundamental right conferred under our Constitution, which is the right to liberty under Article 21. The appellant has made out a case in terms of Section 45(1)(ii) of the PMLA on the power to grant bail - There are no allegation of the misuse of liberty granted under the bail order in the said application. The impugned orders passed by the High Court granting the stay of the order granting bail, is set aside - appeal allowed.
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2024 (7) TMI 1171
Money Laundering - criminal conspiracy - taking illegal money to influence a public servant and for exercise of personal influence with public servant and abuse of official position by public servant against accused persons - constitutional vaidity of Section 50 (2) of Prevention of Money Laundering Act, 2002 - ultra vires and violative of Articles 14, 20 and 21 of Constitution of India and Section 132 of Indian Evidence Act, 1872 - HELD THAT:- In the present case, during the course of investigation by ED, Satish Babu Sana and Pradeep Koneru in their respective statements recorded under Section 50 of PMLA, admitted having paid crores of rupees to Moin Akhtar Qureshi through his employee Sh. Aditya Sharma for obtaining illegal favor from govt. servant(s) after using his influence. Aditya Sharma was also confronted with the facts and evidences on record, who confirmed the monetary transactions received by him. The same were also found in tandem with the contents of BBM messages retrieved by forensics lab, CERT-In. These amounts were found to be sent for Hawala Transactions through Delhi based Hawala Operators which reflected in the BBM messages of Aditya Sharma and Ex. CBI Director AP Singh. Satish Babu Sana and Pradeep Koneru have, thus, prima facie committed offence of money laundering as defined in Section 3 of the PMLA, 2002 by directly or indirectly indulging in, knowingly assisting, knowingly a party and actually involved in all or any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property. The petitioners have challenged the constitutionality of Section 50 of PMLA, which has already been put to rest by the Hon ble Supreme Court in its Three Judge Bench decision in Vijay Madanlal Choudhary Vs. UOI [ 2022 (7) TMI 1316 - SUPREME COURT] wherein it is held that ' We fail to understand as to how article 20 (3) would come into play in respect of process of recording statement pursuant to such summon which is only for the purpose of collecting information or evidence in respect of proceeding under this Act. Indeed, the person so summoned, is bound to attend in person or through authorised agent and to state truth upon any subject concerning which he is being examined or is expected to make statement and produce documents as may be required by virtue of sub-section (3) of section 50 of the 2002 Act. The criticism is essentially because of sub-section (4) which provides that every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the IPC. Even so, the fact remains that article 20 (3) or for that matter section 25 of the Evidence Act, would come into play only when the person so summoned is an accused of any offence at the relevant time and is being compelled to be a witness against himself. This position is well-established.' Admittedly, in the present case, the petitioners in the case registered by the CBI were arrayed as the witnesses to a case under scheduled offences. However, during the process of investigation, case under the provisions of PMLA has been registered wherein they have been arrayed as accused - The ratio of law laid down by the Hon ble Supreme Court in Vijay Madanlal, clearly spells out that it may happen in cases that a person who is witness in offences related to scheduled offences, during his interrogation, may put-forth some material which would indicate his involvement in the commission of offence under PMLA. This Court in a catena of decisions has already held that proceedings under the scheduled offences and PMLA are separate and distinct and have no binding upon each other. Having regard to the Supreme Court s decision in Vijay Madanlal Choudhary and the fact that the petitioners are involved in the case of money laundering, it is found that proceedings under PMLA have been rightly initiated against them. The petitioners have challenged their summoning, which in our opinion is just and proper to unearth the roots of the money trail - Finding no merit in the averments raised by the petitioners, these petitions and pending applications are accordingly dismissed.
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2024 (7) TMI 1170
Validity of provisional attachment order - no notice issued to the petitioner, who was the lawful owner of the property - violation of principles of natural justice - HELD THAT:- When the records before the Registering Authorities, as well as the Revenue Authorities, reveal that the petitioner herein is the lawful owner of the property, there was a duty cast on the Adjudicating Authority to issue a notice, before confirming the provisional attachment under Section 5 of the Act. In the absence of any such notice, the entire exercise of attaching the petitioner's property, would be in violation of the mandatory requirements of serving the provisional attachment order under Section 5, as well as the prior show cause notice under Section 8(1) of the Act, on the petitioner, apart from violation of the principles of natural justice and therefore cannot be legally sustainable. In the case of R. AMARABALAN VERSUS DIRECTORATE OF ENFORCEMENT (CHENNAI ZONE) , JOINT DIRECTORATE OF ENFORCEMENT (CHENNAI ZONE) , [ 2022 (4) TMI 1619 - MADRAS HIGH COURT] a Coordinate Bench of this Court had dealt with a similar situation and set aside the attachment over the property therein. When the petitioner had lawfully purchased the property on 28.11.2018, much before the Provisional Attachment Order dated 29.05.2019 and has been in peaceful possession and enjoyment of the same, the subsequent attachment under Section 5 (1) of the Act and the confirmation under 6 of the Act, without prior notice, cannot be legally sustained. The impugned impugned Provisional Attachment Order passed by the respondent, which was subsequently confirmed by the Adjudicating Authority - Petition allowed.
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2024 (7) TMI 1169
Seeking extension of an interim bail which was granted to him by the learned Trial Court - grant of interim bail sought on the ground of medical condition of his wife who was suffering from acute calculus cholecystitis in her gall bladder and had been advised to undergo a laparoscopic cholecystectomy - main argument of the applicant now is that the applicant has been advised to undergo surgery for his left knee namely Arthroscopic Medial Meniscal Repair Surgery - HELD THAT:- In the opinion of this Court, the medical condition of the applicant wherein he has been advised to undergo a surgery of left knee cannot be categorized as life-threatening situation , and the surgery which is to be undergone by the applicant is not of such nature which necessitates the applicant's release on interim bail only. For the same, the applicant can be taken to the concerned hospital, for him to undergo the surgery while in custody, as per the scheduled date. Even during the course of arguments, learned Senior Counsel for the applicant had prayed that in case interim bail is not granted to the applicant, he be allowed to get his surgery performed while being in custody, and learned Special Counsel for the Directorate of Enforcement had stated that he had no objection to this prayer made by the applicant. This Court notes that since the applicant had surrendered on 17.02.2024, after his extension application was rejected by the learned Trial Court vide order dated 16.02.2024, the date which was scheduled for the surgery of the applicant i.e. 26.02.2024 has already passed. Considering the medical condition of the applicant and medical documents filed on record, this Court is of the opinion that the present applicant can be allowed to undergo the required surgery while being in custody of the Jail Superintendent. However, a perusal of the documents filed on record also reveals that the date of surgery has not been re-scheduled which was earlier scheduled for 26.02.2024. Thus, the applicant will be at liberty to get the date of the surgery rescheduled and thereafter move a fresh application before this Court for seeking appropriate directions. Petition disposed off.
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Service Tax
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2024 (7) TMI 1168
Liability to pay service tax - Commercial or Industrial Construction Services - main contention put forward by the appellant is that the buildings constructed by the appellant are educational institution buildings and not primarily used for commerce or industry - HELD THAT:- The Board vide its Circular dt. 17.9.2004 has clarified that the assessee is not liable to pay service tax for construction of educational institutions as educational institutions are not commercial in nature - In the present case, the construction services are provided to non-profit bodies (Trust) and constructions carried out are for educational institutions. The Tribunal in the case of M/s.R.R. Thulasi India Pvt.Ltd. [ 2024 (7) TMI 1067 - CESTAT CHENNAI] had occasion to analyse the very same issue in which the Board circular was taken into consideration. It is noted by the Tribunal that the said Board Circular dt. 17.9.2004 has not been withdrawn and was still in force during the disputed period. The Tribunal held that the demand under CICS cannot sustain in respect of construction services provided for construction of educational institutions. The demand cannot sustain - the impugned order is set aside - Appeal allowed.
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Central Excise
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2024 (7) TMI 1163
Exemption on molasses manufactured and cleared for captive consumption - benefit of N/N. 67/95-CE dated 16-03-1995 - eligibility for credit availed on inputs/input services / capital goods. The department was of the view that the benefit of the Notification No.67/95 is available only when the final products suffer duty and the appellant is not eligible to avail the benefit of notification for the reason that the above mentioned products are non excisable goods, as per Section 2 (d) of the Central Excise Tariff Act 1944. HELD THAT:- The very same issue was considered by the Tribunal in the appellant's own case for the earlier period in in Final Order No. 40789-40799/2014 dated 20.11.2014 [ 2014 (11) TMI 919 - CESTAT CHENNAI] . It is submitted that rectified spirit and extra neutral alcohol were classified under subheading 220490 prior to 01.03.2005 at nil duty. After restructuring of Tariff with effect from 01.03.2005, rectified spirit, extra neutral alcohol etc. were cleared without payment of duty as exempted goods by Notification No. 03/2005-CE dated 24.02.2005 and Notification No. 12/2012 dated 17.03.2005. The adjudicating authority has denied the benefit of Notification No. 67/2005 on the view that after the restructuring of Tariff, the rectified spirit and extra neutral alcohol were not mentioned in the Tariff. It has been consistently held by Tribunals and High Courts that after restructuring of Tariff, no item has been excluded from the Tariff. The Board Circular No. 808/5/2005-CX dated 25.02.2005 was also relied. It has been clarified by Board that rectified spirit and extra neutral alcohol are covered under subheading 22 07 2000 after restructuring of the Tariff. Thus, it will be covered under Chapter 22. The above decision of the Tribunal has been affirmed and upheld by the Hon ble Apex Court as reported in Commissioner of CE ST versus Dharani Sugars Chemicals Ltd. [ 2022 (3) TMI 274 - SC ORDER] . The demand, interest and penalties cannot sustain. The impugned order is set aside - Appeal allowed.
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Indian Laws
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2024 (7) TMI 1167
Deficiency in construction - delay in handing over the flats to the appellants - forfeiture of opportunity to file written statement - forfeiture of opportunity to file a written statement - HELD THAT:- Under Annexure P-18 order, this Court declared that the first respondent had forfeited its right to file a written statement and then permitted, rather, directed to proceed further without the written statement of the first respondent-builder. True that even then its right to participate in the proceedings was protected, presumably, taking into account the position of law in that regard. What is the impact of forfeiture of opportunity to file written statement? - HELD THAT:- All the provisions in the Code of Civil Procedure, 1908, (CPC) are not proprio vigore applicable to proceedings before Consumer Forums created under the Consumer Protection Act, 2019, except to the extent it is provided under Section 38 (9) of the Consumer Protection Act. Be that as it may, in the absence of specific provisions dealing with the consequence of forfeiture of the right to file a written statement, it is only appropriate to refer to the provisions and positions dealing with such situations in the CPC to know the general law on this question - The rigour of the rule of pleadings is evident from Rule 7 of Order VI, CPC, which mandates that no pleading shall, except by way of amendment, raise any new ground of claim or contain any allegation of fact inconsistent with the previous pleadings of the party pleading the same . There is no case for the first respondent that it sought permission to cross - examine Kaushik Narsinhbhai Patel who filed affidavit of evidence and produced documentary evidence. At any rate, no such case was put forth by the first respondent and no grievance of denial of such opportunity was also raised - the first respondent could be permitted only to argue the legal questions arising based on authorities and provisions of law as also regarding lapses or laches and the consequential non-admissibility or otherwise of evidence, let in by the appellants. Whether NCDRC had given weight to any such pleadings and contentions taken by the first respondent in its written submissions and/or whether the decision of NCDRC is based on any fact, factors or data furnished by the first respondent beyond the extent permissible on account of the legal trammel of forfeiture of its opportunity to file a written statement? - HELD THAT:- Though the action on the part of the first respondent who suffered Annexure P- 18 order, in bringing on record its case and contentions to resist the case and contentions of the complainants, cannot be appreciated, the contention of the appellants based on the same became inconsequential. As stated earlier, in view of Annexure P-18 order, we are also not going to advert to any case, claims or contentions of the first respondent raised in its reply and objection filed in this proceeding, except to the legally permissible limit, in case any such material is available on record - Though the first respondent participated in the proceeding before the NCDRC, it could not bring-forth anything admissible in view of the impact of forfeiture under Annexure P-18 order. This appeal is allowed in part by modifying the formula formulated under paragraph 8 of the impugned judgment by NCDRC in the matter of payment of compensation for delay in handing over possession of flats and it is ordered that the liability of the developer to pay interest at the rate of 6% per annum shall be from the due date for possession fixed as above viz., from September, 2014 till the date on which the respective complainant-buyers are offered possession. Application disposed off.
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2024 (7) TMI 1166
Application filed by the Election Commission of India seeking further directions regarding data submission - ECI did not retain a copy of the data which was collated by it since it was being placed before this Court in sealed custody - HELD THAT:- The judgment of the Constitution Bench in ASSOCIATION FOR DEMOCRATIC REFORMS ANR. VERSUS UNION OF INDIA ORS. [ 2024 (2) TMI 812 - SUPREME COURT (LB)] required the State Bank of India (SBI) to furnish to the ECI all details of the Electoral Bonds purchased, and, as the case may, redeemed by political parties, including the date of purchase/redemption, name of the purchaser and the denomination of the Electoral Bond purchased. It has been submitted that SBI has not disclosed the alpha-numeric numbers of the Electoral Bonds. The Registry is directed to issue notice to SBI, returnable on 18 March 2024. Additionally, it is also directed the presence of a Senior Officer of SBI who is responsible for the management and storage of details of Bonds purchased and redeemed on the next date of hearing.
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2024 (7) TMI 1165
Non-supply of relevant documents that have been relied by the respondent no. 1-bank, at the time of issuance of the impugned SCN - Categorization of account/name as Fraud , as per Reserve Bank of India (RBI) Guidelines - seeking permission to allow inspection, and furnish all supporting/relied upon documents - HELD THAT:- Failure to supply relevant documents, is a serious one, as without supplying the documents that have been relied upon in the said SCN, it would not be possible to give an effective and proper reply to the said SCN by the petitioner. Non-supply of the underlying documents, at the time of issuance of a SCN, would have the effect of directly impinging upon the right of representation of a party in terms of Principles of Natural Justice. The Principles of Natural Justice have to be strictly followed, in order to give a party an efficacious opportunity to represent its case suitably and adequately. The same cannot be reduced to an empty formality by not affording an appropriate opportunity to a party, by not giving access to the relevant documents, that form the basis of issuance of a SCN. This Court in the case of Shantanu Prakash v. State Bank of India and Others, [ 2024 (5) TMI 1323 - DELHI HIGH COURT] , has held that ' it is imperative that the relevant documents that form the basis of issuance of a SCN, ought to be provided to the concerned party in order to enable such a party to raise its defense effectively. Such fundamental right of a party cannot be taken away by denying a proper opportunity to submit an efficacious reply, which would not be feasible in the absence of requisite documents that form the core foundation of a SCN.' Thus, it is imperative that the petitioner is supplied the complete underlying documents, as relied upon in the SCN dated 20th February, 2024, to allow the petitioner to make an effective reply. The respondent-bank shall provide the Investigation Report dated 18th January, 2024, along with full Annexures, to the petitioner - respondent-bank shall also provide the Stock and Receivables Audit Report, along with full Annexures, to the petitioner - petition disposed off.
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