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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 28, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Indian Laws Articles ITR last dates - Writ Petitions (WP) seems inevitable for directions to extend last date for filing of non-audit ITR and also for amendment in ‘due dates’ prescribed in S.139 (1) News India’s overall (merchandise plus services) exports increased from USD 52.8 billion in June 2021 to USD 64.9 billion in June 2022 Growth in Tea Exports in 2022 Bilateral Trade between India and GCC grew from US$ 87.35 billion in FY 2020-21 to US$ 154.66 billion in FY 2021-22 Government providing all round support to domestic toy industry Notifications Companies Law G.S.R. 602 (E) - dated 22-7-2022 - Co. Law National Financial Reporting Authority appointment of Part-time members (Amendment), Rules, 2022 G.S.R. 400 (E) - dated 25-5-2022 - Co. Law National Financial Reporting Authority appointment of Part-time members (Amendment), Rules, 2022 Customs 63/2022 - dated 20-7-2022 - Cus (NT) Customs Authority for Advance Rulings (Amendment) Regulations, 2022 GST - States 38/1/2017-Fin(R&C)(09/2022-Rate) - dated 16-7-2022 - Goa SGST Amendment in Notification No. 38/1/2017-Fin(R&C)(5/2017-Rate), dated the 30th June, 2017 38/1/2017-Fin(R&C)(08/2022-Rate) - dated 16-7-2022 - Goa SGST Amendment in Notification No. 38/1/2017- Fin(R&C)(3/2017-Rate), dated the 30th June, 2017 38/1/2017-Fin(R&C)(07/2022-Rate) - dated 16-7-2022 - Goa SGST Amendment in Notification No. 38/1/2017-Fin(R&C)(2/2017-Rate), dated the 30th June, 2017 38/1/2017-Fin(R&C)(06/2022-Rate) - dated 16-7-2022 - Goa SGST Amendment in Notification No. 38/1/2017-Fin(R&C)(1/2017-Rate), dated the 30th June, 2017 38/1/2017-Fin(R&C)(05/2022-Rate) - dated 16-7-2022 - Goa SGST Amendment in Notification No. 38/1/2017- Fin(R&C)(13/2017-Rate), dated the 30th June, 2017 38/1/2017-Fin(R&C)(04/2022-Rate) - dated 16-7-2022 - Goa SGST Amendment in Notification No. 38/1/2017-Fin(R&C)(12/2017-Rate), dated the 30th June, 2017 38/1/2017-Fin(R&C)(03/2022-Rate) - dated 16-7-2022 - Goa SGST Amendment in Notification No. 38/1/2017- Fin(R&C)(11/2017-Rate), dated the 30th June, 2017 SEBI SEBI/LAD-NRO/GN/2022/90 - dated 25-7-2022 - SEBI Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2022 SEBI/LAD-NRO/GN/2022/89 - dated 25-7-2022 - SEBI Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2022 SEBI/LAD-NRO/GN/2022/88 - dated 25-7-2022 - SEBI Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2022 Circulars / Instructions / Orders SEBI SEBI/HO/MIRSD/SEC-5/P/CIR/2022/100 - dated 27-7-2022 Implementation of Circular on ‘Guidelines in pursuance of amendment to SEBI KYC (Know Your client) Registration Agency (KRA) Regulations, 2011’ SEBI/HO/MIRSD/DOP/P/CIR/2022/101 - dated 27-7-2022 Settlement of Running Account of Client’s Funds lying with Trading Member (TM) DGFT Policy Circular No. 43/2015-20 - dated 27-7-2022 Relaxation in provision of submission of 'Bill of Export' as an evidence of export obligation discharge for supplies made to SEZ units in case of EPCG Authorization Policy Circular No. 42/2015-2020 - dated 27-7-2022 Clarification regarding Non-Ferrous Metal Import Monitoring System (NFMIMS) 19/2015-20 - dated 27-7-2022 Amendment in Standard Input Outfit Norms (SION) of Engineering Product group Suspension of SIONs C-594, C-791 to C-796 and C-831 Highlights / Catch Notes GST Condonation of delay in filing appeal - The Appellate Authority is not a “Court” and hence the power to condone beyond the prescribed period does not arise - Furthermore, the provisions of Limitation Act, 1963 does not apply to the appeal proceedings before the appellate authority. - AAAR Visit to Get Source Export of goods or not - supply of sunglasses from the retail outlet of the applicant at Terminal-3, IGI Airport (International Departure), New Delhi, to outbound international passengers against the international boarding pass - On going through the definition of “customs frontiers of India” under s2(4) of the IGST Act, 2017, we find that it has reference to the “customs area” as defined in section 2 of the Customs Act, 1962. In terms of s2(11) of the Customs Act, 1962 “customs area” means the area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities - the transactions i.e. supply of goods to outbound international travellers fall within the definition of “taxable territory” and when read in conjunction with section 7 of the CGST Act, 2017 forms “supply” and attracts the applicable GST on the date of supply of the goods - AAAR Visit to Get Source Applicable rate of GST - activity of appellant of supplying food/ beverages in trains or at platforms - supply of food through the food plaza on the railway platform (with A/C)/food stalls on the railway platform (without A/C) - The GST rate on supply of food and/or drinks by the appellant whether in trains or at platforms (static units), will be 5% without ITC. - AAAR Visit to Get Source Income Tax Loss from other source [wrongly shown as interest] and set off u/s.71 - assessee had opted for the deeming provision contemplated u/s.44AD of the Act but had separately raised a claim for deduction of certain business expenses - The mandate of law to the said effect can safely be gathered from a perusal of sub-section (2) of Section 44AD any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. - AT Visit to Get Source Capital gain on transfer of shares - capital gains arising from the transfer of shares because of family arrangement - the assessee has transferred the shares based on the family settlement as per the direction of CLB, which the Ld CIT(A) has accepted in his order - The same cannot be treated as transfer - When there is no transfer there is no capital gain and consequently no tax on capital gain is liable to be paid. - AT Visit to Get Source LTCG - Deduction claimed u/s 54F - joint ownership of the assessee - divergent views of the Courts are available as regards the meaning of the term ‘own’ - joint ownership of the assessee, in the present case, in 2 residential Flats on the date of transfer of original capital asset will not disentitled the assessee from claiming relief under section 54F. - AT Visit to Get Source Deduction u/s 80-IC - Interest on Fixed Deposits (FD) - in order to avail overdraft facility, the bank mandated pledge of fixed deposits - interest earned out of the fixed deposit made from the surplus funds being not connected to the manufacturing activity and do not form an integral part of the profits derived from industrial unit is not eligible for deduction. Interest is an unearned passive income derived out of non manufacturing activity. - AT Visit to Get Source Customs Valuation of imported goods - loading of the value on the bill of entries filed by the appellant without issuance of re-assessment order in terms of Section 17 (5) of the Customs Act, 1962 - Plain reading of the Section 17 (5) show that acceptance of re-assessment made has to be in writing, which means that re- assessment order needs to be accepted positively by the importer and it cannot be derived in an implied manner that re- assessment order has been accepted. - The documents relied upon by the Commissioner (Appeal) were never made available to appellant for replying to the same either by Commissioner (Appeal) or the assessing officer. Thus the impugned order has been passed contrary to the settled principles of natural justice and has no legs to stand on - AT Visit to Get Source Valuation - contemporaneous import - import of betel nuts made by the Appellant - rejection of transaction value - In view of the non-availability of evidence of identical or similar goods of same quantity and at same commercial level, the suspicion casted by the Original Authority, leading to the rejection of transaction value is also incorrect. Therefore rejection of transaction value, even at the first place, is misplaced. - AT Visit to Get Source Indian Laws Dishonor of Cheque - discharge of legally enforceable debt or not - In fact, he has categorically admitted that he did not possess any documents to establish the alleged transaction. This becomes even more glaring because the appellant is an educated person being an advocate. Further, the complainant has not been able to establish a close friendly relationship with the accused; he did not know the name of the wife of the accused, the details of his other family members or the residential address of the accused. It does not stand to reason that a person would advance a loan of Rs.15 lakhs to a virtually unknown person whose residential address is also not to his knowledge. - HC Visit to Get Source Dishonor of Cheque - Insufficient Balance - offences by companies - Vicaricious liability - In this case there are no averments in the complaint that the petitioner-accused signed the cheque in the capacity of the director or the person in charge of the affairs of the firm or that the transaction was with the firm. The complaint has been filed without any reference to the firm. The factum that the applicant-accused signed the cheque in the capacity of the director or the person in charge of the affairs of the firm or that the transaction was with the firm can be determined during the stage of trial otherwise also invoking the powers under the provisions of Section 319 of Cr.P.C. the Court can array the firm as an accused in the course of trial. - HC Visit to Get Source Admission of additional evidence - The legislative intent in enacting Section 391 is to empower the appellate court to see that justice is done and if the appellate court finds that certain evidence is necessary in order to enable it to give a correct and proper findings, it would be justified in allowing further evidence under Section 391. But such power must be exercised only in suitable cases where the court is satisfied that directing additional evidence would serve the interests of justice. - HC Visit to Get Source IBC Conduct of IRP - Validity of order whereby application for initiation of CIRP was accepted - Settlement between the Corporate Debtor and the Operational Creditor - IRP wanted to continue with the CIRP even after Corporate Debtor and Operational Creditor has settled and Application is filed for withdrawal of the CIRP. We do not find the conduct of the IRP in consonance with the scheme of the Code. Present is the case where Insolvency and Bankruptcy Board of India may look into the matter and examine the conduct of the IRP. - AT Visit to Get Source Validity of order of CIRP obtained - allegation of fraud on the part of Financial Creditor (FC) - The entire transaction as narrated in the Section 7 application is plainly imaginary, concocted and fraudulent. The CD does not appear to have had any genuine liability towards the alleged FC and the entire documentation has evidently been prepared by the alleged FC in collusion with Videocon Group entities. The alleged documents disclosed in the Supplementary Affidavit of the alleged FC, far from helping its case, further demonstrate the fraudulent nature of the documents - CIRP stands vitiated and terminated due to the fraud committed - Cost imposed on FC - Tri Visit to Get Source Service Tax Rejection of Form SVLDRS-1 - draft of the Minutes of the Managing Committee has been prepared by June 2019 itself and hence it can be safely concluded that though there was audit, amount of duty quantified also has been quantified before 30th June 2019. In our view, therefore, rejection of petitioner’s declaration on the ground that final audit report is issued after 30th June 2019 is incorrect. - HC Visit to Get Source Case Laws: GST 2022 (7) TMI 1168 Cancellation of the petitioner s registration - non-existent report dated 23/07/2020 - HELD THAT:- Although counter-affidavit has been filed, the following has not been disputed by the respondents/revenue: (i) Firstly, no notice of inspection was served on the petitioner, as is required under Section 25 of the CGST Rules 2017. (ii) Secondly, the inspection report dated 23.07.2020, which forms the basis of the impugned order dated 30.03.2021, was not furnished to the petitioner. (iii) Several other reasons have been mentioned in the counter-affidavit by the respondent/revenue, which find no reflection in the impugned order dated 30.03.2021. The writ petition is thus, disposed of, with the direction that the petitioner s revocation application will be dealt with in the next two weeks. 2022 (7) TMI 1167 Violation of principles of natural justice - petitioner was afforded an opportunity of personal hearing in terms of the proviso to Section 29 (2) of the Karnataka Goods and Services Tax Act or not - HELD THAT:- The proviso to Section 29 (2) of the Karnataka Goods and Services Tax Act specifically observes that there shall be no cancellation of registration without giving an opportunity of being heard. Accordingly, during the course of proceedings relating to cancellation of registration, there is a statutory mandate that the assessee should be given an opportunity of personal hearing. The authorities concerned in such proceedings is required to specifically state the time and date as regards personal hearing provided to the assessee. In light of the absence of such reference in the order at Annexure-B, the order at Annexure-B deserves to be set aside and the matter be remitted for fresh consideration before the Authority. The matter is remitted for fresh consideration before the Authority to be disposed off in terms of the observations made above and the proceedings are directed to be commenced from the stage after issuance of notice dated 06.02.2019 - Petition allowed by way of remand. 2022 (7) TMI 1166 Condonation of delay in filing appeal - Taxability - Appellant is a society registered under the Societies Registration Act, 1860 - client-service provider relationship - Induction and in-service training to Indian Corporate Law Service (ICLS) officers - Capacity building and training programs in the field of competition law, market regulations, finance, corporate governance and public policies - Policy advisory functions, public outreach and stakeholder consultations through seminars, conferences and forums - management consultancy services or not - HELD THAT:- In terms of Section 100 of the CGST Act, 2017 an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, the Appellate Authority is empowered to allow the appeal to be presented within a further period not exceeding 30 days if it is satisfied that the Appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days. In the Form ARA-02, the Appellant has stated that the date of communication of the advance ruling order is 28.06.2019 Clearly the appeal has not been filed within the prescribed time period of thirty days from the date of communication of the order. Whether the appeal filed on 14.02. 2020 is within the condonable period of another 30 days? - HELD THAT:- The Appellate Authority is not a Court and hence the power to condone beyond the prescribed period does not arise - Furthermore, the provisions of Limitation Act, 1963 does not apply to the appeal proceedings before the appellate authority. Since the appeal cannot be allowed to proceed on account of time limitation, the question of discussing the merits of the issue in appeal does not arise - Appeal dismissed. 2022 (7) TMI 1165 Export of goods or not - sales effected from the Security Hold Area of the IGI Airport, T-3, New Delhi - supply of sunglasses from the retail outlet of the applicant at Terminal-3, IGI Airport (International Departure), New Delhi, to outbound international passengers against the international boarding pass - liable to SGST under the DGST Act, 2017 and CGST under the CGST Act, 2017 or is it a zero rated export supply within the meaning of Section 2(23) r/w Section 2(5) of the IGST Act, 2017? - HELD THAT:- As per Section 2(5) of the Integrated Goods and Services Tax Act, 2017, export of goods with its grammatical variations and cognate expressions, means taking out of India to a place outside India. Further, as per Section 2(56) of CGST Act, 2017 India means the territory of India as referred to in article 1 of the Constitution of India, its Territorial Waters, Seabed and Sub-oil underlying such waters, Continental Shelf, Exclusive Economic Zone (EEZ) or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters. For the purpose of CGST Act, India extends upto the Exclusive Economic Zone upto 200 nautical miles measured from the appropriate baseline. On going through the definition of customs frontiers of India under s2(4) of the IGST Act, 2017, we find that it has reference to the customs area as defined in section 2 of the Customs Act, 1962. In terms of s2(11) of the Customs Act, 1962 customs area means the area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities - Notwithstanding the aforesaid, Section 15 of the IGST Act, 2017 is applicable to tourists leaving India and any supply of goods taken out of India by him shall be refunded in the manner prescribed. As per Explanation appended to Section 15 of the IGST Act, 2017 tourist means a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes. This section is yet to be operationalized and the payment of IGST will be refunded to the tourist as per the procedure to be prescribed. Thus, the transactions i.e. supply of goods to outbound international travellers fall within the definition of taxable territory and when read in conjunction with section 7 of the CGST Act, 2017 forms supply and attracts the applicable GST on the date of supply of the goods - appeal dismissed. 2022 (7) TMI 1164 Applicable rate of GST - activity of appellant of supplying food/ beverages - supply of food through the food plaza on the railway platform (with A/C)/food stalls on the railway platform (without A/C) - supply of foods on board the Rajdhani Trains - Supply of food on board the Mail/Express train - taxability of supply of newspaper - rate of tax on supply of newspaper - applicability of N/N. 11/2017-Central Tax (Rate) dated 28.06.2017 vide N/N. 46/2017 - Central Tax (Rate) dated 14.11.2017; amendment made in N/N. 8/2017- Integrated Tax (Rate) dated 28.06.2017 vide N/N. 48/2017 Integrated Tax (Rate) dated 14.11.17; amendment made in N/N. 11/2017 - State Tax (Rate) dated 30.06.2017 vide N/N. 46/2017 - State Tax (Rate) dated 28.11.17 in the NCT of Delhi - HELD THAT:- The clarification issued by CBIC vide letter F.No. 354/03/2018-TRU dated 23.03.2018 given in the letter ibid is squarely applicable to the facts of the case, where it was held that With a view to remove any doubt or uncertainty in the matter and bring uniformity in the rate of GST applicable for all kinds of supply of food and drinks made available in trains, platforms or stations, it is clarified with the approval of GST Implementation Committee, that the GST rate on supply of food and/or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (static units), will be 5% without ITC. The GST rate on supply of food and/or drinks by the appellant whether in trains or at platforms (static units), will be 5% without ITC. Advance Authority's Order stands overruled to this extent. Taxability - Supply of newspaper - rate of tax - HELD THAT:- The same is exempt vide Entry at S. No. 120 of Notification No. 2/2017 - Central Tax (Rate) dated 28.06.2017, Entry at S. No. 120 of Notification No. 2/2017 - Integrated Tax (Rate) dated 28.06.2017 and Entry at S. No. 120 of Notification No. 2/2017 - State Tax (Rate) dated 30.06.2017. Hence no tax is payable on the supply of newspapers on the trains. Income Tax 2022 (7) TMI 1163 Deduction on account of bad debts - amounts claimed as bad debts had been taken into account in computing the income of the Assessee in the previous year and offered for taxation and the unrecovered amounts had been written off in the books of account - HELD THAT:- This Court is of the view that Section 36(1)(vii) r/w Section 36(2) of the Act provides that in order to claim deduction on account of bad debts, two conditions have to be met by the Assessee i.e. (i) the bad debts must have been taken into account in computing the income of the Assessee of previous year or of an earlier/previous year and; (ii) the bad debts should have been written off in the accounts of the Assessee. In the present case, CIT(A) has given a finding of fact that the amounts claimed as bad debts had been taken into account in computing the income of the Assessee in the previous year and offered for taxation and the unrecovered amounts had been written off in the books of account and, consequently, the claim of the Assessee was duly allowable. This Court is also in agreement with the contention of learned counsel for the Respondent that as M/s Max New York Life Insurance Company had considered Respondent s invoices as not payable , the amount claimed as bad debts by the Appellant was legal and justified. In any event, in the appeal filed by the Department, it has not been averred that the Respondent has received any payment from M/s Max New York Life Insurance Company against the alleged bad debts in the last seven Assessment Years. 2022 (7) TMI 1162 Disallowance u/s14A read with Rule 8D(iii) - ITAT made deletion of the disallowance made under Section 14A of the Act by relying upon circular no. 5/2014 dated 11th February, 2014 - HELD THAT:- The said challenge of the department cannot be accepted in view of the judgment of this Court in Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT wherein Court answers the questions framed by holding that the expression does not form part of the total income in Section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. The aforesaid judgment has held field since 2015 and has been consistently applied by the ITAT and followed by this Court in all subsequent matters. ITAT admitting additional ground raised by the assessee regarding the treatment of subsidy - HELD THAT:- No error was committed by the ITAT by permitting the assessee to raise the additional ground at the stage of the appeal because there is no dispute raised by the department to the fact that the said subsidy given by State of Jammu Kashmir to the assessee is liable to be treated as a capital receipt in view of the judgment of Shri Balaji Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] 2022 (7) TMI 1161 Validity of re-assessment orders issued u/s 143(3)/ 147 r.w.s.144B - as argued impugned orders have been passed in violation of the principles of natural justice, as the Respondents have not taken into consideration the material on record and the replies and documents filed by the Petitioner - Petitioner did not come to know of the show cause notice, as she did not get the real time alert, as is mandatorily required under Section 144B(7)(ii) - HELD THAT:- A perusal of the impugned assessment order reveals that though the mutual funds are held in the joint name of the assessee and her husband, yet the payments of the same have been made from the bank accounts held jointly by the assessee and her husband in one of bank accounts the first name is that of the petitioner-assessee. It is also alleged in the impugned order that, the source of deposit in all these bank accounts does not indicate whether such deposits has been made by her husband or by the assessee, out of their independent source of income . Consequently, the dispute involved in the present matters is essentially factual in nature. Moreover, appeals against the impugned assessment orders have already been filed under Section 246A by the Petitioner before the appropriate Authority. Consequently, this Court is of the view that it would be appropriate if the petitioner raises all her contentions and submissions before the Appellate Authority. Accordingly, the present writ petitions along with applications stand disposed of with liberty to the petitioner to raise all her contentions and submissions before the Assessing Officer. 2022 (7) TMI 1160 Stay of demand - disputed demand has arisen on account of the failure of the petitioner to deduct tax at source on the interest payments made to China Development Bank (hereinafter referred to as CDB ), which as per the petitioner was a bank wholly owned by the Government of China - HELD THAT:- We find force in the submissions of the counsel for the respondents that this Court cannot at this stage cannot arrive at any conclusion, prima facie or otherwise with respect to ownership of the CDB, which will be determined in the present appeal after due consideration of the documents relied upon by both the parties. The respondents do not admit the inference of ownership drawn by the petitioner on the basis of the documents placed on record by the petitioner being the annual reports of the CDB. The ownership of the CDB being a disputed question of fact cannot be decided by this Court and it cannot be a matter of prima facie determination as it is the material fact to be determined in the appeal filed by the petitioner. With respect to the plea of hardship, it is noted from the petitioner s standalone statement of profit loss that its earnings before interest, tax, depreciation and amortisation for the year ended 31st March, 2021 is Rs. 330.76 crores. It is further noted that the revenue from operations of the petitioner for the same year stand at Rs. 1604.66 crores. So also the current assets of the petitioner are reported as Rs. 4,930.34 crores. With respect to the contention of the petitioner as regards brought forward losses of Rs. 9,671.83 crores as reported in its ITR for AY 2021-22, it is noted that out of the same, Rs. 7167 crores have been set off in the AY 2021-22. The petitioner has not suffered any operational losses in the relevant financial year. In these circumstances, the plea of hardship as raised by the petitioner is not made out. Accordingly, the impugned order dated 2nd June, 2022 does not call for any interference. We, however, direct the Commissioner (Appeals) to dispose of the appeal within a period of 12 weeks from today. 2022 (7) TMI 1159 Addition u/s 68 - approved scheme of Amalgamation - whether the scheme of amalgamation which was approved by this Court could be stated to be a scheme which was floated by the assessee with the sole object of avoidance of income tax - HELD THAT:- As confirmed in Vodafone Essar Gujarat Ltd. [ 2012 (9) TMI 100 - GUJARAT HIGH COURT] in case the Scheme is sanctioned, it may result into tax avoidance on the part of the appellant, but it is required to be noted that even if the ultimate effect of the Scheme may result into some tax benefit or even if it is framed with an object of saving tax or it may result into tax avoidance, it cannot be said that the only object of the Scheme is tax avoidance . Considering the various clauses of the Scheme, it is not possible for us to come to a conclusion that the Scheme is floated with the sole object of tax avoidance. - Decided against revenue. 2022 (7) TMI 1158 Addition u/s 68 - identity, creditworthiness and genuineness not proved - HELD THAT:- There was no compliance of this notice also by the assessee. Then AO issued notice u/s 133(6) to the investor who had paid share application money to the assessee company towards share capital and share premium. However, the investor did not file details before the assessing officer. Therefore, we note that three ingredients of section 68, namely identity, creditworthiness and genuineness, have not been satisfied by the assessee. Hence, we are of the view that one more opportunity should be given to the assessee to furnish basic documents, as required by assessing officer before the assessing officer. Therefore, we set aside the order of CIT(A) and remit this issue back to the file of the assessing officer for denovo adjudication in accordance with law. Disallowance of interest expenses @ 12% on interest free advances given to its sister concern M/s Jay Bharat Fin stock Private Limited, when interest was incurred at the same rate by the assessee on its borrowed funds - HELD THAT:- It is settled principle of law that when the assessee has adequate interest free funds to make interest free advances to sister concerns, then no disallowance of interest expenses can be made. For this, reliance can be placed on the judgment of Hon`ble Gujarat High Court in the case of Commissioner of Income-tax, Gandhinagar vs. Rajendra Brother [ 2014 (9) TMI 885 - GUJARAT HIGH COURT] . We note that where the assessee was having sufficient interest free funds available with him to lend interest free advances, the ld CIT(A) was justified in deleting disallowance of interest in relation to such interest free advances. 2022 (7) TMI 1157 Estimation of income - bogus purchases - HELD THAT:- We note that issue under consideration is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in case of Pankaj K. Choudhary others [ 2021 (10) TMI 653 - ITAT SURAT] . This Tribunal has taken a constant view and made disallowance @ 6% of bogus purchases. As the issue is squarely covered by the decision of the Coordinate Bench, in the case of Pankaj Choudhary(supra), and there is no change in facts and law and the ld DR for the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench(supra), hence respectfully following the binding precedent, we allow Revenue`s appeal partly. 2022 (7) TMI 1156 Validity of the initiation of proceedings u/s 153C - HELD THAT:- Admittedly, the impugned A.Y falls within the period of six years as envisaged in the provisions of section 153C of the Act and the AO has completed the assessment u/s 143(3) r.w.s. 153C - The basis of initiation of proceedings u/s 153C is the documents being provisional balance sheet of the assessee seized from the premises of Shri I. Shyam Prasad Reddy during the course of search at his premises on 18.7.2012. The satisfaction note was duly received by the Assessing Officer of the assessee from the AO of the searched person. Therefore, in our opinion, there is no infirmity or illegality in the order of the Assessing Officer in initiating the proceedings u/s 153C and the order of the learned CIT (A) in upholding the order u/s 153C. Accordingly, grounds raised by the assessee on this issue including the additional grounds are dismissed. Disallowance u/s 14A r.w. r. 8D - HELD THAT:- We find the Finance Act, 2022 has drastically amended the provisions of section 14A w.e.f. 1.4.2022 and one of the Coordinate Bench of the Tribunal has held such amendment to be retrospective in nature. Therefore, considering the totality of the fact of the case and in the interest of justice, we deem it fit and proper to restore the issue to the file of the AO with a direction to adjudicate the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Grounds raised by the assessee on the issue of addition 14A are accordingly allowed for statistical purposes. 2022 (7) TMI 1155 Revision u/s 263 - As during the assessment not only examined the issue of capital gain - HELD THAT:- The view adopted by the assessing officer was in accordance of the decision in CIT Vs Siddharth J. Desai ( 1981 (9) TMI 48 - GUJARAT HIGH COURT] and Madhabhai Patel ( 1993 (7) TMI 28 - GUJARAT HIGH COURT] so such assessment order cannot be branded as erroneous. Thus, the twin conditions as enunciated in section 263 cannot be said to be fulfilled in the present case. Again retreating the principal as laid down in Malabar Industrial Company Ltd ( 2000 (2) TMI 10 - SUPREME COURT] that when an assessing Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. Thus, in view of the aforesaid factual and legal discussion, we are of the considered opinion that the revision order passed by ld. PCIT under section is not legally sustainable as the same is based on mere change of opinion, which we set aside. In the result, the substantial ground of appeal raised by the assessee is allowed. No contrary facts or law is brought to our notice to take other view. - Decided in favour of assessee. 2022 (7) TMI 1154 Addition on account of past savings of the assessee - assessee has submitted that the assessee is in legal practice as an Advocate since 1976-77 and also having a substantial income from agricultural operations. - AO has estimated the past savings at Rs. 6,00,000/- instead of the claim of the assessee at Rs. 8,03,900/- - HELD THAT:- AO has accepted that the assessee is in the profession of law since last so many years and also has an agricultural income and therefore, it cannot be denied that he is having no savings. Assessing Officer then observed that in the absence of any credible evidence, the past savings was accepted at Rs. 6,00,000/-. It is pertinent to note that the AO has not given any basis for acceptance of past savings at Rs. 6,00,000/- when the assessee in in the legal profession for last more than 40 years as well as having the agricultural land holding and agricultural income. Therefore, the estimation of the AO without any basis at Rs. 6,00,000/- as against the claim of Rs. 9,03,900/- is arbitrary and unjustified. Even otherwise the savings of Rs. 8,00,000/- in the legal profession of more than 40 years as well as the proof of agricultural land holding of the assessee is not an excessive claim and therefore, in the absence of any contrary material or fact brought by the Assessing Officer, the denial of this claim of past savings and restricting the same to Rs. 6,00,000/- as against Rs. 8,03,900/- is not justified Thus ignoring the facts and circumstances of legal practice of the assessee for such a long period as well as evidence produced for agricultural land holding, the additions sustained by the CIT(A) on the ground that no evidence could be furnished, is not justified. Accordingly, the addition made by the Assessing Officer and confirmed by the CIT(A) is deleted. Addition denying the claim of loan taken from the relatives as source of deposits in the bank account of the son - HELD THAT:- As in the facts and circumstances of the case as well as the settled proposition of law, the addition sustained by the CIT(A) ignoring the evidence produced by the assessee to prove the identity, creditworthiness of the creditors and genuineness of the transaction by furnishing their identity proof, their source of income and confirmation is not justified and highly arbitrary. All these evidence produced by the assessee except the confirmation were independent evidences and cannot be fabricated or manufactured and consequently, the same cannot be doubted on the ground of afterthought. Accordingly, the impugned orders of the CIT(A) on this issue is set aside and the addition made on this account is deleted. Appeal of assessee allowed. 2022 (7) TMI 1153 Rectification of mistake u/s 154 - allowing less credit on account of tax deducted at source - Assessee submitted that assessee has not been granted benefit of Tax Deducted at Sources (TDS), which was deducted by the National Insurance Corporation Ltd ( NICL for short) from the commission amount paid to the assessee. HELD THAT:- We note that difference in TDS appears to be on account of TDS certificate issued to assessee by National Insurance Co. Ltd. from the commission amount paid to assessee and the amount of TDS reflected in Form No.26AS. It is possible that later on, NICL might have revised its TDS returns and reduced TDS credit of assessee. We note that assessee has fully offered commission income for taxation, as received by him from NICL and he had also received valid TDS certificates from NICL against the commission income so offered by him. Thus, assessee is justified in claiming TDS credit as assessee has offered income for the same. However, at this stage we cannot ascertain the fact that why the TDS credit was not allowed to the assessee, as we have pointed out that NICL might have revised its TDS return, that is way, the exact amount of TDS is not getting reflected in Form No.26AS. However, without verifying the real facts, such disallowance of TDS credit must not be made, as income has been duly offered by the assessee, and if TDS credit is disallowed in that case the corresponding income shown by assessee also ought to have been reduced by passing rectification order u/s 154 of the Act. That is, the right income should be taxable in the hands of the assessee. Alternatively, the assessing officer should examine Form No. 26AS and TDS certificate of assessee and revised TDS return of TDS of NICL and adjudicate the issue afresh in accordance with law. In this alternative also, we make it clear that if TDS credit is disallowed in that circumstances the corresponding income offered by the assessee for taxation also ought to have been reduced by passing rectification order u/s 154 of the Act by the assessing officer. Assessee s appeal is allowed for statistical purposes. 2022 (7) TMI 1152 Interest disallowance computed at 12% in respect of financial transactions with M/s Om Kailash Cotton - HELD THAT:- As correctly noted by the Ld. CIT(A) in the appellate proceedings, the assessee has not been able to demonstrate that interest-free funds were available with the assessee during the year under consideration out of which interest-free advances had been given to M/s Om Kailash Cotton. Also, we note that Ld. CIT(Appeals) also observed specifically that the interest disallowance on account of financial transactions with M/s Om Kailash Cotton offered for taxation by the assessee is also not reliable for the reason that it has taken the opening balance of ₹ 5,24,388/- instead of ₹ 3,07,80,727/- for which no justification has been given. The argument of the assessee that the opening balance of ₹ 3,07,80,727/-should not be considered for disallowance of interest is also not acceptable since firstly, the assessee has been unable to demonstrate that a part of this relates to trading transactions with M/s Om Kailash Cotton despite being given several opportunities and secondly, since assessee has been unable to demonstrate with any supporting evidence that interest-free funds were utilised for giving advances to M/s Om Kailash Cotton, and since the assessee has claimed deduction of interest on the aforementioned interest bearing funds made available to M/s Om Kailash Cotton during the impugned assessment year, interest on the same is liable to disallowed. In the result, we are of the view, that in the instant set of facts, the assessee s appeal is liable to be dismissed. 2022 (7) TMI 1151 Loss from other source [wrongly shown as interest] and set off u/s.71 - assessee had opted for the deeming provision contemplated u/s.44AD of the Act but had separately raised a claim for deduction of certain business expenses - HELD THAT:- As we find substance in the view taken by the A.O that now when the assessee had opted to disclose his income under the deeming provisions of section 44AD of the Act, then, it was not permissible on his part to have separately claimed set-off of the aforesaid expenses as the same were to be deemed to have been already given full effect while computing his income under the aforesaid deeming provision. The mandate of law to the said effect can safely be gathered from a perusal of sub-section (2) of Section 44AD any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. We, thus, in terms of our aforesaid observations uphold the view taken by the CIT(Appeals) who had rightly sustained the disallowance made by the A.O. Thus, the Ground of appeal No.1 raised by the assessee is dismissed Estimation of assessee s income from business as that of civil contractor a/w. a consequential disallowance of interest on loans raised from bank u/s.43B(e) - HELD THAT:- CIT(Appeals) had rightly concluded that now when the A.O had not placed on record any material which would substantiate his conviction that the assessee had generated contract receipts of Rs.1,15,73,522/-, therefore, there was no justification on his part in estimating the income of the assessee at Rs.6,93,488/- i.e. @8% of the said impugned receipts. At this stage, we may herein observe that the Department had accepted the aforesaid view of the CIT(Appeals) and had not carried the matter any further in appeal before us. Sustainability of the impugned disallowance of bank interest u/s.43B(e) - we are unable to find favour with the same. In our considered view, now when the assessee had disclosed his income u/s.44AD of the Act, therefore, no disallowance of the aforesaid amount was called for in his hands. As the disallowance u/s.43B presupposes raising of a claim for deduction, therefore, now when in the case before us the assessee had not sought any deduction of bank interest of Rs.23,21,099/-, there could have been no justification in disallowing the same. We, are unable to sustain the disallowance of bank interest made by the A.O u/s.43B(e) of the Act. Accordingly, the order of the CIT(Appeals) qua the aforesaid issue in hand is set-aside with a direction to the A.O to vacate the disallowance made by him u/s.43B(e) - Ground of appeal No.2 raised by the assessee is allowed in terms of our aforesaid observations. Addition of interest on FDR/deposits held by the assessee with bank - HELD THAT:- As transpires from a perusal of the records that the assessee had sought to telescope/include the same in his deemed income that was disclosed u/s.44AD of the Act. As the aforesaid interest income by no means would fall within the domain of the deemed income of the assessee worked out under Section 44AD of the Act, therefore, we concur with the view taken by the A.O who had separately made an addition of Rs.25,914/- under the head Other sources in the hands of the assessee. We, thus, in terms of our aforesaid observations uphold the aforesaid addition made by the A.O. Thus, the Ground of appeal No.3 raised by the assessee is dismissed. 2022 (7) TMI 1150 Revision u/s 263 - Addition u/s 56(2)(x)(b)(A) - difference in the purchase price of property as per the consideration recorded in the sale deed and value fixed as per guideline of sub registrar of the registration department to be added as per the provisions of section 56(2)(viib)(ii) - HELD THAT:- We noted that the Co-ordinate bench of this Tribunal, Mumbai Bench in the case of Maria Fernandes Cheryl [ 2021 (1) TMI 620 - ITAT MUMBAI] has considered this issue in detail and further considered the Finance Act, 2018 inserting second proviso to section 50C of the Act, whereby the tolerance limit of 5% was introduced and similarly in the provisions of section 56(2)(x)(b)(A) tolerance limit of 5% is increased, which was increased subsequently by the Finance Act, 2020 to 10%. Hon ble Supreme Court in the case of C.B. Gautum [ 1992 (11) TMI 1 - SUPREME COURT] held the provisions of chapter XX-C can be resorted to only where there is a significant under valuation of the property to the extent of 15% or more in the agreement of sale, as evidenced by the apparent consideration being lower than the fair market value by 15% or more. It is pertinent to note that although the observations of Supreme Court that pre-requisite for passing the order of compulsory acquisition of property by Central Government, viz., where, in an agreement to sell an immovable property in an urban area, there is significant under valuation of the property by 15% is not incorporated in the amended provision of section 269UD of the Act but the law declared by Supreme Court is the law of the land in view of Article 141 of the constitution and the Central Government while resorting to compulsory acquisition of immovable property had adhered to test laid by Hon ble Supreme Court. Hon ble Supreme Court finally laid down the principle that where there is a significant under valuation of the property to the extent of 15% or more in the agreement of sale, as evidenced by the apparent consideration being lower than the fair market value by 15% or more, in that case only the provisions of chapter XX-C can be resorted to. As in the present case before us, the issue is whether assessment framed by the AO is erroneous and prejudicial to the interest of Revenue for the reason that there is difference of Rs.25 lakhs between the guideline value as per stamp valuation which is Rs.3.50 crores. However, as per registered sale deed the actual consideration is Rs.3.25 crores. The assessee has disclosed the investment as per consideration declared in sale deed at Rs.3.25 crores but the PCIT was of the view that the difference of Rs.25 lakhs in view of the guideline value fixed by Stamp Valuation Authority at Rs.3.50 crores is to be accepted and added to the return of income of the assessee. We are of the view that this is highly debatable issue and even the tolerance limit of 10% is to be considered or not is again a debate. Once there is a debate, the order cannot be held as erroneous in view of the decision in the case of Malabar Industrial Co. Ltd.,[ 2000 (2) TMI 10 - SUPREME COURT] . Appeal of assessee allowed. 2022 (7) TMI 1149 Penalty u/s 271(1)(c) - disallowances were made on the ground that since the assessee is following project completion method, these expenses cannot be allowed as revenue expenditure and deserve to be capitalized - HELD THAT:- Reliance on the Hon ble Supreme Court decision in the case of Reliance Petroproducts Pvt. Ltd. ( 2010 (3) TMI 80 - SUPREME COURT ] is germane and duly supports the case of the assessee. The assessee s claim cannot be said to ex-facie bogus. Hence, denial of the assessee s claim cannot lead to the rigors of penalty u/s 271(1)(c). Hence, we do not find any infirmity in the order of ld. CIT (A). Appeal by the Revenue stands dismissed. 2022 (7) TMI 1148 Rectification of mistake u/s 254 - LTCG - consideration was received by the late father of the assessee or assessee? - assessee before the Tribunal argued that the assessee having not received any consideration, there was no question of any capital gain tax chargeable in her hands - HELD THAT:- As rightly contended by learned DR, a definite view was taken by the Tribunal while rejecting the main contention of the assessee by passing a well reasoned and well discussed order. It is well settled that the scope of rectification under Section 254(2) of the Act is limited to rectify the mistakes which are apparent from the record and it is not permissible to review the decision taken by the Tribunal. In our view, what the assessee is seeking in the guise of this Miscellaneous Application is the review of the well reasoned and well considered decision taken by the Tribunal which is not permissible under Section 254(2) of the Act. We, therefore, reject the said application being devoid of any merit. Miscellaneous Application is dismissed. 2022 (7) TMI 1147 TDS u/s 195 - Withholding the tax on payment made to the nonresident/ foreign entity who do not have PE in India - HELD THAT:- It is trite to say that the liability to deduct tax under section 195 arises only, when the amount being paid is chargeable to tax under the Income Tax Act of India and if the person or supplier or manufacturer to whom payment made, is a tax resident of a foreign country or non-resident, having no PE in India, then such entity can not be subjected to taxation in India and consequently payment made to it not liable to deduct any TDS under Section 195 of the Income Tax Act 1961. In this case M/s. GSI Engine B.V. from whom the Assessee had taken Aircraft Engine on a lease rent basis, admittedly is a tax resident of Netherland, having no PE in India and consequently cannot besubjected to taxation in India and thuspayment made to M/s GSI Engine B.V. does not attract the provisions of Act for withholding the tax, hence we are inclined to sustain the impugned order passed by the Ld. Commissioner, as the same does not suffers from any perversity, impropriety and/or illegality. Consequently, the appeal of the Revenue Department is dismissed. 2022 (7) TMI 1146 LTCG OR STCG - assessee had entered into joint development agreement with the builder M/s.Siddharth Finance Housing Ltd. on 19.08.2011 and admitted capital gain on transfer of 73% undivided share of the land in exchange of 27% built up area - HELD THAT:- In this case, there is no doubt with regard to fact that for the impugned assessment year only a sum of Rs.60,17,104/- is received by the assessee from sale of flats. Therefore, we are of the considered view that the Assessing Officer ought to have taxed consideration received during the assessment year 2015-16 only instead of taxing entire consideration received by the assessee, including consideration received for earlier financial years. Therefore, we are of the considered view that the Assessing Officer as well as learned CIT(A) were erred in taxing total consideration received by the assessee amounting to Rs.4,89,35,461/- for the assessment year 2015-16 on the basis of admission of the assessee. Hence, we direct the Assessing Officer to consider amount received for the assessment year 2015-16 alone and compute capital gain from transfer and determine whether it is short term or long term depending upon period of holding of asset by the assessee. Computation of capital gain on sale of shares of M/s.Akshaya JMB Properties Pvt.Ltd - assessee has sold 41,325 shares for consideration of Rs.4,46,69,825/-. - capital gain on sale of shares - HELD THAT:- Evidences placed by the assessee clearly shows that the assessee has transferred 41,325 equity shares on three dates to different persons and different rates and also received consideration through cheque. The evidences filed by the assessee further strengthened fact that entire consideration has been received through cheque and purchasers have confirmed transactions. The parties have entered into MoU to set out terms conditions of sale of shares, but nowhere specified manner in which share price is to be determined. Therefore, we are of the considered view that the Assessing Officer has completely erred in replacing full value of consideration of Rs.13,63,10,512/- as against actual consideration received by the assessee at Rs.4,46,69,825/- and computed long term capital gain and hence, we direct the Assessing Officer to adopt consideration as received by the assessee for transfer of 41,325 equity shares of M/s.Akshaya JMB Properties Pvt.Ltd. for consideration of Rs.,4,46,69,825/- and compute long term capital gain in accordance with law. Cost of acquisition of shares of M/s.Akshaya JMB Properties - According to the assessee, actual cost of equity shares acquired by the assessee works out to Rs.53.87/- per share, whereas the Assessing Officer has adopted face value of equity shares @ Rs.10/- per share - HELD THAT:- The matter needs further examination from the Assessing Officer. Hence, we set aside the issue to file of the Assessing Officer and direct the A.O to reconsider the issue after considering relevant materials and decide correct amount of cost of acquisition of shares sold by the assessee. Addition u/s.56(2)(vii)(b)(ii) - AO has made addition towards difference in sale consideration for transfer of UDS in 11 flats devolved to the share of assessee as per MOU and observed that there is difference between sale price and market value of flats - HELD THAT:- We are of the considered view that issue of application of section 56(2)(vii)(b)(ii) of the Act, needs to go back to the file of the Assessing Officer to give one more opportunity of hearing to the assessee to ascertain correct facts with regard to market value of flats sold by the assessee and sale consideration received for transfer of property and thus, we set aside issue to the file of the Assessing Officer and direct the Assessing Officer to re-examine claim of the assessee in accordance with law. Addition u/s.50C - Addition made towards UDS involved in flats sold by the assessee - as per AO the assessee has registered 440 sq.ft of UDS for consideration of Rs.3,30,000/-, whereas guideline value of 440 sq.ft was at Rs.6,60,000/-.- HELD THAT:- Assessee pleaded for one more opportunity of being heard before the Assessing Officer to justify her case with reference to guideline value of the property and consideration for transfer of UDS. Hence, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to reconsider the issue in accordance with law. Disallowance of exemption claimed u/s.54 54F - AO has disallowed exemption claimed u/s.54 on the ground that the assessee does not qualify for exemption u/s.54 however, allowed deduction for only one flat - HELD THAT:- As assessee pleaded for one more opportunity of being heard before the Assessing Officer to justify her case to verify eligibility of the assessee for claim of exemption u/s.54 54F. Therefore, we are of the considered view that the issue needs to go back to the file of the Assessing Officer for further examination of claim of the assessee. Hence, we set aside the issue to file of the Assessing Officer and direct the A.O. to reexamine claim of the assessee in accordance with law and decide the issue. 2022 (7) TMI 1145 Assessment u/s 153C - Whether no incriminating material was seized? - HELD THAT:- The objections of the assessee regarding assessment u/s 153C of the Act are that the assessment is not based upon any incriminating material recovered during the course of search. AO has not brought any material in support of his allegation regarding higher fair market value of the property. It is stated that both Stamp Valuation Authority as well as the DVO have assessed the fair market value of the property much lower than the value as disclosed in the Sale Deed. Moreover, the Valuation Report pertained to a date much prior to registration of Sale Deed. AO has not brought any material in support except the Valuation report. The Valuation Report is merely an opinion. It cannot be equated with a document as envisaged u/s 153C(b). In the present case, it is not the case where no material was available with the AO. During the course of search, a valuation report was found at the premises of third party wherein the fair market value of the property was assessed at higher value than what was disclosed by the assessee. There was a reasonable cause for the AO to initiate proceedings u/s 153C of the Act. The assessee stated that adopting of a higher fair market value by the approved valuer was for obtaining a loan from the bank. Moreover, the Stamp Valuation Authority and the DVO assessed fair market value much lower than what assessee has disclosed in the Sale Deed. AO has not brought on record any other material suggesting that the valuation adopted by the Stamp Valuation Authority or the DVO was not correct. AO has also not brought any other comparative sale instances of similarly situated property to rebut the claim of the assessee. Therefore, there is no material to accept the valuation report by the approved valuer which was obtained much prior to the assessment year under consideration for sustaining the addition. So far the decision of CIT(A) for deleting the addition is justified as the AO has not brought any evidence supporting the valuation report. We do not see any reason to disturb the conclusion drawn by the Ld.CIT(A) regarding merit of the case. However, we are of the considered view that the AO was justified for initiation the proceedings u/s 153C of the Act when he was in possession of certain valuation report related to the property which was sold during the year under consideration. The appeal of the Revenue is partly allowed. 2022 (7) TMI 1144 Reopening of assessment u/s 147 - application u/section 7 of the Insolvency and Bankruptcy Code filled - as argued notice under section 143(2) of the Act was not served within the prescribed period - Assessee also challenged the addition made by AO/CIT(A) on account of unexplained money under section 69A - HELD THAT:- Since proceedings under I B code have already been initiated/decided and moratorium has been declared by prohibiting all the proceedings against the corporate debtors including execution of any judgment, decree or order of any court of law, tribunal, arbitration panel or other authority, present appeals in the present format are not maintainable having not been filed by the Interim Resolution Professionals (IRP) who can file appeal with approval of committee of creditors. Moreover, none has come present on behalf of IRP to assist the Bench to proceed further in these appeals, hence aforesaid appeals are liable to be dismissed being not maintainable at this stage. Resultantly, aforesaid appeals filed by the assessee companies are disposed of with liberty to file fresh appeal in the proper format, duly verified by the person authorized to file the return of income or to get the present appeal restored by moving an application. However, nothing expressed herein shall affect the aforesaid appeals on merits. 2022 (7) TMI 1143 Estimation of GP - unaccounted sales - estimation of unaccounted cash sales - HELD THAT:- Both sides are in agreement that declared gross profit rate of 1.69% may be applied on estimated unaccounted cash sales from 01.04.2013 to 30.09.2013 to compute the unaccounted income of the assessee and that the same may be confirmed. Consistent with this, both sides are in agreement that out of the aforesaid addition of Rs.30,43,343/-; the aforesaid amount of Rs.11,03,177/- may be confirmed, and the remaining amount of Rs.19,40,168/- may be deleted. In view of the foregoing, and as representatives of both sides were in agreement with this at the time of hearing before us, we direct the AO, in the specific facts and circumstances of the present case before us, to restrict the addition to Rs.11,03,177 and to delete the remaining amount of Rs.19,40,168/- out of the total addition of Rs.30,43,345/-. 2022 (7) TMI 1142 Deemed dividend addition u/s 2(22)(e) - undisclosed income admitted by the assessee in search proceedings has been considered the financial statements of VEIL and included as part of reserves and surplus of the company - DR contended that the company had sufficient accumulated profits and therefore the provisions of section 2(22)(e) of the Act are attracted - HELD THAT:- As noted that the accumulated profits to the extent available in the books of account shall be considered for the purpose of determining the deemed dividend U/s. 2(22)(e) - The reliance placed by the Ld. AR in the case of Promod Kumar Dang [ 2005 (11) TMI 193 - ITAT DELHI-A] has been rightly distinguished by the Ld. CIT(A) and cannot be applied to the instant case. However, we also find that the assessee has included the undisclosed income in its books of account resulting an increase in the accumulated profits of the company. CIT(A) has rightly computed the accumulated profits for the purpose of section 2(22)(e) of the Act subject to verification of certain tax challans as detailed in para 5.7 and 5.8 of the CIT(A)‟s order. We also note that the Ld. AO has rightly considered the directions of the Ld. CIT(A) and passed the consequential order revising the order passed U/s. 143(3) r.w.s 254 of the Act. In view of the above discussions, we find that there is no infirmity in the order of the Ld. CIT(A) as well as the Ld. AO while passing the consequential order. This ground of the assessee is therefore dismissed. Additional grounds of appeal regarding reopening of the case u/s. 148 - We find from the record that the Ld. AO has rightly given the reasons for such reopening and reopening is well within the period as prescribed under the Act. Therefore, this ground raised by the assessee is dismissed. 2022 (7) TMI 1141 Reopening of assessment u/s 147 - Penalty levied u/s. 271(1)(c) - sale of shares to be treated as capital gain or income from business - Valid sanction by authority u/s. 151 - HELD THAT:- Sub-section (1) of Section 151 deals with the cases of reopening of assessment within four years wherein the respective Joint Commissioner is the sanctioning authority for reopening of such assessment. The reopening of assessment after the expiry of four years period, the sanctioning authority are either Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner only. In this case no doubt for the Assessment Year 2005-06 and reopening of notice was issued in 2012 which is beyond four years period but however Joint Commissioner of Income Tax, Range-7 by his letter dated 9.3.2012 sanctioned for the reopening proceedings, which is clearly against the provisions of Section 151. Therefore, the entire reopening assessment itself is vitiated and against the provisions of Section 151 of the Act. Therefore the entire reopening of assessment vis- -vis quashed. Though there is merits in the arguments of the assessee that the reasons recorded by the Assessing Officer is also not clear relating to which assessment year the income is said to be escaped or taxation. As we have quashed the entire assessment proceedings on the point of sanctioning authority u/s. 151. We are not addressing the other aspects of the reopening of assessment. Furthermore this has attained finality by the Jurisdictional High Court in the assessee's own case for the A.Y. 2006-07 holding that the sale of shares to be treated as Long Term Capital Gains only and not as Business Income . In the result, the appeals filed by the Assessees are allowed consequently the Revenue appeals are dismissed. 2022 (7) TMI 1140 Capital gain on transfer of shares - capital gains arising from the transfer of shares because of family arrangement - appellant claimed that no tax should be levied on a sum being long term capital gains arising from the transfer of shares out or family arrangement as per CLB order - HELD THAT:- Since the assessee has transferred the shares only on the direction of the CLB. As per the direction of CLB, the assessee has to either transfer the shares to ANP Group or to the company whichever is acceptable to the ANP Group. As far as assessee is concerned, he has agreed to transfer the shares, it is irrelevant for him how the shares to being transferred, as long as he receives the compensation as set out by the CLB. In this case, the ANP Group has decided to buy back the shares in the NPCL itself. Therefore, it is not proper on the part of the tax authorities to take divergent view without their being proper reasons. We observe that in the case under consideration, there is no doubt that there is a family arrangement and based the condition specified in the order passed by CLB, the shares were transferred to the company on the buyback terms. In the given case, the transferor is an individual whereas in the case relied by the CIT(A) in which the transferor is the legal entity. As held in the case of R Nagaraja Rao [ 2012 (5) TMI 184 - KARNATAKA HIGH COURT] observed that Partition or family settlement is not transfer. When there is no transfer there is no capital gain and consequently no tax on capital gain is liable to be paid. Therefore, in the given case, the assessee has transferred the shares based on the family settlement as per the direction of CLB, which the Ld CIT(A) has accepted in his order. Therefore, we are incline to accept that the assessee has transferred the shares under family arrangements only. Therefore, we direct the Assessing Officer to allow the claim of the assessee even though the assessee has paid the tax by calculating the capital gain under mistaken belief that this transaction is taxable. The appellate authorities can direct the Assessing Officer to allow the legal claim of the assessee as held in the case of Goetze India [ 2006 (3) TMI 75 - SUPREME COURT] - Appeal of assessee allowed. 2022 (7) TMI 1139 Addition under the head Income from House Property - AR submitted that annual letting value determined by the Assessing Officer is contrary to the provisions of sections 22 and 23 - HELD THAT:- In the present case, it is evident that the lower authorities have determined the annual letting value by applying 8% of capital cost and not considered the provisions of rent control legislation, despite the fact that the aforesaid properties are subjected to the said legislation. Thus, we remand this issue to the file of the Assessing Officer for determination of annual letting value in terms of the applicable rent control legislation. Accordingly, ground no. 2 raised in assessee s appeal is allowed for statistical purpose. Deduction claimed u/s 54F - joint ownership of the assessee - divergent views of the Courts are available as regards the meaning of the term own - HELD THAT:- As respectfully following the decisions passed by the Hon ble Madras High Court in Dr. Smt. P.K. Vasanthi Rangarajan ( 2012 (7) TMI 563 - MADRAS HIGH COURT] and Kapil Nagpal [ 2015 (9) TMI 613 - DELHI HIGH COURT] which view has also been taken by the coordinate bench of Tribunal in Ashok G. Chauhan ( 2019 (4) TMI 1024 - ITAT MUMBAI] we are of the considered view that joint ownership of the assessee, in the present case, in 2 residential Flats, namely, Flat No. A 408 and B 504 on the date of transfer of original capital asset will not disentitled the assessee from claiming relief under section 54F. As the expression a residential house in section 54F, prior to its amendment vide Finance (No. 2) Act, 2014, w.e.f. 01/04/2015, includes more than one residential house purchased/constructed by the assessee, within the prescribed time. In the present case, as the properties were purchased by the assessee pursuant to transfer of long-term capital asset ( original asset ), the same will fall within the category of a residential house (or as referred in the section as new asset ) for the purpose of section 54F of the Act. As the aforesaid properties, fall within the category of new asset , same cannot be considered as residential house for the purpose of proviso to section 54F of the Act, which, as stated earlier, is other than the new asset . The proviso only carves out exceptional situation in which the provisions of section 54F will not be applicable. Therefore, as the aforesaid properties are not in the nature of residential house , for the purpose of proviso, none of the conditions as mentioned in proviso are applicable to the present case. Further, as it is not disputed that the aforesaid properties were purchased by the assessee within the prescribed time, therefore, we are of the considered view that assessee is entitled to claim benefit under section 54F of the Act. Accordingly, ground No. 6 raised in assessee s appeal is allowed. Addition as income from other sources - It is the claim of the assessee as wrongly declared as income under an anticipation of refund of investment in property which was made and cancelled during the year - HELD THAT:- As per the assessee, revised return also could not be filed as the time limit for filing the same was expired. Further, as per the assessee, the aforesaid amount was never realised and the investee with whom the investment was made refused to entertain any claim. It is well established that assessment proceedings before the taxing authority is to assess the correct tax liability and therefore no hypothetical income / profit could be brought to tax. In the present case, addition was made by the Assessing Officer and same was upheld vide impugned order without examining the submission of the assessee. Therefore, we deem it appropriate to remand this issue to the file of Assessing Officer for de novo adjudication after consideration of all the aspects. Accordingly, ground no. 7 raised in assessee s appeal is allowed for statistical purpose. 2022 (7) TMI 1138 Deduction u/s 54F - AO disallowed the exemption claimed u/s 54 and Sec 54F - additional evidences in support of assessee s claim towards completion of the construction of the residential house within the time specified u/s. 54 was admitted without calling for a remand report by the Ld.CIT(A) - HELD THAT:- As details in respect of allowability of the claim were furnished before the CIT(A) by the assessee and the Ld.AO has not got any opportunity to verify these details. The Ld.DR thus prayed for the issue to be remanded to the Ld.AO. AR did not object for the remand to the Ld.AO. Considering the submissions, we remand this issue to the Ld.AO keeping all the contentions open. The Ld.AO is directed to consider the claim in accordance with law. 2022 (7) TMI 1137 Addition u/s 68 - cash deposited by the assessee in his bank account which is fully explained - HELD THAT:- As perused the material available on record and decisions relied upon by the assessee. Respectfully following the decision of the coordinate bench and in the absence of any contra judgment produced by the DR following the cited co-ordinate bench decision we hold that benefit of the ratio decided in those judgement be given to the assessee but as the assessee unable to substantiate the whole deposit and taking the turnover is not correct. Therefore, the assessee should pay the tax considering the whole amount of cash deposited as turnover and on that 8% amount be added as income of the assessee which would end the justice - In terms of these observations, we partly allowed the ground no. 1 of the assessee. Addition on account of capital introduced in firm without considering the submission of the assessee - HELD THAT:- The assessee however placed a general plea that the introduction of the capital is sourced from this account. There is no force in the argument assessee as he failed to place on record any cogent evidence as stated by the ld. DR. Not only that it has been observed that the income which is arising and offered in the return of income by the assessee is far less then this amount introduced in the firm. Therefore, the argument of the ld. AR is incorrect on fact and in the absence of any evidence and income being offered as arise from these unaccounted transactions as alleged and decided by us should be considered to substantiate the introduction of cash in the firm to the extent of that income and therefore, this ground of appeal is partly allowed and therefore, the AO is directed to reduce the addition to that extent of income decided as per Ground No. 1 above. In the result, Ground No. 2 is partly allowed. 2022 (7) TMI 1136 Reopening of assessment u/s 147 - Addition u/s 68 - unsecured loans treated as unexplained cash credits - HELD THAT:- The basis of reopening is the statement of Shri Praveen Kumar Jain albeit the said statement was retracted by him subsequently. In this background, we are of the view that the AO at the same time of issue of notice under section 148 of the Act was having fresh tangible material in the form of information supplied by investigation wing which is sufficient to form a reasonable belief of escapement of income. AO need not prove the escapement of income at the time of initiation of reassessment of proceedings and instead what is required is some tangible material which suggest escapement of income. The information received from investigating wing constitutes a fresh material which is sufficient to form a basis for escapement of income. Therefore, we are of the considered view that reopening as done by the AO is legally tenable and accordingly dismiss the ground taken by the Appellant challenging the reopening of the assessment as well as proceedings as completed under section 147 of the Act. Addition u/s 68 - Appellant has duly proved the genuineness of the transactions by submitting various details as also mentioned at Page 12 and 13 of Ld. CIT (Appeals) order. Taking it into consideration entire facts and circumstances of the case and the ratio of the decision relied upon by the Ld. AR, we set aside the order passed by the Ld. CIT (Appeals) and direct the AO to delete the additions so made under section 68 of the Act in both the assessment years in the impugned appeals. Both the appeals of the assessee are allowed. 2022 (7) TMI 1135 Exemption u/s 11 - Trust is registered u/s. 12A - HELD THAT:- Appellant is holding Registration u/s. 12A of IT. Act 1961 and no violation of any of the provisions of section 13 is alleged in the assessment order. In view of there being application of income at more than 85% of receipts of trust no income is exigible to tax at the hands of appellant. In view of above it held that trust is assessable entity and income of trust is to be assessed/determined at the hands of appellant itself. Income of appellant is determined at Rs. NIL as shown in the return considering provisions of section 11 - Order of CIT(A) is reversed/modified in terms of discussion made hereinabove. Grounds of appeal of appellant are allowed. Revision u/s 263 - income assessed in the case of appellant assessment framed is on protective basis and income computed is assessed on substantive basis in the case of Shri Vasantrao Ghonge by same A.O. - HELD THAT:- The income assessed on substantive basis at the hands of Late Shri Vasantrao Ghonge is after deducting the expenditure incurred and shown in Income and expenditure account of trust from the gross receipts. CIT Central has found no fault with allowability of same expenditure in the case of Shri Vasantrao Ghonge where income has been determined on substantive basis even though case of Shri Vasantrao Ghonge was under his charge. It is also noted that the income determined on substantive basis in the case of Shri Vasantrao Ghonge has been settled under Vivad se Vishwas Scheme by Shri Vasantrao Ghonge for Asstt. Years 2009-10 and 2010-11 and form No. 5 has been issued in the case of Shri Vasantrao Ghonge for Asstt. Years 2009-10 and 2010-11 on 25/11/2020 which is placed on record. The CBDT Circular No. 7 dated 04/03/2020 issued clarification on provisions of Direct Tax Vivad se Vishwas Bill 2020, Answer to Question No. 35 it has been clarified that on settlement of dispute relate to substantive addition A.O. shall pass rectification order deleting protective addition. In view of discussion made hereinabove the order passed by A.O. in no manner of consideration can be considered as erroneous or prejudicial to the interest of revenue. The order passed by A.O. not being erroneous or prejudicial to the interest of revenue Learned CIT Central ought not to have set aside the assessment framed u/s. 143 r.w.s. 153C in case of appellant by his order u/s. 263 - We are of the view that order passed u/s. 263 is bad in law. 2022 (7) TMI 1134 Deduction u/s 80-IC - assessee received consideration from sale of Focus Scrip/ License received under Focus Products Scheme under the Foreign Trade Policy - AO denied deduction of income received from sale of FPS on the ground that such income is not related to manufacture or sale of the products of the undertaking and is only related to a post manufacturing event, which is not eligible for deduction - HELD THAT:- As applying the purpose test laid down by the Hon ble Supreme Court in various decisions, particularly Sahney Steel [ 1997 (9) TMI 3 - SUPREME COURT ] and Ponni Sugars [ 2008 (9) TMI 14 - SUPREME COURT ] and also the direct judicial precedents referred supra, we hold that Focus Products Incentive in the nature of capital receipt not liable to tax under the provisions of the Income Tax Act, 1961. Duty Draw Back - AO held that the profits of the industrial undertaking included the amount of duty drawback, which is not eligible for deduction under section 80-IC - HELD THAT:- In the instant case by reason of an export promotion scheme, an assessee was entitled to import entitlements which it could thereafter sell. Hence, the same could not be said to be directly from profits and gains by the industrial undertaking but only attributable to such industrial undertaking inasmuch as such import entitlements did not relate to manufacture or sale of the products of the undertaking, but related only to an event which was post-manufacture namely, export. The judgment of Hon ble Supreme Court in the case of Liberty India [ 2009 (8) TMI 63 - SUPREME COURT ] wherein it was held that subsidy by way of customs duty draw back could not be treated as a profit derived from the industrial undertaking is very specific to the issue of duty draw back. The judgment of the Apex Court in the case of Liberty India (supra) was in relation to the subsidy arising out of customs draw back and duty Entitlement Pass-book Scheme (DEPB) similar to the facts of the instant case. Hence, keeping in view the judgment of the Hon ble Apex Court, we hereby affirm the order of the ld. CIT(A). Interest on KDR - HELD THAT:- We hold that interest earned out of the fixed deposit made from the surplus funds being not connected to the manufacturing activity and do not form an integral part of the profits derived from industrial unit is not eligible for deduction. Interest is an unearned passive income derived out of non manufacturing activity. Judgment in the case of Pandian Chemicals Ltd. [ 2003 (4) TMI 3 - SUPREME COURT ] held that although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with the Electricity Board could not be said to flow directly from the industrial undertaking itself. Captivating the same analogy of the Hon ble Apex Court in the case of the assessee, the interest on the fixed deposits kept with the bank though may be required for the purpose of obtaining over draft facility, it can be said that it is a step removed from the business of the industrial undertaking. Hence, we hereby affirm the action of the ld. CIT(A). 2022 (7) TMI 1133 Difference in stock - Discrepancy in closing opening stock - CIT-A deleted the addition - HELD THAT:- We do not find any infirmity in the order of the Ld.CIT(A) who has given a categorical finding of fact after due verification that there was no such discrepancy in the figures of stock of the preceding and impugned year in the audited financial statements of the assessee., that the discrepancy in the return filed therefore was a mere typographical error. The Revenue being unable to controvert the finding of the Ld.CIT(A) before us, we see no reason to interfere in the order of the Ld.CIT(A) deleting the addition made on account of alleged difference in stock. Late payment of employees contribution u/s 36(1)(va)/43B - HELD THAT:- We have no hesitation in upholding the order of the AO disallowing employees contribution to ESI deposited delayed, u/s 36(1)(va) of the Act, in view of the decision of the jurisdictional High Court in Gujarat State Transport [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] categorically holding that the deposit of the same before the due date of filing of return of income will not suffice to escape from the provisions of section 36(1)(va) of the Act. Since it is a fact on record that the employees contribution was deposited delayed as per the applicable provisions of law, the issue stands covered against the assessee. The disallowance on account of delayed deposit of employee s contribution to ESI is accordingly upheld. Disallowance u/s 14A - disallowance of expenses incurred for the purposes of earning incomes - CIT-A deleted the addition - HELD THAT:- We see no reason to interfere in the order of the Ld.CIT(A) who deleted the disallowance finding sufficient interest free funds available with the assessee for the purpose of making the investments. This fact has remained uncontroverted before us. It is a settled position of law that where sufficient own funds are available, the presumption is that the investments have been made out of the same calling for no disallowance of interest u/s 14A of the Act - we uphold the order of the Ld.CIT(A) deleting the disallowance made u/s 14A. Disallowance u/s 40(a)(ia) interest on late payment - non deduction of tax at source - said interest expenses pertained to that paid to the creditor of the assessee M/s Hero Moto Corp. Ltd for delay in payments against various purchases - CIT(A) deleted the disallowance finding that interest paid to creditors is not in the nature of interest as envisaged in the definition of interest u/s 2(28A) of the Act and hence the said interest was not covered u/s 40(a)(ia) - HELD THAT:- Before us Ld.DR was unable to controvert the finding of the LD.CIT(A) that interest paid to creditors on account of delayed payment did not qualify as interest as defined u/s 2(28A) - we see no reason to interfere in the order of the Ld.CIT(A) deleting the disallowance of interest. Disallowance u/s 40(a)(ia) freight expenses - Addition pertained to transportation/freight charges paid/credited by the assessee without deduction of tax at source - CIT(A) deleted the disallowance on finding that the transportation charges were included in the Bills of the Creditors/Suppliers and was therefore part of purchase cost paid to them and not in the nature of transportation expenses - HELD THAT:- DR was unable to controvert the factual contentions of the assessee and the factual findings of the Ld.CIT(A) that the freight payments were part of the bill of suppliers nor was he able to bring to our notice any decision of the jurisdictional High Court or the Hon ble apex court holding to the contrary to what was held by the Hon ble Punjab and Haryana High Court in the case of Bhagwati Steels [ 2010 (1) TMI 411 - PUNJAB HARYANA HIGH COURT ] - no reason to interfere in the order of the Ld.CIT(A) deleting the disallowance of freight expenses. Addition on account of travelling expenses - CIT-A held that the foreign traveling was not justified by the explanation and accordingly while he upheld the disallowance of foreign travelling expenses, the domestic travelling expenses were allowed - HELD THAT:- DR though relied on the order of the AO was unable to controvert the fact that the assessee had business transactions with the Hero Moto Corp Group ,nor was he able to point any infirmity in the findings of the Ld.CIT(A) that domestic travelling could not be ruled out completely in the aforestated backdrop of facts - we see no reason to interfere in the order of the Ld.CIT(A) deleting the disallowance. Addition on account of personal nature expenses out of car loan, interest , car depreciation, car insurance and car fuel expenses - AO disallowed 1/3rd of the total expenses incurred by the assessee on cars on various accounts attributing personal use to them noting that all of them were luxurious, expensive and the least fuel efficient cars, the assessee has used more than one car for business purpose during the year under consideration and the assessee did not furnish any log book relating the usage of above cars to distinguish business personal uses - HELD THAT:- Both the AO and the Ld.CIT(A) have resorted to estimation for the purposes of disallowing car expenses on account of non-business user. We see no reason to interfere in the order of the Ld.CIT(A) whose disallowance of 20% of the fuel expenses we find is justified considering that there is no basis with the Revenue also for justifying disallowance of 1/3rd of entire car expenses which definitely is in our considered view on the higher side - we uphold the order of the Ld.CIT(A) deleting disallowance of car expenses. 2022 (7) TMI 1132 TDS u/s 194H - payment of the discounts allowed to its prepaid distributors on sale of starter kits and prepaid recharge vouchers - Addition u/s 40(a)(ia) - HELD THAT:- As in the case of the appellant [ 2020 (3) TMI 1187 - ITAT MUMBAI] which are in favour of the appellant, it is held that the appellant was not required to deduct tax at source u/s 194H in respect of the discounts allowed to prepaid distributors on sale of starter kits and prepaid recharge vouchers. Therefore, disallowance made by the AO under section 40(a)(ia) of the IT Act is directed to be deleted. - Decided in favour of assessee. 2022 (7) TMI 1131 Adhoc addition of 10% of labour charges - HELD THAT:- It is a very difficult task to obtain the all the details where the labour payments are made to the persons and not to the firms and for various reasons the assessee could not produce certain details due to non collection of information and non availability of concerned persons. Therefore, the A.O has not doubted the labour charges but considering the fact that there is discrepancy in respect of the maintaining of the records and the labour charges are paid without any proper verification and made an adhoc addition @ 10%. A.O has made addition without any proper verification or enquiry. We are of the opinion that the addition @ 10% on the adhoc basis is without primary evidence and cannot be sustained but the fact remains that the assessee should fallow the minimum necessary norms and maintain such records necessary for authentication of the claims before the appropriate authorities and the assessee shall be bound to maintain the records at least in future. Accordingly, we modify the order of the CIT(A) on this disputed issue and restrict the disallowance to the extent @ 3% instead of @10% and partly allow this ground of appeal of the assessee. Unexplained purchases - addition of 30% alleged bogus purchases sustained by the CIT(A) - HELD THAT:- We are of the opinion if any addition has to be made it should be based on the profit element and it was rightly pointed out by the Ld. AR that the GP worked out by the assessee is around 7.22%. Considering the factual aspects, nature of the business and the assessee could not produce the proper evidence with the records are of the considered view that the assessee has to be taxed on the profit element if the purchases are treated as a alleged bogus purchases as the assessee could not completely produce evidences of the genuineness of the transactions. We are of the view that the addition made by the CIT(A) @ 30% is on the higher side considering the GP rate @ 7.22% offered by the assessee. Accordingly, we restrict the addition of the CIT(A) to the extent @ 4%, and partly allow the ground of appeal of the assessee. Addition of outstanding current liabilities being labour charges payable in respect of two parties - addition was sustained by the CIT(A) as the parties have not complied with the notice issued u/s 133(6) - HELD THAT:- We considering the facts and the information are of the opinion that the assessee is engaged in the business of subcontracts and working at various sites and has to depend on the various parties in respect of execution of works. The assessee has substantiated the closing balance of liabilities as on 31.03.2011 in respect of two parties before the appellate authorities. The A.O has not doubted the genuineness of expenses claimed in the profit and loss account filed in the course of the assessment proceedings but disbelieved the outstanding liability of labour charges payable as on 31-02-2011 reflected in the balance sheet. Accordingly, we set aside the order of the CIT(A) on this ground of appeal and direct the A.O to delete the addition and allow the ground of appeal in favour of the assessee 2022 (7) TMI 1130 Assessment u/s 153C - Genuineness of job work charges - HELD THAT:- As on appraisal of the facts carried out in the case of the recipient, has rendered a favourable finding. Hence, the basis for additions made in the hands of the assessee and later modified by the CIT(A) is inconsistent with the order of Co-ordinate Bench and thus cannot be countenanced. The additions were made by the AO to the extent of the job work receipt billed to Orient Craft Ltd. which were reduced to 5% thereof by the CIT(A). Hence, no case was made out on the nature of expenses incurred by the assessee herein. Consequently, the plea of the Revenue for restoration of the matter to the Assessing Officer for examination of corresponding expenses does not emanate from the assessment order and therefore cannot be entertained. 2022 (7) TMI 1110 Cash deposited in Bank on different dates during demonetization period - Deposits in three bank accounts out of cash in hand being Income from Agriculture activities, Receiving from Transport Business and out of accumulated past savings - only reason for not accepting the contention of the assessee that such deposits were part of business receipts is that the assessee had deposited these amounts in cash during the demonetization period - HELD THAT:- While making addition the authorities below have ignored the fact that in the same year before the demonization period started i.e. from 01/04/2016 to 08/11/2016, there was cash deposits which fact is apparent from the order of CIT(A) where he has noted this fact of having deposited such amount in cash during these dates. If in the same year, cash can be accepted to be belonging to the business and has been accepted to be part of business receipts, there cannot be reason that a sum in the same year should not be accepted as income from the same business. Moreover, we find that in the immediate preceding year, the assessee had declared total receipts of Rs.62 lacs and all of the receipts were in cash and AO during assessment proceedings had accepted the net income declared by assessee. A copy of assessment order dated 17/12/2018 is placed. The fact that in the preceding year all receipts were in cash is verifiable from the copy of reply filed by assessee. The nature of business run by the assessee is transport business and agricultural income and in both businesses, there is a pre dominant role of cash. Moreover, we find that the assessee s husband is also old income tax payee like the assessee which fact is verifiable where the copies of returns of income of her husband are placed. The assessee has been declaring her income on presumptive basis every year and therefore, there is no justification in the action of CIT(A) by which he has upheld the addition. In view of the above, the addition sustained by learned CIT(A) is deleted and the appeal of the assessee is allowed. 2022 (7) TMI 1109 Revision u/s 263 - Addition u/s 40A (3) and additional depreciation claimed by the assessee which was not verified accordingly excess depreciation was required to be disallowed - HELD THAT:- The assessment proceeding is continued by verification of expenses as required by the ld AO. The a provided details during proceeding. Only in point of additional depreciation the issue is covered during filing of return with financial statement ld AO had taken care during computation to total income. Where specific issue related to assessee-company's claim of higher rate of depreciation was raised by AO in scrutiny assessment and assessment order was passed after detailed submissions made by assessee were duly accepted. Mere non-mentioning of specific reasons for accepting explanation of assessee by AO in assessment order could not be reason to invoke revisionary powers under section263. PCIT had invoked the section 263 which is beyond the jurisdiction. Appeal of the assessee is allowed. 2022 (7) TMI 1108 Appealable orders before Commissioner (Appeals) u/s 246A - Levy of late Fee u/s 234E - intimation under section 200A - HELD THAT:- In this case the Appellant assessee had filed an appeal before the CIT(A) against the Intimation u/s 200A of the Act. The said fact is clearly mentioned in the Form-35, Column Number 2a. Therefore, as per section 246A of the Act, the assessee has a right to file an appeal before the ld.CIT(A) against the intimation u/s 200A of the Act. Therefore, we are of the opinion that the CIT(A) has erred in holding that the appeal is not maintainable. Hence, the issue is set aside to the file of the CIT(A) to be decided a fresh after giving opportunity to the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purpose. Customs 2022 (7) TMI 1129 Jurisdiction - power of DRI to issue SCN - When jurisdictional High Court judgments are available upholding the competency of the DRI to issue show cause notice under Section 28 of the Customs Act 1962, whether the CESTAT is correct in remanding the appeal? - Power of Tribunal to remand the case without deciding the issues raised therein on the ground that jurisdiction of the officer to issue show cause notice is under dispute - HELD THAT:- Reliance placed in the case of THE COMMISSIONER OF CUSTOMS VERSUS SHRI SANKET PRAFUL TOLIA [ 2021 (6) TMI 432 - MADRAS HIGH COURT] where it was held that I n the case of the Commissioner of COMMISSIONER OF CUSTOMS, TUTICORIN VERSUS CESTAT, CHENNAI, M/S. SRI RAJENDRA MANSUKHLAL SHAH, SHRI. MOHAMMED AZAM, M/S. VISAL TRIBOTECH (P) LTD., SHRI. R. PARRIVALLAL AND M/S. SHRI. TARUN SALOT [ 2019 (12) TMI 249 - MADRAS HIGH COURT] a Division Bench of this Court, to which one of us (T.S.SIVAGNANAM, J.) was a party, had an occasion to test the correctness of an identical order passed by the Tribunal and by a common Judgment, dated 04.10.2019, set aside the order of the Tribunal and restored the appeals to the file of the Tribunal to be kept pending and await the decision of the Honourable Supreme Court. Following the latest decision in Sanket Praful Tolia 's case, which is squarely covered by the issues involved herein, these Civil Miscellaneous Appeals are allowed by setting aside the order impugned herein and the matters are remanded to the Tribunal with a direction to keep the same pending and await the decision of the Hon'ble Supreme Court in the appeals filed against the decision in UNION OF INDIA VERSUS MANGALI IMPEX LTD. [ 2016 (8) TMI 1181 - SC ORDER] . Appeal disposed off. 2022 (7) TMI 1128 Demand of 1% Extra Duty Deposit - import of Silicon Electrical Steel of Cold Rolled Full Hard (unannealed) - appellant argued that the impugned order is non-speaking and passed without application of mind - Circular No.11/2001-Cus - HELD THAT:- In terms of the decision of the Hon ble High Court of Madras in COMMISSIONER OF CUSTOMS (EXPORTS) CUSTOM HOUSE VERSUS M/S. SAYONARA EXPORTS PVT. LTD., CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL [ 2015 (3) TMI 861 - MADRAS HIGH COURT] , the appellants would be entitle to automatic refund of EDD without filing of application for refund under Section 27 of the Customs Act, 1962. The Hon ble High Court held that there is no need to file any refund application and the order for refund can be made suo moto. The appellant was not even required to file refund claim and EDD should have been refunded without filing of refund claim. In this circumstances, if and when the refund claim was filed by the appellant cannot be treated as barred by limitation - Appeal allowed. 2022 (7) TMI 1127 Valuation of imported goods - loading of the value on the bill of entries filed by the appellant without issuance of re-assessment order in terms of Section 17 (5) of the Customs Act, 1962 - no speaking order as provided by Section 17 (5) of the Customs Act, 1962 was issued to the appellants - HELD THAT:- Admittedly in this case the value of the goods as declared by the Appellants at the time of filing the Bill of Entry has been enhanced by the assessing officer. However no order under Section 17 (5) of Customs Act, 1962 has been passed by the assessing officer - In terms of the Section 17 (5) of the Custom Act, 1962 as it existed at the material time, it was mandatory for the proper officer to issue a speaking order on the reassessment except in the cases where the importer/ exporter confirms his acceptance of the re assessment in writing. It is the submission of the appellant that they had never accepted the said re-assessment order in writing. Plain reading of the Section 17 (5) show that acceptance of re-assessment made has to be in writing, which means that re- assessment order needs to be accepted positively by the importer and it cannot be derived in an implied manner that re- assessment order has been accepted. In absence of the written acceptance by the importer/ exporter, this section mandatorily provides that proper officer has to issue the speaking order for the re-assessment done within fifteen days of such re- assessment - there are no merits in the said findings recorded by the Commissioner (Appeal). The documents relied upon by the Commissioner (Appeal) were never made available to appellant for replying to the same either by Commissioner (Appeal) or the assessing officer. Thus the impugned order has been passed contrary to the settled principles of natural justice and has no legs to stand on - the matter needs to be remitted back to the Commissioner (Appeal) for reconsideration of the entire issue after making available to the appellants all the documents and communications that revenue wishes to rely upon and hearing the appellants on the same. Appeal allowed by way of remand. 2022 (7) TMI 1126 Valuation - import of betel nuts made by the Appellant - rejection of transaction value - redetermination of value under Rule 5 of the Customs (Determination of Value of Imported Goods) Rules 2007 - evidences of contemporaneous import - HELD THAT:- The Adjudicating Authority, by Order-in-Original rejected the transaction value under Rule 12 (1) of the Custom (Determination of Value of Imported Goods) Rules 2007 and re-determined the same under Rule 5, after discussing non-adoptability of valuation under Rule 4 of the Customs Valuation Rules 2007, finding contemporaneous imports during more or less same period on higher value. Appeal against the Order passed by the Original Authority was dismissed, without modifying the original order. Betel nut being an agricultural product, similarity and identical nature of goods can be ascertained only by quality assessment, as the price of betel nuts are largely depended on grade, quality, time of yield, age of the product, level of processing, time of import etc.. Even though Revenue has placed reliance on betel nuts imported through the ports of Chennai and Nhava Sheva, no quality test report is available on records. Even the Betel nuts imported by the Appellants are not tested to ascertain its grade and quality. In the absence of any quality assessment test reports, the contemporaneous nature of goods cannot be ascertained. NIDB data and the documents relied upon by the Department are not made available to the Tribunal and the same is not seen part of the Order-in-Original. Therefore, there is no clarity and specificity on the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. In the present case, Department has rejected transaction value under Rule 12 (1) and re-determined under Rule 5 of the Customs (Determination of Value of Imported Goods) 2007, finding that there are contemporaneous imports through the ports at Chennai and Nhava Sheva on higher transaction value. Rules are very clear to the extent that, in order to invoke Rule 5, evidences of similar goods at the same commercial level and in substantially the same quantities, as the goods being valued are required and in the absence of the later, conditions contemplated under Sub Rule (1) ( c) of Rule 4 has to be followed. In so far as the present case is concerned no evidences are available on records to prove that the relied upon contemporaneous imports through Chennai and Nhava Sheva were similar goods at the same commercial level and in substantially the same quantities - In the absence of any evidence, the Order in Original as well as Order in Appeal failed to meet the necessities mandated under Rule 5 of the Customs Valuation Rules 2007. In view of the non-availability of evidence of identical or similar goods of same quantity and at same commercial level, the suspicion casted by the Original Authority, leading to the rejection of transaction value is also incorrect. Therefore rejection of transaction value, even at the first place, is misplaced. In the instant case, Revenue has not come with any evidence, either in the nature of any reports or documents to meet the standards prescribed under Rule 5 - the identical nature of the goods, compared in this case, are not proved in the manner established under law and therefore applicability of this rule and sub rule mutatis mutandis to Rule 5 also fails. Appeal allowed. Corporate Laws 2022 (7) TMI 1125 Seeking grant of Bail - acts of misappropriation of huge sums of money by Bhushan Steel Ltd. and Bhushan Energy Ltd. - case of applicant is that the main accused Nitin Johri and Neeraj Singhal have been granted bail, therefore, the applicant also needs to be enlarged on bail - HELD THAT:- As regards the legal embargo of Section 212(6), Sub-section-(i) has duly been complied with, as the Public Prosecutor (Ld. CGSC) has been given a chance to oppose the bail application. The Applicant is not guilty of the offence of which he is charged with, and therefore, it is opined, that he is not likely to commit any further offence while on bail. Hence, sub-section (ii) of Section 212(6) is also complied with. The Applicant is enlarged on bail on the following terms and conditions: i. The applicant shall furnish a personal bond with two local sureties in the sum of Rs. 25,000/- each, to the satisfaction of the Trial Court; ii. He shall appear before the Court as and when directed; iii. In case he changes his address, he will inform the IO concerned and this Court also; Application disposed off. Insolvency & Bankruptcy 2022 (7) TMI 1124 Validity of order whereby application for initiation of CIRP was accepted - subsequent withdrawal of application - appellant submits that when both the Operational Creditor and Corporate Debtor has entered into Settlement and entire operational debt of Rs. 28,07,764/- was paid on 04th June, 2022, Form FA was submitted to the IRP on 08th June, 2022 and payment of entire fee and expenses of the IRP of Rs. 11,89,657/- having been paid on 10th June, 2022 through Demand Draft dated 10th June, 2022, IRP deliberately delayed in filing of the withdrawal Application to defeat the Settlement. HELD THAT:- It is satisfying that the fact that between the period 01.11.2021 to 31.12.2021 payment of Rs. 40 Lakhs have been made by the Corporate Debtor to the Operational Creditor and Operational Creditor is continuing with the business relation, ought to have been taken into consideration by the Adjudicating Authority which fact clearly indicated that the Corporate Debtor is not insolvent. In any view of the matter, the Adjudicating Authority ought to have referred to directions of the Hon ble Supreme Court which directions permitted continuance of the project to secure the interest of the home-buyers and to ensure that home-buyers should get the flats. The Adjudicating Authority ought to have adverted to the said factors before proceeding to admit the Section 9 Application for an amount of Rs. 28,07,764/- which was the Operational Debt. The Order passed by the Adjudicating Authority admitting the Section 9 Application cannot be sustained. Settlement between the Corporate Debtor and the Operational Creditor - HELD THAT:- The fact is not disputed that on 04th June, 2022, Operational Creditor and Corporate Debtor entered into Settlement and paid Operational Debt of Rs. 28,07,764/- through the Demand Draft to the Operational Creditor and Form FA was also handed over to the IRP on 08th June, 2022 by the Operational Creditor for filing an Application for withdrawal of Section 9 Application. On 08th June, 2022, IRP had informed his fee of Rs. 6 Lakhs and expenses of Rs. 5,89,657/- which was also paid through the Demand Draft dated 10th June, 2022. Suspended Directors of the Corporate Debtor having realized that IRP might delay in filing the Application, an Application under Rule 11 of NCLT Rules, 2016 was filed by the Suspended Directors of the Corporate Debtor which Application was also signed by the Corporate Debtor praying for withdrawal of the said Application. At the time of enactment of Insolvency and Bankruptcy Code, 2016, there was no provision akin to Section 12A it was only after the observations were made by the Hon ble Supreme Court of India in the matter of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ] that Insolvency Application can be permitted to be withdrawn, Section 12A was inserted in the Code. The object and purpose of the IBC is the resolution of the Corporate Debtor and in the facts of the present case when in a Real Estate Project, Operational Creditor had filed the Application for amount of Rs. 28,07,764/- which amount was paid, what was the interest of the IRP to proceed with the constitution of CoC and proceed with the CIRP has not been explained. IRP wanted to continue with the CIRP even after Corporate Debtor and Operational Creditor has settled and Application is filed for withdrawal of the CIRP. We do not find the conduct of the IRP in consonance with the scheme of the Code. Present is the case where Insolvency and Bankruptcy Board of India may look into the matter and examine the conduct of the IRP. This Appeal deserves to be allowed. 2022 (7) TMI 1123 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The defense raised by the Corporate Debtor is moonshine defense in response to the Demand Notice dated 04.07.2019 to shy away from the liability - this Bench is of the considered opinion that there is no dispute regarding the fact that Corporate Debtor owes money to the Financial Creditor - The Corporate Debtor while replying to the demand notice has not brought to light any pre-existing dispute as required under the Code. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - Moratorium declared. 2022 (7) TMI 1122 Fraudulent transactions - an amount of Rs.72.45 crores has been identified as fraudulent transactions under section 66 of the IBC, 2016 - HELD THAT:- It appears that the respondents have sold out the fixed assets without passing it through the books of account. The Respondents have not provided any books of account, list of debtors and their outstanding balances - the whole story has been concocted by the suspended directors of the Corporate Debtor and the same is unbelievable and the liquidator is right in moving this application and claiming the relief as prayed in the present case. There has been due and independent application of mind by resolution professionals besides the transaction audit report while filing this application and thus prayer of the Resolution Professional must be allowed - the Respondents No.1 and 2 are directed to jointly and/or severely pay a sum of Rs. 72.45 Crores on account of payments made to the related parties from the account of the Corporate Debtor - application disposed off. 2022 (7) TMI 1121 Validity of order of CIRP obtained - allegation of fraud on the part of Financial Creditor (FC) - it is submitted that order of admission was obtained on the basis of fraudulent and manufactured documents for a fictitious and imaginary transaction in collusion with unknown third parties claiming to represent the Corporate Debtor without any authority, who fraudulently admitted liability though there was none - HELD THAT:- It is very strange that the Financial Creditor and the Corporate Debtor had obtained orders of CIRP fraudulently and in complicity with each other by filing a collusive petition and later on settled the matter by payment of Rs.30 Lacs, which cheques although were given on behalf of the Corporate Debtor by some unknown person and are stated to have not been encashed by the Financial Creditor. Both the parties have given a somewhat shady picture which does not bring out a real truth in this matter. This matter needs to be further investigated. The entire transaction as narrated in the Section 7 application is plainly imaginary, concocted and fraudulent. The CD does not appear to have had any genuine liability towards the alleged FC and the entire documentation has evidently been prepared by the alleged FC in collusion with Videocon Group entities. The alleged documents disclosed in the Supplementary Affidavit of the alleged FC, far from helping its case, further demonstrate the fraudulent nature of the documents - the alleged FC is guilty of practicing and committing fraud on this Tribunal and therefore, as per Section 65 of the Code, penalty of Rs.50 lakh is imposed on the alleged FC and the CIRP stands vitiated and terminated due to the fraud committed. In any event, even apart from the aspect of fraud, the Section 7 petition was not maintainable due to the prohibition in Section 10A of the Code. Application disposed off. Service Tax 2022 (7) TMI 1120 Validity of Show Cause Notice (SCN) - service tax is leviable on royalty paid on mining operations or not - HELD THAT:- There are no need to entertain the Special Leave Petition under Article 136 of the Constitution of India. SLP dismissed. 2022 (7) TMI 1119 Rejection of declaration filed by petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - rejection has been made by passing a very cryptic order without spelling out the reason - opportunity of hearing also not provided - violation of principles of natural justice - HELD THAT:- Reliance placed in the MAGNUM MANAGEMENT AND SERVICES P. LTD. VERSUS UNION OF INDIA ORS. [ 2021 (3) TMI 136 - BOMBAY HIGH COURT] , where it was held that the petitioner ought to have been given a personal hearing before his declaration was rejected. The order is set aside with a direction to respondents to reconsider petitioner s declaration and pass order as it deemed fit but after offering an opportunity of a personal hearing to petitioner. The notice for personal hearing shall be given atleast 7 days in advance. The order shall be a reasoned order, if respondents are not willing to accept petitioner s explanation. Petition disposed off. 2022 (7) TMI 1118 Rejection of Form SVLDRS-1 - rejection of petitioner s declaration on the ground that as per final audit report dated 7 th November 2019 the amount of tax dues was not quantified before 30th June 2019 - HELD THAT:- To see whether the duty demand was quantified on or before 30th June 2019, let us examine the audit report which was released to petitioner on 9th October 2019. In the audit report the dates on which audit was undertaken is given as 29th March 2019 and 1st April 2019. Though the audit was completed on these two dates the Monitoring Committee held its meeting on 8th July 2019 and the Monitoring Committee issued Minutes of the Meeting on 16th July 2019. This date of 16th July 2019 is what has been relied upon in the impugned rejection letter. First of all, we are unable to accept that the date on which the audit committee decides to have its meeting and issue Minutes of the Meeting can ever be stated to be the date on which the amount was quantified. Generally, the same members of the audit committee may have to carry out audit of various other declarants and it would be impossible for them to prepare Minutes of the Meeting over night. This is one of the reason the circular dated 27th August 2019 has been issued where it says that during the enquiry or audit the liability is admitted by the person in the audit report . As could be seen from the four audit objections mentioned above, the declarant has admitted the duty liability under each head. Since the audit was conducted on 29th March 2019 and 1st April 2019, these would be the dates on which the amount of duty has been quantified. Therefore, the amount of duty has been quantified on or before 30th June 2019. Therefore, draft of the Minutes of the Managing Committee has been prepared by June 2019 itself and hence it can be safely concluded that though there was audit, amount of duty quantified also has been quantified before 30th June 2019. In our view, therefore, rejection of petitioner s declaration on the ground that final audit report is issued after 30th June 2019 is incorrect. Respondents are directed to reconsider the declaration filed by petitioner and issue necessary discharge certificate in Form SVLDRS in accordance with law - petition allowed. 2022 (7) TMI 1117 CENVAT Credit - Short payment of Service Tax - Transport of Goods by road - Business Auxiliary Services - Renting of immovable property services - rent received from their clients by way of reimbursement - extended period of limitation - penalty u/s 78 of FA - HELD THAT:- It is an admitted fact that the appellant have received the rent for the use of the said premises from their clients, by way of reimbursement, whose goods are stored and transported by the appellant. Further, the admitted fact is that the appellant have paid input tax on the rent for the use of the godown of M/s. Excellent Packaging, which is also a registered assessee. Further, the admitted fact is that the appellant have duly accounted for all the receipts in the books of accounts maintained in the ordinary course. The issue appears to be wholly interpretational in nature, as it appeared to the appellant that they have received lesser rent than the rent paid by them for the same godown and accordingly, they are not liable to pay service tax. CENVAT Credit - HELD THAT:- The denial of input cenvat credit for the rent paid by the appellant to M/s.Excellent Packaging is erroneous and against the provisions of law - the appellant is entitled to cenvat credit for the rent paid by them to M/s. Excellent Packaging for hiring of the godown as the same is input service for them. They have also received the rent from their clients by way of providing output service for the same premises, which is held to be taxable. Penalty under Section 78 of FA - HELD THAT:- The penalty under Section 78 is reduced to Rs.10,000/-. The matter to the Adjudicating Authority for the limited purpose of re-calculating the tax liability, after taking into consideration the input cenvat credit available to the appellant for the rent paid as well as any other input service received by them, in accordance with law - Appeal allowed by way of remand. 2022 (7) TMI 1116 Continuation of proceedings after death or adjudication as an insolvent of a party to the appeal or application - HELD THAT:- Till date there are no application being filed in the matter for continuation of the proceedings by the successor-ininterest. Sufficient time has been allowed for the successor-in-interest to file an application for continuation of proceedings in this case. In absence of any such application by the operation of Rule 22 of the CESTAT (Procedure) Rules, these appeals abate. CST, VAT & Sales Tax 2022 (7) TMI 1115 Service of notice beyond time limitation - whether the order in Annexure E is vitiated for any commission or omission by the Deputy Commissioner in making the order dated 30.09.2016 in Annexure E? - suo motu revision under Section 35 is properly exercised and decided by the Deputy Commissioner or not - HELD THAT:- The argument on service of notice and that the revision is beyond the period of limitation prima facie appears to be both unavailable to the dealer and untenable in view of the earlier round of litigation. The Deputy Commissioner was directed by the Supreme Court to give one more opportunity to the dealer and finalize the assessment. The Deputy Commissioner accorded opportunity, and from the order in Annexure E, it is equally evident that the dealer filed a reply. The reply is considered by the Deputy Commissioner, resulting in order in Annexure E. What is under challenge before the Tribunal or what is the consideration is the order in Annexure E. Whether the exercise of suo motu revision by the Deputy Commissioner is correct and whether the order made thereon is sustainable? - HELD THAT:- The Tribunal has given a finding that when fresh assessment proceedings are initiated, the appellant would get a reasonable opportunity of being heard. The appellant would be at liberty to file all objections before the assessing authority and establish the appellant's case that the penalty proceedings cannot be relied upon. In the above circumstances, we find no reason to interfere with the order of the Deputy Commissioner under Section 35 - The dealer did not demonstrate an infirmity in the above-said finding. Revision dismissed. Indian Laws 2022 (7) TMI 1114 Dishonor of Cheque - Funds Insufficient - discharge of legally enforceable debt or not - presumption in favour of the holder of the cheque - rebuttal of presumption - acquittal of the accused - HELD THAT:- In the present case, the complainant has been unable to establish his financial capacity to advance such a huge loan to the respondent/accused. In fact, he has categorically admitted that he did not possess any documents to establish the alleged transaction. This becomes even more glaring because the appellant is an educated person being an advocate. Further, the complainant has not been able to establish a close friendly relationship with the accused; he did not know the name of the wife of the accused, the details of his other family members or the residential address of the accused. It does not stand to reason that a person would advance a loan of Rs.15 lakhs to a virtually unknown person whose residential address is also not to his knowledge. Interestingly, he has not mentioned any specific date of the issuance of the friendly loan either in the examination-in-chief or in the body of the complaint. He has further been discrepant about when the cheque had been issued to him i.e. either at the time he had advanced the loan or 05 months thereafter, when he had sought the return of the said amount. A perusal of the cheque would also reveal that the signatures of the accused have been affixed with green ink while the particulars of the cheque have been filled with blank ink. This fact also remained unexplained by the accused. With respect to the involvement of Gurpartap Singh Wadal, it may be pertinent to mention here that the complainant himself had very close friendly relations with the said person, though he has tried to explain during his cross-examination that the relationship with the accused developed through the above-said Gurpartap Singh Wadala. Strangely, this fact too has not been mentioned in the complaint. The accused-respondent has been able to rebut the presumption of there being a legally enforceable debt - thus, the respondent accused has been able to rebut the presumption that the cheque was issued in the discharge of a legally enforceable debt and the view taken by the Trial Court while acquitting the accused is a reasonable view based on the evidence on the record and cannot be said to be perverse and as such is not required to be interfered with. The leave to appeal is hereby dismissed. 2022 (7) TMI 1113 Dishonor of Cheque - compounding of the case - acquittal of the accused - framing of charges - Section 147 of the Negotiable Instruments Act - HELD THAT:- Section 138 of the Negotiable Instruments Act empowers the Court to award compensation in favour of complainant, which may extend to twice to amount of cheque. The maximum compensation has already been awarded by the trial Court. Therefore, the respondent stands adequately compensated in the matter. So far as imprisonment is concerned, in case of compounding the accused/petitioner is to be acquitted and in view of provision of Section 147 of the Negotiable Instruments Act, present case is compounded and complaint arising out of dishonor of cheque, under Section 138 of the Negotiable Instruments Act, is treated to be withdrawn and judgments of conviction and sentence passed by the Courts below are quashed and set aside. Petitioner-accused is acquitted of the accusation framed against him. Learned counsel for the petitioner submits that considering the ratio of law laid down by the Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] as clarified by the Apex Court in MADHYA PRADESH STATE LEGAL SERVICES AUTHORITY VERSUS PRATEEK JAIN ANOTHER [ 2014 (10) TMI 528 - SUPREME COURT] , a lenient view be taken and the petitioner be exempted from payment of compounding fee. After depositing compounding fee, petitioner shall place a copy of receipt of deposit of compounding fee on record of this petition. In case of default in depositing compounding fee/cost with the H.P. State Legal Service Authority, Shimla within four weeks from today, the consequential action shall follow to recover the said amount as fine under Cr.P.C. - Petition stands disposed of. 2022 (7) TMI 1112 Dishonor of Cheque - Insufficient Balance - offences by companies - Vicaricious liability - offence against the petitioner in an individual capacity - Section 141 of Negotiable Instrument Act, 1881 - HELD THAT:- The provisions of Section 141 of Negotiable Instrument Act, 1881 are concerned with the offences by the company. It makes the other person vicariously liable for commission of an offence on the part of the company. The vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Negotiable Instrument Act stands satisfied. 'Company' means anybody corporate and includes a firm or other association of individuals. It is also clear as crystal that if a person who commits an offence under Section 138 of the Negotiable Instrument Act is a company, the company as well as other persons in charge of, are responsible to the company for the conduct of the business of the company at the time of commission of the offence shall be deemed to be guilty of the offence - In the case of ANEETA HADA VERSUS GODFATHER TRAVELS TOURS (P.) LTD. [ 2012 (5) TMI 83 - SUPREME COURT ], it has been held that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. In the present complaint, there are averments that the petitioner/accused gave an account payee cheque bearing cheque No.909210 of Account No.34170258215 for Rs.11 lacs to the complainant on 15/09/2019. In this case there are no averments in the complaint that the petitioner-accused signed the cheque in the capacity of the director or the person in charge of the affairs of the firm or that the transaction was with the firm. The complaint has been filed without any reference to the firm. The factum that the applicant-accused signed the cheque in the capacity of the director or the person in charge of the affairs of the firm or that the transaction was with the firm can be determined during the stage of trial otherwise also invoking the powers under the provisions of Section 319 of Cr.P.C. the Court can array the firm as an accused in the course of trial. It is well settled that while exercising Inherent jurisdiction u/s 482 or Revision jurisdiction u/s 379 of The Code of Criminal Procedure where complaint is sought to be quashed, it is not proper for the High Court to consider the defense of the accused or embark upon an inquiry in respect of merits of the accusation. The present petition is hereby dismissed. 2022 (7) TMI 1111 Dishonor of Cheque - rebuttal of fresh evidence to rebut the reasons given in the judgment by the trial court and for just adjudication of the appeal filed by the Petitioner - opportunity to rebut preponderance of presumption of a liability in a complaint filed under section 138 of the Negotiable Instruments Act, 1888 - HELD THAT:- The object of judicial administration is to secure ends of justice. The courts exist for rendering justice to the people. Chapter XXIX of the Code deals with Appeals . Section 391 of the Code empowers the Appellate Court to take further evidence or direct it to be taken. The relevant words incorporated in section 391(1) are if it thinks additional evidence to be necessary which implies necessary for deciding the appeal to secure ends of justice and there are no fetters on the power under Section 391 of the Code. The legislative intent in enacting Section 391 is to empower the appellate court to see that justice is done and if the appellate court finds that certain evidence is necessary in order to enable it to give a correct and proper findings, it would be justified in allowing further evidence under Section 391. But such power must be exercised only in suitable cases where the court is satisfied that directing additional evidence would serve the interests of justice. The Supreme Court again in Rambhau and another V State of Maharashtra, [ 2001 (4) TMI 937 - SUPREME COURT ] had noted the power of the Appellate Court under section 391 of the Code and observed that there is available a very wide discretion in the matter of obtaining additional evidence in terms of section 391 of the Code. However additional evidence cannot and ought not to be received in such a way so as to cause any prejudice to the accused. It is not a disguise for a retrial or to change the nature of the case against the accused. The petitioner wants to file contain documents to establish monetary transactions in regard to a chit fund between him and the respondent no 2. The trial court in final judgment did not believe the defence of the petitioner that cheque was given to the uncle of the respondent no 2 by giving detailed reasons. The appellate court in impugned judgment also observed that the documents are hand written notes and not signed by anyone and the appellant would not be able to prove handing over the cheque in question in the year 2004 to the respondent no 2 on the strength of these unsigned documents. The appellate court by giving appropriate reasoning rightly disallowed prayer of the petitioner to place these documents as additional evidence. The petitioner also did not put forward cogent reasons for placing documents pertaining to his catering business. The nature of business being carried by the appellant does not have any relevance in context of present dispute between the respondent no 2 and the petitioner. The appellate court rightly observed that surety bond sought to be proved would only show that the respondent no 2 was aware about catering business of the petitioner and ITR of the petitioner does not appear to be relevant. The documents sought to be produced on record as additional evidence are not necessary to pronounce judgment and there would not be failure of justice if these documents are not allowed as additional documents. If the application under section 391 of the Code is allowed it would result in retrial of the case. The petitioner initiated legal proceedings for filing additional evidence at much belated stage with intention to delay final disposal of appeal. The appellant has not filed these documents at the earliest point of time. The petitioner was aware of these documents and in possession of these documents when the respondent no 2 filed the complaint under section 138 of the Negotiable Instruments Act, 1888 - The application under section 391 of the Code is after thought and is filed to protract the appeal and fill up lacunae and for extraneous circumstances. The decision of the trial court would not be changed even if the these documents are received as additional evidence and taken into consideration as the trial considered the defence of the petitioner in detail and not accepted by giving detailed and cogent reasons. The appellate court rightly dismissed the application under section 391 of the Code by considering every legal and factual position and appropriately observed that application have been moved only to delay the disposal of the appeal. There is no legal or factual infirmity in the impugned order which cannot be interfered - Petition dismissed.
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