Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 12, 2024
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
GST
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Notice uploaded, though under wrong tab. Adequacy not decided. Avail appeal remedy within 30 days. Petition disposed.
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Petitioner sought Writ to unfreeze company accounts. Court ordered respondent to decide appeal after pre-deposit within 2 weeks.
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GST registration cancellation order & SCN set aside due to vague allegations violating natural justice. Cryptic notice can't be basis for cancellation.
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GST registration cancelled retrospectively without valid SCN, violating natural justice. Order lacked reasons & wrongly backdated.
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Authorities' portal redesign addressed issue of improper notice service under GST Act. Court set aside order, remanded for fresh adjudication.
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Tax demand set aside due to GSTR mismatch. 10% tax payable in 2 weeks, reply to show cause allowed.
Income Tax
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Unexplained cash credit addition deleted; authorities failed to analyze assessee's stand. AO's findings on cash deposit trend incorrect.
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Reassessment notice invalid, investment not income. Capital transaction, no income earned. Discrepancy not mentioned, violates natural justice.
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Bogus transactions are tax evasion camouflage. Authorities must inquire, procure info from other depts to tax real income & prevent evasion.
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Company dissolved after NCLT-approved Resolution Plan can't be reassessed. M Tech Developers, Sree Metaliks & Rishi Ganga view prevails.
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Faceless assessment notices by Joint AO invalid. HC strikes down u/s 148 notices issued by JAO citing lack of jurisdiction.
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Petitioner firm failed to prove Rs 1.01 cr investment/expense belonged to partners. Rental income used for maintenance.
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Roaming charges paid by telcos are "fees for technical services" u/s 194J, attracting TDS due to integral human intervention & expertise for smooth roaming.
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Sec 44AB inapplicable for tax-exempt income. No penalty u/s 271B for non-audit if income exempt u/s 10(34).
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Transfer of funds by assessee to own foreign account doesn't attract TDS u/s 195 as remittance wasn't to another person.
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CIT(A) erred in allowing appeal without considering facts. Section 50B applicable for slump sale capital gains computation.
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Interest income earned by govt co-op society in regular operations qualifies as cottage industry revenue eligible for 80P(2)(a)(ii) deduction.
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Voluntary income surrender /= concealment. AO failed to prove concealment. Not deemed concealment under Exp. 5A to 271(1)(c).
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Assessee proved identity & genuineness of share applicants; creditworthiness verification in shareholders' hands if doubted.
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Disallowance u/s 14A: AO to accept assessee's suo moto disallowance. Only non-exempt income yielding investments considered. Deduction u/s 80G allowed except for specific Kosh, Fund & CSR contributions.
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Unexplained share capital & premium received = assessee's own unaccounted money flowing back. Creditworthiness proved. No sec 68 addition.
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Filing Form 10-IE for new tax regime & Form 67 for FTC before due date is directory. Consider if filed before assessment.
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AO's findings on unspent funds u/s 11 set aside. Capital fund use for assets, WIP & current assets excluded from Sec 11(2)/(5). Remanded for fresh adjudication.
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Land valuation can't solely rely on DVO report. Land-locked properties' market value considered by independent valuer.
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Incriminating docs like satakhat & digital data insufficient for additions u/ss 69A & 69B. Lack of payment proof, unexamined sellers, no probe.
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Ex-parte order set aside. Assessee denied fair hearing. Natural justice calls for fresh opportunity to present case with evidence.
IBC
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Delay in appeal filing denied; prerequisites unfulfilled. Negligence, not jurisdictional defect. Visa Steel case distinguished. 209 days delay exceeds 15 days limit. Appeal dismissed.
PMLA
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Proceeds of crime include property of value equivalent to crime proceeds, even if not directly obtained.
Service Tax
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Sizing stones/boulders=manufacturing, not mining service. Equipment control transferred to recipient. No suppression. Appeals allowed.
Central Excise
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Clandestine removal claims rejected due to inadmissible witness statements. Insufficient evidence from documents. Discrepancies noted. Penalties on partners impermissible. Demand set aside.
VAT
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Assessment can't be reopened on basis of later SC judgment if earlier assessment was per law then. Impermissible colourable exercise.
TMI Short Notes
Articles
Notifications
News
Case Laws:
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GST
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2024 (8) TMI 583
Restoration of registration - Defective prayer - it should be mentioned revocation of cancellation of registration instead of revocation of registration in the prayer - HELD THAT:- The application dated 22.05.2024 filed by the petitioner is not in consonance with the requirements enumerated under Rule 23. Nevertheless, there being no dispute that the order dated 12.03.2024 has attained finality, it has to be complied with by the respondent no.2 within 30 days from the date of application, as per Rule 23(2)(a). The petitioner is permitted to file a proper application before the respondent no.2 under Form GST Regulation 21 as provided under Rule 23(1) of the Rules within 10 days from today annexing therewith relevant documents and true attested copy of this order - Petition disposed off.
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2024 (8) TMI 582
Violation of principles of natural justice - service of notice - petitioner had no notice of the proceeding, as all notices were uploaded in the drop down menu of the dashboard under the tab additional notices of the portal, though ordinarily the same are required to be uploaded under the menu view notices and orders - challenge to order u/s 73 of the WBGST/CGST Act, 2017 - HELD THAT:- Although the petitioner complains of violation of principles of natural justice, it is found that the order had been passed on 11th December 2023. The order appears to have been uploaded in the portal, though under the additional notices drop down menu. Although, the petitioner claims that the petitioner had no notice or knowledge with regard to the aforesaid order and the petitioner had only been able to ascertain the same in the last week of May 2024 when the respondent no. 3 had brought the factum of passing of the aforesaid order to the notice of the petitioner by a telephonic call, since, the notice/order had admittedly been uploaded on the portal, without going into the controversy at this stage, whether uploading of notice/order under the additional notices drop down menu constitute adequate service in terms of Section 169(1)(d) of the said Act, by reasons of an alternate remedy in the form of an appeal being available, the petitioner should approach the appellate authority. The petitioner is permitted to prefer the appeal before the appellate authority within 30 days - petition disposed off..
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2024 (8) TMI 581
Violation of principles of natural justice - non-reasoned order - rejection of ITC claim - HELD THAT:- In the notice issued to the petitioner, neither the date for personal hearing was fixed nor any reason has been assigned for initiating the proceedings under Section 73 of the SGST Act, and the impugned order has been passed by the assessing authority i.e. respondent no.3 without assigning any reason. Further, in the appeal, new facts were brought to which the petitioner was never put to notice, learned Standing Counsel could not dispute the said fact that for the first time, the new facts have been mentioned in the impugned order to which the petitioner has not been given any opportunity to rebut the same. The impugned orders cannot sustain in the eyes of law and the same are hereby quashed - matter is remanded to the respondent no.3 to pass a fresh reasoned and speaking order - petition allowed by way of remand.
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2024 (8) TMI 580
Seeking to defreeze the petitioner's company savings accounts - Seeking issuance of a Writ of Mandamus to direct the respondent to withdraw the FORMS GST DRC-13 16 dated 15.11.2023, 22.11.2023 24.11.2023 issued against the petitioner - HELD THAT:- Taking into consideration the fact that the petitioner's company has already made a pre-deposit of Rs. 4,43,078/- and thereafter filed a statutory appeal before the Appellate Authority, this Court is inclined to issue a direction to the respondent to dispose of the petitioner s representation dated 07.02.2024 and pass appropriate orders on merits and in accordance with law within a period of two weeks from the date of receipt of a copy of this order. This Writ Petition is disposed of.
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2024 (8) TMI 579
Challenge to SCN - Cancellation of GST registration of petitioner - proccedings taken place without complying with the request made by Petitioner - no opportunity of personal hearing provided - HELD THAT:- It is quite clear that Petitioner was not even given a copy of the said file to effectively reply to the show cause notice or even make proper representations before Respondent No. 2. It is quite obvious that Petitioner was severely handicapped and despite that Respondent Nos.2 and 3 proceeded to pass the impugned orders. Thus, no purpose will be served for granting time to Respondents to file any Affidavit-in-reply and in any case, Respondents had enough time to file reply. The impugned order set aside - petition disposed off.
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2024 (8) TMI 578
Application for deletion of the name of the second respondent appearing in the CTS records - HELD THAT:- Upon receipt of the communication from Assistant Commissioner of Commercial Taxes (Enforecement-1) Belagavi the ADLR, City Survey Belagavi is directed to delete the name of the second respondent in the CTS records of CTS No.1495 - aplication allowed. Violation of principles of natural justice - petitioner was not heard as contemplated under Section 75 (4) of the GST Act - HELD THAT:- From a plain reading of Section 75 (4), it is noticeably clear that even in a case where a person is chargeable with tax or penalty and has not requested a personal hearing, the Department is bound to give a personal hearing when an adverse decision is contemplated against such a person. In the present case, such an exercise has not been made by the Department concerned. In the circumstances, the second respondent was bound to give a personal hearing to the petitioner before passing an order on 29.06.2019. This would be irrespective of the fact as to whether the petitioner has asked for such a personal hearing or not. The order has been passed without giving any personal hearing to the petitioner and the same violates principles of natural justice and ex-facie contrary to the provisions of Section 75 (4) of the CGST Act. The orders at Annexures-C and F are liable to be quashed and accordingly, they are quashed. Petition allowed.
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2024 (8) TMI 577
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax proposal on merits - mismatch between the petitioner's annual return and the reconciliation statement - HELD THAT:- The petitioner has placed on record his reconciliation statement. Prima facie , this statement indicates that the supplies were declared through amendments for the value of Rs. 6,78,000/- and sums of Rs. 61,020/- each were paid with regard thereto in respect of CGST and SGST. This amount tallies with the amounts specified in the impugned order in respect of discrepancy no.12. It also appears prima facie that the same issue was raised as discrepancy no.2. The petitioner has placed on record an extract from the electronic credit ledger, which indicates prima facie that credit was reversed to the extent of Rs. 8,42,451/- on 17.02.2023. The impugned order dated 30.12.2023 is set aside on condition that the petitioner remits 5% of the disputed tax demand in respect of discrepancy nos.2 and 12 collectively, 5% of the disputed tax demand in respect of discrepancy nos.6 9 and 10% of the disputed tax demand in respect of discrepancy no.4 as agreed to. Such remittance shall be made within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period. Petition disposed off.
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2024 (8) TMI 576
Challenge to SCN whereby the petitioner was called upon to show cause as to why its Goods and Services Tax (GST) registration should not be cancelled - non-constitution of Tribunal - SCN does not contain any details of the allegations against the petitioner - scope of SCN crossed by impugned order - violation of principles of natural justice - HELD THAT:- The impugned SCN does not contain any details of the allegations against the petitioner; it merely refers to Rule 21 (g) (presumably of the CGST Rules) and states that the person violates the provisions of Rule 86B. Rule 21 (g) of the CGST Rules pertains to the issuance of invoices without supply of goods. Thus, it appears that the petitioner s GST registration was proposed to be cancelled on an allegation that it had issued invoices without supply of goods. However, the impugned SCN neither provides the details of invoices that are allegedly not covered by supply of goods, nor provides any clue as to transaction alleged to be in violation of the aforesaid rule. It is well settled that a show cause notice must clearly state the reasons on which the adverse action is proposed in order to enable the noticee to respond to the allegations. It is also material to note that there was no suggestion in the impugned SCN to cancel the petitioner s GST registration with retrospective effect. There is no allegation in the impugned SCN that the petitioner was found non-functioning - the impugned order has travelled beyond the scope of the impugned SCN and thus, is passed in violation of settled principles of natural justice. There are merit in the contention that the petitioner s GST registration cannot be cancelled on cryptic allegations and on the basis of the impugned SCN. The impugned SCN did not state any specific allegation, which could be explained by the taxpayer. The impugned cancellation order and the impugned SCN are set aside. The respondent is directed to restore the petitioner s GST registration forthwith - Petition allowed.
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2024 (8) TMI 575
Retrospective cancellation of the GST registration of the petitioner s deceased father - non-filing of returns for a continuous period of six months - SCN did not specifically set out any grounds for cancellation of the GST registration with retrospective effect or suggested that any such action would be taken against the taxpayer - violation of principles of natural justice - HELD THAT:- In terms of Section 29 (2) of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act), the proper officer is empowered to cancel the taxpayer s GST registration including with retrospective effect, as he deems fit on the grounds as set out in the said sub-section. However, the exercise of cancelling the GST registration with retrospective effect is required to be informed by reason. Such action cannot be taken whimsically or arbitrarily. The proper officer must have good reasons to cancel the GST registration with retrospective effect. In the present case, the only ground on which the taxpayer s GST registration was sought to be cancelled was failure to file the returns for a continuous period of six months. Plainly, absent anything more, the cancellation of the taxpayer s GST registration for the period during which the GST returns were filed, is not warranted. It is considered apposite to direct that the impugned order would be operative from the date on which the petitioner s father expired, that is from 07.08.2020, and not with effect from 05.04.2018. Petition disposed off.
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2024 (8) TMI 574
Cancellation of GST registration ab initio with retrospective effect from 01.07.2017 - SCN does not specify any reason for cancelling the petitioner s GST registration with retrospective effect - violation of princples of natural justice - HELD THAT:- The SCN does not mention any specific provision of the GST Act or the Rules, which were allegedly violated by the petitioner. More importantly, the SCN does not propose the cancellation of the petitioner s GST registration with retrospective effect. Although, the petitioner was not aware of the SCN, however, even if it is accepted that the petitioner had duly received the same, no action could be taken pursuant to the said SCN. This is because the SCN is bereft of any reasons and fails to meet the standards as are required of a show cause notice - any show cause notice must clearly set out the reasons for the proposed adverse action in order to enable the noticee to furnish a meaningful response. As is apparent from the plain reading of the SCN, the same fails to meet this standard. The order dated 16.06.2020, cancelling the GST registration of the petitioner is also bereft of any reasons. It merely mentions that it is pursuant to the SCN. It also mentions that it is in reference to the reply dated 07.06.2020. However, concededly, no such reply was submitted by the petitioner. The order cancelling the petitioner s GST registration is based on a template that automatically picks up a reference to a reply even in the cases where none has been furnished. It is considered apposite to direct the order dated 16.06.2020 cancelling the GST registration of the petitioner will take effect from the date of the SCN, that is, 29.05.2020 and not ab initio - petition disposed off.
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2024 (8) TMI 573
Cancellation of petitioner s Goods and Service Tax (GST) registration - petitioner ceased to carry on its business - HELD THAT:- Since the petitioner claims that it has ceased to carry on its business, its application for cancellation of the GST registration is required to be processed. The same cannot be withheld. Insofar as the Proper Officer s query regarding address for future correspondence including Rent Agreement, ownership proof, KYC documents etc. is concerned, the petitioner is required to provide the same to the Proper Officer. If the Proper Officer seeks to initiate proceedings for recovery of tax and other dues, it is necessary that it has the correct address for service of notice and proceedings. However, insofar as further scrutiny of returns and proceedings for assessment of tax is concerned, no such proceedings have been initiated as yet. Admittedly, the cancellation of GST registration does not preclude the Adjudicating Authority from initiating the appropriate proceedings for recovery of dues as well as for non-compliance of any statutory provisions. Thus, the petitioner s request for cancellation of its registration cannot be held up on that ground. The petitioner s application for cancellation of its GST registration not be held up on account of assessment of tax, interest or penalty that may be recoverable from the petitioner. The petitioner is also directed to provide the necessary documents for future correspondence within a period of one week from date. Petition disposed off.
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2024 (8) TMI 572
Violation of principles of natural justice - impugned SCN was uploaded on the portal in the category of View Additional Notices Orders , which the petitioner claims was not easily accessible - HELD THAT:- The issue involved in the present petition is covered by earlier decisions of this Court, including in M/s ACE Cardiopathy Solutions Private Ltd. v. Union of India Ors. [ 2024 (5) TMI 974 - DELHI HIGH COURT] - In the said decision, this Court had rejected the contention that uploading of the notices under the heading Additional Notices would be sufficient service in terms of Section 169 of the Central Goods Services Tax Act, 2017. The GST Authorities have addressed the issue and have re-designed the portal to ensure that View Notices tab and View Additional Notices tab are placed adjacent to one another and under one heading - Admittedly, the impugned SCN was issued before the portal was re-designed. The present petition is allowed and the impugned order is set aside - the matter is remanded to the concerned authority to adjudicate the impugned SCN afresh.
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2024 (8) TMI 571
Application to allow him to travel to South Africa for business purposes was disallowed - Denial on the grounds inter alia that the same is unjust, arbitrary and untenable in law - Whether the petitioner should be allowed to travel to South Africa considering the plea of business commitment? - HELD THAT:- In the case at hand, the petitioner is a businessman and has had previous travels to South Africa since 1998 till recently in 2022 and the same is supported by the visa documents submitted by him before the learned court below. No doubt, the prosecution against the petitioner relates to tax fraud but is a native of Gurgaon, Haryana and runs business. Having regard to the nature of the offences alleged, the delay in commencement of trial with the charge framed, attendance of the petitioner all along duly represented by a counsel without default with no any instance cited and the fact that the petitioner has a past travel history and unlikely to abscond having his roots in India, the Court reaches at a conclusion that the learned court below was not right in denying the permission for him to travel abroad which could have been ensured imposing suitable conditions. The impugned order under Annexure-7 passed in 2 (c) C.C. No.61 of 2023 by the learned S.D.J.M., Bhubaneswar is hereby set aside with a direction that the petitioner shall be allowed to receive the original Passport and retain it for such period depending on his itinerary/travel to visit South Africa - revision petition allowed.
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2024 (8) TMI 518
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - mismatch between the petitioner's turnover as per the GSTR 3B return in comparison to the GSTR 1 statement - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal pertains to a mismatch between the petitioner's turnover as per the GSTR 3B return in comparison to the GSTR 1 statement. By taking into account the assertion that the petitioner could not participate in proceedings on account of being unaware of the same, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 23.08.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - petition disposed off.
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Income Tax
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2024 (8) TMI 570
Validity of rejection of the declarations filed by petitioner under the DTVSV Act - prosecution u/s. 276C(2) of the Income Tax Act - whether the provisions of DTVSV Act shall apply to petitioner? - HC [ 2023 (9) TMI 894 - BOMBAY HIGH COURT] decided as u/s 9(a)(ii) of DTVSV Act, the only exclusion visualised is a pendency of prosecution in respect of tax arrear relatable to an assessment year as on the date of filing the declaration and not pendency of a prosecution in respect of an assessment year on any issue. In the petition before us also prosecution has been instituted against petitioner u/s 276C(2) - Therefore, in our view, Macrotech [ 2021 (3) TMI 1089 - BOMBAY HIGH COURT ] will squarely apply to the facts and circumstances of this case. The declaration of petitioner filed on 31st January 2021 for Assessment Years 2010-2011 and 2011-2012 would have to be decided by respondent no. 1 in conformity with the provisions of DTVSV Act. HELD THAT:- We are not inclined to interfere with the impugned judgment, as the criminal prosecution relates to a different subject matters. Hence, the present special leave petition is dismissed. We, however, clarify that the impugned judgment and the dismissal of the present special leave petition will not, in any way, affect the criminal prosecution.
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2024 (8) TMI 569
Maintainability of appeal before the High Courts - low tax effect - since none of the exceptions provided in Clause 3.1 of the aforesaid circular are applicable, this appeal u/s 260A cannot be filed by the Revenue - order passed by the Tribunal quashing an order u/s 263 of the Act was not appealable - HELD THAT:- Upon a careful perusal of the relevant clauses of the aforesaid circular, it appears that where the tax liability is not quantifiable or is not involved, in such cases the order passed u/s 263 of the Act would fall under the exception provided in Clause 3.1(f). In the present case, such is not the case and the entire issue is with regard to the tax, and quantification of the same has also been made by the AO. As the quantum involved is below Rs. 1 crore, in our view, the appeal is covered by the said circular and is not maintainable before this Court. The appeal filed by the revenue is not maintainable and the same is, accordingly, dismissed.
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2024 (8) TMI 568
Applicability of limitation as prescribed u/s 153 to the proceedings u/s 144C - whether the provisions of Section 153 prescribing time limit for completion of assessment, re-assessment and re-computation apply to the proceedings u/s 144C which provide for cases where a reference may be made to the dispute resolution panel? - HELD THAT:- A decision is rendered by a co-ordinate Bench of this Court in Shelf Drilling Ron Tappmeyer Limited [ 2023 (8) TMI 460 - BOMBAY HIGH COURT] wherein a view is taken that the limitation as prescribed where Section 153 applies to the proceedings u/s 144C. Also there is one more decision of M/s. Roca Bathroom Products Private Limited [ 2022 (6) TMI 848 - MADRAS HIGH COURT] taking a similar view. Both these decisions were referred to and relied on behalf of the parties. There was quite a debate at the bar on such decision and what one is permitted to do with it. We were informed that the decision of this Court in Shelf Drilling [ 2023 (8) TMI 460 - BOMBAY HIGH COURT] is assailed by the Revenue before the Supreme Court. As informed that the proceedings not only in Shelf Drilling (supra), but in several other cases arising from orders passed by the different High Courts on the same issue, are pending consideration before the Supreme Court. The orders passed by the Supreme Court issuing notice in such proceedings, are also placed on record. It is on such complexion, the proceedings were argued before us. Having heard learned Counsel for the parties, we reserve appropriate orders to be passed on the present proceedings.
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2024 (8) TMI 567
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 566
Unexplained cash credit - addition u/s 68 and tax u/s 115BBE - unusual sales - HELD THAT:- None of the Officer was able to analysis the specific stand of the assessee and unnecessarily assumed availability of unexplained cash credit with the assessee. AO has observed that cash deposit trend of the assessee during demonetization period and in earlier few months is abnormal. To our mind, this finding is absolutely incorrect. The assessee has demonstrated in the tabulated details that cash deposit from 09.11.2014 to 30.12.2014 in Axis Bank Account was Rs. 53,36,100/-. As the total turnover of all these three years is being analyzed from 1st April to 30th December, then there is hardly any abnormality. In F.Y. 2014-15, it was 2.64 crores. In F.Y. 2015-16, it was roughly Rs. 4 crores and F.Y. 2016- 17, it was Rs. 4.61 crores. There is a gradual increase in the turnover. There is no all of a sudden increase in any year. Similarly, there is no abnormal growth in the turnover from 1st January to 31st March in all these three years. AO has not visualized the circumstances during demonetization, where every amount available, is required to be routed through the Bank accounts. He has made analysis of average cash balance from January, 2016 to June, 2016 and December, 2016 to March, 2017. AO has tried to compare un-comparable without visualizing the effects of the true situation. The other expectation of the ld. Assessing Officer was that the assessee should have maintained details of old and specified currency, which were deposited in the Bank, but no such guidelines were issued to the assessee by the Income Tax Department. Addition restricted by CIT(A) on different analogy - CIT(Appeals) though reduced the quantum addition, but adopted a very different analogy. He calculated the availability of cash in the hands of the assessee in the same ratio in which turnover of the business increased in different years starting from F.Y. 2014-15. The ld. CIT(Appeals) ought to have analyzed the purchases also and whether such a profit has resulted to the assessee, which can give rise to unexplained cash to the assessee. In such a situation, why the books of account should have not been rejected. It is to be find out by the Revenue that the profit ratio from sales and purchases could not be swindled of that magnitude but they have not examined in all that aspect. Therefore, we are of the view that this addition is not sustainable. We allow the appeal of the assessee and delete the addition. Decided in favour of assessee.
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2024 (8) TMI 565
Validity of reassessment proceedings - test of information within the meaning of Section 148/148A - addition of unexplained investment - Sufficiency of reasons to believe - funds remitted in India were used for subscription in securities - HELD THAT:- A perusal of the record reveals that proceedings initiated u/s 148-A pertain to certain investments made in shares by the petitioner, which is an FPI, having received remittances in India for the purpose of subscribing to securities. The subscription of share capital in India would undoubtedly be a Capital Account Transaction . Since the funds remitted in India were used for subscription in securities, no income was earned in AY 2019-20 and therefore petitioner was under no requirement to file return of income in India. The fundamental premise of the Revenue that the investment made by the petitioner in shares amounted to income which has escaped assessment was flawed and therefore we are unable to sustain the impugned notices. Discrepancy noticed between the share prices as provided by the petitioner from the exchange rate (NSE) - Undoubtedly, this aspect of the matter was never taken up with the petitioner in the notice issued u/s 148A (b). The noticee or the assessee should not be prejudiced or be taken by surprise. The uncontroverted fact is that in the notice under Section 148A (b) of the Act, there is no mention of any discrepancy in the share price. foundational material alone would be relevant for the purposes of evaluating whether reassessment powers were justifiably invoked. Revenue cannot take a fresh ground while passing order under Section 148A (d) of the Act. We are clearly of the view that notice and the reasons given, therefore do not conform to the principles of natural justice as the assessee did not get a proper and adequate opportunity to reply to the allegations. For the above reasons, we hold that the reasons recorded for issuance of notice u/s 148 cannot be sustained. Accordingly, the impugned notices issued u/s 148A (b), order passed under Section 148A (d) and consequential notice under Section 148 issued by the respondent for the Assessment Year 2019-20 are quashed. Decided in favour of assessee.
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2024 (8) TMI 564
Estimation of income - addition u/s. 69C - addition of assessee had failed to prove the genuineness of purchase transaction in entirety - addition restricted @ 12.5% - HELD THAT:- The bogus transactions are in the nature of a camouflage and/or a dishonest attempt on the part of the assessee to avoid tax, resulting in addition to the assessee s income. It is for such reason, the approach of the AO is required to be well considered approach and in making such additions, he is expected to adhere to the lawful norms and well settled principles. After such scrutiny, the transactions are found to be bogus as the law would understand, in that event, they are required to be discarded by making an appropriate permissible addition. The orders passed by the CIT (A) in the present case are partly interfered in favour of the revenue as discussed by us hereinabove. In doing so the tribunal has observed that the CIT (A) was not correct in reducing the gross profit already returned by the assessee at 4.74% from 12%, as the gross profit returned by the assessee in relation to the sales made by the assessee, did not have bearing on the purchases of the assessee, qua the bills procured by the assessee, by making savings in VAT etc. It is on such premise the revenue s appeal has been allowed, by making a direction to the AO to assess the income from such transaction at 12.5% in each of the assessment years, on the purchases so made by the assessee. The assessee has happily accepted such finding as this has benefited the assessee, looked from any angle. In a given case if the Income Tax Authorities are of the view that there are questionable and / or bogus purchases, in that event, it is the solemn obligation and duty of the Income Tax Authorities and more particularly of the AO to undertake all necessary enquiry including to procure all the information on such transactions from the other departments / authorities so as to ascertain the correct facts and bring such transactions to tax. If such approach is not adopted, it may also lead to assessee getting away with a bonanza of tax evasion and the real income would remain to be taxed on account of a defective approach being followed by the department.
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2024 (8) TMI 563
Validity of reassessment action initiated against company dissolved - Resolution Plan having been approved by the NCLT - HELD THAT:- As it is not the case of the respondents that the NCLT has been moved for the purposes of recall of its order according approval to the Resolution Plan. It is also not their case that the Resolution Plan insofar as it rings in a closure in respect of any claim or demand that may be said to exist in respect of the corporate debtor is liable to be set aside. In fact, the respondents do not appear to have questioned the validity of the Resolution Plan at any stage. We thus find ourselves unable to appreciate how the decision in Rainbow Papers could come to their aid. Viewed in the aforesaid light, it is manifest that it is the view taken by this Court in M Tech Developers [ 2024 (4) TMI 712 - DELHI HIGH COURT ], Sree Metaliks [ 2023 (2) TMI 682 - DELHI HIGH COURT ] and Rishi Ganga Power Corporation [ 2023 (11) TMI 201 - DELHI HIGH COURT ] which would prevail and lead us to the inevitable conclusion that the reassessment action would not sustain. Assessee appeal allowed.
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2024 (8) TMI 562
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 561
Reopening of assessment u/s 147 - information from the Directorate of Revenue Intelligence ( DRI ) regarding evasion of custom duty by undervaluing the Paper Cup Machines imported from China - HELD THAT:- Information received from DRI. The additions were made solely relying upon the order passed by the A.O. determining the value of the goods imported. It is an undisputed fact that the order passed by the A.O. was quashed by the CESTAT. The contention of appellant that the appellate authorities should have decided the matter independently on merits, is noted to be rejected, as the additions u/s 147 were made on the basis of value of imports determined by the AO. The Income Tax Department had not done any investigation or held an inquiry. There was no other material except the value determined by the AO, consequently, setting aside the order of the AO had ramification on the proceedings initiated under the Act. Tribunal considering the pendency of customs appeal before this Court, granted liberty to the appellant for passing fresh order, in case of acceptance of custom appeal. The relevant part of the order of the Tribunal as pertinent to mention that in these appeals the liberty is granted to the Revenue in case they succeed in the appeals filed by them before Hon ble Rajasthan High Court against the order of CESTAT and then in that eventuality afresh order would be passed by the AO considering the Hon ble High Court judgment after providing opportunity of hearing to the assessee. No substantial question of law.
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2024 (8) TMI 560
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 559
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid as and there is no dispute that the JAO had no jurisdiction to issue the impugned notice. We, accordingly, allow this petition in favour of assessee.
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2024 (8) TMI 558
Exemption u/s 11 - activities of the assessee are charitable or not? - HELD THAT:- In view of the law laid down in Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT ] the substantial question No.1 is answered against the Department as held Authorities, Corporation, or bodies established by statute. The amounts or any money whatsoever charged by a statutory corporation, board or any other body set up by the State Government or Central Governments, for achieving what are essentially public functions/services (such as housing, industrial development, supply of water, sewage management, supply of food grain, development and town planning, etc.) may resemble trade, commercial, or business activities. However, since their objects are essential for advancement of public purposes/functions (and/are accordingly restrained by way of statutory provisions), such receipts are prima-facie to be excluded from the mischief of business or commercial receipts. As in every case the Assessing Authorities would have to apply their mind and scrutinize the record, to determine if, and to what extent, the consideration or amounts charged are significantly higher than the cost and the nominal mark-up. If such is the case, then the receipts would indicate that the activities are in fact in the nature of trade, commerce or business and as a result, would have to comply with the quantified limit (as amended from time to time) in the proviso to Section 2(15) of the IT Act.
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2024 (8) TMI 557
Validity of order passed u/s 264 - Unexplained investment in the purchase of property - as argued notice as is contemplated under Section 143(2) was not issued in time - HELD THAT:- Onus was on the petitioner partnership firm to show that the amount which was sought to be treated as unexplained investment and unexplained expenditure of the petitioner partnership firm, was that of the other partners and that of the individuals namely, 5 brothers. That apart, there are no records to show that any of the partners of the petitioner partnership firm was having substantial income to lend a sum of Rs. 1,01,00,000/- to the Muthukrishnan who has purportedly executed a Mortgage Deed dated 31.08.2005. The fact remains that the petitioner partnership firm has income from the rental property. The profit and loss account for the year ended on 31.03.2007 filed of the typed set of papers indicates that the petitioner partnership firm had rental income and the amounts were used for maintenance of buildings of the petitioner partnership firm. Therefore, no infirmity in the impugned order rejecting the petition filed by the petitioner under Section 264 before the respondent in the remand proceedings. Objections, that has been raised for the first time, as far as the non-issuance of the Notice u/s 143(2) of the Income Tax Act, 1961 within the period of 6 months - It cannot be countenanced, as this was not the ground taken by the petitioner before the respondent before the impugned order was passed. Section 292BB of the Income Tax Act, 1961 makes it clear that if an assessee had participated in the proceedings, the notice issued would be deemed to be valid even if there were infractions by way of legal fiction. This is what the Hon'ble Supreme Court has clarified in its decision in Commissioner of Income Tax Vs. Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT ] Only if no notice was issued, the defects cannot be cured. That apart, Explanatory Note to the provisions of the Finance Act, 2008, content of which has been extracted above also makes it clear that legal fiction shall not apply where the assessee had not raised such objection before the completion of the assessment or reassessment. Therefore, this Writ Petition is liable to be dismissed and is accordingly dismissed.
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2024 (8) TMI 556
Deduction u/s 80P(2)(d) - interest received from the Co-operative Banks - in the absence of Return u/s 139(4), benefit of Section 80P(2)(d) of the Act will not available to the petitioner - as submitted petitioners have neglected assessment in as much as neither filed their Returns nor participated in the proceedings after the notices were issued u/s 148 and thus, the respective impugned orders have been passed. HELD THAT:- The Court is of the view that the final issue relating to the availability of exemption under Section 80P(2)(d) of the Act, cannot be decided under Article 226 of the Constitution of India. In these cases, no doubt the petitioners have neglected. However, the petitioners do deserve one more opportunity to went out their grievances in the re-assessment proceedings. Therefore, the cases are remitted back to the respondent to pass fresh orders on merits and in accordance with law from the stage of show cause notice after the issuance of Section 148 notices to the respective petitioners, since the petitioners have neglected by not filing of Return both at the stage of filing of regular Return under Section 139(4) of the Act and have not participated in the proceedings, despite the service of the respective show cause notices through post to the respective petitioners. Since the respective petitioners have neglected and did not comply with the requirements of the Act, under new regime, the respective petitioners are directed to pay a sum of Rs. 10,000/- each to the credit of Siddha Centre, Madura within a period of 15 days from today. It is made clear that the petitioner shall participate in the de-novo proceedings and co-operate with the respondent. The impugned orders, which stand quashed, shall be treated as addendum to the respective show cause notices issued to the respective petitioners.
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2024 (8) TMI 555
TDS u/s 194J - payments to other telecom operators in the form of roaming charges without deducting Tax at Source (TDS) - HELD THAT:- The provision contemplates three different services which are mutually inclusive. The use of the punctuation mark comma in the provision after the first category of managerial is to separate it from the second category of technical and the use of or after the second category of technical is to classify a separate category of consultancy . As noted that the technical service can be automated and also with human intervention at various stages which can be either managerial or consultancy or both. In the present case, the undisputed facts and the respondent's own National GSM Roaming Agreement clearly establish that human intervention and technical expertise are integral and indispensable components for the smooth, efficient, and uninterrupted operation of roaming services as a whole. Roaming Agreement explicitly acknowledges the need for human intervention in various critical aspects of roaming services, such as discussing impacts and taking necessary actions upon any change in the system or network, providing customer care support, addressing network faults through coordination between customer care and technical teams, handling issues related to lost/stolen SIM cards or mobile equipment, and resolving billing inquiries or disputes. Tribunal also accepted the presence of human intervention, however holding that for connecting a roaming call, human intervention is not required. We wish to point out few situations, which in our opinion the Tribunal has not considered. Two such situations, as it existed then and also now, is the option to manually select a network when one goes out of the home network at the subscribers end or to activate international roaming. When the subscriber selects another network when the service is either down or when the service provider does not provide any service in any particular area or country and when there are glitches or connectivity issues, it is only through human intervention, it can be resolved. Similarly, the activation of international roaming is also another situation which requires human intervention. As evident from the above that human intervention by skilled technical personnel is an integral and unavoidable part of the roaming services provided by the host telecom operators to the respondent-assessee. In our opinion, the roaming service to be provided is not mere connection but a seamless service throughout the period, when the subscriber is outside the home geographical area. These services cannot be rendered effectively or efficiently without continuous human monitoring, coordination, troubleshooting, and expertise. Therefore, this Court is of the firm view that the roaming services provided by the respondent-assessee to other telecom operators undoubtedly involve human intervention and technical expertise at various levels, thereby the charges paid would constitute fees for technical services u/s 194J as the provision lucidly spells out that the consideration can also be in one lump sum. Apex Court in Bharati Cellular Ltd case [ 2010 (8) TMI 332 - SUPREME COURT] which in our opinion is the only case directly on the point, issued certain directions. Nothing has been placed on record to show that at what stage the expert opinion was obtained, whether the expert was subjected to cross-examination by the parties, whether the technical evidence was collected, consideration of the agreements between the parties, the extent of human intervention in the contingencies like travelling out of home network including the period when one is travelling abroad and basis of fixation of capacity and even if it is accepted that human intervention is necessary, would it not suffice if such intervention is at some stage are all the factors that ought to have been considered by the Tribunal, which in our opinion failed and misconstrued the judgment of the Hon ble Apex Court in Bharati Cellular Case. The Tribunal unfortunately restricted itself to the question of connection at the initial stage when the subscriber leaves the home territory or in other words when he is in roaming and has not postulated a situation and rendered findings on the entirety of the period of roaming. The substantial questions of law raised in these appeals are answered in favour of the appellant-Revenue and against the respondent-assessee. The impugned common order dated 20.07.2015 passed by the Income Tax Appellate Tribunal, which erroneously held that the assessee was not liable to deduct tax at source on the roaming charges paid, is set aside and the matter is remanded back to the Tribunal for fresh consideration. Tax case appeals preferred by the Revenue are allowed and the matter is remanded back to the Tribunal for fresh consideration.
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2024 (8) TMI 554
Penalty u/s. 271B - not getting its accounts audited u/s 44AB - AO took the view that the main activity of the assessee is investment activity and hence, dividend income was considered as business receipts by the AO - HELD THAT:- Admittedly, the only income earned by the assessee is dividend income and the same is claimed as exempt u/s. 10(34) - AO also accepted the claim of the assessee in the assessment order dt. 10-03-2015 passed u/s. 143(3) of the Act. The question as to whether the provisions of section 44AB will be applicable when the assessee has claimed its income as exempt u/s. 10 of the Act came to be considered in the case of Market Committee, Sirsa [ 2017 (7) TMI 920 - BOMBAY HIGH COURT] as held where the income of the assessee was exempted under Section 10(20) of the Act which falls in Chapter III of the Act. There was no income of the assessee which would fall under heading profits and gains of business or profession . Once that was so, it could not be said that the provisions of Section 44AB were applicable and as a sequel thereto, penalty under Section 271B of the Act was not leviable. Thus provisions of section 44AB of the Act will not be applicable when there was no income of the assessee which would fall under the head profits and gains of business and consequently, penalty u/s. 271B of the Act was not leviable for not getting into audited the accounts of the assessee u/s. 44AB - Decided in favour of assessee.
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2024 (8) TMI 553
TDS u/s 195 - non deduction of tds on remittances made by the assessee to its foreign bank account - assessee in default in terms of sec. 201 - HELD THAT:- As noticed that the assessee has not remitted the above said amount to any other person. It has transferred the above said amount from its bank account maintained in India to its own bank account located in United Kingdom i.e., it is a case of transfer of funds by the assessee to itself. The provisions of section 195 shall come into operation only if a person is making payment to any other person of any sum chargeable under the provisions of the Act. It is not the case of the AO that the remittance made by the assessee from its Indian bank account to its foreign bank account is chargeable under the provisions of the Act. Hence the provisions of section 195 of the Act will not be applicable to the impugned remittance made by the assessee to its foreign bank account. Hence, the assessee cannot be treated as assessee in default in terms of sec. 201 in respect of the above said remittance. Decided in favour of assessee.
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2024 (8) TMI 552
Telescopic benefit of the addition made as sales during the A.Y. 2010-11 by giving to the counter sales during the A.Y. 2011-12 - HELD THAT:- The issue available based on the facts is with respect to the accounting of sales by the assessee in the year A.Y. 2011-12 whereas the Revenue has stated that the income in the A.Y. 2010-11 is based on the confirmation by the vendor M/s. Raj Impex. It is trite law that the same income cannot be taxed twice in the hands of the assessee in two different assessment years. Since the income has already been taxed in the hands of the assessee consequent to the order of the Tribunal it cannot be once again taxed in the hands of the assessee during the A.Y. 2011-12 where the sales have been accounted by the assessee in the books of accounts. We therefore find no merit in the argument of the Ld.DR thereby setting aside the orders of the Revenue Authorities and accordingly the grounds raised by the assessee is allowed.
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2024 (8) TMI 551
Capital gains treating the sale as 'slump sale' - Addition u/s 50B - CIT(A) found AO not found justified in assessing the appellant's income by treating LTCG u/s 50B as it is not found to be a case of sale by lock, stock and barrel - HELD THAT:- We find that the CIT(A) has not considered the facts and circumstances of the issue properly and thus the CIT(A) was not correct in holding that the provisions of section 50B of the Act are not applicable in the facts of the present case. CIT(A) simply allowed the appeal of the assessee without giving proper reasons. We, therefore, reverse the order passed by the learned CIT(A) and allow the grounds raised by the Revenue.
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2024 (8) TMI 550
Addition u/s. 14A r.w.r.8D - Assessee earned any exempt income or not? - CIT(A) deleted the disallowance made by the AO - HELD THAT:- Assessee has not earned any exempt income during the year under consideration. Accordingly, CIT(A) has deleted the disallowance, by following the decisions M/S. NIRVED TRADERS PVT. LTD. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT] AND M/S. CHETTINAD LOGISTICS PVT. LTD. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] Even though the amendment has been made in section 14A of the Act w.e.f. 01-04-2022 making it mandatory to make disallowance u/s. 14A of the Act even if the exempt income is not earned, the same has been held to be prospective in nature as per the decision of Era Infrastructure (India) Ltd.[ 2022 (7) TMI 1093 - DELHI HIGH COURT] - Decided against revenue.
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2024 (8) TMI 549
Addition of deemed gift - assessable in the hands of the assessee u/s 56(2)(vii)(b)(ii) or not? - difference between the stamp duty valuation, minus actual purchase consideration has been added to the total income of the assessee HELD THAT:- We are of the view that 3rd proviso to section 56(2)(vii)(b)(ii) contemplates that in case, an assessee disputes the valuation of the property for the purpose of charging stamp duty, then, as contemplated in sub-section (2) of section 50C, AO will make a reference to the DVO for determining the fair market value of the property. Once assessee is disputing to the alleged deeming purchase consideration for the purpose of treating as a gift under section 56(2)(vii)(b)(ii), then, it was incumbent upon the ld. 1st Appellate Authority to construe that even if assessee has not made a prayer before the AO he should make a reference to the DVO for the just decision of the appeal. The objective of Commissioner in the first appeal ought to have been to resolve the controversy in a fair manner according to the position of law and not to legalize injustice on technical issues. CIT(Appeals) when realized that the fair market value of the property ought to be determined for the purpose of determining its purchase cost in the hands of assessee, then, the reference to the DVO ought to have been made. Considering the above, we deem it appropriate to set aside both the impugned orders and restore this issue to the file of ld. AO for re-adjudication. AO shall call for a report from the DVO and thereafter determine the alleged purchase consideration in the hands of the assessee for the purpose of section 56(2)(vii)(b)(ii) - Appeal of the assessee is allowed for statistical purposes.
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2024 (8) TMI 548
Addition u/s 68 - unexplained cash credit - Deposits of the money during the demonetization period - HELD THAT:- The present case in hand is that appellant has explained the nature as well as sources of cash deposit that is the said cash deposits were made out of sales in ordinary course of carrying on business. Accordingly, we are in this view that the appellant has duly discharged its responsibility u/s 68 - We find that collection in deposits has duly been recorded in the books of accounts. Hence, there is no reason to treat the same as unexplained cash credit/unexplained money. We find force in the argument of assessee that merely due to the contravention of the notification issued by RBI does not mean that the amount collected by the appellant against sales and duly recorded in the books of accounts treated as unexplained cash credit of the appellant. We are of this view that appellant has been able to succeeded in establishing his case and accordingly, the order of the CIT(A) with regard to the unexplained money is hereby set aside and the appeal of the assessee is hereby allowed.
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2024 (8) TMI 547
Condonation of delay 1638 days in filing the first appeal before CIT(A) - delay was caused by due to assessee s bonafide belief that grievances raised electronically shall be resolved - HELD THAT:- We notice that the statutory period for filing an appeal before learned CIT(A) u/s. 249(2) is 30 days - Section 249(3) of the Act empowers the first appellate authority to condone the delay if satisfied that appellant had sufficient cause for not presenting it within that period. CIT(A) was, however not satisfied to condone the said delay of 1638 days. The assessee, submitted its response against the said outstanding demand on the income tax portal on 11.06.2019 continued pursuing the same till it received the rejection of his prayer for rectification on 01.08.2023. It appears that the assessee was under a bonafide belief that his grievances raised through the income tax portal shall be resolved in due course of time. This expectation of assessee caused such a huge delay in filing first appeal. It is well established principle of law that the substantial justice cannot be denied on technical aberrations. The object of prescribing procedure is to advance the cause of justice. In an adversial justice system like ours, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Justice is the goal of jurisprudence. Any interpretation which eludes or frustrates the recipient of justice, is not to be followed. The provisions relating to the condonation of delay, need to be interpreted liberally. The object of prescribing the time period for filing of the appeal, is to expedite the proceedings before the concerned authorities and to advance the cause of justice. In view of the explanation stated hereinabove, we, deem it just and proper to condone the said delay in filing the first appeal before the first appellate authority. Appeal is allowed. The impugned order is set aside. The delay in filing the first appeal before first appellant authority i.e learned CIT(A) stands condoned.
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2024 (8) TMI 546
Validity of order passed by CIT(A) u/s. 250 wherein dismissed assessee s appeal on the ground that the jurisdictional AO has granted relief by issuing rectification order u/s. 154 - validity of Rectification order u/s. 154 HELD THAT:- As noticed that during the pendency of first appeal assessee filed a clarification letter dated 09.11.2023 before CIT(A), wherein it was submitted that on the condition of grant of relief of rectification of mistakes by JAO u/s. 154, the issues which were part of the rectification proceedings would only be treated infructuous if decided by JAO. As without waiting for the rectification order and without considering the remaining grounds on merit, CIT(A) has dismissed assessee s appeal as infructuous under a belief that JAO has passed rectification order in respect of all the issues. Assessee has a legal right under para 5(i)(ii) of the faceless appeal scheme 2021 for having a notice for submitting its response in support of the grounds before the first appellate authority/NFAC. In the circumstances, we deem it appropriate to remit the matter back to the file of learned CIT(A) for denovo adjudication on merit after taking assessee s aforesaid details into consideration. We further direct the assessee to be diligent and cooperative in attending the hearings and making submissions before the first appellate authority for the expeditious and effective disposal of the appeal.
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2024 (8) TMI 545
Excess payment of interest - interest expenditure on account of loan received - HELD THAT:- Amount disallowed was the TDS deducted and paid by the assessee in respect of said loan. The CIT(A) after examining the issue deleted the addition. No document controverting findings of the CIT(A) are brought on record by the Revenue. We find no infirmity in findings of the CIT(A) on this issue. Hence, the same are upheld. Ergo, ground no. 1 of Revenue s appeal is rejected. Addition u/s. 56(2)(viib) - AO held that there is flaw in the method of valuation adopted by the assessee and applied NAV method for valuation of shares and computed the valuation of shares at Rs. 7426/- per share - HELD THAT:- A bare perusal of provisions of section 56(2)(viib) would show that, if shares are issued on a rate exceeding the face value of such shares and the aggregate consideration received on such shares exceeds the market value of the shares, the amount that exceeds market value shall be chargeable to tax under the head Income from other sources . In the instant case, the assessee had issued shares having face value of Rs. 10/- per share at a premium of Rs. 4262.31 per share as against the market value of shares determined by the AO adopting NAV method Rs. 7426/- per share. Thus, the provisions of section 56(2)(viib) of the Act are not attracted in the present case. The AO disputed valuation of shares under DCF method which is one of the approved methods under Rule 11U and 11UA of the Income Tax Rules, 1962 and recomputed the value of equity shares following NAV method. Though the AO cannot tinker with the valuation report unless it is fundamentally flawed, without going further into merits of valuation, even, if the market value of shares as determined by AO is accepted the provisions of section 56(2)(viib) of the Act are not attracted as the assessee had issued shares at a rate lesser than the market value determined by the AO. We find no error in findings of the CIT(A) in deleting the addition. Thus, ground no. 2 of appeal by the Revenue is dismissed, being devoid of any merit.
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2024 (8) TMI 544
Deduction u/s. 80P received from State bank of India and Tamilnadu Industrial Co-Op.Bank - assessee is a co-operative society formed and managed by the Govt. of Tamilnadu through the department of Social welfare - HELD THAT:- As observed that the interest income earned by the society is in its regular course of its operations and does forms part of the revenue attributable to the operations of the society as a cottage industry and in our considered view the assessee is eligible for deduction 80P(2)(a)(ii) itself. On perusal of the decision in the case Tumkur Merchants Souharda credit Co-Op. Ltd [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] relied by the Ld.AR is clearly explained that, the interest earned from the deposits made out of the idle funds of the assessee, the said interest income is attributable to the profits and gains of the business only. Therefore, we are of the view that the lower authorities have grossly erred in disallowing the said deduction u/s. 80P(2)(d), without appreciating the fact that, the claim of the assessee as a cottage industry and the entire Income was claimed as deduction u/s. 80P(2)(a)(ii). Therefore, we are of the view that, the assessee is a cottage industry and the entire income is attributable to business of the society and hence eligible to claim Interest earned on deposit also as deduction u/s. 80P(2)(a)(ii) - Appeal of the Assessee is allowed.
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2024 (8) TMI 543
TP Adjustment - inclusion of certain comparable companies like Evoke Technologies Pvt Ltd, Akshay Software Technologies Ltd, Mindtree Ltd and R.S. Software India Ltd . - HELD THAT:- FAR analysis of Evoke Technologies Ltd is similar to appellant company which is evident from revenue earned from software development services which is similar to services rendered by the appellant to its AEs. Therefore, we are of the considered view that the DRP is erred in excluding Evoke Technologies (P) Ltd by applying new filters which was not at all applied by the appellant and the TPO. This principle is supported by the decision of the ITAT Bangalore Benches in the case of Aspect Technology Center (India) Private Limited [ 2020 (9) TMI 1093 - ITAT BANGALORE] We therefore, direct the TPO/AO to include Evoke Technologies (P) Ltd in the list of comparables. Exclusion of Akshay Software Technologies Ltd, Mindtree Ltd and R.S Software India (P) Ltd, the DRP - Suo motto applied on site revenue filters and excluded the above companies on the ground that these companies are engaged in predominantly onsite development and is not comparable to appellant company - Unless the TPO and DRP makes out a case that the appellant has incurred higher cost which is on account of providing onsite development services, in our considered view, onsite revenue filter cannot be applied. Further, when the appellant and the TPO are accepted a particular company as comparable after analyzing their functions, then the DRP cannot Suo motto exclude the above company by applying new filter and this principle is supported by the decision of the ITAT Bangalore Bench in the case of Aspect Technology Center (India) Private Limited [ 2020 (9) TMI 1093 - ITAT BANGALORE] Therefore, we set aside the findings of the learned DRP and direct the TPO/AO to include Akshay Software Technologies Ltd, Mindtree Ltd and R.S. Software India Ltd in the list of comparables. Exclude Persistent Systems Ltd from the list of comparables held to be not comparable to a software development. Sasken Communication Technologies Ltd is predominantly a product company which cannot be compared with the appellant company which is engaged in providing software development services to its AE on cost plus mark up. This company has been held to be not comparable to a software development service provider in the case of Conexant Systems (P) Ltd [ 2018 (1) TMI 1152 - ITAT HYDERABAD] Therefore, we direct the TPO/AO to exclude Sasken Communication Technologies Ltd from the list of comparables.
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2024 (8) TMI 542
Penalty u/s 271(1)(c) - assessee for voluntary surrender of income - non-admission of short-term capital gain in the original return of income - HELD THAT:- When the appellant has voluntarily surrendered income in good faith to buy peace and to cooperate with the Department, the said voluntary surrender of income cannot be considered as concealment of income. AO in the present case had not discharged its burden of proving its concealment and had simply made a conclusion on the assessee for voluntary surrender of income in good faith and voluntary surrender does not fall under deemed concealment as provided in Explanation 5A to section 271(1)(c) and this principle is supported by the decision in the case of CIT vs. Suresh Chand Mittal [ 2001 (6) TMI 63 - SC ORDER] Therefore, we are of the considered view that on this count also, penalty levied by the AO u/s 271(1)(c) cannot be sustained. We are of the considered view that the AO is erred in levy of penalty u/s 271(1)(c) by invoking the provisions of section 271(1)(c) and Explanation 5A provided therein. CIT (A) without appreciating the relevant facts has simply sustained the penalty levied by the AO - Thus, we set aside the order passed by the CIT (A) and direct the AO to delete the penalty levied u/s 271(1)(c). Assessee appeal allowed.
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2024 (8) TMI 541
Unexplained credit u/s 68 - assessee has failed to prove the identity of the share applicants - identity of the share applicants was not proved even though all the shareholders have responded to the summons u/s 131 of the Act, appeared before the AO - HELD THAT:-The assessee proved the identity and the genuineness of the transactions. In so far as the creditworthiness of the shareholders is concerned, we observe that all the shareholders have deposed in their statements giving the sources for investments in the assessee company. If at all if the AO had any doubts for the creditworthiness of the shareholders he could have proceeded against the shareholders. As decided in J.D. Securities and Finance Ltd. [ 2013 (2) TMI 452 - ALLAHABAD HIGH COURT ] if the assessing authority is not satisfied with the creditworthiness of the shareholders it is opened to the AO to verify the same in the hands of the shareholder and not in the hands of the assessee company. Similar view has been taken in the case of CIT Vs. Nav Bharat Duplex Ltd. [ 2013 (2) TMI 44 - ALLAHABAD HIGH COURT ] Also find that in the case of CIT Vs. Mishra Preservers Pvt. Ltd. [ 2013 (4) TMI 13 - ALLAHABAD HIGH COURT ] that if the shareholders are identified and they are not fictitious persons, the payments are made by cheques and were assessed to Income tax there cannot be any addition u/s 69 of the Act. On perusal of copy of ITR/Bank statement of all the parties who have applied for shares in the assessee company, it has been observed that the applicants have sufficient balance in their account to apply for shares and all the transactions have been done through banking channel . We observe that the Ld.CIT(A) on examining the information filed by the assessee in the form of confirmation, ITR, Bank statements, PAN details and also since there was no adverse material in the course of search to prove that the share application money is bogus and also assessee has proved the identity, genuineness and creditworthiness of the shareholders and deleted the addition made by the AO in respect of share application money from shareholders - Decided in favour of assessee. Ad hoc disallowance of expenses on the ground that certain expenses incurred on various heads were not supported by proper bills and vouchers - HELD THAT:- Except stating that the expenses were not supported by bills and vouchers the AO failed to pinpoint any particular expenses for which bills and vouchers were not present. On perusal of the CIT(A) order, we observe that the ad hoc disallowance was deleted observe that the AO did not point out any defect in the books of account, the books were not rejected and, therefore, there is no justification for making ad hoc disallowance. Thus, we do not see any infirmity in the order of the Ld.CIT(A) in deleting the ad hoc disallowance made by the AO in support of unverifiable vouchers. This ground of Revenue is rejected. Addition u/s 68 - share application money unexplained - AO treated the shareholders as not genuine as the assessee did not produce the ITRs and bank statements without making further enquiries - HELD THAT:- Most of the shareholders invested in the company are all small time investors, wherein they have invested amounts ranging from Rs. 480/- to Rs. 60,000/- and it cannot be said that the small time investors have no source to invest such a small amounts ranging from Rs. 480/- to Rs. 60,000/-. AO accepted share application money to the extent of Rs. 1,10,98,200/- out of Rs. 1,31,42,420/- and what was remained was Rs. 20,44,620/- and most of this amount came from all small time investors who have invested small amounts ranging from Rs. 480/- to Rs. 60,000/-. Therefore, the creditworthiness of the small time investors who have invested in the limited company of the assessee ranging from Rs. 480/- to Rs. 60,000/- cannot be doubted on the ground that the Assessee did not file bank statements and ITRs of these investors ignoring the share application forms and copy of receipts filed by the Assessee Thus, held that once the assessee proves the identity of the shareholder the onus on the assessee to prove the source of share application money stands discharged. AO should have accepted the investment made by the small time investors in the assessee which is a limited company. Thus, we are of the view that the assessee has proved the identity, creditworthiness and genuineness of the transactions of the shareholders and, therefore, direct the AO to delete the addition - Assesee appeal allowed.
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2024 (8) TMI 540
Disallowance u/s 14A r.w.r. 8D - as argued AO has not duly recorded his satisfaction with regard to the claim of expenditure in relation to the exempt income which does not form part of total income - HELD THAT:- As in Assessee s own case [ 2023 (1) TMI 1401 - ITAT DELHI] as held hold that the AO has not recorded any objective satisfaction in not accepting suo moto disallowance made by the assessee. Thus, we direct the AO to accept the suo moto disallowance made by the AO in respect of disallowance u/r 8D(2)(iii) read with section 14A of the Act. Also the assessee succeeds in as much as it has been held in the case of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] held for disallowance u/s 14A r.w.r.8D, only those investment should be considered which has not yielded exempt income. Decided in favour of assessee. Deduction claimed under chapter VIA on account of donation made and claimed u/s 80G - HELD THAT:- Section 80G(2)(a) allows deduction for 'any sums paid by the assessee in the previous year as donations'. Thus, the deduction allowable is for sums paid as donation. Donations paid to the said Kosh and Fund are not allowable u/s 80G(2)(a)(iiihk) and (iiihl) as explained above. What is not allowable is however amounts spent by the assessee in pursuance of CSR in pursuance of section 135 of the Companies Act 2013. Contributions to the said Kosh and Fund are CSR activities included in Schedule VII to the Companies Act 2013, The disallowance for deduction u/s 80G vis-a-vis CSR can be restricted only to contributions to these Funds under CSR. It is a well-established rule of interpretation that one must look merely at what is stated in the statute; there is no scope for intendment in law. So only contributions to these two funds will not qualify for deduction u/s 80G(2)(a) of the Act. No error or infirmity in the order of the CIT(A) in directing the A.O. to allow the deduction claimed u/s 80G of the Act. Decided against revenue.
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2024 (8) TMI 539
Denial of TCS credit - purchases were accepted by the AO however, in turn denied the TCS credit on the ground that the TCS was collected and was reflecting in the account of one Mr. Prashanth Shetty from Mangalore, as he was the original owner of the excise license - HELD THAT:- It is not a disputed fact that, the business was carried on by the assessee based on an arrangement between the assessee and Mr. Prashanth Shetty. It is noted that Mr. Prashanth Shetty provided a declaration stating that, though the excise license is in his name, he has not declared the income as declared by the assessee and has also not claimed the credit of TCS a The assessee has been consistently carrying on business in this similar fashion as has been recorded by the erstwhile CIT(A) in the appellate orders passed for the preceding assessment years placed in the paper book referred to by the Ld.AR. Every year, this issue was considered and allowed in favour of assessee based on the declaration given by Mr. Prashanth Shetty. The declaration given by Mr. Prashanth Shetty reproduced hereinabove is verifiable by the authorities below. DR before us also could not establish any contrary to what has been stated in the declaration by Mr. Prashanth Shetty. We therefore do not find any reason to uphold the impugned order of Ld.CIT(A). We direct the Ld.AO to allow assessee s claim after due verification of what is stated in the declaration. Assessee appeal allowed.
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2024 (8) TMI 538
Denial of exemption u/s 80G(5) - As Assessee has not filed the present application within the time limit allowed not only rejected the application filed by the Assessee but also cancelled the provisional registration granted on 19.03.2022 under clause (iv) for 1st proviso to section 80G(5) of the Act - HELD THAT:- Assessee remained un-represented which resulted into passing the order in limine but not on merits. As the Ld. Commissioner was unable to pass the order on merits in the absence of relevant reply/submissions and documents, therefore for the just decision of the case and for the ends of substantial justice, we are inclined to set aside the impugned order and consequently the case is remanded to the file of the Ld. Commissioner for decision afresh on merits, suffice to say by affording reasonable opportunity to the assessee to substantiate its claim. We also direct the assessee to cooperate with the appellate proceedings and to file the relevant submissions/documents which would be essential and required by the Ld. Commissioner for proper adjudication of the case. In case of further default the assessee shall not be entitled for any leniency. Appeal filed by the assessee stands allowed for statistical purposes.
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2024 (8) TMI 537
Validity of reopening of assessment - Addition u/s 69A - cash deposited in bank account and on account of accrued interest - reasons recorded by the AO based on the AIR information - HELD THAT:- AO while reopening proceedings u/s 148 and/or while completing the assessment u/s 147 has not even gone through the bank statements and had just relied upon the AIR information. It is a settled law that the reopening made merely on the basis of AIR information is bad in law. Since there was non-application of the mind by the Ld. AO as evident from the fact that the AO failed to verify the amount of cash deposited in bank from the copies of bank statements duly furnished by the appellant during the course of assessment proceedings. From the record, it is evident that the reasons recorded by the AO for reopening the completed assessment of the assessee are based on factual errors, rendering the notice issued u/s. 147 to be void ab initio, in view of the decision of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] as considered in 'Dr. Aiit Gupta' [ 2016 (4) TMI 167 - DELHI HIGH COURT] The reasons recorded are bad in law as the reopening has been made based on incorrect facts. It is a settled law that the reopening cannot be made based on wrong assumption of facts following AIR information and accordingly, the assessment made on the basis of wrong assumption of facts is liable to be quashed. Decided in favour of assessee.
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2024 (8) TMI 536
Payment made u/s 36(1)(va) - delayed deposit of employees contribution of Provident Fund (PF) and ESI - delay in deposit of PF and ESI of the employees share was for the month of April 2020 and May 2020 - due date of payment was falling in the period of Covid Pandemic - complete lock down and on account of operational and economic difficulties, the payment in due date was not in the control of the appellant. HELD THAT:- When the EPF Organisation itself has waived off the levy of penal damages for delayed payment during the period of lockdown by issuing the aforesaid circular, there is no question of treating the delay which occurred during the period of lockdown detrimental to the assessee under the Act, more specifically under the explanation to section 36(1)(va) of the Act. The delay in deposit of PF and ESI of the employees share is for the month of April 2020 and May 2020. These months fell in the period of lockdown when pandemic of COVID-19 was at its peak. Due dates to deposit for these two months were 15.05.2020 and 15.06.2020 as per the relevant enactments. Assessee deposited the delayed amount in the month of June 2020 when there was relaxation in the lockdown and banking was permitted. There is no mischief on the part of the assessee in holding the employees contribution for long periods as contemplated in the memorandum explaining the provisions introduced in the Finance Bill, 1987 and CBDT circular (supra) and dealt in Checkmate Services [ 2022 (10) TMI 617 - SUPREME COURT] . In fact, assessee demonstrated its vigilance in depositing the impugned amounts at the first opportunity it got when the relaxation was given in the lockdown. Also, for all the subsequent months, the deposits have been on or before the prescribed due dates under the relevant enactments. Thus, in the present case under its peculiar set of facts, there cannot be any adverse effect on the assessee of not depositing the employees contribution of EPF and ESI within the meaning of section 36(1)(va) of the Act when the relevant enactment itself had given a waiver from levy of penal damages for the delay in deposit during the lockdown period . We delete the addition so made. Grounds taken by the assessee in this respect are allowed.
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2024 (8) TMI 535
Denial of benefit of lower tax as per section 115BAC - form 10IE was not filed before the due date of filing of return u/s 139(1). i.e. 31.12.2021 - whether the filing of Form 10-IE, before the time allowed for filing of return u/s 139(1) in order to opt for the new scheme of taxation u/s 115BAC is directory or mandatory? - if the said option is not allowable to the assessee, in the instant case, whether it is incumbent on the part of the AO to allow the claim for deduction under Chapter VIA, as claimed in the original return? HELD THAT:- In the instant case we find that the original return of income is within time u/s 139(1) filed on a returned income which was subsequently revised u/s 139(5), at a higher figure which is the finally assessed figure u/s 143(1) dated 28/10/2022, meaning thereby, the revised return has been considered and accepted by CPC, ignoring the claim of the assessee in Form 10-IE, which was also on record before the AO, on the date of assessment. We find that an identical issue has been decided in the case of Akshay Devendra Birari [ 2024 (6) TMI 272 - ITAT PUNE] where as held on the facts case that filing of Form 10-IE is not a mandatory requiredment but only directory in nature and CPC ought to have considered the same allowing the benefit of new tax regime. One of the requirements of Rule 128 for claiming FTC is that form 67 is to be submitted by assessee before due date prescribed u/s 139(1) of the Act , but this requirement cannot be treated as mandatory, rather it is directory in nature , because Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form 67. Regarding the issue of technical glitch raised by the assessee , that Form 10- IE could not be uploaded in the portal within the time allowed u/s 139(1), due to technical incompatibility in the portal we refer to a judgment of KGY Glass Industries P Ltd, [ 2024 (7) TMI 92 - GUJARAT HIGH COURT] where Form 10-1C was required to be filed by the domestic company within time allowed u/s 139(1) of the Act ,opting to be taxed as per provisions of section 115BBA , was not practically possible due to technical glitches in the portal, the Hon ble court held that in absence of any fault on the part of the assessee, the assessee cannot be deprived of benefit under section 115BBA of the Act . Thus, we are in agreement with the decision of Akshay Devendra Birani [ 2024 (6) TMI 272 - ITAT PUNE] hold that requirement of filing form 10-IE is directory in nature and not mandatory and it is sufficient compliance if the said form is before the AO at the time of assessment. As such we direct the CPC to take into consideration the form 10-IE filed by the assessee and pass appropriate orders. Appeal of the assessee allowed for statistical purposes.
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2024 (8) TMI 534
Rejection the provisional registration u/s. 12AB invoking provisions of section 13(1)(b) - HELD THAT:- The provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration u/s 12A of the Act. Our view is further supported by the decision of Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT] wherein on the issue of denial of grant of registration u/s 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. Thus, the matter is restored to the file of CIT (Exemptions), for de-novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order for rejecting the application filed by the assessee trust. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (8) TMI 533
Disallowing the set off of the loss in respect of derivative transaction by treating the same as speculative transaction - HELD THAT:- The provisions of section 43(5)(e) of the Act has been brought into the Statute book w.e.f. 1.4.2014. Section 43(5)(e) of the Act talks of commodity derivatives. Foreign currency transaction admittedly is commodity derivatives. Here also, the requirement of section 43(5)(e) is that the transactions are to be made through recognised Stock Exchange. A perusal of the order of the CIT(A) clearly shows that even though the assessee has made the claim of Rs. 43(5)(d) before the CIT(A), cunningly, the CIT(A) switched over his findings by relying upon the provisions of section 43(5)(a) of the Act, which was not a claim before him. In these circumstances, as the evidences in regard to nature of the transaction and the recognised stock exchange, if any, through whom the transactions have been carried out by the assessee are not before us, the issues in these appeals are restored to the file of the AO for the relevant assessment years to specifically examine whether the derivatives have been dealt with by the assessee for the assessment years 2015-16 and whether such derivatives are transacted through the recognised stock exchange as defined in Section 43(5)(d). In respect of foreign exchange loss in both the years, the issue is restored to the file of the AO to examine and give a clear finding in regard to the compliance of provisions of section 43(5)(e) of the Act. If in both the years, the transactions carried out by the assessee are found in order in terms of section 43(5)(d) and 43(5)(e), the same is to be treated as normal business transactions and not as speculative transaction. Unsecured loans raised in assessment year 2016-17 - Admittedly, the account confirmation as has been shown in the paper book contains the PAN No. of Outram Properties Pvt Ltd. This being so, this issue is restored to the file of the AO for re- adjudication and verification as to whether Outram Properties Pvt Ltd have filed their return of income for the relevant assessment year. AO shall examine the financial capacity of Outram Properties Pvt Ltd., and decide the issue after granting the assessee adequate opportunity of being heard to the assessee. AO is directed to adjudicate the above issues in terms of the direction given above after allowing adequate opportunity of hearing to the assessee.
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2024 (8) TMI 532
Validity of assessment order as time-barred - HELD THAT:- There is no dispute of assessment order being passed on 23 December 2016 before time barring date. If there was any discrepancy in mentioning the address due to which the demand notice along with the assessment order was not served on the assessee that can only help the assessee to claim that the period of limitation for filing the appeal would be from the date when assessee actually receives the demand notice or assessment order. There is no force in the contention of learned AR that for the purpose of section 143(3) r.w.s. 153 of the Act, the assessment order shall be considered to be passed beyond the limit prescribed, for the only reason that though assessment order was passed before the time barring date but was not served upon the assessee, due to inadvertent mistake in mentioning the house number. In fact, it is for such purposes the act provides that discrepancy in notices will not affect the proceedings. We find no error in the findings of the learned CIT(A). The ground no. 2 has no substance. Disallowance of foreign exchange fluctuation loss on reinstatement of the ECB loans borrowed near the end of FY 2011-12 - HELD THAT:- It comes from the order of AO that he considered disallowance u/s 37 of the exchange fluctuation only for the reason that ECB loan was utilized for purpose of acquiring capital asset which has enduring benefit. Contrary to the same CIT(A) has made the disallowance by relying section 43A. We are in agreement with AR that disallowance u/s 37 and u/s 43A of the Act, both operate in different spheres. Section 43A is a deeming provision for adding or deducting, the fluctuation loss or profit, from the cost of asset. Disallowance u/s 37 is however for the reasons that capital expenditures are specifically disallowed. Thus, we are of the opinion that the additional grounds raised have substance, more so as it does not appear from the order of CIT(A) that any notice was given to the assessee to contest the addition to the cost of asset u/s 43A. Even otherwise there was merely reinstatement of losses as per accounting standards and there was no actual payment or remittance so as to invoke Section 43A. It also comes admittedly that the issue has some sort of consistency. The aforesaid go to show that except in the present assessment year otherwise the reinstatement of income or loss from fluctuation of currency has been accepted as per the accounting done by the assessee. Appeal filed by the assessee is allowed.
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2024 (8) TMI 531
Accumulated unspent fund as provided u/s 11 - AO found that the amount accumulated in the assessment year 2013-14 as per Form 10 stands at Rs. 4 crores against which, the utilization in the year under consideration stands at Rs. 3,13,07,781/- only leaving the unspent accumulated amount of Rs. 86,92,219/- only, which should have been utilized in the year under consideration being the last year for utilization - HELD THAT:- We are of the view that the amount specified in the report in Form 10 by the auditor cannot be relied upon - we note that the audited financial statements, statement of income and the copy of the return of income for the assessment year 2013-14 were not filed by assessee during the proceedings before the authorities below. It is pertinent to note that all these documents, stated above, are filed along with the return of income, meaning thereby, these documents were already available with the authorities below, but the revenue authorities did not look into it - in the interest of justice and fair play, we are inclined to set aside the issue to the file of AO for fresh adjudication in the light of the above stated discussion and as per the provisions of law. Hence, the ground of appeal raised by the assessee is allowed for statistical purposes. Addition under the provisions of sec. 13(1)(d) - Capital fund shown by the assessee was utilized in fixed assets, capital work in progress and current assets. In our considered view, such an amount represents the application of income and, therefore, the same should be excluded while calculating the amount to be invested under the provisions of sec. 11(2) r.w.s. 11(5). Nevertheless, the assessee has not represented the facts properly and, therefore, we are inclined to restore this issue to the file of the AO for denovo adjudication as per the provisions of law. Hence, ground of appeal raised by the assessee is allowed for statistical purposes.
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2024 (8) TMI 530
Addition u/s 68 - unexplained share capital and premium - assessee s own unaccounted money which has flown back to it in the form of premium on share allotment - HELD THAT:- We are of the considered view that assessee has filed all details regarding the identity of the shares allottees viz. their PAN card, copies of pass ports, acknowledgement of income tax returns, copies of bank statements from which the share allotment premium has been given. Further, it is also notable fact that the share allottees or not unknown third parties but have been appointed as Directors on the Board of the assessee company. Accordingly, in our considered view, this is not a fit case for invoking the provisions of Section 68 of the Act, looking into the instant facts. In the case of Enrich Agro Food Products (P.) Ltd.[ 2023 (1) TMI 487 - DELHI HIGH COURT] held that where assessee-company received share capital including share premium from an investor and during assessment proceedings assessee had furnished documents so as to establish identity and creditworthiness of investor and genuineness of transaction and also valuation report of CA for premium amount, impugned addition made u/s 68 in respect of such share capital and premium amount was unjustified. In the case of Kunjal Synergies (P.) Ltd. 2024 (3) TMI 103 - ITAT KOLKATA] ITAT held that where assessee-company had raised Share capital/share premium by issuing equity shares to five subscribers at a premium of Rs. 990 per share and assessee had filed all evidences consisting of copies of ITRs, audited accounts, certificates of incorporation, Memorandum and Articles, Annual Returns etc., to prove identity and creditworthiness of share subscribers, impugned addition made under section 68 was to be deleted. Assessee appeal allowed.
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2024 (8) TMI 529
Revision u/s 263 - assessee treating the foreign exchange loss as operating - HELD THAT:- There is no strength in the argument of AR that the assessee placed before the learned TPO all the material sufficient to take a view and, therefore, the assessee cannot be put to peril for the TPO not considering such material. Here, the prime factor relates to the consistent treatment given by the auditors to the foreign exchange gain/loss and unless and until assessee establishes that such a fact of the assessee treating the foreign exchange gain/loss as operative for the assessment years between 2015-16 and 2020-21, except 2017-18, being borne on record before the TPO such an argument is not at all helpful to it. Observation of the CIT(IT TP) that at the cost of consistency and bonafide intention, only to cause leak of revenue, the assessee adopted a different criterion for the assessment year 2017-18 goes undisturbed and its non-verification by the learned TPO is fatal to the assessment proceedings. We are of the considered opinion that non-considering of the consistent treatment given by the assessee to the foreign exchange gain/loss either prior or subsequent to 2017-18 amounts to error insofar as it is prejudicial to the interest of Revenue and, therefore, we find it difficult to hold that the learned CIT (IT TP) committed anything illegality or irregularity in setting it aside and directing the learned TPO to consider the issue afresh, after affording an opportunity of being heard to the assessee. Appeal of the assessee is dismissed.
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2024 (8) TMI 528
Addition u/s 56(2)(vii)(b) - difference in between the set fourth value and valuation of the DVO - HELD THAT:- Whether an addition can be made solely and simply on the basis of valuation report submitted by the DVO is no longer res integra. The land locked issue is duly considered by both DVO independent valuer during the valuation of property. The impugned lands are in nature of land locked property and the independent valuer considered the market value - DR has not submitted any contrary judgment against the submission of assessee and has not made any strong argument against the fact cited by the ld. AR. After considering the different valuation report of land, the valuation of independent valuer is accepted and valuation of land is confirmed - Accordingly, we quash the addition made by ld. CIT(A) - The market value of the land is confirmed and the appeal of the assessee is partly allowed.
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2024 (8) TMI 527
Validity of the reassessment proceedings - reasons to believe - made additions on grounds different from the reasons for which the case was reopened - HELD THAT:- We find that the AO has made an addition being 3% of the aforesaid amount by treating the same as unexplained expenditure. AO has also returned a finding that the Appellant had paid aforesaid amount as commission. Thus, clearly, the reasons recorded for reopening the assessment and income that was believed to have escaped assessment are different from with the addition made by the AO and the reasons thereof. In our view, the judgment in the case of Jet Airways (India) Private Limited [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] would apply to the facts of the present case. AO could not have made addition in the hands of the Appellant on account of change in the quantum as well as nature of the addition. Accordingly, Ground No. 1(b) raised by the Appellant is allowed.
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2024 (8) TMI 526
Unexplained money u/s. 69A - addition was made on the basis of incriminating documents seized during the course of search proceedings in the form of notarized satakhat - CIT(A) deleted addition - HELD THAT:- On perusal of contents of Satakhat, we find that it contains the photograph and signature of several sellers, however, the part of acknowledgement/receipt of payment is blank. Moreover, the said Satakhat is not signed by seven persons as seen on page No. 12 of assessment order. We also find that the AO has not made any independent investigation of fact, when the assessee right from the beginning was claiming that Satakhat was not materialized. The sellers were the best persons to strengthen the case of Assessing officer, who were not examined by Assessing Officer for the reasons best known to him. As in the case of CIT Vs Fairdeal Textile Park (P) Ltd. [ 2014 (5) TMI 226 - GUJARAT HIGH COURT ] held that no addition could be made only on the basis of agreement to sell, found during the search which was not at all implemented. In view of the aforesaid factual and legal discussion, we do not find any reason to interfere with the order of ld. CIT(A) which we affirm with our additional observation. In the result, grounds of appeal raised by the revenue are dismissed. Unaccounted investment u/s. 69B - additions were made on the basis of incriminating documents extracted from digital devices - CIT(A) deleted addition - HELD THAT:- As in the search action no evidence of on money payment for purchase of impugned land was found. The assessee right from the beginning took his plea that the contents shown on the digital image found in the Pen drive was related with same land transaction which was never acted upon. Kedar Jagirdar was in fact not the owner nor having any relation with the original buyer. The father of assessee filed the settlement application before the Settlement Commission, Mumbai and offered 10% income of the figure mentioned on said Sauda Chithi which was accepted, copy of order of Settlement Commission was filed before the Assessing Officer as well as before the ld. CIT(A). We find that all such facts are not countered by the assessing officer as well as by ld CIT- DR while arguing his case. The seller of the land were the best person to through light on the entire transaction of the land, if the said land was in fact purchased by the assessee as a part of same Sauda Chitthi found during the search action in the pen drive or fresh deal was materialized between them and the assessee. The assessing officer had not taken any effort to examine them for the reasons best known to him. Thus, in absence of any corroborative evidence that any on money was paid by the assessee for purchase of land, we do not find any reason to interfere with the finding of ld CIT(A) which we affirm. In the result, all the grounds of appeal raised by the revenue are dismissed.
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2024 (8) TMI 525
Ex-parte order passed by CIT(A) - HELD THAT:- CIT(A) has passed the order considering the fact that there is no appearance in spite of providing adequate opportunity of hearing and the notices were issued. CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. CIT(A) has issued the notices of hearing of the order, but there was no response and thus the CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the additions of the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the principles of natural justice shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the appeal.Appeal of the assessee for statistical purposes.
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Insolvency & Bankruptcy
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2024 (8) TMI 524
Condonation of delay in filing the appeal - whether the period from 08.06.2023 to 03.01.2024 need to be excluded by extending the benefit of Section 14 of the Limitation Act? - Whether the Appellant is entitled for benefit of Section 14 of the Limitation Act? - HELD THAT:- In M.P. Steel Corporation [ 2015 (4) TMI 849 - SUPREME COURT ], the Hon ble Supreme Court has held that for invoking Section 14, the Application should not be guilty of negligence, lapse or inaction and further there should be no pretended mistake intentionally made with a view to delaying the proceedings or harassing the opposite party. The present is a case where one of the ingredients as laid down by the Hon ble Supreme Court in Consolidated Engineering Enterprises is not being fulfilled, i.e., failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature . It has been held that all the ingredients as noted in the judgment of the Hon ble Supreme Court need to be fulfilled. The judgment in State Bank of India vs. Visa Steel Ltd. [ 2021 (3) TMI 631 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] clearly hold that while computing the period of limitation under Section 61, sub-section (2), time spent in prosecuting the legal remedy need to be excluded. There cannot be any quarrel to the above preposition laid down in the above case. Whereas, the question in the present case is as to whether condition precedent required for applicability of Section 14, are fulfilled in the facts of the case or not? - The above judgment clearly hold that while computing the period of limitation under Section 61, sub-section (2), time spent in prosecuting the legal remedy need to be excluded. Thus, no case has been made out to extend the benefit of Section 14 of the Limitation Act for excluding the period from 08.06.2023 to 03.01.2024. The Appeal having been filed with the delay of 209 days, and the delay being beyond the condonable period of 15 days, IA No.2256 of 2024 field for condonation of delay of filing the Appeal, is rejected. Appeal dismissed.
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PMLA
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2024 (8) TMI 523
Provisional Attachment Order - circular transaction - land property of the appellant was provisionally attached treating it to be `proceeds of crime - time limitation of 180 days. Proceeds of crime - HELD THAT:- Even if the appellant is not named as an accused but he is holding the `proceeds of crime and even if the property if not directly or indirectly obtained out of the crime but is of the value thereof, it would fall in the definition of `proceeds of crime and such property or document can be subjected to seizure/attachment. Provisional attachment should lapse on completion of 180 days - HELD THAT:- Reliance placed in the judgement of Telangana High Court in the case of Hygro Chemicals PharmtekPvt. Limited Vs. Union of India Ors. [ 2023 (3) TMI 1367 - TELANGANA HIGH COURT ] where the period of 180 days was counted after excluding the period between 15.03.2020 till 28.02.2022. The Government had also notified for the exclusion of period of Covid and elaborate discussion has been made in the case of Hygro Chemicals PharmtekPvt. Limited. Thus, the aforesaid need not be reiterated, but it also supports the respondent and thereby a challenge to the order on the ground that it was passed beyond the period of 180 days given under Section 8 (3) of the Act of 2002 is not made out. Coming back to the factual issue, it is necessary to refer to main allegation which exists against M/s Seabird International Pvt. Ltd. and its two Directors Gurinder Singh and Jagmohan Singh and prior to that Pirtpal Singh who had extracted money from 51 students for arranging visa and admission in different colleges in Australia. The amount of Rs.7.56 crores was taken to be `proceeds of crime derived as a result of criminal activity. The detailed investigation has revealed deep involvement of Pirtpal Singh, Jagmohan Singh and Gurinder Singh for generating money to the tune of Rs.7.56 crores from 51 students - The facts on record reveal that the sole purpose of creating circular transaction is to project `proceeds of crime as untainted. In fact, Gurinder Singh and Pirtpal Singh tried to show the amount generated by them out of scheduled offence as bonafide transaction by creating channel of circular transaction with Sant Singh and many others. In the light of the facts referred to above, we do not find a case in favour of the appellant. Appeal dismissed.
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Service Tax
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2024 (8) TMI 522
Extension of period of limitation under Section 73(4B)(d) of the Service Tax Act - extension in case of justifiable reasons and ground available with the Department - HELD THAT:- The show cause notice in the instant case admittedly was issued during the pandemic period i.e., 22-12-2020. Further it also reflects that notices for personal hearing after the reply to the show cause notice was issued on 2-3-2021, 18-3-2021, 19-5-2021, 10-2-2023 and 16-8-2023, directing the petitioners to appear for personal hearing on 10-3-2023, 25-3-2023, 2-6-2021, 17-2-2023 and 28-3-2023 respectively. The petitioner for the initial period submits that since it was peak COVID period, the petitioner was not in a position to enter appearance before the authorities concerned for the personal hearing. If the petitioner themselves take advantage of the pandemic period for not appearing before the authorities, the same condition also prevailed with the Department for not concluding the proceedings within the period as is envisaged under Section 73(4B)(d). The period of limitation has been satisfactorily explained by the counsel for the department. The writ petition not entartained on its merits - The right of the petitioner to challenge the same by way of an appeal stands reserved and protected - petition dismissed.
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2024 (8) TMI 521
Levy of service tax - mining service - supply of tangible goods for use service - time limitation. Mining service - it is submitted that the demand of service tax under the category of mining services is not sustainable as it would amount to manufacture - HELD THAT:- It is clear that the Appellants were engaged in supply of sized stones/ boulders, Ld. Commissioner has not denied this fact. It is found that the demand of service tax under the taxable category of mining services is not sustainable in view of the decision of coordinate bench in case of COMMR. OF CENTRAL EXCISE S. TAX, BOLPUR VERSUS M/S INTEGRATED COAL MINING LTD. [ 2021 (1) TMI 179 - CESTAT KOLKATA ] wherein it was observed ' Sizing of coal is an incidental and ancillary process to make coal marketable and thus complete manufacture of coal and to make it into excisable goods as per Section 2(d) of the Central Excise Act. The process of sizing of coal is also therefore outside Section 65(19) of the Act since it is a process in the manufacture of the final product, sized coal.' Thus, the demand of service tax under the taxable category of mining is not sustainable in the present case. Demand of service tax under the category of supply of tangible goods for use - HELD THAT:- It is found that Ld. Commissioner has not examined the terms of the work orders issued to the Appellants. Ld. Commissioner has confirmed the demand of service tax despite of the fact that he has categorically recorded the submission of the Appellants that effective control and possession of the equipment was transferred to the recipient. It is found that in case of Air Liquide India Holdings Pvt. Ltd. [ 2023 (9) TMI 1495 - CESTAT AHMEDABAD] where it was held that ' It therefore leaves no doubt that credit on Capital goods is available even if they are removed outside from the premises of the Appellants for providing output service. We are therefore of the view that there is no ground for denial of cenvat credit on Capital goods to the Appellants.' Thus, the demand of service tax under the taxable category of supply of tangible goods for use is not sustainable and the same is set aside. Time Limitation - HELD THAT:- The appeals succeed on the ground of limitation as well as suppression or wilful misstatement of fact cannot be alleged on the part of the Appellants as revenue authorities were well within the knowledge of the activities of the Appellants. The appeals filed by the Appellants are allowed.
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Central Excise
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2024 (8) TMI 520
Clandestine removal of excisable goods - Allegation on the basis of various statements recorded from partners of the appellant firm, its employees and some buyers of the goods etc. - Section 9D of the Central Excise Act, 1944 - HELD THAT:- From the reading of the Section 9D it is seen that it is mandatory to provide the cross-examination of the witnesses to the appellant against whom the case of clandestine removal was proposed. Section 9D provides that the cross-examination is mandatory and only after cross-examination of witnesses, the statements can be admitted as evidence to use against the appellant for adjudication of the show cause notice. It is not the choice of the Adjudicating Authority to grant or to deny the cross-examination of the witnesses. Since admittedly the adjudicating authority has rejected the request for cross- examination of the witness, then the statements of the witnesses cannot be relied upon as admissible evidence. In the case of Motabhai Iron Steel Industries [ 2014 (10) TMI 723 - GUJARAT HIGH COURT ] it was held that 'no reliance can be placed on the statement of such witness who has not subjected himself to cross-examination by the affected party. Under the circumstances, the statement made by Shri Arjandas lost its efficacy and therefore, could not have been used against the assessee. Besides, the Tribunal has also found that M/s. Star Associates was regularly supplying goods to the assessee in the past and on no occasion, it was found that they had issued invoice without actually supplying the goods. It is in the light of the aforesaid facts that the Tribunal has deleted the disallowances of credit of Rs. 14,42,177/-. Under the circumstances, it cannot be said that there is any infirmity in the view taken by the Tribunal while deleting the disallowance of credit of Rs. 14,42,177/-.' Thus, it is settled that without cross-examination of the witness their statements recorded under Section 14 of the Central Excise Act, 1944 cannot be accepted and the demand on that basis cannot be confirmed on the charge of clandestine removal. It is found that the case is merely based on the statements and when as per our observation the said statement cannot be used as evidence then only evidence left is loose paper/sheets/dispatch chits. On perusal of those documents, we find that appellant has pointed out many discrepancies and there is a clear contradiction in the show cause notice itself about the statement of kiln operator. These documents in isolation cannot be considered as sole evidence to conclude the clandestine removal for the reason that the veracity of these loose papers/sheets/chits is also based on the statements - It is settled position in various judgments that only on the basis of loose paper/diaries, charge of clandestine removal cannot be established. The loose papers/sheets/chits cannot be accepted as conclusive evidence to establish the clandestine removal. Therefore, on both the counts i.e. statements without carrying out any cross-examination and loose papers/sheets/dispatch chits without having its' authenticity cannot be used as evidence for clandestine removal. Accordingly, the revenue could not prove beyond doubt their case of clandestine removal of excisable goods, hence the impugned order is not sustainable. Hence, the same is set aside. Since the demand itself is not sustainable, penalty imposed on various persons will also not survive - as regard the penalty imposed on the partners of the appellant firm, it is settled legal position by the Hon ble Gujarat High Court in the case of PRAVIN N. SHAH VERSUS CESTAT [ 2 012 (7) TMI 850 - GUJARAT HIGH COURT ] and COMMISSIONER OF CENTRAL EXCISE VERSUS JAI PRAKASH MOTWANI [ 2 009 (1) TMI 501 - GUJARAT HIGH COURT ] that the separate penalty on the partner of the partnership firm cannot be imposed. The impugned order is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2024 (8) TMI 519
Reopening the assessment based on subsequent judgment on the ground that in the judgment of Mohd. Ikram Khan the transaction in question was held to be amenable to tax - HELD THAT:- It is clear that at the time when the original assessment order was passed, it was duly considered by the Assessing Authority that the petitioner had replaced the spare parts of the vehicle during the period of warranty and such replacement of spare parts during the aforesaid period, the assessee was not liable to tax and consequently granted the exemption. This legal ground was clearly reversed by the Supreme Court in the facts of the present case and the transaction where the revisionist had been given a credit note from the manufacturer for replacing spare parts during the period of warranty came within the ambit of sale and amenable to tax. The question herein as to whether the said assessment could have been reopened in light of the aforesaid judgment. This aspect of the matter has been duly considered by this Court in the case of M/S SAMSUNG INDIA ELECTRONICS PVT. LTD. VERSUS STATE OF U.P. AND 2 OTHERS [ 2016 (12) TMI 630 - ALLAHABAD HIGH COURT] has held ' a subsequent judgment cannot be used to reopen assessments or disturb past assessments which have been concluded.' The reopening of proceedings of completed assessment in question is rendered bad and colourable exercise of power and without jurisdiction. It is also clear that once the assessment has become final, it should not be reopened on the basis of subsequent judgment of the Supreme Court. This Court is of the view that further reassessment have been initiated on the basis of subsequent judgment of the Apex Court which cannot be used to reopen assessment or disturbed to pass assessment which have been concluded. The department cannot be authorized to reopen assessment, which stood closed on the basis of law as and it stood at the relevant time. The writ petition is allowed.
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