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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 20, 2020 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Central Excise CST, VAT & Sales Tax Indian Laws Articles AAR, Andhra Pradesh ruling on composite supply to M/s. CMC VELLORE ASSOCIATION INDEPENDENCE OF AN ARBITATOR News Cabinet approves Fair and Remunerative Price of sugarcane payable by sugar mills for the sugar season 2020-21." Cabinet approves measures to provide liquidity in the Power Sector Dues to the financial stress caused by COVID-19 Notifications Customs 79/2019 - dated 19-8-2020 - Cus (NT) Amendment of Notification No.134/2016-Customs (N.T.) dated 02.11.2016 for omitting Rule 4 of the Deferred Payment of Import Duty Rules, 2016 78/2020 - dated 19-8-2020 - Cus (NT) Amendment of Notification No.135/2016-Customs (N.T.) dated 02.11.2016, for Extension of Deferred Payment of Import Duty to Authorised Public Undertakings DGFT 28/2015-2020 - dated 18-8-2020 - FTP Amendment in Export Policy of textile raw material for masks and coveralls FEMA FEMA 6 (R)/ (2)/2020-RB - dated 11-8-2020 - FEMA Foreign Exchange Management (Export and Import of Currency) (Amendment) Regulations, 2020 GST - States FTX.56/2017/Pt-I/300 - dated 1-7-2020 - Assam SGST Seeks to extend the one-time amnesty Scheme to file all FORM GSTR-I from July 2017 to November 2019 till 17th January 2020 FTX.56/2017/Pt-III/444 - dated 2-6-2020 - Assam SGST Seeks to give effect to the provission of rule 87(13) and FORM GST PMT-09 of the Assam GST Rules S.O. 157 - dated 18-8-2020 - Bihar SGST Bihar Goods and Services Tax (Ninth Amendment) Rules, 2020 S.O. 156 - dated 18-8-2020 - Bihar SGST Seeks to amend Notification No. S.O. 110 dated the 6th May, 2020 S.O. 155 - dated 18-8-2020 - Bihar SGST Seeks to amend Notification No. S.O. 212 dated the 8th May, 2019 S.O. 54 - dated 17-8-2020 - Jharkhand SGST Screening committee on anti profiteering 36/2020 – State Tax - dated 17-8-2020 - Jharkhand SGST Amendment in Notification No. 29/2020 – State Tax, dated the 25th June, 2020 35/2020 – State Tax - dated 17-8-2020 - Jharkhand SGST Seeks to extend due date of compliance which falls during the period from "20.03.2020 to 29.06.2020" till 30.06.2020 and to extend validity of e-way bills Indian Laws A-105/CCPR/NCDRC/2020 - dated 24-7-2020 - Indian Law Consumer Protection (Consumer Commission Procedure) Regulations, 2020. Money Laundering G.S.R. 512(E) - dated 19-8-2020 - PMLA Insurance Regulatory and Development Authority of India, notifies the reporting entities to undertake Aadhaar authentication service of the Unique Identification Authority of India under section 11A of the Prevention of Money-laundering Act, 2002 Highlights / Catch Notes GST Raid - validity of search and seizure proceedings - attachment of Bank Accounts - the said principle does not apply insofar as an attachment made to protect the interest of the revenue. If notice is issued before attachment, then the account holder could as well defeat the purpose, by withdrawing the amounts kept in such accounts. - The rule for a hearing does not arise prior to attachment. Whether it arises before seeking disbursement of the amounts remaining in the account, we are not called upon to adjudicate as of now. - HC Visit to Get Source Raid - validity of search and seizure proceedings - Section 67 of the CGST Act - simultaneous proceedings of investigation when audit in progress - there are no infirmity in the audit and investigation proceeding being continued simultaneously. - HC Visit to Get Source Classification of goods - masks and sanitizers - classified as ‘Essential Commodity’ under the Essential Commodity Act, 1955 or not - seeking reduction of rate of GST from 18% to either 5% or 12% - Merely, because this petitioner feels that the GST rate applied on masks and sanitizers is excessive, this cannot be a reason for issuing a writ of mandamus and direct the respondents to reduce tax on the said commodities. - HC Visit to Get Source Income Tax Belated filing of ITR - offences u/s 276(c)(c) - Admittedly, the respondent on the inspection dated 18.12.2012, had seized the relevant book of accounts and as such the petitioner could not able to file the return of income on or before 05.08.2013. Therefore, the petitioner had no wilful intention to evade tax as alleged by the respondent - Further since tax has been paid in 2018, the offence is not at all attracted as against the petitioner herein, and the entire criminal proceedings pending against the petitioner is nothing but clear abuse of process of law. - HC Visit to Get Source TDS u/s 192 or 195 - salary paid to expatriates - assessee has deducted tax at source u/s 192 of the Act. On the given facts of the case, we are of the considered opinion that the provisions of Section 195 of the Act do not apply. - AT Visit to Get Source Draft assessment order u/s 144C in the name of a non-existent company - amalgamation of the company under the scheme of merger - the draft order framed u/s 144C(1) of the Act is in the name of a non-existent company and accordingly, void ab initio, making all subsequent proceedings non- est. First substantive grievance is, accordingly, allowed. - AT Visit to Get Source Revision u/s 263 - Addition u/s 68 - second revisional jurisdiction of Pr. CIT - Whether the AO (called second AO) has not conducted enquiry while framing re-assessment order - if the Second Pr. CIT had to find the order of Second AO erroneous for lack of enquiry or for not collecting the entire facts, then the Second Pr. CIT ought to have called for the additional facts which he thinks that the Second AO has not collected from the assessee or the shareholders and then explained in his impugned order as to what effect those additional documents would have made on the second assessment order/reassessment order or in other words the impact on the decision making process of framing the second assessment order due to the failure of second AO’s omission to collect the additional documents. - AT Visit to Get Source Addition u/s 68 - Unexplained cash credit - it is to be construed that no amount in real sense has been found to be credited in the accounts of the assessee for the current assessment year and if that be so, then how an inquiry for the purpose of section 68 can be made. Therefore, there is no need to examine this evidence i.e. confirmation, capacity and genuineness of 28 applicants. - AT Visit to Get Source Fee u/s 234E - CIT(A) deleted the fee - where the TDS statement has been processed by the CPC and while processing the same, fee u/s 234E has been levied having tax effect less than the prescribed limit, it will continue to be governed by low tax effect circular issued by the CBDT which is binding on the Revenue. - AT Visit to Get Source Customs Import of Foreign Flag Vessel - Appellants have not been able to provide any definitive proof to show that during the period in dispute the vessel did proceed to a place beyond Indian territorial waters for any purpose. Therefore, the appellants cannot take recourse to the definition contained in Section 2(21) (ii) of Customs Act, 1962, to claim that the impugned vessel is a foreign going vessel - AT Visit to Get Source Indian Laws Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - The defence taken by the accused that the loan transaction was with the father of the complainant but not with the complainant since has remained not proved, the Courts below have rightly held that the complainant has proved the alleged guilt against the accused which is punishable under S.138 of the N.I. Act. - HC Visit to Get Source IBC Hearing of petition before NCLAT - matter listed for hearing on virtual mode - grievance is that it should not be partly physical and partly through virtual hearing - Any assertion on oath made in any petition cannot dislodge what is recorded in the order of the Court or Tribunal. Even if it has happened, there is no contemporaneous record to suggest the same. - petition rejected with cost of ₹ 10,000/-. - HC Visit to Get Source Initiation of CIRP - Settlement of disputes between the parties - where interests of the majority of stakeholders are in serious jeopardy, it would be inappropriate to allow settlement with only two creditors which may amount to perpetrating of injustice. Exercise of inherent powers in such cases would be a travesty of justice. - AT Visit to Get Source Maintainability of application - initiation of CIRP - Period of limitation after default - the Adjudicating Authority relied on the balance sheet to hold that there was acknowledgement and thus, the claim was within limitation. - even if we are to consider that contents in Balance Sheet could be read as acknowledgment even then if we read the contents in balance sheet in the matter, the Corporate Debtor acknowledged as such the liability to pay the alleged outstanding debt. - AT Visit to Get Source Case Laws: GST 2020 (8) TMI 418 Raid - validity of search and seizure proceedings - Section 67 of the CGST Act - simultaneous proceedings of investigation when audit in progress - attachment of Bank Accounts - allegation of harassment and high-handedness - HELD THAT:- The allegations raised of harassment and high-handedness cannot be considered in a petition under Article 226 of the Constitution. An operation carried out by a statutory authority invested with the powers of search, inspection and seizure, by reason only of such activities having been carried out in the residences and offices of any person under investigation for a long time, cannot be labeled as harassment or high-handed. Nor could the inconvenience caused to the person under investigation, especially of remaining in the premises for the entire duration, termed to a detention pursuant to an arrest. A search and seizure operation necessarily brings with it certain discomforts, which are to be endured in the best interest of the person under investigation who witnesses every action of the inspection team. The allegations are also not substantiated which, we perfectly understand, are impossible of substantiation, especially in a petition under Article 226. Apart from the invalidity urged of the very search, inspection and seizure, we are not considering any of the issues so raised in the writ petition and in the appeal. Simultaneous proceedings of investigation having been commenced when already an audit was in progress - HELD THAT:- Audit under section 65 is a routine procedure to be carried out by the Commissioner in such frequency and in such manner as prescribed in the rules; which is independent of an investigation under Section 67. Section 67 is a more onerous procedure which can be initiated only on the satisfaction of an Officer not below the rank of a Joint Commissioner of, suppression of taxable transactions, excess claim of input tax credit, contravention of the provisions of the Act and Rules, keeping of goods and accounts in contravention of the provisions, escapement of tax, secreting of goods or material liable to confiscation or relevant or useful in any proceedings under the Act and any act leading to evasion of tax. Investigation under Section 67 is no routine procedure as is an audit under section 65. In this context we cannot but observe that the appellants, on their own admission, were issued with notice dated 17.03.2020, Exhibit P2, calling for details of the LCOs. There is nothing stated in the writ petition as to how and in what manner the appellants responded to the said notice - there are no infirmity in the audit and investigation proceeding being continued simultaneously. But the learned Standing Counsel informs us that in the wake of the investigation commenced, the audit would not be proceeded with. Kaish Impex Private Limited, [ 2020 (1) TMI 933 - BOMBAY HIGH COURT ] the decision of a Division Bench of the Bombay High Court, is not applicable to the facts of the instant case. Kaish Impex Private Limited was summoned with reference to an enquiry against a taxable person, one Maps Global. The allegation against Maps Global was fraudulent availing of input tax credit. On scrutiny of bank accounts of the said taxable person, it was noticed that an amount was transferred to one Balajee Enterprises who had transactions with Kaish Impex Private Limited. Simultaneous to the summons issued to Kaish Impex Private Limited, their Bank accounts were also attached - The attachment order specifically spoke of proceedings under Sections 67 and 70 as against Kaish Impex Private Limited. The power to provisionally attach, for the purpose of protecting revenue, is available under Section 83. Such attachment is also in the context of proceedings initiated under the specified Sections of the GST Act. The Division Bench found that Section 70 is not specified in Section 83 and there was no proceeding under Section 67 against Kaish Implex Private Limited. The attachment therein was of an entity who was twice removed from the taxable person subjected to investigation. This was the reasoning on which attachment was interfered with. Here, the Bank accounts attached are of the taxable person, against whom an enquiry is initiated under Section 67. The rule for a hearing does not arise prior to attachment. Whether it arises before seeking disbursement of the amounts remaining in the account, we are not called upon to adjudicate as of now. We leave the matter to be adjudicated before the appropriate authorities or forum. We do not think that the proceedings initiated under Section 67 is improper, illegal or that the actions projected before us were in any manner proceeded with, in an arbitrary or high-handed fashion. Appeal dismissed. 2020 (8) TMI 417 Grant of Bail - evasion of GST - allegations against the firm M/s Vishnu Essence, while the petitioner is neither a partner nor in any other way concerned or connected with the firm - It is contended that the entire case of the respondent is based on the statement of the petitioner recorded under Section 70 of the Act, which was recorded under coercion and duress and was retracted immediately - HELD THAT:- On due consideration of the allegation against the petitioner, evidence produced before the court to show his involvement, the act attributed to him, the part played by him in the alleged tax evasion, parity of his case with the case of the co-accursed persons who have been granted bail and other facts and circumstances of the case, it is deemed appropriate to allow the application. Petition allowed. 2020 (8) TMI 416 Grant of Bail - evasion of GST - clandestine sale of Pan Masala - retraction of statements by the petitioner as well as other co-accused persons - pendency of investigation - Section 70 of the G.S.T. Ac - HELD THAT:- Elaborate discussion of all the evidences, which is otherwise confidential, would not be appropriate as it may affect the case of either party. But on careful consideration of the evidence on record, it is found appropriate to allow the petition The petition is allowed - It is directed that the petitioner Kishore Wadhwani S/o Shri Khanchand Wadhwani be released from custody on his furnishing a personal bond in the sum of ₹ 10,00,000/- with one solvent surety to the satisfaction of the Trial Court for his appearance before it as and when required further subject to the conditions imposed. 2020 (8) TMI 415 Refund of wrongly deducted G.S.T., amount from the security deposit - purchase of rejected wheat - HELD THAT:- The writ petition is disposed of with direction to Managing Director, Uttarakhand Seeds and Tarai Development Corporation Ltd. to take decision on petitioner s representation dated 20.09.2019 (annexed as Annexure No. 12 to the writ petition) as early as possible; but, not later than eight weeks from the date of production of certified copy of this order. 2020 (8) TMI 414 Levy of penalty u/s 129 (3) of the Central Goods and Services Act, 2017 - Principles of natural justice - sufficient and reasonable opportunity of being heard not provided to the petitioner - HELD THAT:- Without going into the legal and factual aspects of the matter, it can be seen from the impugned order at Annexure-E that several documents and circumstances which were neither referred to nor enumerated in the show cause notice at Annexure-B4 have been relied upon by the respondent No.1 in the impugned order. It is not in dispute that no opportunity of personal hearing was given to the petitioner before passing the impugned order - The material on record also indicates that several documents relied upon by the respondent No.1 in the impugned order at Annexure-E were neither brought to the notice of the petitioner nor was he permitted to cross-examine the witnesses with reference to the said documents. In the absence of sufficient and reasonable opportunity being granted in favour of the petitioner, the impugned order is clearly in contravention of principles of natural justice and that the same deserves to be set aside on this ground - matter deserves to be remitted back to the respondent No.1 to consider and dispose off the same afresh in accordance with law - Petition allowed by way of remand. 2020 (8) TMI 413 Classification of goods - Rate of tax - AUS ingredients bases sanitizer - deposit of GST at the Tariff Rate of 18% under the HS Coder 3808-94 instead of 12% - petitioner argued that the impugned show cause notices have been wrongly issued by the respondent-authority by misclassifying the same as alcohol based sanitizer , whereas the sanitizers being manufactured by them are Ayurvedic/ Unani/ Sidha (AUS) ingredient based sanitizers. HELD THAT:- It is submitted that the representation dated 27.07.2020 (P-9), if already submitted, shall be forwarded to the establishment of the GST Council for appropriate consideration in accordance with law. Application disposed off. 2020 (8) TMI 376 Classification of goods - masks and sanitizers - classified as Essential Commodity under the Essential Commodity Act, 1955 or not - seeking reduction of rate of GST from 18% to either 5% or 12% - benefit of Notifications dated 12/03/2020 and 21/03/2020 - HELD THAT:- The petitioners have placed on record an Office Memorandum dated 1st July, 2020 issued by the respondents (Annexure P-5 to the memo of writ petition) wherein it has been stated that inclusion of masks and sanitisers under the Act is not being continued as there were no longer any adverse reports from States and Union Territories regarding availability and price of these commodities. There are no reason to issue mandamus and direct the respondents to extend the notification dated 13th March, 2020 or to include the masks and sanitizers as Essential Commodities under the Essential Commodities Act, 1955. However, the learned Additional Solicitor General, appearing for the Union of India, assures us that the respondents will monitor the situation carefully and take remedial action if required. Reduction of rate of GST on masks and sanitizers - HELD THAT:- It ought to be kept in mind that the rate of tax cannot be challenged in a Court of law unless it is abundantly confiscatory in nature - In the facts of the present case, nothing has been argued out about how the present rate of GST is confiscatory in law. Merely, because this petitioner feels that the GST rate applied on masks and sanitizers is excessive, this cannot be a reason for issuing a writ of mandamus and direct the respondents to reduce tax on the said commodities. Petition dismissed. Income Tax 2020 (8) TMI 412 Scope of Section 44BB - Amount of service tax being statutory levy, received by the appellant from its customers was to be included in calculating the aggregate amount referred to in sub-section (2) of Section 44BB of the Act? - HELD THAT:- Substantial question of law has since been answered in DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION, M/S SMITH INTERNATIONAL INC., M/S BAKER HUGHES SINGAPORE PTE, COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION [ 2019 (4) TMI 1177 - UTTARAKHAND HIGH COURT ] the substantial question of law therein was answered in favour of the assessee, and against the revenue, by holding that the amount reimbursed to the assessee (service provider) by the Oil and Natural Gas Corporation (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in clauses (a) and (b) of sub-section (2) of Section 44BB of the Act. - Decided in favour of the assessee and against the revenue. 2020 (8) TMI 411 Filing return of income belatedly after the expiry of the time limit prescribed u/s 139(1) - offences under Section 276 (c) (c) of the Income Tax Act, 1961 - HELD THAT:- To punish the accused, there must be wilful attempt to evade payment of tax, he must be in possession of the book with false entries, the person should have made false entries in the book of accounts and omitting any entry in the statement of accounts. The petitioner voluntarily disclosed the undisclosed income to the respondent on the inspection conducted u/s 132 on 18.12.2012. Therefore, there is no intention from the petitioner for willful evading of payment of tax. Admittedly, the respondent on the inspection dated 18.12.2012, had seized the relevant book of accounts and as such the petitioner could not able to file the return of income on or before 05.08.2013. Therefore, the petitioner had no wilful intention to evade tax as alleged by the respondent. Petitioner had paid the entire tax amount on 13.03.2018 and the respondent had also acknowledged the same by the acknowledgment dated 14.03.2018. Therefore, the offence under Section 276 (c ) (2) of the Income Tax Act is not at all attracted as against the petitioner herein, and the entire criminal proceedings pending against the petitioner is nothing but clear abuse of process of law. As such it cannot be sustained as against the petitioner and it is liable to be quashed. This criminal original petition is allowed. 2020 (8) TMI 410 Draft assessment order u/s 144C in the name of a non-existent company - Amalgamated Company / Merger - HELD THAT:- There is no obligation upon the assessee to intimate the Assessing Officer and secondly, as mentioned elsewhere, vide letter dated 10.04.2018, the assessee has intimated the AO regarding the dissolution of BICIPL and to transfer all proceedings in the name of the appellant, BIPL. Considering the factual matrix we hold that the draft order framed u/s 144C(1) of the Act is in the name of a non-existent company and accordingly, void ab initio, making all subsequent proceedings non- est. First substantive grievance is, accordingly, allowed. TP adjustment on account of outstanding receivables - HELD THAT:- The undisputed fact is that the assessee is a debt free company. It is also not in dispute that no interest was paid to the creditor/supplier nor any interest has been earned from unrelated party. Moreover, being a 100% captive service provider, the revenue of the assessee is 100% from its AEs. In our considered opinion, the question of receiving any interest on receivables does not arise. Considering the facts of the assessee in hand, in totality, we do not find any merit in the TP adjustment of ₹ 22.16 lakhs and the same is, accordingly, directed to be deleted. TDS u/s 192 or 195 - salary paid to expatriates - Failure of non-deduction of tax at source - assessee explained that reimbursement of salary cost to expatriate employees is not taxable as FIS, both under the provisions of the Act and relevant DTAA, and no withholding tax was required on the same - HELD THAT:- As perused the TDS certificates, Forms 15CA and 15CB, tax deducted by the assessee and all these documents are part of the paper book. There is no dispute that the assessee has deducted tax at source u/s 192 of the Act. On the given facts of the case, we are of the considered opinion that the provisions of Section 195 of the Act do not apply. Considering the facts of the case in totality, in light of judicial decisions referred to hereinabove, we do not find any merit in the disallowance made by the Assessing Officer/DRP. We, accordingly, direct for deletion of addition . 2020 (8) TMI 409 Deduction u/s 54F - Assessee claims to have made payments by the time allowable for filing the revised return of income under section 139 (4) - HELD THAT:- As decided in the case of Smt. Vatsala Asthana [ 2019 (10) TMI 1025 - ITAT DELHI ] in support of the contention that for the purpose of utilisation of the amount for purchases/construction of residential house, the date of filing of return of income under section 139 (1) of the Act has to be construed with reference to the due date prescribed for filing return of income under section 139 (4) of the Act. Respectfully following the above decision rendered by a coordinate Bench of this Tribunal in the light of the decision in the case of K.Ramachandra Rao [ 2015 (4) TMI 620 - KARNATAKA HIGH COURT ] we are of the considered opinion that in case the assessee paid the amount equivalent to or more than the capital gains derived in the sale transaction of the house, the assessee is entitled to claim the relief under section 54F of the Act. We set aside the impugned order and direct the assessing officer to consider the amount utilised by the assessee for purchase of the house till the time allowable under section 139 (4) of the Act for filing the revised return, for deduction under section 54F of the Act. Appeal of the assessee is allowed in part. 2020 (8) TMI 408 Condonation of delay - delay of 502 days - HELD THAT:- CIT(A) has allowed the appeal of the assessee by treating the same as appeal against the order passed by the AO for first quarter of financial year 2009-10 relevant to assessment year 2010-11. The facts are not in dispute that the assessee dully filed the appeal within the period of limitation however, due to bonafide mistake and that too on the part of the tax consultant of the assessee to file one appeal instead of 4 separate appeals for each quarter order passed by the AO. Accordingly, in these facts and circumstances when the assessee has explained the cause of delay which is factually correct as due to bonafide mistake the assessee filed only one appeal instead of four separate appeals against quarterly orders passed by the AO, we condone the delay of 502 days in filing the appeals before the ld. CIT(A). Consequently the impugned orders passed by the ld. CIT(A) dismissing the appeals in limine are set aside and the matters are remitted to the record of the CIT(A) for deciding the same on merits. Needs to say that the assessee be given an appropriate opportunity of hearing before passing the fresh order. Appeals of the assessee are allowed for statistical purposes. 2020 (8) TMI 407 Revision u/s 263 - Addition u/s 68 - second revisional jurisdiction of Pr. CIT - Whether the AO (called second AO) has not conducted enquiry while framing re-assessment order - HELD THAT:- Assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. In the light of the aforesaid discussions and on perusal of the documents, we are of the view that AO s view to accept the identity, creditworthiness and genuineness of the share capital and premium collected from the share subscribers was a plausible view and at any rate can be termed as an unsustainable view on law or facts. Since the assessee company has discharged its onus as discussed and still if the Second Pr. CIT had to find the order of Second AO erroneous for lack of enquiry or for not collecting the entire facts, then the Second Pr. CIT ought to have called for the additional facts which he thinks that the Second AO has not collected from the assessee or the shareholders and then explained in his impugned order as to what effect those additional documents would have made on the second assessment order/reassessment order or in other words the impact on the decision making process of framing the second assessment order due to the failure of second AO s omission to collect the additional documents. Second Pr. CIT has not carried out any such exercise or even spelled out in his impugned order, which all documents the second AO failed to collect for considering the total facts; and even if we presume he has conducted such an exercise, then he has not been able to bring out any adverse factual finding to upset the view of Second AO. No merit in the vague allegation of second Pr. CIT that the second AO has not collected the full facts necessary to decide the issue of share capital premium. Second AO, the assessing authority who is a quasi- judicial office has discharged his dual role as an investigator as well as an adjudicator. Angle of doctrine of merger - second Pr. CIT 4 by passing the second revisional order dated 14.03.2019 has substituted the First Pr. CIT s order passed u/s. 263 of the Act dated 23.08.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 07.12.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the very same subject matter on which specific directions/instructions were given by the First Ld. Pr.CIT, which direction since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e. share capital premium collected by assessee company. Resultantly the second Ld. Pr.CIT, again cannot rake-up the same subject matter without the second Ld. Pr.CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the Second Ld. Pr.CIT has not done, so the second Ld. Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of First Ld. Pr. CIT. And if this practice is allowed, then there will be no end to the assessment proceedings meaning no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safe-guards, restrictions conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. Be that as it may be, as discussed above, we find that the Second Ld. Pr. CIT without satisfying the condition precedent u/s 263 of the Act has invoked the revisional jurisdiction (second time), so all his actions are ab initio void. CIT(A) has made a bald statement that the AO s assessment order attracts Explanation 2(c) u/s. 263 of the Act. However, he failed to spell out in his impugned order how the action of AO while framing the assessment order is not in accordance to any order, direction or instruction issued by the Board under section 119 of the Act. So, the deeming fiction as envisaged in Explanation (2) u/s. 263 of the Act cannot be used to interfere with the order of AO. This action of Ld. Pr. CIT is bad for nonapplication of mind. In the light of the aforesaid discussion and case laws cited supra, we find merit in the appeal filed by the assessee, therefore, we allow the appeal of assessee on the ground that since the Ld. Pr CIT has exercised his revisional jurisdiction u/s. 263 without satisfying the condition precedent as stipulated in section 263 of the Act. Therefore, we hold that the impugned action of the Ld. Pr. CIT is without jurisdiction and, therefore, is null in the eyes of law - Decided in favour of assessee. 2020 (8) TMI 406 Addition u/s 68 - Unexplained cash credit - Year of assessment - whether the assessee is able to discharge of its onus of explaining the source of alleged money received by it or not; or whether this amount is required to be added with aide of section 68 or not ? - HELD THAT:- No actual money was received during this year. The assessee has just passed journal entry and ultimately share application was received in the subsequent year i.e. Asstt.Year 2014-15. Therefore, no inquiry could be made in this year. Assessee has filed a paper book containing 287 pages. We have taken note of all the details tabulated by the ld.counsel for the assessee in his paper book with respect to each share applicant. However, we do not deem it necessary to go through all these details, and record some finding of fact because ultimately even if it is held that assessee was not able to prove the identity or credit-worthiness or genuineness of the transaction, then also in this accounting year this amount cannot be added; because section 68 contemplates that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by the assessee is not, in the opinion of the AO satisfactory, then the sum so credited in the accounts may be treated as income of the assessee of that previous year. The assessee has demonstrated that it has not received any money on account of share application during this year. This statement has been proved by the assessee from the details obtained from the bank, which we have taken note of. Thus, it is to be construed that no amount in real sense has been found to be credited in the accounts of the assessee for the Asstt.Year 2013-14 and if that be so, then how an inquiry for the purpose of section 68 can be made. Therefore, there is no need to examine this evidence i.e. confirmation, capacity and genuineness of 28 applicants. - Decided in favour of assessee. 2020 (8) TMI 405 Unaccounted/Unexplained Income - bogus LTCG - onus of proving the genuineness of the transactions - HELD THAT:- There is nothing on record which establishes the fact that the assessee was acquainted with Shri Vipul Bhat or any of his entities and secondly, the onus casted upon assessee to prove the genuineness of the transactions was already discharged by the assessee. Shri Vipul Bhat, in his statement, stated that one Shri Sandeep Maroo acted as intermediary who introduced Vardhan family to him. No further investigations have been carried out to establish this vital link between the assessee and Shri Vipul Bhat. We do not find any independent investigations by Ld. AO to bring on record any tangible material to corroborate the same - No evident or even allegation of any cash exchange between the assessee and group entities of Shri Vipul Bhat. This is further evidenced by the fact that no substantial incriminating material / wealth of that magnitude has been found during the course of search operations on assessee which would corroborate such presumption and prove that the transactions were sham transactions, in any manner. Assessee could not produce the concerned person of M/s SAL was rightly controverted by submitting that the aforesaid entity was not under the control of the assessee and the assessee was under no obligation to do so. The existence of M/s SAL is beyond doubt since it was a listed corporate entity and secondly, it was subject matter of scheme of amalgamation u/s 391 to 394. The scheme of amalgamation was duly been approved by Hon ble Bombay High Court. Therefore, the existence of the said entity could not be doubted, in any manner. In share sale transactions through online mode, the identity of the buyer of the shares would not be known to the assessee. Therefore, the adverse conclusion drawn by Ld. AO merely on the basis of the fact that the buyer of the shares were group entities of Shri Vipul Bhat, could not be sustained. The fact that there were independent buyers also would rebut the same and weaken the conclusion drawn by Ld. AO. We are not inclined to accept the stand of Ld.CIT(A) in sustaining the impugned additions in the hands of the assessee. Resultantly, the addition on account of alleged Long-Term Capital Gains as well as estimated commission against the same, stands deleted. The grounds of appeal of assessee allowed. 2020 (8) TMI 404 Correct head of income - rental income including the amenity charges received - income from other sources instead of income from house property - HELD THAT:- We noted that the Tribunal in assessee s own case has considered this issue for Assessment Year 2002-03 [ 2015 (11) TMI 1817 - ITAT MUMBAI] considered this issue as amenity charges and held that the same falls under income from house property and not income from other sources. Even otherwise, then issue is absolutely covered by the decision of Hon ble Supreme Court in the case of Shambhu investment Pvt. Ltd. [ 2003 (1) TMI 99 - SC ORDER] . Accordingly, we accept the income declared by assessee under the head income from other sources as against assessed by Assessing Officer under the head income from house property. Hence, we direct the Assessing Officer to consider this income under the head income from house property and not income from other sources. - Decided in favour of assessee. 2020 (8) TMI 403 Revision u/s 263 - incentive received being refund of VAT under the scheme of Government of Gujarat - revenue or capital receipt - CIT was of the view that such incentive was disbursed towards meeting the running expenses and the operating the business and has to be treated as revenue in nature - HELD THAT:- ITAT in the own case of the assessee has decided the identical issue in favour of the assessee. Thus the AO has taken one of the possible view by treating the incentive as capital receipt not chargeable to tax. Therefore, in our considered view the order of the AO cannot be held as erroneous insofar prejudicial to the interest of revenue. In this regard we find support and guidance from the judgment in the case of CIT vs. Max India Ltd [2007 (11) TMI 12 - SUPREME COURT] . We hold that there is no error in the order of the AO causing prejudice to the interest of revenue as alleged by the learned principle CIT. Accordingly we hold that the order passed by the learned PCIT under section 263 of the Act, is not sustainable. Hence we quash the same. Thus the ground of appeal of the assessee allowed. 2020 (8) TMI 402 Fee u/s 234E - intimation u/s 200A(1)(C) - CIT(A) deleted the fee - processing of eTDS statement (s) filed late in contravention to Section 200 for F.Y 2016-17 (Quarter-3) in contrary to Clause (c) to Section 200A(1) inserted by the Finance Act 2015 w.e.f 01.06.2015 - HELD THAT:- As per the Revenue s own submission, DCIT, CPC-TDS Ghaziabad holds concurrent jurisdiction with the AO(TDS)-3, Jaipur over the case, as per the provisions of Section 120 read with 124 of the Income Tax Act, 1961. Therefore, even though CPC has its separate and identifiable functions relating to TDS returns, the officers hold concurrent jurisdiction over such TDS matters with that of the Assessing officer, there cannot be any dispute that both administratively and functionally, the CPC of the Department is part of Income Tax Department and is therefore clearly not an external law enforcement agency qua Income Tax department and that too, as specified in the aforesaid exception. Therefore, in the instant case, where the TDS statement has been processed by the CPC and while processing the same, fee u/s 234E has been levied having tax effect less than the prescribed limit, it will continue to be governed by low tax effect circular issued by the CBDT which is binding on the Revenue. Present appeal filed by the Department is dismissed on account of low tax effect given that the matter is not covered by any of the exceptions so specified and the contentions advanced by the ld DR on merits of the case are left open and not adjudicated upon. Appeals filed by the Revenue are dismissed. Customs 2020 (8) TMI 401 Valuation of imported goods - Silicone Weather Proofing Sealant - Fast Track Acqua tech very high bond foamed acrylic tape - rejection of declared value - revaluation of goods - confiscation with option to redeem on payment of fine - demand of differential duty alongwith penalty under Section 114A of the Act and further penalty under Section 114AA of CA - HELD THAT:- The impugned order has been passed in accordance with law. Further, the appellant have failed to bring any cogent evidence on record, even before the Tribunal, inspite of being regular importer importing under their own brand name. Thus, apparently the appellant has not come with clean hands before this Tribunal. Impugned order upheld - appeal dismissed in toto. 2020 (8) TMI 400 Import of Foreign Flag Vessel - MV Darya Manthan - non-payment of duty in terms of Notification No. 21/2002 or 19/2012 - foreign going vessel or not - Jurisdiction of Commissioner of Customs, Cochin over the import which initially occurred at the port of Paradeep - It appeared to investigation that the dredger was not covered as a foreign flag vessel in terms of Section 2(21) of Customs Act, 1962 and CBEC Circular No. 16/2012 dated 13.06.2012 - demand of duty along with interest and equal penalty under Section 114A of CA. Whether the impugned vessel MV Darya Manthan is foreign going vessel in terms of Section 2(21) of Customs Act, 1962? - HELD THAT:- Understandably, the work undertaken by the vessel is in the port premises and even going by the definition of the Territorial Waters as provided by the counsel himself, the work undertaken is within Territorial Waters. Appellants have not been able to provide any definitive proof to show that during the period in dispute the vessel did proceed to a place beyond Indian territorial waters for any purpose. Therefore, the appellants cannot take recourse to the definition contained in Section 2(21) (ii) of Customs Act, 1962, to claim that the impugned vessel is a foreign going vessel. Therefore, the impugned vessel cannot be treated as a foreign going vessel during the impugned period. Whether the appellants are entitled to the benefit of Notification No.94/96? - HELD THAT:- The first import has taken place in 2007 when there was no duty leviable on such dredgers. Thereafter, the subsequent visits to the Indian Ports by the impugned vessel should be treated as reimport and benefit of Notification No.94/1996-Cus should be made available and duty should be charged to the extent of repair or maintenance charges incurred - this argument is not tenable - the import and export activities as claimed by the appellant are not recorded. The appellants themselves agree that no Bills of Entry and Shipping Bills have been filed. In the absence of clear record to correlate the import and export of the vessel and the extent of repairs claimed to have been undertaken, the appellant s claim cannot be entertained - the appellants cannot claim the benefit of a notification retrospectively, that too having not established the fulfilment of conditions envisaged in the notification. Whether Commissioner of Customs, Cochin has jurisdiction over the import which initially occurred at the port of Paradeep on 11.6.2011? - HELD THAT:- No act of import Vis a Vis the impugned vessel has taken place at the port of Cochin. There is no legal backing to come to a conclusion that the act of import has occurred/completed at Cochin. The only change in circumstances with regard to the vessel at Cochin is that either the disponent and/or the lessee has changed, vis a vis its position in Dhamra Port, where the vessel was already in coastal run as permitted by Paradeep Customs. Per contra, the appellants submit that it is accepted by the department that in May 2011 when it was converted into coastal run; it is evident that the dredger was imported into India for home consumption in Paradeep first by its conversion to coastal run; therefore, Cochin Customs has no jurisdiction to demand duty on imports made at Paradeep Port. Whether the vessel MV Darya Manthan is liable to pay duty on being used for coastal run at Cochin for the period 28.1.2012 to 28.2.2013? - HELD THAT:- The impugned order confirms duty on the vessel imported in 2011, in terms of a Notification issued in 2012. The said Notification is not retrospective, as it effects the substantial rights of an importer. Moreover, we find that duty has been demanded for three periods i.e., 28.1.2012 to 10.10.2012; 16.10.2012 to 08.01.2013 and 09.01.2013 to 28.02.2013 depending on the disponent owners and the companies who took the vessel on lease. We fail to understand as to how duty could be demanded and confirmed for three different periods, when there is no change in the status of the impugned vessel i.e., the vessel continued to be in the coastal run throughout the period. We find that the Notification No.19/2012 dated 17.3.2012, did not envisage any such collection of duty from different lessees during the period. Moreover, customs duty is charged when the act of importation is done - a stand, taken even due to mistaken appreciation of law, cannot be selective. Whether the Commissioner of Customs was right in holding that separate proceedings for demand of duty and seizure of the vessel MV Darya Manthan can be initiated? - HELD THAT:- Cochin Customs had no jurisdiction to demand duty on the impugned vessel and we find that the show-cause notice and adjudication order have been issued without proper authority of law. Moreover, in the instant case, the vessel has been traveling between foreign ports and Indian ports. During the current Journey, the vessel arrived at Paradeep Port on 11-5-2011. If duty was chargeable on vessels as per change in law if any, and if a Bill of entry was needed to be filed in view of the circular issued by CBEC, it was incumbent upon Paradeep Customs to advise the appellants. Paradeep Customs have not only permitted costal run for the vessel but also have accepted bills of entry for ship stores, bunkers etc. Proper officers have boarded the vessel and inspected the documents at various places. Every movement and intention of the vessel was known to the department. Therefore, extended period cannot be invoked in this case - the action cannot be taken on a vessel imported in 2011 on the basis of a clarification issued vide circular in 2012. If the department can view the issue differently at different periods of time, the appellants also can understandably, entertain a bona fide belief on the taxability of the impugned vessel and the procedures to be adopted thereof. In any case, suppression of fact, etc cannot be alleged, and extended period cannot be invoked. Whether Commissioner of Customs was correct in confirming the duty liability jointly on different parties? - HELD THAT:- Learned Commissioner while passing the impugned order confirmed the duty of ₹ 3,28,42,609/- jointly on the owner of the dredger MV Darya Manthan , M/s. Manthan Dredging Ltd., Hong Kong and disponent owner M/s. Samudra Dredgers (UK) Ltd. and M/s. Samudra Dredgers Ltd., London, UK. He also confirmed duty of ₹ 46,73,440/- jointly on the owner of the dredger MV Darya Manthan , M/s. Manthan Dredging Ltd., Hong Kong and the disponent owner M/s. Samudra Dredgers (UK) Ltd. and M/s. Universal Dredgers Ltd., London, UK. We find that such a joint confirmation has no sanctity of law, inasmuch as the exact amount payable by the individual noticees is not given. The order is not enforceable also for the said reason. On this count also, the impugned order is liable to be set aside. Duty demanded at the rate of 6% CVD - HELD THAT:- CVD at the rate of 1% is applicable in terms of Notification No.1/2011. They also submit that the value of the dredger is inflated, relying on a news report about the controversy on Sethusamudram Project, even though the appellants have placed on record the purchase cost of the dredger - this issue does not require consideration, as it is held that the impugned order is not maintainable on the count of jurisdiction, limitation and for the reason that the same is not legally enforceable being jointly confirmed without specifying the due amount payable by individual noticees. Appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2020 (8) TMI 399 Permission to hand over the title documents and possession of the suit property - initiation of CIRP - satisfaction of the entire debt of the plaintiff, as per Resolution Plan - HELD THAT:- Consequent to the aforesaid approval of the Resolution Plan by the learned NCLT, APPL infused ₹ 265 crores in Defendant No. 3, towards the payment of various costs and expenses and towards a one-time settlement of all claims and unclaimed debt against the corporate debtor. Consequent to the receipt of the said amount, the applicant/Defendant No. 2 issued a No Dues Certificate on 24th July, 2020. In terms of the resolution plan, Defendant No. 3 also paid all amounts due to the plaintiff, in the account of the applicant, in its name and trust, and a No Dues Certificate also stands issued by the plaintiff, in acceptance thereof. This fact is accepted by Mr. Manu Nair, learned counsel appearing for the plaintiff, who submits that the grievances, in the plaint, thereby stand redressed. The present application has been moved by the applicant, for permission to hand over the title documents and possession of the suit property, i.e. Plot No. 3, Bhagwan Das Road, New Delhi 110001, to Defendant No. 3, i.e. M/s. Aditya Estates Private Limited. - Application allowed. 2020 (8) TMI 398 Hearing of petition - matter listed for hearing on virtual mode - grievance is that it should not be partly physical and partly through virtual hearing - HELD THAT:- The readiness shown before this Court orally about hearing through virtual platform, it runs counter to his prayer made in this petition at paragraph 35(B), with a view to delay the proceedings, which is ordered by the NCLAT to be heard expeditiously. The sequence of events, which took place on 27.07.2020, the date of hearing, stated on oath by the petitioner, is not recorded in the order by the adjudicating authority dated 27.07.2020, which is at page 28. The said assertion on oath cannot be believed to be true unless it is found in the order itself. Any assertion on oath made in any petition cannot dislodge what is recorded in the order of the Court or Tribunal. Even if it has happened, there is no contemporaneous record to suggest the same. The issue that the hearing before the adjudicating authority whether it should be by virtual mode or physical mode or partly virtual mode or partly physical mode requires to be determined by the authority subject to the instructions issued by the appellate authority or instructions issued by the competent Government in view of a situation like this pandemic for a particular course of action. However, under Article 226 of the Constitution of India, this Court cannot issue mandamus for which there is no prayer made to the authority conducting hearing. If any party has any constraints joining virtual hearing or physical hearing, they may ventilate that grievance before the adjudicating authority or the appellate authority thereof. The reliance placed on the press note dated 27.07.2020 issued by the High Court permitting hard copy i.e. physical filing of the matters in subordinate Courts is again issued to the subordinate Courts by the High Court and that too for the purpose of filing only. Nowhere the High Court has permitted even physical hearing, and therefore, the reliance placed on the same is erroneous. Entertaining this petition any further where the NCLAT has directed the adjudicating authority the expeditious disposal of the proceedings would amount to setting aside the order passed by NCLAT, the jurisdiction of which is not with this Court - this petition is rejected with cost of ₹ 10,000/-. 2020 (8) TMI 397 Valuation - Liquidation of Corporate Debtor - allegation that the Reserve price of ₹ 52.83 Crores has been kept at a dismal low - valuation is challenged on the ground that valuers have proceeded on the basis of wrong assumption that the land in question is Agricultural in nature, whereas, it is an industrial land - Whether the valuation and consequential Sale Notice is in accordance with the provisions of Regulation 35(3) (4) of the IBBI (Liquidation Process) Regulation, 2016? HELD THAT:- Conversion of land from agriculture to any other use is governed by the Punjab Scheduled Road and Controlled Areas Restriction of Unregulated Development Rules, 1965. Rules 26 (D) states that there is condition to be fulfilled prior to conversion which includes, payment of development charges for External Development Works. Rule 26 (E) states that only upon the fulfillment of condition of Rule 26(D) permission will be granted for change of land use. Company under Liquidation received notice from the MCF dated 16.12.2002 in which it is mentioned that the permission for change of land use for setting up an industrial unit for land in question is allowed, in accordance with the condition of CLU II Agreement executed on 24.10.1978 as per requirement of Rule 26(D) of Controlled Area Rule, 1965. In the notice there was a demand of ₹ 1,21,80,505/- for the amount of External Development Charges. The Company under Liquidation was required to pay this amount within 30 days. Admittedly, no such amount of EDC has been paid to the MCF. Therefore, as per Rules land use was not changed from agriculture to industrial - the land in question is Agricultural land though in past, it was used as industrial land however, as per Rules use of land was not changed. It cannot be said that valuers have determined the valuation of the land in question on the basis that use of land in question is Agricultural. It is also argued that as per the Circle Rate of the agriculture land the valuation of the land in question is amounting to ₹ 99 Crores, no such evidence is placed on record. However, while deciding earlier Application of the Appellant the Ld. Adjudicating Authority directed the Appellant to produce evidence in this regard before the Liquidator but, the Appellant was not able to produce any evidence and produced any bidder with better price. In the Sale Notice nothing is mentioned which prejudices the prudent bidder for bidding. It is pertinent to note that the Ld. Adjudicating Authority while deciding the objections granted an opportunity to the Appellant, to produce any person who is prepared to purchase the land in question at price higher than the Reserve price. He may also file his bid before the Liquidator before the closing date. In terms and conditions of the direction the Appellant was not able to produce any bidder with better price. The land in question was earlier put to e-auction during Liquidation in March, 2019 with Reserve price of ₹ 52.83 Crores and no bid was received even at a Reserve price and the Applicant had failed to identify any bidder/buyer whatsoever, inspite of opportunity given vide order dated 08.04.2019 passed in CA No. 501 (PB)/2019 - there is no substance in the objections raised in these Appeals, in regard to valuation of land and Sale Notice. Appeal dismissed. 2020 (8) TMI 396 Maintainability of application - initiation of CIRP - Settlement of disputes between the parties - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not. Whether this is a fit case for invoking Rule 11 of the NCLAT Rules to allow the parties to settle the dispute? - HELD THAT:- Whether the allottees in the instant case are speculative investors or want to jump the ship, is for the Adjudicating Authority to determine when approached under Section 65 of the I B Code . That situation is not obtaining in the instant case as of now the joint Settlement of the Corporate Debtor with Respondent Nos.1 and 2 is confined to their claims and nothing beyond that. No issue of the nature referred to hereinabove has been raised in this appeal, therefore, the same does not require consideration. Admittedly, the Interim Resolution Professional has received 283 claims from allottees of different projects, Financial Creditors, Operational Creditors, other Creditors and Employees as detailed in para 10 of the reply filed by Respondent No.3 and the Settlement Deed does not take care of the interest of Claimants other than Respondent Nos.1 2. Therefore, allowing of withdrawal of application on the basis of such Settlement which is not all-encompassing and being detrimental to the interests of other Claimants including the allottees numbering around 300 would not be in consonance with the object of I B Code and purpose of invoking of Rule 11 of the NCLAT Rules. In a case where interests of the majority of stakeholders are in serious jeopardy, it would be inappropriate to allow settlement with only two creditors which may amount to perpetrating of injustice. Exercise of inherent powers in such cases would be a travesty of justice. Whether application filed by Respondent Nos. 1 2 under Section 7 of the I B Code was not maintainable? - HELD THAT:- The impugned order dated 17th March, 2020 initiating Corporate Insolvency Resolution Process against Corporate Debtor cannot be sustained. The Adjudicating Authority has landed in grave error in admitting the application of Respondent Nos.1 and 2 under Section 7 who claimed to be the Financial Creditors in their capacity as decree-holders against the Corporate Debtor on account of non-payment of the amount due under the Recovery Certificate dated 10th August, 2019 issued by the UP RERA while execution of decree/ recovery of amount due under Recovery Certificate would not justify triggering of Corporate Insolvency Resolution Process. We are also of the firm view that the application of Respondent Nos. 1 and 2 was moved for execution/ recovery of the amount due under the Recovery Certificate and not for insolvency resolution of the Corporate Debtor. The impugned order suffers from grave legal infirmity and cannot be supported. Application dismissed. 2020 (8) TMI 395 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - impugned order assailed on the ground that the debt was payable in law as the same had been acknowledged by the Corporate Debtor in its balance-sheet of financial years commencing from 2010 to 2016 which for purpose of Section 18 of the Limitation Act amounted to acknowledgement of liability on the part of the Respondent (Corporate Debtor) - HELD THAT:- The determination of the claim of the proceedings before the DRT would neither extend the time nor exclude the period of limitation. The limitation commenced from the date of default reckoned on the basis of classification of Corporate Debtor s account as NPA would not admit of any extension or exclusion on the basis of pursuit of a remedy under the SARFAESI Act, 2002 or in a recovery proceedings before the DRT. The date of default computed with effect from the date of account of the Corporate Debtor being classified as NPA would not shift as in the instant case proceedings taken before the DRT for recovery of the financial debt would not be a proceeding being pursued before a wrong forum nor would that be a continuation of the cause of action. The argument advanced on behalf of the Appellant to find fault with the impugned order on the ground of limitation being extended on account of the financial debt being reflected in the balance-sheet/annual return of the Corporate Debtor for the relevant period has to be repelled - the default in respect of the financial debt admittedly declared as NPA occurred on 20th February, 2010 and the debt was barred by limitation - Appeal dismissed. 2020 (8) TMI 394 Maintainability of application - initiation of CIRP - unpaid Operational Debt - pre-existing debt or not - Adjudicating Authority has rejected the application mainly on the ground that the Applicant has failed to prove the Operational Debt and its default and further on the ground of pre-existing dispute - HELD THAT:- Admittedly demand notice in Form 3, under Rule 5 of the Adjudicating Authorities Rules has been issued on 03 June 2019. In reply to the demand notice dated 14 June 2019 the corporate Debtor has acknowledged the receipt of the demand notice on 06 June 2019. Thus, reply to the demand notice is given within the statutory period of ten days. On perusal of the documents submitted by the parties, it is evident from the Letter dated 08.01.2019 which is signed by both the parties, that the Applicant had failed to complete the Tranche II Conditions Precedent as a result of which the Corporate Debtor had exercised its right under the BTA and set-off and adjusted the Tranche III payment of ₹ 6,00,00,000/-. It is further evident from the Letter of Corporate Debtor dated 06.03.2019, wherein the Corporate Debtor had demanded a refund from the Applicant of ₹ 15.01 Crores along with interest for violation of terms of Letter dated 08.01.2019 by the Applicant, in the same Letter the Corporate Debtor had also disputed that the Applicant is in non-compliance of the BTA and therefore is not liable to receive Tranche II and Tranche III payment under the BTA. These disputes by the Corporate Debtor are raised before the receipt of demand notices - there is a plausible contention in the defence raised by the corporate debtor which requires further investigation and that the alleged dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. The Ld. Adjudicating Authority has rightly dismissed the application filed under Section 9 of IBC - Appeal dismissed. 2020 (8) TMI 393 Maintainability of application - initiation of CIRP - service of SCN - Reply to the notice, raising dispute - pre-existing dispute or not - Appeal filed pointing out various documents to show that there were deficiencies in service including delays and because of that the Work Order was terminated and that Adjudicating Authority did not give proper opportunity to the Appellant to defend the action - HELD THAT:- The Adjudicating Authority was proceeding with an important proceeding like one under IBC and even if the Appellant had not appeared, it was apparent from the application under Section 9 filed itself that there was pre-existing dispute. The Adjudicating Authority referred to the averments made by the Operational Creditor in Para- 2 of its Order and the averments themselves show there were incomplete works and Corporate Debtor had terminated Work Order. The Learned Counsel for the Appellant has referred to Rejoinder and trail of e-mails dated 27.09.2016, 29.09.2016, 30.09.2016, 04.10.2016, 14.10.2016, 19.10.2016, 23.10.2016, 26.10.2016 09.11.2016. sent by Appellant to Corporate Debtor which show that there were disputes regarding workmanship and time factor and the Learned Counsel for Appellant states that because of such aspects the Work Order was terminated on 17th November, 2016. The Operational Creditor kept quiet for long time and then sent Notice under Section 8 which was duly replied - Considering all this, it is found that there were pre-existing disputes and it was inappropriate for the Adjudicating Authority to admit application under Section 9. Application dismissed. 2020 (8) TMI 392 Liquidation of Corporate Debtor - Sections 33(1), 33(2) and 33(3) of the I B Code, 2016 - Appeal is filed mainly on the ground that the Adjudicating Authority has failed to acknowledge the fact that the Respondent No.2/IRP Mr Manish Kumar Bhagat was unable to perform any of the necessary steps under the CIR Process, i.e. to prepare Information Memorandum, evaluation matrix, evaluation of assets etc. which are significant towards achieving the objective of the Code. Can the Resolution Professional, with the approval of CoC with 66% vote share, directly proceed for the liquidation of Corporate Debtor Company without taking any steps for Resolution of the Corporate Debtor? - HELD THAT:- It is apparent that statutory provision permits CoC to take the decision for liquidation of Corporate Debtor at any stage of CIRP, but before confirmation of Resolution Plan. In the instant case, the CoC intentionally deferred the matter for approving EoI for inviting the Expression of Interest for submission of Resolution Plan and unanimously decided to liquidate the Corporate Debtor. As per the explanation added to sub-clause (2) of Section 33 of the I B Code, it is clear that the CoC has the power to order for liquidation at any stage of CIRP but before confirmation of Resolution Plan - It is germane to mention that CIRP of the Corporate Debtor was initiated on 10th July 2019 and during Corporate Insolvency Resolution Process, the CoC unanimously, with 100%vote share took the commercial decision to liquidate the Corporate Debtor, which is non-justiciable. There is no illegality in the decision of CoC in liquidating the Corporate Debtor before taking any steps for inviting Expression of Interest for submission of Resolution Plan - Appeal dismissed. 2020 (8) TMI 391 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Operational Debt - HELD THAT:- The submission of the Counsel for the Appellant that amounts of ₹ 1,95,79,294/- and ₹ 1,95,34,823/- dated 21.10.2017 and 10.11.2017 respectively are reflected in the journal entries in the ledgers of the sister concern M/s Olympus Metal Private Limited is unsustainable specially keeping in view the evidence on record and the specific pleading by the Operational Creditor in their Rejoinder that these amounts have been paid to them through RTGS Bank transfer. There are no substantial reasons given by the Corporate Debtor for having sent a letter authorising the transfer of the same amount in favour of a third Party, when the same amounts have admittedly been paid to the Operational Creditor itself. Hence, there are force in the contention of the Learned Counsel appearing for Operational Creditor that these two amounts were never claimed as Operational debt as they have already been paid. There is no documentary evidence filed by the Appellant to substantiate their plea that all accounts have been reconciled and signed by both the Parties except for filing these confirmatory letters which portray so many discrepancies and therefore, inspire no confidence. Both the defences raised by the Appellant s Counsel are mutually exclusive and cannot coexist as a debt cannot be disputed and discharged at the same time - the Appellant did not raise any plausible contention requiring further investigation and the argument raised is not substantiated by any evidence. There is no illegality or infirmity in the Order passed by the Adjudicating Authority - Appeal dismissed. 2020 (8) TMI 390 Maintainability of application - initiation of CIRP - Operational Debt - Petition was dismissed by Ld. Adjudicating Authority holding that the Applicant due to its inconsistent conduct has been unable to establish that the amount being claimed by it was owed by the Respondent and that the Respondent has defaulted in the payment - HELD THAT:- It is found out that only ₹ 22,56,833/- was due to be paid to the Appellant and he has also handed over the cheque but Appellant has refused to accept the said cheque. i) Admittedly, the Operational Debt is exceeding ₹ 1 lakh. ii) The Appellant sent notice under Section 8 of the IBC to the Respondent and the Respondent have accepted and was not disputed the amount. iii) The Appellant have also produced documentary evidence in the support of operational debt before the Ld. Adjudicating Authority and this Appellate Tribunal. iv) In view of the aforesaid, admitted fact, the Ld. Adjudicating Authority committed error of record and not considered the judgment of the Hon ble Supreme Court in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, [ 2017 (9) TMI 1270 - SUPREME COURT ] wherein Hon ble Supreme Court laid down the law regarding powers of Adjudicating Authority passing the order of under Section 9 of the IBC. v). The Ld. Adjudicating Authority failed to appreciate the documents placed on record along with Application under Section 9 of the IBC . vi). From the record as we find that the Respondent has defaulted to pay more than ₹ 1 lakh and in absence of any pre-existing dispute and the record being complete, the Application under Section 9 preferred by the Appellant was fit to be admitted. Case remitted to the Ld. Adjudicating Authority for admitting the application under Section 9 of the IBC after Notice to both the parties and further to enable the Corporate Debtor to settle the matter prior to the admission - appeal allowed by way of remand. 2020 (8) TMI 389 Approval of Resolution Plan - alleged illegalities committed in the conduct of CIRP - Violation of principles of natural justice - Appeal is filed mainly on the ground that impugned Order has been passed in violation of Principles of Natural Justice, as one of the Members of the Bench, which passed the impugned Order, was not a Member of the Bench that had heard the arguments. Whether the Resolution Professional with the approval of CoC, was authorized to accept the Resolution Plans after the expiry of the deadline for submission of the Bid, without extending the timeline for submission of EOI? - Whether the act of the Resolution Professional, with the approval of CoC, in accepting the Resolution Plan after the expiry of the deadline for submission of Resolution Plan, can be treated as an act under commercial wisdom of the CoC? - HELD THAT:- After the expiry of the deadline for submission of Resolution Plan, the Resolution Professional, with the approval of CoC, was fully authorized to invite fresh invitation for Expression of Interest for submission of Resolution Plan. It is apparent that three notices for inviting Expression of Interest were issued and the offer was open to the public to submit Resolution Plans. When Expression of Interest is invited, then notices should be published, and the offer for inviting EOI should be made public. It is noticed that the Resolution Professional had earlier issued public notices in Form-G as per Regulation 36A on 24th August 2018, whereby offer was made public to submit EOI/Resolution Plan by 06:00 pm on 28th September 2018. It is also on record that another notice in Form-G was published by Resolution Professional on 09th November 2018, which was also made public and the offer was made to submit Resolution Plan by 06:00 pm on 13th December 2018 - All the above notices inviting Expression of Interest were made public, and Resolution professional under Regulation 36A published the notice in Form-G as per CIRP Regulation, 2016. For approval of Resolution Plan the Adjudicating Authority can only exercise power U/S 30(2) read with Sec 31(1) and the Appellate Court can only exercise its power under Sec 61(3) of the I B Code - Thus it is clear that approved Resolution Plan can be challenged before the Adjudicating Authority on limited grounds referred to in Section 30(2) or the Appellate Authority on ground of material irregularity in exercise of the powers by the Resolution Professional during the Corporate Insolvency Resolution period. The material irregularity in exercise of powers by the Resolution Professional, even with the approval of CoC, in the conduct of CIRP cannot be treated as an exercise of Commercial Wisdom. In the instant case, the Adjudicating Authority has not given any finding on the issues raised in MA 1039 of 2019 by the Appellant, specifically regarding illegalities committed, in accepting the Resolution Plan of the successful Resolution Applicant. The Adjudicating Authority has justified the actions of the Resolution Professional on the ground that the alleged act of accepting the Resolution Plan is based on the commercial decision of the CoC. It is important to mention that the approval of the Resolution Plan depends on the business decision of CoC. Still, the CoC is not empowered to approve the illegalities committed in the conduct of CIRP - After expiry of the deadline for submission of EOI, CoC was fully competent to extend the timeline for submission of EOI. It could have done so by following the Rules and Regulations as per due process. We have noticed that earlier, the RP had thrice issued notices in 'Form G' for inviting Expression of Interest. As to why the same procedure was not adopted in accepting the Resolution Plan of successful Resolution Applicant/Respondents No. 2 and 3, the RP has failed to come up with any proper justification. Whether Amended Regulation 36A, which came into effect from 04.07.2018, will be applicable in this case, where CIRP is initiated against the Corporate Debtor before coming into force of the amended Regulation? - HELD THAT:- Regulation 36A came into force w.e.f. 04th July 2018 by the amendment in CIRP Regulation, 2016. There is nothing in the amended Regulation which provides for retrospective operation of the amended Regulation - However, the Learned Counsel for the Respondent No.1 contends that Regulation 36A(6) was introduced vide Notification No. IBBI/2018-19/GN/REG031, which clearly states that the amended CIRP Regulations shall apply to CIRP commencing on or after 04th July 2018. The law intends that for CIRPs commencing before 04th July 2018 (like the present case), the earlier CIRP Regulation (as they stood before the amendment) should apply. The Corporate Debtor was admitted to CIRP on 14th May 2018, and hence, the amendments introduced vide notification No. IBBI/2018-19/GN/REG031 are not applicable to Corporate Debtor's CIRP. Regulation 36A(6) was introduced vide Notification No. IBBI/2018-19/GN/REG031, which clearly states that the amended CIRP Regulations shall apply to CIRP commencing on or after 04th July 2018.The Corporate Debtor was admitted to CIRP on 14th May 2018, and hence, the amendments introduced vide notification No. IBBI/2018-19/GN/REG031 is not applicable to Corporate Debtor's CIRP. Whether Judgment of the Bench consisting of Member (Technical), who has not heard the argument regarding MA No.1039 of 2019 is valid? - HELD THAT:- The salutary principle applicable in the instant case is that of the maxim, one who hears the matter must decide . It is the Single Member Bench which had heard the argument of the Miscellaneous Application 1039 of 2019 and thus, it alone could have decided it. Merely because the presiding member of the Single Member Bench was also a part of the reconstituted Division Bench of the Tribunal comprising of two members, it does not mean that he could have taken up the Applicant's MA No.1039 of 2019 along with the MA No.691 of 2019. Thus, the Bench has passed the Order on the MA No.1039 of 2019, even though the other Member of the Bench, Member (Technical), didn't get an opportunity to hear the arguments on that application. Rule 150(2) NCLT Rules, 2016 provides for the Bench which hears the case to also pronounce the Order - the Resolution Professional committed a grave error in accepting the Resolution Plan of the Resolution Applicant Kalpraj Dharmshi Rekha Jhunjhunwala after the expiry of the deadline for submission of the Bid/Resolution Plan without notifying/publishing the extension of the timeline for submission of EOI, as per provision of the I B Code and Regulations thereof. The Adjudicating Authority has also failed to appreciate the illegalities and irregularities pointed out by the Appellant. Appeal allowed. 2020 (8) TMI 388 CIRP Process - Restoration of PPA - violation of Moratorium declared by the Adjudicating Authority - Section 14(1) of the Insolvency and Bankruptcy Code, 2016 - principles of unjust enrichment - whether the termination of PPA is in violation of Section 14(1) of the I B Code justifying the same being set aside in terms of the impugned order and if not, whether the Appellant could have validly terminated the same unilaterally? HELD THAT:- The Appellant is a Government concern supplying electricity in bulk after purchasing power from four different generation Companies. The role of the Appellant is that of a trading licensee. Corporate Debtor- M/s. Alex Green Energy Pvt. Ltd. , engaged in the business of Solar Power Generation in Patnagarh in the State of Odisha was to supply power to Appellant under the PPA which had been approved by the OREC. Admittedly, the PPA was executed pursuant to a bidding process in which Corporate Debtor had participated. It was to last for 25 years and power was to be supplied to Appellant at the rate of ₹ 7 per KWH for the entire period of 25 years - On a plain reading of Clause 7 of the PPA, it emerges that the tariff at the rate of ₹ 7/- per KWH was quoted by the Corporate Debtor as per tariff bid submitted by it through Odisha Renewable Energy Development Agency (OREDA) and same was accepted with Corporate Debtor being the L1 bidder. The bid process culminated in acceptance of quoted tariff of Corporate Debtor for 25 years for Solar Power Plant at the fixed rate of ₹ 7/- per KWH and the terms and conditions agreed upon crystallized into the PPA executed inter se the Corporate Debtor and Appellant. The argument that presently the tariff of solar power is much less than ₹ 7/ KWH does not hold water as the tariff in PPA was decided on commercial consideration obtaining at the time the PPA was executed. Admittedly, PPA does not contain a provision for revision of tariff though it makes a provision for force majeure and default and termination. A bare perusal of provision contained in Clause 17.4 leaves no room for doubt that the affected party/ buyer viz the Appellant in the instant case, in the event of default in performance of obligation on the part of seller/ project proponent, was required to issue a default notice to the seller/ project proponent and in the event of the default not being set right i.e. power supply not being restored to Appellant, the Appellant was required to seek specific performance of agreement till the time default is corrected. Clause 17.5 provides that in case of default being cured, the agreement will revive and its provisions shall become enforceable automatically within a maximum period of six months. Admittedly, in the instant case, power supply from Corporate Debtor to Appellant got disrupted and completely stopped on account of damage to the plant of Corporate Debtor due to a storm on 24th May, 2018 which rendered the plant non-operational. According to Corporate Debtor, the cessation of power supply to Appellant did not arise out of any act of nonfeasance, misfeasance or malfeasance on the part of the Corporate Debtor but on account of storm damaging the plant and rendering it non-operational and such eventuality is squarely covered under the force majeure clause viz Clause 14 of the PPA. In these circumstances, termination of the PPA purportedly for failure on the part of Corporate Debtor to restore the plant and power supply almost one year after power supply had ceased and about five months after commencement of Moratorium as a sequel to the initiation of the Corporate Insolvency Resolution Process of the Corporate Debtor communicated by the Resolution Professional to Appellant in terms of letter dated 25th February, 2019, being in violation of Section 14(1) of the I B Code would not sustain. There is no hesitation in accepting the Respondents contention that the termination of PPA on the part of Appellant in the given circumstances would not sustain. In view of this finding, endeavours on the part of the Appellant to show his willingness and make overtures for reinstatement/ revival of PPA at the revised rates would be unacceptable and the argument raised on behalf of the Appellant on this score has to be repelled. The effect of approval of the Resolution Plan of Respondent No.4 and such approval having been upheld by this Appellate Tribunal which stands un-assailed is that the Resolution Plan of Respondent No.4 is binding on the Corporate Debtor and all other stakeholders involved in the Resolution Plan which encompasses the Appellant within its fold who had the notice of pendency of Corporate Insolvency Resolution Process culminating in approval of the Resolution Plan of Respondent No.4. There is no merit in this appeal - Appeal dismissed. 2020 (8) TMI 387 Rejection of Resolution Plan - Section 31 of the Insolvency and Bankruptcy Code, 2016 - it is claimed that the Resolution Applicant was not disqualified under Section 29 of the I B Code to submit a Resolution Plan and the and the Committee of Creditors had approved the Resolution Plan with an overwhelming majority of 96.39% - HELD THAT:- It is the settled law of land that the approval of the Resolution Plan depending upon various factors including feasibility, viability, financial matrix and distribution mechanism rests upon the business decision taken by the Committee of Creditors in its commercial wisdom which are not to be interfered with by the Adjudicating Authority or even by this Appellate Tribunal. But at the same time the Adjudicating Authority has to ensure that the Successful Resolution Applicant(s) are not ineligible to submit Resolution Plan within the ambit of Section 29A and that the approved Resolution Plan complies with the mandate of Section 30(2) of the I B Code . While considering whether the Resolution Plan approved by the Committee of Creditors does not emanate from any ineligible person, does not contravene any of the provisions of the law in force and provides for management of affairs of the Corporate Debtor after approval of the Resolution Plan, the Adjudicating Authority has to keep in view the object of the legislation. Section 29A inserted by amending Act No.8 of 2018 declares certain persons ineligible to be Resolution Applicants. It cannot be disputed that the person who is promoter or in the management or in control of the Resolution Applicant or is promoter or in management or in control of the business of the Corporate Debtor during the implementation of the Resolution Plan falls within the expression connected person . Persons who contributed to default of company with their misconduct have to be excluded from submitting a Resolution Plan or acquiring the assets of the Corporate Debtor when pushed into liquidation. The Adjudicating Authority has rightly declined to approve the Resolution Plan of Mr. Madhusudhan who was only used as a ploy to gain control of the Corporate Debtor by the very person who had pushed the Corporate Debtor into insolvency. The Committee of Creditors has overlooked the settlement offer and ignored the withdrawal plea without assigning any reason. This in itself raises eyebrows. This is further compounded by approval of the Restructuring Plan camouflaged as Resolution Plan emanating from an ineligible person which renders the role of the Committee of Creditors questionable. Such circumstances justify raising of inference of complicity. The impugned order is well reasoned and in consonance with the object of the Code - Appeal dismissed. 2020 (8) TMI 386 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority has rejected the Application filed under Section 7 of the Code on the ground that CIRP cannot be initiated for recovery of dues as the Tribunal is not a recovery forum. It is contended by the Respondent that Section 65 of the IBC prohibits initiation of CIRP if the purpose of proceeding is other than resolution for insolvency. Section 65 of the Code provides for penal action for initiating Insolvency Resolution Process with a fraudulent or malicious intent or for any purpose other than the resolution. However, the same cannot be construed to mean that if a petition is filed under Section 7, 9 or 10 of the Code without any malicious or fraudulent intent, then also such a petition can be rejected by the Adjudicating Authority on the ground that the intent of the Applicant/Petitioner was not resolution for Corporate Insolvency Resolution Process. As the proceedings under IBC are summary in nature, it is difficult to determine the intent of the Applicant filing an application under Section 7, 9 or 10 of the Code unless shown explicitly by way of documentary evidence. This situation may arise in specific instances where a petition is filed under IBC specifically with a fraudulent or malicious intent. The Appeal deserves to be allowed - the Appellant/ Financial Creditor has proved that the Corporate Debtor has committed default of more than One lakh rupees, Application filed by the Appellant under Section 7 of the Code is complete and no disciplinary proceeding is pending against the proposed Resolution Professional. Therefore, the Application filed under Section 7 by the Appellant / Financial Creditor should have been admitted by the Adjudicating Authority. Appeal allowed. 2020 (8) TMI 385 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Opportunity of filing reply not provided - principles of natural justice - HELD THAT:- It is beyond doubt that there was an admission of debt and default of more than ₹ 1,00,000/-. Still, despite taking several opportunities from the Adjudicating Authority for settlement with the Financial Creditor, the Corporate Debtor defaulted in making the payment. Therefore, the contention of the Appellant that Order has been passed without affording an opportunity for filing Reply, in violation of the principle of natural justice is without any basis. It is the admitted position that for the same Financial Debt the earlier Company Petition No.1788 of 2018 was filed against the Corporate Debtor, which was not opposed and the Corporate Debtor offered One Time Settlement. Based on that offer the Adjudicating Authority permitted the withdrawal of the earlier Petition by its Order dated 25th September 2018 - It is also apparent that the Corporate Debtor in compliance of OTS issued post-dated cheques which were returned, dishonoured and Petitioner was constrained to file fresh proceeding under Section 7 of the Code, which was numbered as 27 of 2019. In the second Petition again, the Adjudicating Authority provided several opportunities to the Corporate Debtor considering the scope of the settlement. However, after the failure of any hope of settlement, the Order of admission was passed against the corporate debtor. It is pertinent to mention that statutory provision under the Insolvency and Bankruptcy Code, 2016 does not permit to provide several opportunities to Corporate Debtor in hope of the settlement. However, the Adjudicating Authority has tried his best to afford ample opportunity to both the parties to settle the matter amicably. But despite that, the Corporate Debtor has failed to make the payment or arrive at a settlement. In this case debt is of more than Rupees One Lac; default in repayment of such debt is admitted and application in Form-1 is also complete. Therefore the Adjudicating Authority has admitted the Petition by the impugned Order. Appeal dismissed. 2020 (8) TMI 384 Jurisdiction to hear appeal - Judicial Indiscipline - Monitoring of execution of Resolution plan as approved - it is the plea of the Appellant that the erstwhile Bench had the requisite jurisdiction to hear and reserve the matter on the day on which it was heard - it is the contention of the Appellant, when the erstwhile Bench of NCLT , Mumbai had reserved orders, the reconstituted Bench No. II, Mumbai had acted arbitrarily and in excess of its jurisdiction had stayed the proceedings, where the orders were reserved by the co-ordinate Bench HELD THAT:- Section 419(1) of the Companies Act, 2013 speaks of constitution such number of Benches of the Tribunal, as may, by notification, be specified by the Central Government etc. As a matter of fact, Constitution of Benches and Assignment of Cases is left to the subjective administrative discretion of the President / Chairman of a Tribunal. Section 420(1) of the Companies Act, 2013 says that the Tribunal may, after giving the parties, to any proceeding before it, a reasonable opportunity of being heard pass such orders thereon as it thinks fit . Needless to state that the Tribunal is to ascribe reasons for arriving at a conclusion, of course resting upon the materials on record. The Hon ble President of NCLT , New Delhi, (in exercise of the powers conferred u/s 419 of the Companies Act, 2013) on 29.1.2020 had re-constituted the Benches at NCLT Mumbai for the purpose of exercising and discharging the functions assigned by the statute which was in partial modification of the order dated 25.07.2020. It is to be remembered the principle of qundo aliquid prohibetur, prohibetur et omne per quod devenitur ad illud is that an Authority is not to be permitted to evade a Law by shift or contrivance . In as much as the impugned order which was heard by the erstwhile Bench on 30.01.2020 wherein orders were reserved, until the next date of hearing i.e. on 28.02.2020 is beyond the jurisdiction of the re-constituted Bench of NCLT Court No. II, Mumbai, the said order with a view to prevent an aberration of justice and with a view to secure the ends of justice, is set aside by this Tribunal, of course in the interest of our institutional justice delivery system, with a benign hope and trust that such slipup will not recur again in future - Appeal allowed. Jurisdiction of Monitoring Agency - Appellant submits that the Monitoring Agency does not have the Locus-Standi to file MA No.249/2020 (MA No. 1) in which the impugned order was passed on 18.2.2020 - grievance of the Appellant is that the Monitoring Agency had not even consulted with the Steering Committee before filing MA No. 249/2020 and there was no resolution on record approving such an action - HELD THAT:- In the instant case, it cannot be brushed aside that nearly six months have gone by, from the order of approving the Resolution Plan dated 25.11.2019 of the Appellant and the same is yet to be implemented by the Appellant till date. In the Preliminary Reply Affidavit , the Appellant / Respondent at paragraph 6 had stated that it had always shown its willingness and ability to execute the approved Resolution Plan etc. As such, this Tribunal is of the earnest opinion that the Appellant / Respondent cannot avoid/evade/ or circumvent its solemn responsibility to implement the Resolution Plan unconditionally in stricto sense of the term, without any further procrastination. This Tribunal taking note of the facts and circumstances of the present case which float on the surface in a conspectus fashion and also keeping in mind that the upfront payment was not made by the Appellant as well as the Non-Convertible Debentures of ₹ 480/- Crores in favour of Financial Creditors was not issued; comes to an inevitable and irresistible conclusion that the Adjudicating Authority had rightly directed the Appellant / Resolution Applicant to make: (a) payment of upfront amount of ₹ 420/- Crores which was already due consequent to the completion of 30 Business Days from the date of approval of the Resolution Plan by it; (b) the issuance of Non-Convertible Debentures of ₹ 480/- Crores in favour of the Financial Creditors ; (c) to deposit the balance performance guarantee of ₹ 48/- Crores within 90 days of the approval of the Resolution Plan by granting a week s time and resultantly allowed the miscellaneous application - Appeal dismissed. 2020 (8) TMI 383 CIRP process - Financial Creditors or not - whether un-secured Creditors who may avail other remedies to recover their debts, or not - whether the loans advanced by the Appellants are legal in the eye of law and whether they can be treated as unsecured creditors? - HELD THAT:- The stand of the Appellants that the loans were advanced by the individuals to the Corporate Debtor for the business purposes. The Appellants failed to provide any evidence showing that the Corporate Debtor required the loans and Board of the Corporate Debtor decided and resolved in its Board Meetings to take loans @ 3.3%,4% 5% rates of interest that too from the individuals. In normal course of business, the Company takes loans from the Public Sector Bank or the Private Banks at the rate of interest charged by the Banks or Private institutions - But in the present case, Respondent-Corporate Debtor accepted loans from the individuals with an exorbitant rates of interest and the said advancement of loans by the individuals may be at the behest of Directors in collusion with the individuals. No reasonable person would agree to such transaction hence we say there appears to be collusion. It is admitted position that the Appellants No. 2,3,4,6,7 9 have purportedly advanced loans to the Corporate Debtor with exorbitant rates of interest on 04.07.2016, 22.08.2016, 23.08.2016, 10.10.2017, 02.08.2016 and 21.03.2017 which are within period of two years preceding insolvency commencement date i.e., 01.06.2018. Even as per submission of the learned Counsel for the Appellants, these transactions are considered to be Extortionate Credit Transactions and the same needs to be quashed and set aside. The transactions of the Appellants No. 1, 5 8 which are prior to two years preceding the insolvency commencement date. However, taking into consideration, the exorbitant rates of interest charged by the Appellants, the said transactions are unconscionable. Thus, keeping in view that the rates of interest which they charged are exorbitant, we are of the view that claim of exorbitant rates of interest is extortionate regarding interest and thus illegal. However, Appellants No. 1,5 8 can make their claims for Principal Amount as Unsecured Creditors - appeal disposed off. 2020 (8) TMI 382 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - Dishonor of cheque - grievance of the Appellant is that the said application was filed before the Adjudicating Authority despite the fact that Section 8(1) Demand Notice was not delivered to it and there was a pre-existing dispute in the matter - HELD THAT:- In the present case, the 1st Respondent / Operational Creditor has come out with the plea that the letters dated 2.7.2016, 27.7.2016,25.08.2016 and 27.01.2016 are believed to be false and they are concocted, fabricated and manufactured for the purpose of this case to take an illegal defense. Further, the 1st Respondent / Operational Creditor has taken a stand that the signatures and the Company s seal on the letter / reply dated 27.7.2016 was fabricated by the Corporate Debtor . Therefore, this Tribunal is of the considered view that the plea of the 1st Respondent / Operational Creditor that the alleged forged letters were created in a single night for taking an illegal defense of dispute and the Corporate Debtor is liable to be tried for perjury can be pleaded / agitated before the Competent Forum. The 1st Respondent / Operational Creditor had accepted the payments of ₹ 4,51,84,594/- in respect of supplies and full and final payment of ₹ 12/- lakhs on 17.5.2017. No tangible / substantial material / evidence is produced on the side of the Appellant to show that it was a final payment in full quit and nothing remains to be paid by the 2nd Respondent/ Corporate Debtor. Therefore, this Tribunal negatives the plea of the matter had been settled and no sum remains to be paid by the 2nd Respondent / Corporate Debtor to the 1st Respondent/Operational Creditor other than the purported full and final payment of ₹ 12 lakhs made on 17.5.2017. Dishonor of Cheques - HELD THAT:- The 1st Respondent / Operational Creditor had initiated Proceedings under Section 138 of the N I Act, 1881 against the Corporate Debtor . Although, the Appellant has taken a plea that these cheques were issued by the Corporate Debtor for some other project and not for the project concerning the subject matter in issue, the same is not established by the Appellant to the subjective satisfaction of this Tribunal. If a Debt is due and payable one to the Operational Creditor by the Operational Debtor then the said Debtor will squarely come within the purview of the ingredients of the definition of Section 5(21) of the Code. In a given case, if it is exhibited that there is a clear default of minimum of ₹ 1/- Lakh, then the dispute in regard to quantum of the amount claimed can not be an hindrance in admitting an Application/ Petition filed either under Section 7 or 9 of the I B Code - The aspect of Addition of Parties in a given proceeding is within the exclusive domain of a concerned Court/ Tribunal. A party/ parties are not to be added /arrayed as parties in a given application to introduce a fresh/new cause of action. In as much as the 2nd Respondent / Corporate Debtor had committed default as per definition Section 3(12) of the Code which defines default and in spite of notice the 2nd Respondent had failed to effect the payments due to 1st Respondent / Operational Creditor and an amount of ₹ 61,24,637/- was due as on date of filing of the application before the Adjudicating Authority coupled with interest @ 24% p.a., this Tribunal without any haziness comes to a consequent conclusion that the view arrived at by the Learned Adjudicating Authority that the 2nd Respondent/Corporate Debtor had committed default and ultimately admitting the application filed by the 1ST Respondent/ Operational Creditor is free from any legal infirmities - Resultantly, the present Appeal fails and the same is accordingly dismissed but without costs. Appeal dismissed. 2020 (8) TMI 381 Maintainability of application - initiation of CIRP - Period of limitation after default - Corporate debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Apparently, dispute regarding the assignment is being contested in City Civil Court and in summary proceeding before the Adjudicating Authority when the Financial Creditor and bank are supporting each other, it is not possible for the Adjudicating Authority to decide the dispute which would be a matter of Suit - Before us, not much stress was laid on this aspect and we do not find any reason to differ from the Adjudicating Authority on this count. Time Limitation - HELD THAT:- The date of default is stated to be 31st December, 2013 and NPA was declared on 30th March, 2014. The Adjudicating Authority found that the claim was within limitation - the Adjudicating Authority relied on the balance sheet to hold that there was acknowledgement and thus, the claim was within limitation. Whether in the Balance Sheet which is being relied on, what is seen in the statement and if the same could be read as acknowledgement? - HELD THAT:- The statement recorded by the Auditor with regard to the pending litigation in the facts of the present matter, we find, cannot be read as an acknowledgement by Company under Section 18 of the Limitation Act. The Adjudicating Authority did not go into the particulars. In present matter, we are not deliberating whether entry in Balance Sheet can be termed Acknowledgement in law - In our view, even if we are to consider that contents in Balance Sheet could be read as acknowledgment even then if we read the contents in balance sheet in the matter, for reasons stated above, we do not find that the Corporate Debtor acknowledged as such the liability to pay the alleged outstanding debt. It is stated that the Application under Section 19(4) of SARFAESI Act filed by the Bank on 29th June, 2015 is still pending adjudication before DRT-3, Kolkata. The default dated 31.12.2013 which was declared NPA on 30th March, 2014, was time barred for the purpose of filing of Application under Section 7 of IBC on 31st October, 2018. The Application thus should not have been admitted - application dismissed. 2020 (8) TMI 373 Hearing of the case - outbreak of COVID-19 pandemic situation - It is stated at the Bar that the matter is now listed for 27th July, 2020 for hearing through virtual mode - HELD THAT:- n view of the events that have intervened bringing the wheels of justice to a halt, we direct the Adjudicating Authority to hear the matter expeditiously alongwith all IAs according priority to the matter as the same pertains to insolvency resolution which process was commenced on 20th February, 2018. It is expected that the Adjudicating Authority would hear the matter with utmost expedition and dispose of the same without any further loss of time - appeal disposed off. PMLA 2020 (8) TMI 380 Permission for withdrawal of petition - Validity of provisional attachment order - Proceeds of crime - petitioner seeks to withdraw the writ petition today on the ground that the provisional order of attachment no longer remains in force by efflux of time under Section 5 of The Prevention of Money-Laundering Act, 2002 - HELD THAT:- his Court is of the view that under Section 5(1)(b) of the PMLA, an order of provisional attachment remains in force only for a period of 180 days from the date of the order passed by the Director with regard to the proceeds of crime which the concerned Director has reasons to believe are likely to be concealed, transferred or dealt with in a manner which may frustrate any proceedings relating to confiscation of such proceeds of crime under Chapter III of the PMLA - Section 8(3) deals with a situation where the Adjudicating Authority makes an order in writing confirming the attachment of the property made under Section 5(1) or for retention of the property etc. Admittedly, no such order has been passed by the Adjudicating Authority against the petitioner under Section 8(3). It should be mentioned that the Adjudicating Authority has been served with copies of the petition. If the concerned Act provides certain windows to a party in relation to a provisional order of attachment expressed in the clear language of Section 5(1)(b), this Court cannot come in the way of the petitioner taking advantage of the said exit route - petition dismissed as withdrawn. Central Excise 2020 (8) TMI 379 Area based exemption - benefit of N/N. 50/03-CE dated 10.06.2003 - benefit denied on the ground that while plant and machinery as declared on 15.03.2010 were installed in the factory premises, the same were not used by them till the date of their visit i.e. 17.04.2010 - recovery of the duty for the period from April, 2010 to September, 2011 along with interest thereon under Section 11 AB of the Central Excise Act and imposition of penalty under Section 11 AC of the Central Excise Act, 1944 - HELD THAT:- We had directed both the parties to inform the status report, if any appeal has been filed by the Revenue against the aforementioned final order of this Tribunal, within a period of 10 days. As no such report is filed, it appears that Revenue has accepted the Tribunal s order and no further appeal has been filed. The appellant is entitled to area based exemption under Notification No.50/2003-CE. - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2020 (8) TMI 378 Issuance of Form-9 - exemption from sales tax - HELD THAT:- The respondents, if so advised, may make such claim, as they are entitled to under law, for the purpose of claiming exemption in respect of sales tax for the assessment years in question. This would not affect any claim for exemption made earlier nor result in re-opening of any assessment already made. Obviously, assessments, if any, will be made according to law. The application for issuance of form 9 or any other appropriate form for the purpose of claiming exemption in respect of assessment years in question shall be made by the respondent within a period of three months from today. Appeal disposed off. 2020 (8) TMI 377 Recall of order - ex-parte order - section 32 of the U.P. Value Added Tax Act, 2008 - contention of applicant is that as per section 29(6) of the Act, no proceedings could have continued after the end of the assessment year - HELD THAT:- When the First Appeal was being heard and the applicant's case was that no proceeding against him could be continued as per section 29(6) of the Act, then a complete stay of the recovery ought to have been there. Under such circumstances, it is being provided that while the First Appeal would be heard and decided within a period of four months from the date of presentation of this order, the disputed demand as was being made by the Department shall remain stayed for a period of four months or till the disposal of the First Appeal, whichever is earlier. Revision disposed off. Indian Laws 2020 (8) TMI 375 Dishonor of Cheque - insufficiency of funds - cross-examination of the case - acquittal of the accused - sufficient opportunity to the complainant to lead further evidence of PW-1 not provided - principles of natural justice - HELD THAT:- The respondent- accused has been secured by issuance of summons and thereafter the GPA holder of the complainant has been examined and subsequently, the case had been posted for cross-examination of PW-1 on 29.06.2019 and that the case came to be dismissed and the accused was acquitted. As could be seen from the order, it indicates that PW-1 was absent and the advocate for the complainant had sought time to keep PW-1 present for the purpose of cross- examination but without giving any opportunity, though time had been sought by the counsel for the complainant, erroneously, the impugned order has been passed. However, if one more opportunity is given, no prejudice would be caused to the respondent-accused. Thus, if one more opportunity is given to the complainant-appellant to lead his evidence, without pleading for any further time, then under such circumstances, it would meet the ends of justice - The trial Court is directed to dispose of the case expeditiously by affording full opportunity to the appellant-complainant - appeal allowed. 2020 (8) TMI 374 Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - offence punishable u/s 138 of the N.I. Act or not - Service of notice - Whether the Judgment of conviction and Order on sentence under revision deserves interference at the hands of this Court? - HELD THAT:- In the instant case, the accused as DW-1 while taking such a vague contention has not produced any corroborative evidence to prove his contention. On the contrary, the very same accused in his cross-examination has stated that as a builder, he develops land for which he raises loans from banks and several individuals. Thus, he has shown that he is a regular borrower not just from the father of the complainant but from banks and other individuals also. Further in the very same cross-examination, when he was confronted with the cheque which was marked at Ex.P4, he has admitted that the said cheque pertains to him and admitted a suggestion as true that the amount mentioned in the cheque is in his hand-writing - With these admissions and the statements made by DW-1 in his cross-examination coupled with evidence of PW-1 and DW-2 it clearly goes to show that the complainant both by his oral and documentary evidence has clearly established that the cheque in question was issued to him by the accused towards the repayment of the loan amount which is said to have been taken by the accused, from him. Merely because the complainant has not produced his bank passbook or statement, by that itself, it cannot be suspected that there was no such loan transaction. The oral and documentary evidence led by the complainant and the admissions made by the accused in his cross-examination and also the non denying of the submissions of PW-1 in his cross- examination would clearly go to establish that the accused had availed a loan of ₹ 9,35,000/- from the complainant and towards the repayment of the same, he had issued the cheque marked at Ex.P4. Thus, apart from a mere legal presumption under S.139 of N.I. Act, the complainant's evidence further crystalises the said presumption and proves it to be a fact. Service of notice - HELD THAT:- The notice sent under certificate of posting can also be deemed as having been delivered to the addressee / accused. Thus, even after service of such a notice, the accused has not responded to the same in any manner. Therefore it clearly goes to show, that the accused had issued a cheque in favour of the complainant towards the repayment of the legally enforceable debt and the said cheque was dishonoured when presented for encashment, with the reason 'funds insufficient'. The defence taken by the accused that the loan transaction was with the father of the complainant but not with the complainant since has remained not proved, the Courts below have rightly held that the complainant has proved the alleged guilt against the accused which is punishable under S.138 of the N.I. Act. The quantum of sentence ordered also being proportionate to the gravity of the proven guilt, there are no ground to interfere with the impugned Judgment of conviction and Order on sentence - revision petition dismissed.
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